Saturday, June 22, 2013

Cops: HOA Prez Pilfered $148K Of Association's Funds From 66-Unit Condo, Then Blew It At Nearby Casino; Arrest Culminates 2+ Year Probe Triggered By Financial Discrepancies Found By Replacement Board Members

In Pembroke Pines, Florida, the South Florida Sun Sentinel reports:

  • Luck finally ran out for a Pembroke Pines condo association president accused of gambling away the community's maintenance money at a casino.

    Nancy Marquez, 58, was arrested on charges she stole $148,012 from the French Villas condominium association, Pembroke Pines police said. Taken into custody, she admitted she commingled association funds with her own and used the cash to gamble at Seminole Hard Rock Hotel & Casino in Hollywood, investigators said.

    "It made my day when I got the call," said current condo board member Paul Coffman upon hearing of Monday's arrest.

    Coffman said he and fellow board members found financial discrepancies in January 2011, when he replaced Marquez as association president for the 66-unit building in the 600 block of French Drive. "We got the invoices and everything for the two years that she was on the board and started going through them," he said. "Some things caught our eye that just weren't right."

    The board contacted police, who carried out an investigation that more than two years later resulted in Marquez's arrest.

    Because of the inquiry, Coffman and other board members couldn't publicly discuss the missing money — even to concerned condo residents, Coffman said. Meanwhile, bills were being paid late because of the shortage of funds, Coffman said. "When people kept complaining, you had to bite your tongue," he said.

    The association received notices from the city of Pembroke Pines that the water would be shut off unless utility bills were paid. Florida Power & Light Co. sent notices threatening to switch off electricity that powered hallway and parking-lot lighting in the community.
  • She was arrested on charges of grand theft and perpetrating a scheme to defraud. She was freed from jail Tuesday on $7,500 bond, records show. [...] In Pembroke Pines, the French Villas condominium association has since managed to pay down its debt through the satisfaction of liens against foreclosed units, Coffman said. As they sold, the association received a percentage of the money, Coffman said.

    "We were getting enough money to makes ends meet," he said. "We have caught up." The debt problems have not disappeared altogether, but the association is in better shape. "We're not sailing yet," he said. "We're still in a dinghy, but we're catching up."

HOA Treasurer Pinched, Accused Of Improperly Dipping Into Community's Till In $260K+ Ripoff Over Four Year Period

In Columbia, County, Georgia, WJBF-TV Channel 6 reports:

  • Nestled neatly along a country road, the Stratford neighborhood is relatively quiet and peaceful. But, the news of an arrest in the case of stolen homeowners association money has punctured the typical silence.

    Neighbor Song Sparks says, "everybody let their guard down because over a number of times the community was thriving, the grass was being cut, everything was being done. We assumed the statements that we got looked pretty on paper."

    However, the ugly truth soon reared its head when the dollars and cents didn't add up. It turns out, Stratford Homeowners Association treasurer Laurie Wainwright-Vanover was suspected of taking more than $200,000 from the coffers.

    According to the police report, it happened over a four year period through credit cards and ATM transactions. Homeowner's Association president Tom Gorta says, "obviously, you have to be more vigilant than anything and what you take out of this is trust no one."
  • Laurie Wainwright-Vanover has been released on a $40,000 bond. [...] Deputies arrested Laurie Wainwright Vanover of Andover Court and charged her with Larceny - Theft By Taking (Felony/Misdemeanor), Financial Transaction Card Fraud, Computer Theft, and Theft By Conversion (Felony/Misdemeanor).

    Investigators say, Vanover is accused of stealing $267,663.08 from the Stratford Community Association between November 2008 and December 2012. 

Sticky-Fingered HOA Treasurer Gets 15 Days House Arrest For Embezzling $26K From Outside Employer, Then Using Partial Proceeds To Dodge Jail Time In Earlier $10K HOA Ripoff

In Bonney Lake, Washington, the Bonney Lake-Sumner Herald reports:

  • Bonney Lake woman Jeanette Kay Sturtz, 57, was sentenced Wednesday to 30 days community service and 15 days house arrest after pleading guilty to embezzling more than $35,000 from her homeowners association and a Puyallup landscaping company.

    Sturtz was charged March 5 for the theft of nearly $26,000 from Blue Sky Landscape Service, where she worked as a financial controller. [...] In the declaration of probable cause for the case, deputy prosecutor Lisa Wagner noted that the thefts from Blue Sky began the same month thefts from Sturtz's homeowner's association ended.

    Sturtz was charged in 2011 with the theft of $10,600 from the homeowner's association where she was treasurer. The charges were dismissed under an El Cid diversion program when it was determined she had paid back what she had taken. The Blue Sky case led prosecutors to believe she had embezzled from her employer in part to pay back the association.

    "In (the homeowner's association) incident the defendant had admitted to stealing $10,600.00 from her homeowner's association, and she said that the thefts occurred from February to September 2010," Wagner wrote in the probable cause papers. "That latter date is important because the records in the present case show that the defendant began stealing from Blue Sky Landscaping in September, 2010."

    In light of the new embezzlement case, the theft charge in the association case was reopened. Sturtz originally pleaded not guilty March 20. With her plea of guilty to two counts of theft in the first degree, prosecutors agreed to recommend she be sentenced as a first-time offender. Twelve charges of forgery were dismissed from the case.

Friday, June 21, 2013

Oregon Man Pinched On Suspicion Of Hijacking Possession Of Vacant Foreclosures, Then Pocketing Cash From Subsequent Rentals; Suspect Allegedly Used Online Craigslist Ads To Reel In Unwitting Tenants

In Sherwood, Oregon, KPTV Channel 12 reports:

  • If 40-year-old Jason Dimicelli is your landlord, deputies want to hear from you. Lincoln County deputies say he is responsible for a Craigslist scam that has put renters in multiple counties out of their homes.

    Dimicelli was arrested in May for renting out a Newport home without the owner's permission. Further investigation has linked Dimicelli to residential properties in Lincoln, Clatsop, Yamhill and Washington counties.

    In Sherwood, Shelly Taylor believes she was a victim of the scam. She had been renting a home there from Dimicelli for only two weeks when she started noticing red flags – the home had no smoke detectors, and basic maintenance had been neglected. Further research showed the home was actually bank-owned.
  • Although she only actually lived there two weeks, Taylor says she had already paid Dimicelli $2,000 and done hundreds more in upgrades to the home – including replacing the missing smoke detectors. Now Taylor says she is out the money, and out of a place to rent.

    Deputies say many of the homes in the investigation were either in foreclosure or bank-owned. They are currently investigating how their suspect was able to get into the homes and change the locks.

Tenant Advocates Accuse Foreclosing Bankster, Law Firm Of 'Constructive Eviction' By Rendering Premises Uninhabitable To 'Persuade' Occupants To 'Voluntarily' Vacate; Family Of 8 Left Literally 'In The Dark' - Other Tenants Successfully 'Scared Out'

In Chicago, Illinois, Progress Illinois reports:

  • Eight members of the Shaw family, including a 14 month-old baby, have been living without gas or electricity for nearly a week, according to parents Shantisha and Ezekiel. Their two-bedroom garden apartment in Englewood, on Chicago’s South Side, is flooding and has mold damage. The two apartments above them are vacant, with broken and boarded-up windows.

    “We can’t live like this any more,” said Shantisha Shaw, 36, regarding the home she’s shared with her family since February 2011. A stroke survivor, Shantisha is permanently disabled and lives with her husband and six children.

    The Shaw’s landlord was foreclosed upon last year and Freedom Mortgage Corp. took over the deed for the building on December 14, as indicated by the Cook County Clerk of the Circuit Court.

    But neither Shantisha, nor her husband, Ezekiel Shaw, said they were notified the building was being foreclosed upon. They said they were not given a 90-day notice to vacate, nor were they provided any instructions indicating where they should send their monthly $550 rent — which includes utilities — following the foreclosure.

    The Shaws say they were not provided with any landlord or contact information pertaining to who would be responsible for maintaining the property after the foreclosure. “We’ve been left in the dark, literally,” said Ezekiel, 45. “What are we supposed to do?”

    He said he’s been given the run-around:

    In February the Shaws received an eviction notice from Pierce & Associates, a leading Chicago-based foreclosure law firm. “Demand is hereby made upon you for immediate surrender of possession of the above premises,” the February 4 letter, identifying Pierce & Associates as attorneys for Freedom Mortgage, states.

    “But we don’t have any money, I don’t know what they expect us to do,” said Shantisha. She said the building's utilities were shut off last week and “it’s been like hell”:

    It is under these conditions that the Shaw family is receiving support from the Keep Chicago Renting Coalition, which hosted a press conference and rally this week outside the family’s home at 6936 South Green St.

    According to the group, city law — the Chicago Residential Landlord Tenant Ordinance — requires that landlord notify renters about foreclsoure filings within seven days of the legal action. The coalition also notes that the Illinois Mortgage Foreclosure Law obligates those who take over foreclosures to notify renters of their acquisition of the property within 21 days of securing it. None of this happened in the case of the Shaw family.

    Additionally, Pierce & Associates should have given the Shaw family 90 days to vacate the premises, the coalition alleges, as mandated by the federal Protecting Tenants at Foreclosure Act of 2009.

    The coalition of community, social service and labor organizations also alleges that Freedom Mortgage violated the Chicago Residential Landlord Tenant Ordinance by failing to maintain the property after they acquired ownership.

    “We want Freedom Mortgage to assume responsibility as new owners of the property, and we need Pierce & Associates to apply best practices regarding renters’ rights,” said Dan Kleinman, policy director for Action Now. “When a law-abiding tenant is willing and able to continue paying rent, they deserve the opportunity to keep their lease. And if the bank absolutely refuses, they need to provide a form of compensation that dignifies what the renter is going through.”

    The group has reached out to the office of Illinois Attorney General Lisa Madigan. Kleinman said officials expressed interest in helping the coalition pursue the correct means of redress for the Shaw family. “We need to send a clear message to, not only banks, but the legal firms that represent them, that the law has to be followed and renters’ rights have to be respected,” he said.

    Kleinman accused Pierce & Associates of “constructive eviction”, which is the illegal practice of rendering a property uninhabitable in the interest of persuading a tenant to leave the premesis on their own volition.

    “The Shaws have done nothing wrong,” he said, noting the buildings’ other tenants have already been “scared out.”

Indianapolis Tenant-Couple Face The Boot After Finding Out Premises Was In Foreclosure; Phony Landlord Was Homeowner's Ex-Hubby

In Indianapolis, Indiana, WISH-TV Channel 8 reports:

  • An Indianapolis couple is scrambling to find a new place to live after accidentally finding out their house is in foreclosure. It only took a minute for panic to fill Claudia Mason's chest.

    "First was who are you?" A man was taking pictures of her house.

    "i Came on out and asked him what he was doing and found out that he was putting notices up on our house for a sheriff eviction," said Claudia.

    Just days prior, Claudia and her husband Craig signed their second year's lease. They thought it must be a mistake but after a quick check by the man with the camera. "Not only was the house completely foreclosed, but who we had been paying rent to didn't own the house now or ever," said Claudia.

    Turns out, the landlord had been taking the Mason's rent checks while they lived in a house owned by his ex-wife. Meanwhile, the house was falling into foreclosure.
  • A simple search of public records revealed a long history of financial problems for the landlord; a handful of lawsuits, over $30,000 in property taxes due and he filed for bankruptcy in 2002.

    "We've had to completely drain our savings. We've had to scrap and scrounge so that we can get first months and deposit on a new property plus moving expenses," said Craig. "We found out that in 26 days we are basically going to be homeless," said Claudia.

Thursday, June 20, 2013

Woman On Maternity Leave Scores $13K Fair Housing Settlement For Allegedly Being Told By Lender That It Would Be Willing To Make A Home Loan To Her, But Only After She Returns To Work

From the Department of Housing & Urban Development (Washington, D.C.):

  • The U.S. Department of Housing and Urban Development (HUD) announced [] that it has reached a Conciliation Agreement with Primary Residential Mortgage, Inc. (PRMI), in Salt Lake City, UT, settling allegations that the lender denied a Baltimore, Maryland woman a mortgage loan because she was pregnant and on maternity leave.
  • Refusing to approve a mortgage loan or to provide refinancing because a woman is pregnant or on maternity leave violates the Fair Housing Act’s prohibitions against sex and familial status discrimination.
  • The woman, who applied for the loan in her name, and her husband filed a complaint with HUD alleging discrimination after one of PRMI’s loan officers told her that she was a “good risk” and that the lender would be willing to finance her loan, but only after she returned to work. After being unable to get a loan from PRMI, the woman and her husband applied for a loan with another lender and were approved.

    Under the terms of the agreement, PRMI will pay the woman $13,000 and adopt a parental leave policy with respect to loan applications to ensure compliance with the fair lending requirements of the Fair Housing Act. In addition, PRMI’s loan officers, processors, underwriters and decision makers will be trained on the Act and the new policy. The Parental Leave Policy applies to men as well as women who are on parental leave due to the birth or adoption of a child and prohibits inquiries concerning a person's future parental leave plans.
For the HUD press release, see HUD, Utah Mortgage Company Settle Pregnancy Discrimination Claim (Baltimore family denied approval based on maternity leave status).

HUD, Bankster Settle Fair Housing Allegations That Lender Discriminated Against Two Pregnant Women On Maternity Leave In Unrelated Cases Involving Home Financing Transactions; Victims Each Pocket $18K; Feds: Bias Prohibitions Also Apply When Men Take Paternity Leave

From the Department of Housing & Urban Development (Washington, D.C.):

  • The U.S. Department of Housing and Urban Development (HUD) announced [] that it has reached two Conciliation Agreements with SunTrust Mortgage, Inc., settling allegations that the Richmond, VA-based lender denied mortgage loans to a couple in Port St. Lucie, FL, and another couple in Ashland, VA, because the women were on maternity leave.

    The Fair Housing Act makes it unlawful to discriminate in residential real estate-related transactions based on race, color, national origin, religion, sex, disability, or familial status. These prohibitions include denying a mortgage because a person is pregnant or takes maternity or paternity leave.
  • A Port St. Lucie, FL, woman and her husband alleged that SunTrust had pre-approved them for a mortgage loan, but 14 days before closing, a loan officer informed them that the loan would not be approved unless she returned to work.

    In the Ashland, VA, case, a couple alleged that the bank had provided a construction-to-permanent mortgage loan but delayed its conversion to a permanent loan until after the woman returned from maternity leave. The Fair Housing Act requires lenders to provide full and fair access to home mortgages regardless of a person’s sex or familial status, including pregnancy.

    Under the terms of the agreements, SunTrust will pay each couple $18,000, adopt a parental leave policy that prohibits discriminatory mortgage lending due to parental leave, and train their employees on the fair lending requirements of the Fair Housing Act. The Parental Leave Policy specifically prohibits asking mortgage applicants about their intent to take parental leave in the future. The policy also provides that mortgage applicants on or scheduled to be on parental leave may still qualify for loan approval and funding.
For the HUD press release, see HUD And Suntrust Bank Settle Maternity Leave Discrimination Claims (Bank to pay two couples who were denied loans).

Recorded Restrictive Covenant Prohibiting Use Of House As Group Home For Disabled Persons Leads To $90K Fair Housing Settlement; Listing Brokerage, Law Firm Each To Cough Up $45K; Prospective Buyer Scores $78K, Buyer's R/E Agent Pockets $12K For Initiating Complaint With HUD

From the Department of Housing & Urban Development:

  • The U.S. Department of Housing and Urban Development (HUD) announced [] a $90,000 Conciliation Agreement with Coldwell Banker Residential Brokerage and the seller of a home in Worcester, Massachusetts, settling allegations they violated the Fair Housing Act by preventing the sale of a house to be used as a group home for persons with disabilities.

    The Fair Housing Act prohibits discrimination in rental or sales transactions based on disability, including preventing a home sale because the home is going to be used by persons with disabilities.
  • The prospective buyer planned to rent the house to a non-profit organization that provides supportive housing for persons with disabilities. When Erwin Miller, the executor of the estate learned the house would be used as a rental property, he agreed to sell the home on the condition a restrictive covenant was attached to the property. Miller stated in an email, “If they rent to a responsible family it is okay, BUT no unrelated individuals, students, dorm! Neighbors will fight this.”

    Donna Truex, Miller’s attorney, at Bowditch & Dewey, LLP, recorded a restrictive covenant prohibiting the use of the house as a group home for disabled persons. Miller’s real estate agent, an independent contractor associated with Coldwell Banker Residential Brokerage, then emailed the restrictive covenant to the prospective purchaser’s sales agent, thereby prompting the prospective purchaser to withdraw from the sale.

    The prospective purchaser and his sales agent subsequently filed a complaint with HUD, alleging the restrictive covenant that prohibited future owners of the home from using it as a group home for individuals with disabilities.

    After receiving the complaint, HUD filed its own Secretary-initiated housing discrimination complaint alleging that the actions of the seller, real estate agent Maureen Kelleher, and attorney Donna Truex violated the Fair Housing Act.

    Under the terms of the agreement, which was negotiated by HUD’s Regional Counsel in Boston, Coldwell Banker Residential Brokerage and Bowditch & Dewey will each pay $39,000 to the prospective buyer and $6,000 to his sales agent.

    Coldwell Banker Residential Brokerage and Bowditch & Dewey, LLP, will provide their employees with fair housing training. In addition, Bowditch & Dewey, LLP, will donate 100 hours of free legal services directly related to fair housing and 100 hours of free legal services directly related to the promotion of disability rights.
For the press release, see HUD Settles Discrimination Claim With Coldwell Banker Residential Brokerage And Home Seller (Brokerage firm, seller will pay $90,000 for preventing sale of house).

NYC Fair Housing Watchdog Scores $385K In Settlement With 675-Home Bronx Co-op Over Allegations That Rule Requiring Prospective Homebuyers Submit Three References From Existing Shareholders Discriminated Against African Americans

In New York City, the Fair Housing Justice Center reports:

  • District Court Judge Robert P. Patterson, Jr. approved a settlement between the Fair Housing Justice Center (FHJC) and the Edgewater Park Owners Cooperative, Inc. (EPOC). The agreement resolves a lawsuit filed in February 2010 in which the FHJC alleged that two housing cooperatives located in the Throggs Neck area of the Bronx and a real estate broker were discriminating against African American prospective home buyers.

    Prior to filing a lawsuit, the FHJC conducted a testing investigation in 2009. The complaint alleged that Edgewater Park, a community with 675 homes, and Silver Beach Gardens, a community with 350 homes, required that prospective buyers provide three (3) references from existing shareholders and that this reference rule discriminated against African American home buyers.
  • The settlement provides a general injunction requiring EPOC to abide by fair housing laws and permanently eliminate the 3 shareholder reference requirement. [... In addition to other non-financial terms], the agreement provides that EPOC will make a payment of $385,000 to the FHJC to cover damages, attorney’s fees, and costs.
  • FHJC Executive Director Fred Freiberg stated, “This settlement opens up housing opportunities to prospective buyers of all races. We urge all cooperative and condominium communities in the New York City region to fully comply with fair housing laws by removing policies or procedures that restrict access to housing based on race or other protected characteristics.”

    The FHJC entered into a settlement with Silver Beach Gardens in May 2011 for injunctive relief, which included removal of the 3 shareholder reference requirement, along with a monetary recovery of $115,000.

    The defendant real estate broker, Amelia Lewis, also settled with the FHJC and agreed to pay damages to two African American testers and surrender her real estate license.
For the press release, see Bronx Co-op Community Welcomes All Buyers (Discriminatory Reference Rule Abolished).

Wednesday, June 19, 2013

Tacoma Feds Score Multi-Year Prison Sentences For Sovereign Citizen Pair Convicted Of Filing False Liens In Retaliation Against Government Officials

From the Office of the U.S. Attorney (Tacoma, Washington):

  • Two men, who previously resided in Pierce County, Washington were sentenced [] in U.S. District Court in Tacoma for their illegal actions associated with a militant anti-government group, announced U.S. Attorney Jenny A. Durkan.

    KENNETH WAYNE LEAMING, 57, of Spanaway, Washington, was sentenced to eight years in prison for three counts of filing false liens against federal officials, and one count of harboring federal fugitives and being a felon in possession of firearms.

    His co-conspirator, former Tacoma resident DAVID CARROLL STEPHENSON, 57, was sentenced to 10 years in prison for a single count of filing false liens against a federal official.  STEPHENSON is already serving an eight year prison sentence for tax fraud. Both men were convicted at trial in March 2013. At sentencing U.S. District Judge Ronald B. Leighton said Leaming had earned “every day” of the prison term. Leaming “flaunts authority, he harasses law abiding people who have an obligation to the people to serve.”

    Judge Leighton imposed a ten year sentence, above the guidelines range, on STEPHENSON saying he, “cannot, will not live his life without doing harm to others. He is the master manipulator, the puppeteer... He is in my mind a very dangerous man.”

    These defendants tried to mask their crimes with the cloak of free speech and beliefs,” said U.S. Attorney Jenny A. Durkan. “They thought they were immune from the law or the justice system, but now their frauds aimed at taxpayers and public servants need to come to an end. A lengthy prison term is the best way to protect the public from their schemes.”

    When investigators served a search warrant at LEAMING’s Spanaway home on November 21, 2011, they found six firearms. LEAMING was prohibited from possessing firearms because of a prior felony conviction of operating an aircraft without a pilot’s license. Additionally, investigators determined that two wanted federal fugitives from Arkansas had been living with LEAMING in his home. Finally, the search revealed that LEAMING and STEPHENSON, who was an inmate at the time in an Arizona federal prison, had been conspiring to file liens against various federal officials including the Arizona prison warden and the head of the Federal Bureau of Prisons.

    The men identify themselves as members of the ‘Sovereign Citizen’ movement. ‘Sovereign Citizens’ profess a belief that both state and federal government entities are illegitimate. Members of this group often engaged in so-called “freedom driving,” i.e., driving about without state-required licenses, either for their vehicles or themselves. When contacted by local law enforcement, members of the group often bombard local officials (from the officer, to local judges, to mayors and other members of local government) with frivolous liens, false claims, and sometimes threats of violence. Many members of this same group had previously come to the attention of federal law enforcement for engaging in various fraudulent tax schemes, wire fraud schemes, and (occasionally) inappropriate communications with various members of federal law enforcement and the judiciary.

    In asking for a ten year sentence for both men, prosecutors wrote to the court that only a long prison term would protect the public. About STEPHENSON they wrote, “This is not the case of a defendant who continues to run afoul of the law because of a substance abuse addiction or a history of childhood abuse. Rather, this is a defendant who simply chooses to remain defiant, despite court after court telling him that he must stop, and despite multiple stints in prison. At this point, removal from society is the only way in which the public can be kept safe from the defendant’s crimes.”

    As for LEAMING, prosecutors provided information to the court about his repeatedly holding himself out to victims as a lawyer who could solve their problems, when in fact his actions may have damaged their case. About the crimes from the March 2013 conviction prosecutors wrote: “Defendant’s possession of firearms is particularly disturbing in light of several facts. First is obviously his disdain for government. Second is his possession of various items of police equipment, including numerous badges, light bars, and a Crown Victoria sedan modified to appear to be a police vehicle. Last but not least is Defendant’s repeated invocation of the shooting of government officials in Southern California by a disgruntled former police officer - which again appeared to be a veiled threat to engage in violence himself if he is prevented from pursuing his “‘petitions for redress,’” prosecutors wrote in their sentencing memo.

    Two other defendants active in the Sovereign Citizen movement have already been sentenced to prison for their criminal conduct. David Russell Myrland was sentenced in 2011 to 40 months in prison for making threats against elected officials in Kirkland, Washington. And in 2012 Timothy Garrison was sentenced to 42 months in prison for assisting in the filing of false tax returns.
For the U.S. Attorney press release, see Two Members Of The So-Called ‘Sovereign Citizen’ Movement Sentenced To Long Prison Terms (Defendants Claim to be Tax and Law Experts Damaging Victims and Ensnarling Justice System).

NC Man Allegedly Filed False, 147-Page $3M Lien Against Gov't Employee Who Presided Over Court Hearing That Led To Foreclosure Sale Of His Real Estate; Watchdog Group: Sovereign Citizens Continue "Clogging Up The Court With Indecipherable Filings ..."

In Raleigh, North Carolina, the News & Observer reports:

  • A man who lost a block of three Raleigh townhouses to foreclosure late last year has been arrested on a charge of filing a false $3 million lien against the property of the Wake County court clerk who presided over a foreclosure hearing.

    Court officials say the lien and a second one that he Sullivan Colin, 36, was trying to file Friday when he was arrested, are part of harassment of court officials by adherents of a "sovereign citizenmovement that denies government authority.

    Colin was taken into custody at the Wake County Register of Deeds office Friday afternoon when he went there to file another lien, officials said, and was arrested Friday evening.

    Police charged him with two counts of filing a false lien March 26 against the personal property of Nicole Brinkley, a court clerk who had presided over a foreclosure hearing in which Colin lost properties at 3521, 3523 and 3525 Herndon Oaks Way after lawyers for JP Morgan Chase filed a claim last November.

    Blair Williams, chief assistant clerk of court in Wake County, said the 147-page lien that Colin filed in March appeared to be similar to a 150-page document he was trying to file when he was arrested.

    The lien is the first instance in Wake County, Williams said, of members of a “sovereign citizen” or “sovereign nation” movement filing civil court actions against court officials. There have been cases in western North Carolina, Williams said.

    Police said Colin had said at the foreclosure hearing that he would file the claim.
  • Monday, he was being held in the Wake County Detention Center in lieu of a total bail of $500,000.

    The Southern Poverty Law Center, an organization that tracks extremist movements in the U.S., said members of the sovereigns movement “believe that they – not judges, juries, law enforcement or elected officials – get to decide which laws to obey and which to ignore, and they don’t think they should have to pay taxes.”

    Adherents, the center said, “are clogging up the courts with indecipherable filings....”

Jacksonville Pair Face RICO, Organized Fraud/Schemes Charges In Alleged Adverse Possession Real Estate Hijacking & Rental Scam Peddled Online; Cops To Prospective Tenants: Stay Away From Websites Like Craigslist When Looking For Houses!

In Jacksonville, Florida, WJXT-TV Channel 4 reports:

  • Two people were arrested [] for gaining adverse possession of seven properties and renting them out to families, the Jacksonville Sheriff's Office announced at a news conference [...].

    One of those families who was victimized may have been military and new to Jacksonville, police said.

    Rosemary McCoy, 55, and Elton McCall, 38, are charged with racketeering, organized fraud, engaging in schemes, conspiracy to violate the Racketeer Influenced and Corrupt Organizations Act, and trespassing.

    The duo told tenants they had a property management company named Going Global, which was just a cover, police said. They said the two have been collecting monthly rent of $700 to $1,000 since October after advertising the houses on Craigslist.

    Most of the properties were bank-owned and had been or were in the process of foreclosure, police said.
  • Channel 4 spoke with one of the victims of this scheme, a renter who asked Channel 4 to keep his identity a secret. "they did everything legitimate," said the renter. "Had a lockbox on the door, gave us a tour through the house."

    This renter couldn't believe it when he heard from Channel 4 that his landlords, who he pays each month, don't own the house he's been paying rent for since September 2012. The renter also didn't know that the McCoy and McCall were arrested. [...] "Everything seemed legit?" asked Channel 4's Scott Johnson. "Everything," answered the renter, who police tell us is just one of many who were scammed by McCoy and McCall.

    Police said investigators have been keeping a close eye on adverse possession applications at the city clerk's office, which is where they became suspicious. Investigators said McCoy and McCall also collected utility payments, water, cable, etc., and they operated the utilities in their names.
  • McCoy and McCall recently applied for adverse possession of an additional six houses, police said. Investigators are urging potential renters to stay off of websites like Craigslist when looking for houses.
For the story, see 2 arrested in adverse possession cases (Duo accused of racketeering, organized fraud).

Tuesday, June 18, 2013

Ex-BofA Employees Spill Beans, File Sworn Statements On Bankster's Approach To Giving Financially Strapped Homeowners Loan Modification Jerk-Arounds

ProPublica reports:

  • Bank of America employees regularly lied to homeowners seeking loan modifications, denied their applications for made-up reasons, and were rewarded for sending homeowners to foreclosure, according to sworn statements by former bank employees.

    The employee statements were filed late last week in federal court in Boston as part of a multi-state class action suit brought on behalf of homeowners who sought to avoid foreclosure through the government’s Home Affordable Modification Program (HAMP) but say they had their cases botched by Bank of America.(1)

    In a statement, a Bank of America spokesman said that each of the former employees’ statements is “rife with factual inaccuracies” and that the bank will respond more fully in court next month. He said that Bank of America had modified more loans than any other bank and continues to “demonstrate our commitment to assisting customers who are at risk of foreclosure.”

    Six of the former employees worked for the bank, while one worked for a contractor. They range from former managers to front-line employees, and all dealt with homeowners seeking to avoid foreclosure through the government’s program.
For more, see Bank of America Lied to Homeowners and Rewarded Foreclosures, Former Employees Say.

(1) Statements by the Bank of America Employees:
William Wilson, Jr.,
Simone Gordon,
Theresa Terrelonge,
Steven Cupples,
Recorda Simon,
Erika Brown.

Statement by Bank of America Contractor:
Bert Sheeks

Banksters Continue Dual-Tracking Home Loan Borrowers Into Foreclosure, Relying On Subtle Loopholes In 49-State Settlement Agreement To Keep Screwing Homeowners

In West Palm Beach, Florida, The Palm Beach Post reports:

  • Crafters of the National Mortgage Settlement clearly wanted banks to pause the foreclosure process while in negotiations with homeowners for a loan modification, but the double-dealing is only “restricted” in the lengthy agreement, leaving workarounds for lenders to continue the practice.

    Foreclosure defense attorneys cite dozens of cases where homeowners with pending loan modification applications are also finding themselves moving quickly toward a final judgment and foreclosure sale — a procedure known as dual tracking.

    West Palm Beach foreclosure defense attorney Paul Krasker said he has 143 clients who are being dual-tracked. He said lenders are outright violating the dual-tracking restrictions, but are also using the complicated rules to legally continue with a foreclosure during the modification process.

    The banks know they can find loopholes in this type of detailed language,” Krasker said. “I assume the banks would not commit to a simple ‘no dual-tracking’ provision and insisted on carving out exceptions.”

    The dual-track rules, which are outlined in more than four pages in settlement documents, include time lines for when foreclosures will be put on hold, appeals processes, trial payment periods and expedited review requirements.

    There are different rules depending on when the modification is requested and whether the application is considered complete.

    Krasker said some bank attorneys interpret the rules to mean they can get a final judgment against a homeowner but not go to sale. In Florida, sale dates are set when a judgment is entered, and with the courts under pressure to move cases, it may not be so simple to get a sale changed.

    Also, lenders are ruling applications incomplete for minor reasons, such as checking the wrong box on a tax return transcript request, Krasker said.

    “The banks are relying on borrowers to not be able to complete the applications and then the banks notify the borrowers to resubmit after the time deadline passes,” he said. “The worst part is you get banks who come back and say you’re too close to a sale date so we won’t issue a modification.”

    Florida Attorney General Pam Bondi scolded Bank of America and Wells Fargo for possible violations of the 2012 settlement this month, including concerns about dual tracking.

    In a May letter to Wells Fargo that preceded a meeting with the National Mortgage Settlement monitoring committee, Bondi’s office said homeowners are complaining they are wrongfully referred to foreclosure during the modification process and then charged for attorneys costs and other default-related fees. According to the settlement, a homeowner who is late on payments by 10 months or less, but submits a loan modification application, should not be referred to foreclosure.

    Still, the attorney general’s office acknowledges dual tracking is permitted in some circumstances.

    “While there are stringent restrictions on dual tracking in the settlement, the settlement does not prohibit it entirely as there are instances when it is appropriate or mandated by the terms of the mortgage and the entity that controls the loan,” wrote Assistant Attorney General Michael Moore in a June 7 letter to Krasker.

Loan Servicer Cops Guilty Plea To Pocketing Payoff Proceeds From Homeowners' Mortgages, Then Continuing To Remit Monthly Payments & Creating Phony Amortization Schedules To Dupe Note Holders Into Believing Loans Remained Unpaid

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

  • The former president and chief executive officer of U.S. Mortgage, a loan servicing company in Nevada, pleaded guilty [] for his role in a scheme to defraud Wells Fargo Bank out of more than $8 million.
  • Earl Gross, 75, of Las Vegas, pleaded guilty to one count of bank fraud. Gross faces a maximum penalty of 30 years in prison when he is sentenced on Sept. 19, 2013. Gross has agreed to forfeit $8,440,439 pursuant to his plea agreement.

    According to plea documents, Wells Fargo Bank contracted with U.S. Mortgage to service pools of residential mortgage loans held by investors in mortgage-backed securities. Under the agreement, Gross and U.S. Mortgage were obligated to collect from the borrowers the monthly payments that the borrowers made toward their mortgage obligations and forward these proceeds to Wells Fargo Bank.

    In the event that a borrower paid off the loan – usually by selling the mortgaged property – U.S. Mortgage was obligated to remit to Wells Fargo Bank the full payoff amount. U.S. Mortgage agreed to provide Wells Fargo Bank with monthly reports, which described the status of the loans, such as the balance, principal and interest, and payment status and received servicing fees for each loan it serviced.

    According to the indictment, from 2004 to 2009, Gross and U.S. Mortgage withheld more than $8 million in loan payoffs that were due Wells Fargo Bank by submitting to the bank reports stating that numerous borrowers were continuing to make monthly payments when in fact they had paid off the loans in full.

    Rather than remit to Wells Fargo Bank the full payoff amount, Mr. Gross and U.S. Mortgage forwarded only what the borrowers’ monthly payment would have been and retained the difference in U.S. Mortgage’s bank account. To deceive Wells Fargo Bank about the status of paid off loans, Mr. Gross and U.S. Mortgage created fake amortization schedules indicating that borrowers who had sold and paid off homes were continuing to make monthly payments. In addition to withholding loan payoff amounts to which he was not entitled, Mr. Gross charged Wells Fargo Bank fees to service mortgage loans that had been paid off.

Reverse Mortgage Backfires On Another Elderly Homeowner; Now-Widowed Hubby Finds Himself Needing To Cough Up $300K Or Face The Boot From Home Of 40 Years After Being Talked Into Taking Name Off Deed When Refinancing Residence

USA Today reports:

  • As America's population ages, the hard sell is on for reverse mortgages. Promising happier days ahead, the former "Fonz," actor Henry Winkler, is giving the hard sell in relentless television ads. But the housing crash and the fiscal state of today's seniors are causing many of these loans to backfire.

    Reverse mortgages were originally designed for seniors who wanted to take out their home equity to spend during retirement. Unlike a regular mortgage, they require no monthly payments, and the borrower can take out a lump sum or receive regular payments.
  • "It sounded good," said Robert Bennett, a homeowner in Annapolis, Md. He and his wife, Ophelia, took out a reverse mortgage at the end of 2008 for about $300,000. They did it to pay off their regular mortgage and stop making monthly payments. At the time, the lender told them only Ophelia's name would go on the loan, as she was 10 years older. The older the borrower, the less risk the lender takes on.

    "In the case of some couples, they make a decision up front to remove one member of the couple from the title in order to get more money or in order to qualify for the mortgage," said [the National Reverse Mortgage Association's Peter] Bell.

    Bennett said his lender told him he could be added to the mortgage later, but when Ophelia died, just a month after the loan was made, he found out that was not the case.

    "It was set up bad," Bennett said, "I wasn't thinking that — that I would be crossed out completely if she died."

    Bennett is now fighting foreclosure, trying to save the home he has lived in for nearly 40 years. To stay, he would have to pay back the $300,000, but the house is now worth about half that, so he could never get a loan to cover it. Like millions of others, Bennett has no equity in his home.

    Experts argue reverse mortgages often are being used today for all the wrong reasons. Seniors now have less home equity, less savings and more debt.

    "This was originally contemplated as something you could draw money from over a long period of time, as a way of supplementing your income or providing income when you had not others. Now a lot of people are looking to reverse mortgages as a quick fix," said David Certner of AARP.

    About 9.5% of the 775,000 reverse mortgages outstanding are delinquent, far higher than the rate on regular mortgage loans. While lenders are pushing them aggressively, fewer are being made today, due to the drop in home values. Advocates say they can be a valuable tool, if used correctly, and that there are ample safeguards.
  • The Consumer Financial Protection Bureau is now looking at new rules to protect consumers, which could include stricter supervision of lenders and more transparency for borrowers.

NYC Judiciary Kiboshes 'Honor System' Method Of Oversight In Connection With Attorneys Acting As Court-Appointed Foreclosure Referees & Their Handling Of Proceeds From Public Sales; Recently-Discovered Surplus Snatching Scandal Where Lawyer/Politician Allegedly Used Unclaimed Funds As Campaign Piggy Bank Triggers Reform

In Brooklyn, New York, the New York Post reports:

  • State Sen. John Sampson’s alleged embezzlement scheme has sparked specific reform in how city courts handle foreclosure suits, The Post has learned.

    The Brooklyn Democrat was indicted last month for allegedly looting $440,000 from four foreclosure accounts he had been appointed to safeguard.

    Officials say the alleged scam was aided by a total lack of supervision over the cash raised by the auction of foreclosed properties. “Because of the Sampson situation, we realized we had no way to check up if the referee was complying with the law,” said Lawrence Knipel, the Brooklyn Supreme Court administrative judge for civil matters. “We weren’t double-checking.”

    Under the new rule, judges must confirm that money from foreclosure auctions is properly deposited with the clerk and not pocketed by crooked lawyers.

    The oversight began about two weeks ago. Similar monitors will be instated in the other boroughs. “Very shortly, this will be administered citywide,” Knipel said.

    The reform could also have been accomplished with a change to the statewide law, but it was unclear how long that would take or whether it would ever happen, a court source said.

    Civil judges assign attorneys, or “referees,” who are paid $500 to oversee the auction of a foreclosed property, pay off the mortgage and return any leftover money to the homeowner.

    Until the recent reform, there wasn’t any mechanism that checked for excess money that should be returned to the homeowner, which allowed crooks to make off with the dough. But now when the winning bid exceeds the amount owed on the house, the clerk will alert the judge and it will be the judge’s responsibility to check 60 days after the auction whether the money was properly deposited, Knipel said.

    In a bizarre coincidence, in 2001 Knipel assigned Sampson a Windsor Terrace property that the politician allegedly used as a piggy  bank. Prosecutors say Sampson, 47, used the money to finance his failed 2005 bid for Brooklyn district attorney. Sampson has pleaded not guilty to the embezzlement charges.

Monday, June 17, 2013

California Attorney Slammed With State Bar Discipline For Attempting To Circumvent Loan Modification Rules Prohibiting Collection Of Upfront Fees By Unbundling Services, Then Clipping Clients For Cash As Each Service Was Performed

The June 2013 issue of the California Bar Journal announced the discipline handed out to a California attorney for pocketing upfront fees for loan modifications under the mistaken belief that the statute can be circumvented by unbundling his services, then charging for each service as it is provided:

  • SWAZI ELKANZI TAYLOR [#237093], 34, of Beverly Hills, was suspended for two years, stayed, placed on two years of probation with an actual six-month suspension and was ordered to take the MPRE and pay restitution. The order took effect March 29, 2013.

    Taylor committed nine counts of misconduct in eight client matters involving loan modifications. Eight of the counts of misconduct involved charging pre-performance fees for loan modifications. Civil Code Section 2944.7 prohibits the collection of any fees until all loan services are performed.

    Taylor believed he could unbundle the fees for his legal advice and real estate consulting services, charging separately when each service was performed, but the court rejected that argument. Taylor was also found to have failed to provide a client with a separate statement about the lack of necessity for a third-party negotiator. He was ordered to pay $14,350 in restitution, plus interest, to his former clients.
Source: California Bar Journal: Suspensions/Probation.

State Bar Of California Acts Against Members Involved In Various Types Of Client Ripoffs

The Sate Bar of California recently published its periodic 'gossip sheet' announcing the discipline meted out to some of its wayward members.

The following lawyers were disciplined for either playing fast & loose with client's trust funds, attempting to improperly rip off clients out of unwarranted legal fees, or being involved in some form of loan modification scheme:

  • CALEB PAUL LEYS [#171683], 70, of Beverly Hills, was suspended for one year, stayed, and placed on one year of probation with an actual 120-day suspension that will continue until he pays restitution. He was ordered to comply with rule 9.20 of the California Rules of Court. The order took effect March 16, 2013.

    Leys stipulated that he failed to perform legal services with competence, to return unearned fees and to promptly respond to reasonable status inquiries in connection with a home loan modification. The client paid Leys $2,995 in advance attorney fees and Leys pledged to file a civil suit if he was unable to negotiate with the lender. Instead, he performed no services of value and failed to return any part of the unearned fees.

    Leys was previously disciplined for similar misconduct that occurred between March and September 2009. Leys failed to perform legal services with competence and return unearned fees in two client matters involving loan modifications, and in a third matter, engaged in the unauthorized practice of law and collected an illegal fee.
  • CURTIS GEORGE MUCK [#190328], 42, of Rolling Hills Estates, was suspended for two years, stayed, placed on three years of probation with an actual six-month suspension, and was ordered to take the MPRE . The order took effect March 16, 2013.

    Muck committed misconduct in three client matters, all of which involved aiding in the unauthorized practice of law. In one of the matters, Muck also shared fees with a non-lawyer and failed to cooperate with a disciplinary investigation. In that matter, he allowed a non-attorney to give legal advice to a client and to collect fees from her, which the two later shared. Muck later failed to acknowledge a letter from a State Bar investigator asking him to respond to complaints the client made against him.
  • MITCHELL BERENSON [#183166], 48, of Los Angeles, was suspended for one year, stayed, and he was placed on probation for one year subject to conditions, including paying restitution and passing the MPRE. The order took effect March 16, 2013.

    Berenson stipulated to four acts of misconduct in one client matter. Berenson failed to perform legal services with competence in an immigration matter, failed to respond to repeated inquiries from his client regarding the immigration matter, failed to return advance fees, and failed to cooperate and participate in the State Bar investigation. Berenson was ordered to pay his former client $1,500 in restitution, plus interest.
  • CHARLOTTE SPADARO [#190328], 61, of Riverside, was suspended for one year, stayed, and placed on three years of probation with an actual six-month suspension until she makes restitution in the amount of $26,500, plus interest. She was also ordered to take the MPRE. The order took effect March 22, 2013.

    Spadaro was found culpable of failing to account for client funds, failing to return advanced fees and unused advanced costs totaling $7,500, and three counts of entering into an improper business relationship with a client.
  • LOUIS GORDON BRUNO [#137898], 60, of Escondido, was suspended for two years, stayed, placed on two years of probation with an actual six-month suspension, and was ordered to take the MPRE and to pay restitution. The order took effect March 23, 2013.

    Bruno stipulated to three counts of misconduct in one client matter, collecting an illegal fee, holding himself out to be eligible to practice law when he wasn’t and misrepresenting his entitlement to practice law. [...] Bruno was ordered to pay $1,500 in restitution, plus interest.
  • MARIE DARLENE ALLEN [#138263], 63, of Cypress, was suspended for one year, stayed, placed on one year of probation with an actual 30-day suspension and was ordered to take the MPRE. The order took effect April 6, 2013.

    Allen was found culpable of two counts of misconduct: issuing numerous checks from her client trust account without sufficient funds to cover them and failure to cooperate with a disciplinary investigation by not responding in a timely matter to three letters she received from a State Bar investigator.
  • ALLYSON ERWIN BAUTISTA [#202023], 55, of Escondido, was suspended for three years, stayed, placed on three years of probation with an actual six-month suspension and was ordered to take the MPRE and comply with rule 9.20 of the California Rules of Court. The order took effect April 6, 2013.

    Bautista stipulated that he charged and collected an unconscionable fee and failed to provide a client with a full accounting of a settlement the client received.

    Bautista settled his client’s personal injury matter for $15,000 then essentially double billed the client, withholding $2,967.68 for hourly fees as well as $5,000 in contingency fees for the same services. Bautista also failed to provide the client with an itemized list of “administrative costs” he charged for his services.
  • NICOLE ROSIE GALLEGOS [#231744], 36, of Irvine, was suspended for two years, stayed, and placed on two years of probation with an actual nine-month suspension that will continue until she pays restitution. She was also ordered to take the MPRE and comply with rule 9.20 of the California Rules of Court. The order took effect April 6, 2013.

    Gallegos stipulated to 15 counts of misconduct in seven loan modification matters, six of which involved collecting illegal fees from out-of-state clients. Gallegos also committed multiple counts of unauthorized practice of law. She has been ordered to pay $ 11,979.98 in restitution.
  • TANYA CORA ZEROUNIAN [#235207], 36, of Simi Valley, was suspended for two years, stayed, placed on 18 months of probation with an actual six-month suspension and was ordered to take the MPRE, comply with rule 9.20 of the California Rules of Court and pay restitution. The order went into effect April 6, 2013.

    Zerounian stipulated to misconduct in three client matters. In each instance, Zerounian failed to prepare and file clients’ bankruptcy petitions, to respond to inquiries about the clients’ cases and to return unearned fees. Zerounian also failed to respond to allegations in a complaint one of the clients made to the State Bar. She was ordered to pay $5,600 in restitution, plus interest.
Source: California Bar Journal (June 2013): Suspensions/Probation.

Playing Fast & Loose With Trust Accounts, Attempted Legal Fee Ripoffs Among Reasons For Attorney Discipline Recently Meted Out By Florida Supreme Court

The Florida Bar recently published its periodic 'gossip sheet' announcing the discipline meted out to some of its wayward members.

The following lawyers were disciplined for either playing fast & loose with client's trust funds, or attempted to improperly rip off clients out of unwarranted legal fees:

  • Rosalyn Dunlap, P.O. Box 616705, Orlando, disbarred effective immediately, following an April 16 court order. (Admitted to practice: 2006) Dunlap admitted to intentionally misappropriating more than $40,000 from a trust account belonging to an estate. She did not maintain the required trust account records, did not regularly perform mandatory trust accounting procedures, and entered into a business transaction with a client with interests adverse to the client. Dunlap failed to communicate the status of a client’s case, failed to show reasonable diligence, and failed to provide adequate and timely representation. (Case No. SC12-145)

    David A. Hoines, 3081 E. Commercial Blvd., Suite 200, Fort Lauderdale, suspended for 30 days, effective 30 days from an April 16 court order. (Admitted to practice: 1975) Hoines shall also return $25,000 in equal shares to three clients. Hoines entered into a contingent fee agreement with out-of-state clients in a probate matter involving assets of an indeterminable value. Hoines’ use of the contingent fee contract was improper because it caused him to obtain a pecuniary interest in the matter and receive a larger than normal fee. (Case No. SC12-229)

    C. Michael Magruder, 203 S. Clyde Ave., Kissimmee, to be publicly reprimanded by publication in the Southern Reporter, following an April 16 court order. (Admitted to practice: 1990) Magruder was hired by a client to handle business related to an estate and a pending lawsuit. He delegated the estate matter to a paralegal firm and failed to take adequate steps to ensure that the client understood his legal matter. Magruder also failed to timely account to the client regarding the settlement proceeds of the lawsuit, all of which went to pay the hospital lien for services rendered prior to the death of the testator. Magruder also failed to maintain minimum trust accounting records and he failed to follow minimum trust accounting procedures. (Case No. SC12-519)

    Scott Elliott Rovenger, 8 Port Side Drive, Fort Lauderdale, permanently disbarred effective immediately, following an April 17 court order. (Admitted to practice: 1978) Rovenger was disbarred for trust accounting violations in May 2012. In September 2012, Rovenger gave a sworn statement to the Broward County State Attorney’s Office, as a result of a criminal investigation. He admitted to misappropriating more than $1 million in client funds over a period of several years. He also admitted to settling clients’ matters without their knowledge or consent and forging client signatures on settlement checks. (Case No. SC12-1819)

    Guy Bennett Rubin, 1649 Atlantic Blvd., Jacksonville, to be publicly reprimanded by the Board of Governors at a date and time to be determined by the Board, following an April 16 court order. (Admitted to practice: 1987) Rubin filed a suit against a former client alleging breach of contract. A court later ruled that Rubin was not entitled to recover any fees because the agreement violated Bar rules. (Case No. SC12-2059)

    Silvia Rodriguez Sanders, P.O. Box 974, Orlando, to be publicly reprimanded by publication in the Southern Reporter, following an April 16 court order. (Admitted to practice: 1992) Sanders and her husband practice law together. She failed to exercise reasonable diligence to ensure that her firm’s trust account was in compliance. Her husband had managerial authority over the trust account and her mother was the firm’s bookkeeper in the two-attorney law firm. (Case No. SC12-2174)

    Tristan Wilson Sanders, P.O. Box 974, Orlando, suspended for two years, effective 30 days from an April 16 court order. (Admitted to practice: 1992) Sanders and his wife practiced law together. Funds that should have been held in trust on behalf of the firm’s personal injury clients were transferred to the law firm operating account and used for other purposes. Sanders had primary responsibility for the law firm’s trust account at the time the violations took place. His violation of misconduct is based on the grossly negligent supervision of his bookkeeper in the administration of his firm’s trust account. (Case No. SC12-2173)

    Harold Milton Windlan III, 6334 Madison St., New Port Richey, suspended for one year, effective 30 days from an April 16 court order. Windlan shall pay restitution totaling $2,040 to three clients. (Admitted to practice: 2003) Windlan failed to provide adequate representation to clients. In several instances he accepted attorneys' fees and subsequently failed to communicate. He did not take action on cases but led clients to believe he had. Windlan also failed to refund fees he did not earn. (Case No. SC12-666)

    Lawrence Philip Zolot, 3864 Sheridan St., Hollywood, disbarred effective retroactive to Jan. 12, 2011, following an April 22 court order. Zolot shall pay restitution totaling $1,089 to two clients and shall deposit more than $130,000 into the court registry for the 17th Judicial Circuit in and for Broward County. (Admitted to practice: 1974) Instead of disbursing the funds to his clients, in two separate matters, Zolot misappropriated trust funds and used them to pay his personal expenses. (Case No. SC11-267)

Sunday, June 16, 2013

Attorney Admits To Looting An Escrow Account, Co-Conspiring With Another To Rip Off Off $4.7M In Bogus Real Estate Deal

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

  • Preet Bharara, the United States Attorney for the Southern District of New York, announced that EDWARD ADAMS, a New York-based attorney, pled guilty [] in Manhattan federal court to conspiracy to commit wire fraud in connection with his participation in a fraudulent real estate scheme.

    As part of that scheme, ADAMS and a co-conspirator misappropriated millions of dollars in escrow funds that should have been safeguarded for investors in a real estate development project. The real estate project was never developed and investors lost all of their money. ADAMS pled guilty before U.S. District Judge John G. Koeltl.

    According to the Information, statements made during [the] guilty plea proceeding, and a Complaint previously unsealed in Manhattan federal court:

    Beginning in early 2008, ADAMS and James Monahan, a former sergeant in the New York City Police Department and the owner of a real estate investment company called Panam Management Group, Inc., negotiated with another real estate investment company to solicit investors for a project Monahan claimed to be constructing in the Dominican Republic.

    In connection with the project, ADAMS and Monahan executed agreements that required investor funds to be deposited into escrow accounts that were to be managed by ADAMS. From October 2008 through February 2009, approximately $4.7 million in investor funds were deposited into the escrow accounts. Shortly after the deposits were made, the funds were improperly withdrawn by ADAMS and Monahan without disclosure to investors.(1)

    In an effort to hide the fact that the funds had been removed from the escrow account, Monahan mailed a forged letter on the stationery of a major bank to investors in May 2009 claiming that their money was safely deposited with that bank. However, by June 2009, all of the investor funds had been taken from the escrow accounts. At that point, almost no work had been performed on the purported project in the Dominican Republic. None of the money was returned to investors.
For the U.S. Attorney press release, see New York Attorney Pleads Guilty To Participating In Multi-Million Dollar Real Estate Fraud Scheme.

(1) The Lawyers’ Fund For Client Protection Of the State of New York may find itself being asked by the victims to step up and cover at least some of the losses they suffered. The Fund exists to protect legal consumers from dishonest conduct in the practice of law in the state, to preserve the integrity of the bar, to safeguard the good name of lawyers for their honesty in handling client money, and to promote public confidence in the administration of justice in the Empire State. It attempts to secure these goals by, among other things, reimbursing client money that is misused in the practice of law.

According to the Fund, "typical losses covered include the theft of money from estates of dead clients; escrow funds in real property closing; settlements in personal injury actions; and money embezzled from clients in investment transactions" up to a maximum of $300,000 for each client loss.

For similar "attorney ripoff reimbursement funds" that cover the financial mess created by the dishonest conduct of lawyers licensed in other states and Canada, see:
Maps available courtesy of The National Client Protection Organization, Inc.

California Bar Recommends Boot For Attorney Who Played 'Hide & Seek' With Escrowed CMO, Pocketing $400K In Accrued Interest Owed To Rightful Owners; Judge: Lawyer "Fails To Understand & Appreciate The Basic Duties Of A Fiduciary ... Misconduct Displays Shocking Lack Of Basic Honesty"

From The State Bar of California:

  • A State Bar Court hearing judge has recommended the disbarment of a Beverly Hills attorney for misappropriating about $400,000 in interest from two investment vehicles that he agreed to hold in escrow pending their sale.

    In each case, Jon A. Divens, 57, [bar # 145549] agreed to hold in escrow a collateralized mortgage obligation (CMO), a type of investment vehicle that owns an underlying pool of mortgages. When the proposed sales of the CMOs fell through, Divens hid the CMOs from their rightful owners for months and transferred the monthly interest payments to his personal investment accounts.

    State Bar Court Judge Richard A. Platel rejected Divens’ argument that he was entitled to the interest under article 8 of the California Uniform Commercial Code and found him culpable of three counts of moral turpitude.

    “It is clear from the evidence that, from day one, respondent never intended on returning the Cobalt CMO or the FNMA CMO or the interest income they generated to the rightful owners,” Judge Platel wrote in the April 17 decision. “Respondent displays a complete lack of insight and recognition of the wrongfulness of his misconduct. What is more, the record establishes that, after 23 years as a member of the State Bar of California, respondent fails to understand and appreciate the basic duties of a fiduciary. Finally, respondent’s misconduct displays a shocking lack of basic honesty.”(1)
Source: Beverly Hills Attorney Facing Disbarment For Pocketing Interest On Escrow Money.

(1) The State Bar of California Client Security Fund was established to reimburse clients who have suffered a loss due to misappropriation or embezzle­ment by a California-licensed attorney.

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

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

State Bar Judge To Attorney Attempting To Shift Blame To Scheming Client In Investor-Screwing, $1M Trust Account Ripoff: "When Your Sole Job Is To Protect The Henhouse, You Are Not Allowed To Trust The Fox With The Chickens!"

From the California Bar Journal:

  • A Woodland Hills attorney has been stripped of his law license for misappropriating nearly $1 million intended for movie projects. Robert M. Victor [#156232], 47, was disbarred April 7, 2013 and ordered to make restitution and comply with rule 9.20 of the California Rules of Court.

    Two different film companies had entered into agreements with Victor's client, Rosemax Media LLC, in 2011 under the auspices that they would be working together to produce films. The film companies, Triton Films Inc. and SBDL Productions LLC, wired their investment money to Victor's client trust account with the understanding that Rosemax would also invest in the film project. The consolidated funds were to remain untouched in the trust account until all agreements involving the films were finalized and executed.

    Instead, Rosemax never followed through with its agreed-upon investments, and Victor immediately began to disburse money at the request of Rosemax CEO Joseph Q. Bretz. Less than two days after Triton deposited the first $375,000 of its $500,000 investment in a movie to be called “The Zone,” Victor had removed all of Triton’s funds through transfers to his firm and various parties. Similarly, SBDL’s $475,000 investment in a film titled “Light Years” shrank to $33,336.10 within three days of deposit.

    Both Triton and SBDL asked for confirmation that Rosemax had deposited the money it had agreed to, $1.5 million in the case of Triton and $925,000 per its agreement with SBDL. After the companies continued pressing the issue, Victor provided them with account statements which turned out to be bogus, bearing no reference to Victor or his firm and a different account number than Victor’s client trust account. Even after SBDL filed a civil action in court accusing Victor of conversion, fraud, negligence and racketeering, Victor continued to draw on the company’s funds in his trust account.

    The State Bar Court found Victor culpable of two counts of misappropriation and two counts of failure to cooperate in a State Bar investigation. At the time of the court’s Sept. 21, 2012 disbarment recommendation, Victor had not repaid any of the money to Triton or SBDL.(1)

    At trial, Victor argued that Rosemax’s CEO Bretz had swindled both him and the two companies and “spent considerable time and energy seeking to explain how impressive and charismatic Bretz was in the entertainment world,” State Bar Court Judge Donald F. Miles wrote in his recommendation.

    Miles dispelled that notion, saying Triton and SBDL had taken steps to protect themselves from Bretz and were only put at risk because Victor disregarded his fiduciary duties.

    When your sole job is to protect the henhouse, you are not allowed to trust the fox with the chickens, no matter how reassuring that carnivore may purport to be,” Miles wrote.
Source: Disbarred attorney scammed film partners in movie making deal.

(1) The State Bar of California Client Security Fund was established to reimburse clients who have suffered a loss due to misappropriation or embezzle­ment by a California-licensed attorney.

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

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

Indicted Law Firm Office Manager Wins Race To Prosecutor's Office, Copping Quick Plea, Then Spilling The Beans On Attorney/Boss In Alleged $1M+ Fee-Padding Conspiracy That Fleeced Unwitting Client

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

  • The former office manager of a Broward County law firm admitted stealing money from the Seminole Tribe of Florida and helping her former boss — an attorney — to pad legal bills paid by the tribe.

    Maria Hassun, 66, of Coral Gables, pleaded guilty to one count of theft from Indian tribal organizations at a hearing in federal court in Fort Lauderdale, records show. Hassun was indicted earlier [last] month with her former boss Frank Excel Marley III, 39, of Southwest Ranches.(1)

    Federal prosecutors said Marley billed the tribe close to $3.2 million and more than $1 million of that was fraudulently obtained in a conspiracy between October 2006 and early 2011.

    Marley, now at the Excel Law Group in Davie, has pleaded not guilty to one count of wire and mail fraud conspiracy and nine counts of theft from Indian tribal organizations. Hassun was Marley's administrative assistant and office manager at The Marley Firm in Miramar.

    Marley was retained in 2006 to represent the tribe on sports and entertainment issues and help it to obtain Federal Communications Commission licenses and equipment to build radio stations at the Brighton and Big Cypress reservations.

    Hassun admitted [] that she followed Marley's instructions to inflate his billable hours and billed the tribe "for travel, conferences, phone calls and meetings that did not occur."

    "Marley told … Hassun that he needed to make a specific dollar amount, then later told Hassun to be creative in figuring out how to inflate the invoice to reach the specified dollar amount," according to Hassun's plea agreement.

    Hassun agreed to pay restitution of $148,658, the amount prosecutors said she deposited in her bank account during the conspiracy. She faces up to five years in prison and a $250,000 fine when she is sentenced Aug. 9.(2)
Source: Former law firm worker admits stealing from Seminole tribe.

From the U.S. Attorney's Office:
(1) See United States v. Moody, 206 F.3d 609, 617 (6th Cir. 2000) (Wiseman, J., concurring) for one Federal judge's observations on the so-called "race to the courthouse/prosecutor's office" that frequently takes place during the early stages of these "multi-target" criminal probes and conspiracy prosecutions:
  • 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.
(2) The Florida Bar's Clients' Security Fund was established to reimburse clients who have suffered a loss due to misappropriation or embezzle­ment by a Florida-licensed attorney.

For similar "attorney ripoff reimbursement funds" that sometimes help cover the financial mess created by the dishonest conduct of lawyers licensed in other states and Canada, see:
Maps available courtesy of The National Client Protection Organization, Inc.