Saturday, August 10, 2013

Homeowner's Lawsuit: Now-Foreclosed Neighbor's Landscaping Improperly Redirected Stormwater, Causing Flooding Inside My Home At Least Eight Times; Resulting Mold Problem Renders Now-Abandoned Premises Unlivable

In Pelham, Alabama, The Birmingham News reports:

  • Judy Berneske has dangerous black mold in the common wall of her now abandoned townhome in Pelham. Because of the mold, she can't sell the home except at a give-away price, she said. But living in it makes her sick, so she's been forced to rent an apartment at great financial hardship, she said.

    Getting rid of the mold right now is not possible, until all sources of water intrusion are corrected -- that's the subject of a lawsuit against a former neighbor who owned the townhome next to hers.

    After a 5-year ordeal dealing with insurance companies, lawyers and health officials, Berneske said she still has no relief, stuck with a moldy townhome and lingering health effects from living there. "I didn't see it as a big deal at first" in 2008, she said. "But I ran into nothing but dead ends trying to resolve it."

    As a last resort, she said, in 2010 she filed a lawsuit against a former neighbor whom she said caused water to leak into her home.

    She has an engineering report that points a finger at the neighbor for the water. She has a mold laboratory report confirming the presence of high levels of mold, including the stachybotrys chartarum species, commonly known as black mold. And she has a 2010 letter from a doctor saying she has asthma due to exposure to the mold in her home.

    "I can't live there. I can't rent it. And I can't sell it," said Berneske, a 62-year-old living on a fixed disability income.

    The story begins 10 years after she bought the Pelham townhome in 1998. She says a neighbor's landscaping redirected stormwater, causing flooding inside her house on at least eight occasions.

    Her insurance company paid for an engineers report, which confirmed that the water was coming from the neighbor's property and that changes in landscaping were a key reason. Berneske's insurance company, Traveler's, however was unwilling to get involved, Berneske said. Her insurance company said she needed to make a third-party claim on the neighbor's policy, Allstate.

    Allstate offered her a little more than $5,000 for remediation, Berneske said. However, the insurance company said they couldn't make the neighbor correct his water problems, she said.

    "Why would I take the money to repair my home if it was just going to continue flooding?" she asked. "My home can't be repaired until the flooding is stopped."

    In 2010, she filed the lawsuit.

    A mold testing company found "dangerously high" spore levels in her home.

    When she was diagnosed with asthma she followed her doctor's advice and moved out of her townhome to an apartment in Hoover where she lives now.

    Her former neighbor moved out and rented his place to tenants. It later went into foreclosure, and ownership went to PNC Mortgage. It is owned now by the U.S. Department of Housing and Urban Development (HUD).

Jury Rejects Home Builder 's 'Not Guilty' Plea To Ripping Off HUD Grant Funds Targeted To Help Navajo Nation Develop Affordable Housing For Its Members

From the Office of the U.S. Attorney (Las Vegas, Nevada):

  • Following a 13-day jury trial, a home builder was convicted by a jury [] of embezzlement crimes for converting, misappropriating and stealing from a federal housing grant program during 2004, announced Daniel G. Bogden, United States Attorney for the District of Nevada.

    William Aubrey, 69, of Mesquite, Nevada, was convicted of two counts of conversion of money and funds from a tribal organization, and is scheduled to be sentenced on Aug. 7, 2013, by U.S. District Judge Kent J. Dawson. Aubrey faces up to five years in prison and a $250,000 fine on each count.

    The Navajo Nation counted on the monies stolen by the defendant to provide housing for its members,” said U.S. Attorney Bogden. “This defendant stole from the tribe and from the American people, and used the monies to finance an extravagant lifestyle.”

    According to the court records and the evidence introduced at trial, the Navajo Nation is a federally recognized sovereign Indian Tribe whose borders encompass a large portion of Arizona and extend into New Mexico and Utah. The Navajo Housing Authority was an official Navajo Nation entity authorized to receive and administer federal housing funds which were awarded annually by the U.S. Department of Housing and Urban Development (HUD). The Navajo Nation receives an average of $90 million from HUD annually in grant funds.

    A Navajo Nation non-profit corporation, the Fort Defiance Housing Corporation, was responsible for the development of safe and affordable housing on the Navajo Nation lands. Fort Defiance was also a sub-grantee for the HUD grant funds.

    Beginning in 1996 and continuing to 2004, Fort Defiance contracted with a private housing development company, Lodgebuilder, to develop the housing projects. Lodgebuilder is owned and operated by William Aubrey. Lodgebuilder and Aubrey managed several housing development projects for Fort Defiance from approximately 2000 to 2004.

    HUD funds, which were supposed to be used to pay vendors, subcontractors and expenses at the housing developments, were converted by Aubrey for his own personal use and used for gambling, and other personal expenses.
For the U.S. Attorney press release, see Home Builder Convicted Of Embezzling From Hud Grant Program.

Ex-Housing Authority Chief Cops Plea To Being A Thief, Illegally Pocketing $30K Intended For Affordable Housing Programs Targeting Eligible Low-Income Families, Elderly

From the Office of the U.S. Attorney (Hartford, Connecticut):

  • Deirdre M. Daly, Acting United States Attorney for the District of Connecticut, announced that ELIZABETH JO GUTIERREZ, 47, of Ridgefield, pleaded guilty [...] in Hartford to embezzling $30,000 from the Fairfield Housing Authority.

    The Fairfield Housing Authority administers federal housing programs for the U.S. Department of Housing and Urban Development with the mission of providing affordable housing for eligible low-income families and the elderly.

    According to court documents and statements made in court, GUTIERREZ served as the Executive Director for the Fairfield Housing Authority from approximately July 2010 to December 2011. In the summer of 2011, GUTIERREZ issued two checks, each in the amount of $15,000, from the Fairfield Housing Authority’s checking account and subsequently deposited them into her own checking account.

Responding To Stove Blaze, Town Fire & Building Officials Discover Unlawfully Subdivided Single-Family Home Being Used As Boarding House Occupied By 19 Renters; Occupants Now Face The Boot Over Illegal Conditions

In Rockland County, New York, The Journal News reports:

  • A stove fire Tuesday led fire and building officials to discover that 19 people were living in what they said was an illegal boardinghouse infested with bugs and trash.

    Tenants said they were told by a Ramapo building inspector that they would likely be forced to leave the house within 30 days because of the conditions and because boardinghouses, including subdivided apartments, are illegal.

    One of the property managers was heard over the phone admonishing a tenant for calling the Fire Department, essentially alerting authorities to the living conditions in the fairly affluent Oakwood Terrace neighborhood in the Ramapo village.

    The manager, who identified himself to the village fire inspector as Yaniv Razak, told Inez Henriquez: “You don’t call the Fire Department over a spark. You’ll end up sleeping in a car. This is a big problem.”

    Henriquez said she didn’t intend to cause any problems.

    New Hempstead Fire Inspector Chris Kear said the 19 residents, including children, faced dangerous and unsanitary conditions while living in the single-family house at 8 Oakwood Terrace.

    Razak works for Joseph Klein, a New Square resident and property manager who has been called a slumlord and cited for housing violations and running illegal boardinghouses.
  • Kear said eight adults and five children lived on the first floor, where there were six bedrooms with locks on four of the doors.

    In the basement, three adults and three children lived in makeshift apartments, where Kear said he found a 10-year-old boy alone Tuesday while his parents were at work.

    The first-floor tenants paid an average of $500 a month per room, providing the owner with $3,000 a month for the floor. Kear said tenants think a similar room rent was charged for those living in the basement apartment.

    Henriquez, 28, said she moved in two months ago but has spent only six nights in the house because of the bedbugs, mildew and other unsanitary conditions.

    Pointing to the bites and red marks on her legs, Henriquez said that’s why she organized a house cleanup Tuesday, which inadvertently led to the stove catching fire.

    Henriquez said she knows Klein because she lived in his boardinghouse on Pipetown Hill Road. Clarkstown fined Klein $5,000 and forced him to convert the structure back into single-family house.

    Downstairs in the basement, a room she shared with her 8-year-old son had a small window, which Kear said was out of reach so it couldn’t be used as a fire escape.

    Klein has been fined $5,000 each in Haverstraw and Clarkstown during the past two years for operating illegal housing, as well as $20,000 in Spring Valley and $8,500 in Ramapo. Several of his properties have faced foreclosure.

    Beatrice Pierriseme, 23, said she pays $450 a month for one room she shares with her 3-year-old boy, a 6-month-old girl and her fiance. She’s been there for a few months and said the conditions are horrible.

    “We just found out today it’s illegal,” Pierriseme said of the boardinghouse. “Living here isn’t great, but this is what we can afford. We were told they were going to shut it down in 30 days. We’re going to be looking.”
For more, see New Hempstead fire reveals illegal boardinghouse, 'mess' (New Hempstead tenants told they may have to leave).

Pit Bull Tag Team Faces The Boot From Ritzy Downtown NYC Building After HOA Accuses Pet Owner Of Allowing Vicious Pooches To Run Loose & Unmuzzled, Terrorizing Residents, Other Pets

In Battery Park City, the New York Post reports:

  • Two vicious pit bulls are terrorizing a ritzy Battery Park City building filled with young families, and their owner is refusing to keep them muzzled in common areas, residents claim in a new lawsuit seeking the dogs’ ouster.

    The Battery Pointe Condo board on Rector Place off the Hudson River is suing resident Jason Klabal after a series of incidents with the aggressive canines, including in May, when one of his dogs bit a neighbor’s Yorkie mix.

    The guy had the pit bull off the leash, and it just ripped the Yorkie apart,” board member Leslie Lipton told The Post.

    Klabal declined to comment.

Friday, August 9, 2013

South Florida Feds: Hubby, Wife Used Multiple Aliases, Social Security Numbers To Illegally Score Section 8, Other Gov't Benefits While Accumulating Real Estate Holdings

From the Office of the U.S. Attorney (West Palm Beach, Florida):

  • Wifredo A. Ferrer, United States Attorney for the Southern District of Florida, [and other reasonably high-ranking officials], announced the indictment of defendants Gloria Nereida Valle-Clas, 48, and Alexander Gonzalez, 40, of Loxahatchee, Florida.

    According to the indictment, Valle-Clas obtained two social security numbers (SSN), one which was originally associated with her birth name, “Nereida Valle,” and one of which was originally associated with the name “Gloria Lopes Clas.”

    From at least December, 2003, to January, 2013, she used the SSN for “Nereida Valle” to obtain federal housing, social security, food, cash, and medical benefits from HUD, SSA, USDA and HHS.

    At the same time, she used the SSN for “Gloria Lopes Clas” to buy real estate in both Broward and Palm Beach Counties, including over an acre of property in Loxahatchee, Florida on which she built an approximately 2,700 square foot residence.

    Her husband, Gonzalez, also bought real estate in Broward County. When applying for federal benefits, she failed to disclose her or her husband’s ownership of property, as well as other assets and income. In 2009, after obtaining over $330,000 in mortgages on the Loxahatchee Property, Valle-Clas failed to disclose her receipt of federal benefits in obtaining a $145,000 loan charge-off.

    Valle-Clas, who formally changed her name from “Nereida Valle” to “Gloria Nereida Valle-Clas” in 2003, used approximately 12 aliases in perpetrating the scheme, most of which were variations on “Nereida Valle” and “Gloria Lopes Clas.” Gonzalez used approximately eight aliases, most of which were variations on his birth name, “Alexander Jose Gonzalez Flores.”
  • HUD-OIG Special Agent in Charge Lester Fernandez stated, “The United States Department of Housing & Urban Development - Office of Inspector General is dedicated to ensuring these rental assistance funds are properly accounted for and made available to needy recipients. I am proud of the combined investigative efforts which led to this indictment. We will continue to work with our law enforcement partners toward eliminating public assistance fraud in HUD’s programs.”

Another Battle Brews Over Assistance/Emotional Support Animal; Dog Owner: 'She's The Child I Never Had. I Don’t Know What I'd Do Without Her!' HOA: Unit Owner Is Trying To Strong-Arm That Pooch Down Our Throats Without First Following Co-Op Procedures!

In New York City, the New York Post reports:

  • A cuddly cockapoo trained to fetch meds for her master — a Manhattan woman who suffers from post-9/11 posttraumatic stress disorder — may get them both evicted because of her building’s stringent no-pet policy.

    The 14-pound, black-and-white pooch, Ruby, was prescribed to Amy Eisenberg, 56, by her doctor to alleviate her illness.

    “I watched a man plummet to his death, and I can tell you from his suit to his striped tie to his white shirt, and I watched him spiral down,” Eisenberg, her eyes welling with tears, told The Post yesterday.

    “Ruby’s my fur baby,” Eisenberg said. “She’s the reason I get up in the morning. “She is the child I never had. I don’t know what I would do without her.”

    When Eisenberg suffers a heart palpitation from the stress, Ruby springs into action, lying across her lap and even delivering pills if the attack is severe.

    Still, the co-op’s management company filed an eviction proceeding against Eisenberg in 2012, claiming she was “harboring a dog” without written permission.

    Eisenberg’s doctor, Raymond Keller, said in a letter filed in Housing Court that “the presence of the dog is necessary for the emotional health of this patient.’’

    But a lawyer for the Lower East Side housing complex recently argued that Eisenberg hasn’t proved that she is disabled, despite the doctor’s letter and documents from the Health Department saying Ruby is her service dog.

    “I don’t understand how it could not be an ailment, especially after 9/11,” Eisenberg told The Post.

    Co-op attorney Bradley Silverbush doesn’t believe Eisenberg is really ill, and said she didn’t call Ruby a service dog until after getting the eviction notice.

    “Mrs. Eisenberg is trying to strong-arm the co-op by forcing them to accept her dog when she didn’t follow procedures,” he said.

    Eisenberg was working near the Twin Towers as an executive assistant at a financial firm on 9/11.

    She has filed a discrimination complaint with the federal Department of Housing and Urban Development, saying that she should be able to keep the dog in her apartment under the Americans with Disabilities Act.

    Eisenberg has lived at East River Housing on Grand Street since 1966. She’s due back in Housing Court to start a trial Aug. 14.

(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.

Financially Strapped Homeowner Duped Out Of $1700 By Loan Modification Scam That Utilized Official-Looking Letter Simulated To Be From, Or Approved By, HUD

In West Palm Beach, Florida, WPEC-TV Channel 12 reports:

  • CBS 12 has helped uncover details about an emerging mortgage scam that's being viewed as a cruel cash stealing system.

    This type of fraud attacks a homeowner when they're at their weakest point and feel like they're cornered with nowhere to turn.

    Lake Park resident Annette Coates doesn't just feel like she's been scammed out of thousands of dollars, it’s something much deeper, more like a personal attack on her and the home she's has lived in for over 20 years.

    It all started earlier this year when a letter landed in her mailbox. Coates admits she, like many, has fallen on hard times and tell us she had not made a mortgage payment on her house for a year and a half. Foreclosure notifications started to pile up.

    The fine print on this letter says if Annette would shell out two payments of $1,700 that the warnings of foreclosure would stop. The letter she received appears to be certified by the “United States Department of Housing and Urban Development” ((HUD)).

    All good right?

    Well looks can be deceiving and this is where the scam rears its ugly head into the picture.

    The phone number on the letter is bogus, a clear sign something was fishy, the letter was a smokescreen for fake company pretending to be HUD. It was too late to stop the scam; Annette had already sent the first payment of $1,700 to some unknown PO Box in California.

    Her money that she thought she was using to end foreclosure notifications quickly landed in the hands of a scammer who used a devious way to make a quick buck.

    We called up the legitimate officials with HUD speaking with public affairs specialist Brian Sullivan.

    Sullivan confirmed that the document had fraud written all over it, he then described how these phony companies trick a weak homeowner into forking of big bucks that they will never see again. In this case Annette’s foreclosure process fell into the wrong hands.

Central Florida Cop Pinched For Allegedly Renting Out Vacant Home She Didn't Own; Suspect Bagged When Actual Owners Returned To Premises

In Orlando, Florida, WESH-TV Channel 2 reports:

  • An Orange County deputy is accused in a realty rip-off, according to investigators. Detectives said Deputy Jocelyn Aviles posed as a property manager and rented out a vacant house that she didn't own.

    Aviles was arrested and relieved of duty without pay from the Orange County Sheriff’s Office. She said nothing as she left the department in an SUV on Friday night.

    Investigators said they found out about the scheme when the actual owners returned to their home. Squatters were living inside.

    Aviles was charged with grand theft, scheming to defraud, and forgery.
Source: Orange County deputy accused in realty rip-off (Deputy rented out vacant home, officials say).

Thursday, August 8, 2013

Florida Foreclosure Mill Head Reaches Deal With State Bar, Accepts 91 Day Suspension, Coughs Up $35K+ In Connection With Outfit's Activities Relating To Bankster Robosigning Racket

The South Florida Business Journal reports:

  • Marshall C. Watson, one of the original “robo-signing” attorneys, has been suspended for three months as part of an agreement with the Florida Bar.

    Watson was one of 11 attorneys in South Florida disciplined in the latest action by the Florida Supreme Court.
  • Watson agreed to plead guilty in a proposed consent judgment that accused him of failing to supervise or train his employees in foreclosure-related work. Watson also paid $30,000 for a record-keeping analysis by the Bar, plus $5,931 for its investigation.

    Watson ran a so-called foreclosure mill – Law Offices of Marshall C. Watson – where it became common practice to rush thousands of foreclosures through with quick review and sign-off to attest to accuracy of documents, leading to the coining of the phrase “robo-signing” in the media.

Miami-Dade County Property Appraiser Ups Ante In Pursuit Of Property Tax Cheats Making Fraudulent Homestead Exemption Claims

In Miami, Florida, The Miami Herald reports:

  • Miami-Dade Property Appraiser Carlos Lopez-Cantera is enlisting the aid of cities and Miami-Dade Public Schools to investigate property-tax cheats in a bid to collect more revenue.

    Cheating on your property taxes in Miami-Dade County is getting riskier.

    Miami-Dade Property Appraiser Carlos Lopez-Cantera is enlisting the help of police officers from at least 10 cities and the school district to investigate homestead-exemption fraud.

    Hungry for revenue, the cities and school district plan to deploy at least one police officer each to investigate what by many accounts is a pervasive problem: improper claims of homestead exemption.

    Those participating include Miami-Dade Public Schools and the cities of Miami, Hialeah, Coral Gables, South Miami, Pinecrest, Key Biscayne, West Miami, Miami Springs, Miami Gardens, and Sweetwater.

    “I believe this is a win-win for all involved,” Lopez-Cantera said of the cooperative effort. “We will continue to be aggressive to find cost-effective ways to identify tax cheats.”

    Miami-Dade plans to hold a training program this week to brief police in techniques for identifying and proving homestead-exemption violations, which include property owners who have more than one homestead exemption and those who rent out a property while still declaring it a primary residence.

    Lopez-Cantera, the 39-year-old former majority leader of the Florida House who took office as property appraiser in January, had vowed to go after homestead-exemption cheats during his election campaign last year against incumbent Pedro J. Garcia, 79.

    The Miami-Dade Police Department has six detectives assigned full-time to investigating homestead-exemption fraud and the property appraiser has seven employees focused on the task.

    Even so, Miami-Dade has a backlog of 2,917 leads, and Lopez-Cantera contends that adding police manpower will generate tax revenue for the county and other taxing authorities.

    Investigators use various techniques to ferret out improper homestead claims, including looking for those with more than one homestead exemption (in Miami-Dade or elsewhere) and crosschecking exemptions with utility bills and drivers licenses and a host of other publicly available data that would generate a red flag.

BC Supremes Rebuke Provincial Director Of Civil Forfeiture For Abuse Of Power For Improperly Seizing One Man's Home, Another's Rare Bank Note Collection

In Vancouver, British Columbia, The Vancouver Sun reports:

  • The B.C. Supreme Court has rebuked the provincial director of civil forfeiture for seizing a pensioner's numismatic collection and another man's home.

    Justice Jacqueline Dorgan sitting in Victoria called the actions by director Phil Tawtel, a former commercial crime investigator with the RCMP in Edmonton, "contrary to the interests of justice."

    She was critical of his failure to act on the file for more than a year, for relying on a Vancouver realtor's opinion about a southeastern B.C. property he hadn't seen, for not appearing at an earlier Supreme Court hearing and for seizing the old man's bank note collection - the Mounties left behind his coins.

    "In my view, the director had a perfect opportunity to raise the issues raised today on May 1, 2013, either in the foreclosure action or by seeking to have its petition under the Civil Forfeiture Act heard at the same time or perhaps joining the actions," Justice Dorgan said.

    "I am not going to give the director legal advice. The director knows the rules better than I on how to get before the court under the Civil Forfeiture Act and/or the foreclosure action."

    She dismissed his application for a preservation-and-sale order for the Slocan Valley property.

    In February 2012, Mounties armed with a sketchy search warrant raided the acreage in tiny Winlaw, about 50 kilometres northwest of Nelson.

    William Pundick, 72, was living in a 10-by-14 foot cabin with no plumbing and minimal power.

    "What is found in the cabin he occupied at the Powell Road property?" Justice Dorgan mockingly asked. "Wooden boxes with paper bills neatly filed in envelopes, in boxes beside what appear to be catalogues in respect of paper Canadian currency, all of which is consistent with Mr. Pundick's evidence (that he had been a collector for decades)."

    In an old outbuilding, they found three 600-watt lights, 39 flowering marijuana plants and 32 small plants in cups.

    No money, no guns, no power theft, no other controlled substances.

    Owner Robert Murray said he did not see the inside of a courtroom over the pot because the prosecutor didn't lay charges.

    He and Pundick, though, had to fight to retrieve their assets.

    "I believe the officer's actions in this matter were only for forwarding on information for the director of civil forfeiture's use," Murray complained. "The officer told me to my face after charges were not approved that I would be getting this action against me."

    The justice did not appear amused. "This is not a case where wads of tens or twenties or fifties are rolled up and bound by elastic bands, for example," Justice Dorgan emphasized. "In my view, the evidence does not get the director to the threshold of meeting the test of whether there is a fair question to be tried, that the $9,251 is an strument of crime or acquired as a result of illegal activities."

    Even the cop who confiscated the cash knew that - he said it "looked like a money collection."

    This is the latest example of questionable conduct by the director's office, which seems to go asset-grabbing regardless of conviction, circumstance or fairness.

    Last year it seized about $11 million worth of property.

    Once an asset is confiscated, the forfeiture office squeezes the owner to settle out of court, using the prospect of the high cost of litigation and the interminable delays of the legal system to extract a payoff.

    When it's a drug lord or the Hells Angels, maybe this approach can be justified - they can afford to fight the government.

    People without a criminal record or any evidence of organized crime activity being evicted or dragged into civil court by publicly funded lawyers - they're being hurt.

    Pundick had to hire a lawyer to get back a substantial share of his life savings, worth far more than its face value thanks to a number of rare bills.

    Murray, who has no criminal record, is still battling over the $225,000 property. He said police took his tax returns, mortgage documents and other financial documents.

    "There are more pictures of my financial info documents than there are pictures of marijuana plants," he said, fuming. "This matter has rendered me unemployable in the area; the only job I have had is as a family law legal assistant. I have had to move, list the house, and find alternate employment. They are bullies." Pundick's lawyer also questioned the director's conduct.

    "I feel he has a duty of fairness, not to use the immense resources of the state to bludgeon an innocent person," said Blair Suffredine, Liberal MLA for the area from 2001-05.

    "In this case I repeatedly asked for fairness and suggested there was a duty. There was no evidence to support any causal link between the assets my client owned and any crime having been committed. The director repeatedly offered to settle for a portion of those assets using the cost of litigating as a justification for us to choose that option."

    The justice awarded Pundick costs against the government but normally that means litigants recover about half their legal fees, given the formula used by the court.

    "I hope this decision will cause the office of the director to reflect on their duty to innocent people," Suffredine added.

    Fat chance. "They are now threatening to appeal me into bankruptcy or submission," Murray said.

    "Nice, eh?"

Wednesday, August 7, 2013

Colorado Foreclosure Mill Lawyer Faces Federal Sanctions For Allegedly Wrongly Certifying That Copy Of Promissory Note Was "True & Correct" When She Had Never Seen Originals At All

In Denver, Colorado, The Denver Post reports:

  • A foreclosure lawyer whose firm is under state investigation for alleged bill-padding also faces federal discipline for misrepresenting documents she used to take someone's Colorado Springs home.

    Attorney Toni M.N. Dale of Medved Dale Decker & Deere in Lakewood was referred for discipline last month by a federal judge for wrongly certifying that copies of a bank's promissory note — required for any foreclosure in Colorado — were "true and correct" when, in fact, she had never seen the originals at all.

    Additionally, U.S. Bankruptcy Court Judge A. Bruce Campbell said in a written order that not only was Dale's certification in 2011 to the El Paso County public trustee — the overseer of foreclosures in that county — untrue, but so was her verification to the bankruptcy court about the same records.
  • At issue are differing copies of a loan Anthony Semadeni signed with First Magnus Financial in 2007, specifically the endorsement page where a lender transfers ownership with a signature.

    The copies show different or missing signatures, and two key signatures purportedly by the same bank official are markedly dissimilar.

    Dale filed a foreclosure case in 2011 against Semadeni on behalf of Aurora Loan Services, which claimed to be the new holder of the note, and provided a copy of the document — without the endorsement page proving ownership — along with a certification that it was a "true and correct" copy of the original.

    Semadeni filed for bankruptcy protection later that year, essentially freezing the foreclosure process. As is allowed, Dale formally requested that the stay be lifted, filing a copy that she verified was Semadeni's note — this time with the endorsement page showing a pair of stamps and signatures transferring ownership, first from First Magnus to Lehman Brothers Bank, then from Lehman to Aurora.

    A bankruptcy judge granted Dale's request and lifted the stay, and Semadeni's house sold at the trustee's public auction in August 2011 to Aurora Loan Services for $620,000, records show. Semadeni abandoned his bankruptcy case.

    ALS began eviction proceedings on Semadeni in September 2011 in state court. In that proceeding, a different lawyer representing ALS filed copies of Semadeni's note, this time with an endorsement page showing only a single stamp and signature.

    Semadeni filed for bankruptcy again, hoping the automatic stay would help explain the mess. The ALS lawyer, Jamie Siler, filed the same note.

    "Isn't that an admission that it was a dummy note that was submitted to the court (in Semadeni's first bankruptcy)?" Campbell asked Siler in a hearing, referring to the document Dale had used.

    Though Semadeni was eventually evicted last November, he filed a federal lawsuit challenging the validity of the lien.

    It is through that case that Campbell asked Dale to give reason why she shouldn't be held in contempt and sanctioned for allegedly misrepresenting the validity of the documents she used to foreclose. More than two years later, Dale says she can't unravel the discrepancy.

Man Who Abused POA To Drain Now-Deceased, Dementia-Suffering Sister's Home Equity & Other Accounts Buys His Way Out Of Prison Time With $100K Promise To Pay Restitution In Monthly Payments; Will Dodge Criminal Record Upon Full Compliance With Court Requirements

In Chattanooga, Tennessee, the Chattanooga Times Free Press reports:

  • When Terry Alice Patten began showing signs of early onset dementia, she turned to her brother, George "Zeb" Patten Jr., to run her financial affairs.

    Zeb Patten signed a power-of-attorney in 2007 to manage his sister's estate. Just three years before, he had inherited $2 million when his father died. He was to take no more than $5,000 a year of Terry Patten's money for his own use.

    Two years later he had withdrawn more than $419,000 from her accounts, taken out a $236,000 line of credit on her paid-for home on Signal Mountain and sold her Jaguar car.

    On Tuesday he pleaded guilty to three counts of theft over $10,000 in criminal court. Under a plea agreement, he will be allowed to remain free on probation as long as he pays $100,000 in restitution to the estate of his now-deceased sister in $1,660 monthly payments beginning in February. If he completes the court's requirements, the criminal charges can be erased from his record.

    Zeb Patten declined to comment after the Tuesday hearing.

    But Terry Patten's only son, Bo Patten, said he got some belated relief from the 15 minutes in front of Hamilton County Criminal Court Judge Rebecca Stern. "Today was about two things -- today was about my mother and today was about a criminal admitting his guilt," Bo Patten said.

    He found out about his uncle's spending when bank officers began calling about foreclosing on her home. That news shocked him because he knew his mother had paid cash for the house years before. Shortly afterward, Alexian Brothers, where his ailing mother was being cared for in a dementia-specific unit, reported that monthly bills were not being paid.

    A court-appointed third-party conservator, local attorney Linda Norwood, was appointed to oversee the estate at that point.

    At about the same time in 2009, Zeb Patten filed for bankruptcy, citing "breathing room" from creditors for his business, Z Golf Custom Fittings. In a creditors meeting, he said he was owed $200,000 to $250,000 by his sister, Terry Patten, and he had taken that money to cover past loans he had made to her. He also said at that time that $700,000 to $800,000 went into work on a Minnekahda Road house, a Riverview-area property he had bought and remodeled.

    "No transaction went to my personal life," he said in a bankruptcy meeting.

    But he said in a February meeting this year that he was actually owed $400,000 by Terry Patten and the rest was her investment in the Minnekahda house, from which she would have received a portion of the profits upon its sale, according to court documents. He also claimed in this year's meeting that none of Terry Patten's money went into the Minnekhada house, conflicting with his first statements.

    The house sold in the early stages of the bankruptcy for $600,000.

    For that, bankruptcy attorneys have filed a "false oaths" claim against him. He is scheduled for trial on Nov. 5. Lying while under deposition in bankruptcy court is a civil and criminal offense.

    If Zeb Patten loses, he won't get any relief for the nearly $2 million he's claiming in the bankruptcy and instead will owe that amount, which includes money to Terry Patten's estate, to creditors.

    Bo Patten said much of the work regarding the estate and bankruptcy was being dealt with by lawyers, and he knew little of the details. As for his uncle, they haven't talked in years, and that's not likely to change. "I've moved on with my life," Bo Patten said. "I have no desire to try and reconcile any sort of relationship."

San Francisco Feds Pinch Bankster For Allegedly Ripping Off Elderly Widow By Drawing Down $1.8M+ On HELOC, Brokerage Accounts He Had Established For Victim

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

  • A federal indictment charging Adorean Boleancu with twenty-seven counts of bank fraud, wire fraud, money laundering, and aggravated identity theft was unsealed this morning in federal court, announced United States Attorney Melinda Haag. The indictment alleges that Boleancu executed a fraud scheme by forging more than $1.8 million in checks written on accounts of an elderly, widowed client for his personal benefit.

    According to the Indictment, Boleancu, 47, of Napa, Calif., was a Vice President, Senior Financial Consultant in the Wealth Management Group of Wells Fargo Advisors, LLC and, before that, a Vice President, Financial Advisor with Morgan Stanley & Co., Inc.

    The Indictment alleges that Boleancu wrote checks drawn on the client's Morgan Stanley brokerage account and home equity lines of credit Boleancu had established for the victim.

    These checks were made payable to Boleancu's family members, his girlfriend, another female acquaintance, cash, and financial companies where Boleancu had credit card accounts. The Indictment also alleges that Boleancu presented or caused to be presented forged checks in the amount of $750,000 and $600,000 payable to Boleancu's girlfriend, who deposited the checks and transferred much of the proceeds to Boleancu.

Tuesday, August 6, 2013

Granite State Jury Rejects Sale Leaseback Peddler's 'I'm Not A Swindler Or Thief, Just A Crappy Businessman' Defense; Convicts Ex-Countrywide Loan Officer For Running Foreclosure Rescue, Equity Stripping Racket

In Concord, New Hampshire, Foster's Daily Democrat reports:

  • A New Hampshire businessman was convicted of fraud Thursday for orchestrating an elaborate scheme to strip the equity of homes on the brink of foreclosure by falsifying information on dozens of mortgage applications.

    Beginning in 2005, Michael Prieto of Manchester mailed offers to help bail out distressed homeowners if they signed over to him the deeds to their homes. He then sold those homes at inflated prices to straw buyers he paid to sign off on the false mortgage applications and turn the checks over to him, jurors found after hours of deliberation.

    Prieto dropped his head to his chest at the word "guilty" and later expressed disbelief to his lawyers and family members gathered in the courtroom.

    "I thought we had this won," he said to his lawyers.

    Prieto faces up to 20 years in prison and could get an additional 19 years because some of the lenders were federally insured. Sentencing was scheduled for Nov. 12, and Prieto was allowed to remain free until then.

    "Justice was served," prosecutor Mark Zuckerman said. "We're gratified by that."

    Prieto declined to comment. His attorney, Michael Iacopino, would say only, "We're disappointed."

    Assistant U.S. Attorney Michael Gunnison told jurors that from 2005 to 2008, Prieto targeted distressed homeowners through newspaper legal notices and sent letters offering to bail them out. He persuaded them to turn over the deeds to their homes in exchange for the opportunity to continue living in their homes as rent-paying tenants, and gave them the option to purchase back their homes in two years, Gunnison said.

    Then, prosecutors say, Prieto sold the homes at inflated prices to straw buyers whom he paid to filed mortgage applications that falsified their income, assets, debts and other facts. Prieto then stripped the equity from the homes and pocketed thousands of dollars, Gunnison said, using some proceeds for trips to a casino.

    "Was this a scheme about the defendant helping people?" Gunnison queried. "No. This was a scheme about the defendant helping himself -- to obtain money and live large as long as he could keep the scheme going."

    As a former loan officer for Countrywide mortgage company, Gunnison said Prieto knew the mortgage business, its vulnerabilities and how to exploit them.

    Prieto's lawyer said his client ran a failing business, not a criminal enterprise.

    "He ain't a good ... businessman," Iacopino told jurors, his hand resting on Prieto's shoulder. "But's not a swindler and he's not a thief."

    Earlier in the day, U.S. District Court Judge Steven McAuliffe threw out nine counts of money laundering in furtherance of the mail fraud scheme, saying those charges are part of the overarching scheme alleged by prosecutors.
Source: Guilty of mortgage fraud.

(1) For more on this type of foreclosure rescue ripoff, see:

Foreclosure Rescue Operator Gets 24 Months in Equity Stripping Scam That Peddled Phony Sale Leaseback Deals Purporting To Help Financially Strapped Homeowners Save Their Homes

From the Office of the U.S. Attorney (Minneapolis, Minnesota):

  • [A] 40-year-old Bloomington man was sentenced for his role in defrauding financial institutions and homeowners under the guise of a program to rescue homes from foreclosure.
  • [U]nited States District Court Judge John R. Tunheim sentenced Richard Scott Spady to 24 months in federal prison and two years of supervised release on one count of conspiracy to commit wire and mail fraud and one count of filing a false income tax return. On April 4, 2012, Spady was charged in a superseding indictment, and he pleaded guilty on September 5, 2012.

    On April 22, 2013, Spady’s co-defendant, Michele Denise Sengstock, age 50, also of Bloomington, was sentenced to 14 months in federal prison on one count of wire fraud. Spady and Sengstock were ordered to pay $1,127,129.31 in restitution.

    In his plea agreement, Spady admitted operating his scheme between 2005 and 2007. According to the charges in the case, Spady operated a company called Unified Home Solutions, or UHS, which identified homeowners who were facing mortgage foreclosure or already in foreclosure proceedings. UHS then found third party investors to purchase the homes, planning to sell them back to the original homeowners within one to two years. In the meantime, according to the Indictment in the case, the distressed homeowners could live in their homes.

    Though in foreclosure, because they could not make mortgage payments, the homeowners still had some equity in their homes. When the properties were sold, checks were issued to the original homeowners for their equity. The homeowners then signed over the equity checks and the proceeds were used to pay expenses and divided among the investors, UHS, and others. In some cases, equity from one sale was used to purchase other distressed properties.
For the U.S. Attorney press release, see Second Bloomington Resident Sentenced To Federal Prison For Mortgage Fraud Scam.

(1) For more on this type of foreclosure rescue ripoff, see:

Florida Appeals Court To Rogue Bankster: Not Only Was Your Foreclosure Action Dismissed, But The Trial Judge Did Not Abuse His Discretion By Sanctioning You For Ignoring His Discovery Orders & Sticking You With The $74K+ Tab For The Successful Homeowner's Legal Fees & Costs, So Pay Up!

In Miami, Florida, the state's 3rd District Court of Appeal recently issued the following ruling affirming a trial judge's decision to sanction a rogue bankster (it thumbed its nose at various discovery orders) and stick it with the tab for a homeowner's attorneys fees and costs for a successful defense against a foreclosure action(1) that was ultimately dismissed by the trial judge (by the way, the original foreclosure action was filed some time in 2009,(2) so one wonders how close the bankster is to Florida's 5-year statute of limitations in the event it refiles the foreclosure action - Sec. 95.11(2)(c), Florida Statutes):

  • This appeal stems from a foreclosure case filed by the lender, HSBC Bank USA, N.A., as Trustee for the Registered Holders of Renaissance Equity Loan Asset-Backed Certificates, Series 2007-3 (“the Bank”), against Gayle Williams (“the Homeowner”).

    The underlying foreclosure case was dismissed by the trial court based upon the Bank’s failure to comply with various discovery orders.

    The trial court’s dismissal in that regard was not appealed. In the matter before us, the Bank challenges the trial court’s order awarding the Homeowner $74,429 in costs and attorney’s fees.

    Given the Bank’s history in this case of disobeying court orders, we reject the Bank’s assertion that the trial court abused its discretion in sanctioning the Bank for failing to comply with the court’s scheduling order regarding attorney’s fees.

    Turning to the issue of the amount of the fees, the record contains the following evidence: (1) the time sheets and billing records of the Homeowner’s attorney; (2) the testimony of the Homeowner’s attorney; and (3) the testimony of two attorneys who offered expert opinions in support of the amount of fees.

    Contrary to the contention of the Bank, the record reflects that the Bank had prior written notice of the names of the expert witnesses who testified for the Homeowner on the issue of the amount of the attorney’s fees.

    In light of the substantial competent evidence in the record that supports the trial court’s findings, we conclude that the trial court did not abuse its discretion in awarding the costs and fees in the amount at issue. See Shands Teaching Hosp. & Clinics, Inc. v. Mercury Ins. Co. of Fla., 97 So. 3d 204, 213 (Fla. 2012) (“The standard of review for an award of prevailing party attorney fees is abuse of discretion.”); United Auto Ins. Co. v. Ricardo, 916 So. 2d 44 (Fla. 3d DCA 2005) (same).

For the ruling, see HSBC Bank USA, N.A. v. Williams, No. 3D12-1784 (July, 31, 2013).

(1) For earlier posts on the right of Florida homeowners to stick a foreclosing bankster with the tab for their legal fees when successfully defending against a foreclosure action, see:
For those lawyers who handle these cases on a pro bono or contingency fee basis (ie. non-profit, legal aid attorneys, some private attorneys), see:
(2) Trial court case number 09-10793, Miami-Dade Circuit Court - Judge David C. Miller. The statute of limitations begins to run on the date of original default, or if there's a grace period (which there usually is), the date after the grace period expires, if I'm not mistaken.

Bankster Fails In Attempt To Have Suit Accusing It Of Mortgage Flipping Racket Heard In Federal Court; U.S. District Judge 'Abstains' From Hearing Suit, Boots Case Back To State Court, Saying There's No Pressing Federal Interest To Decide Matter Entirely Involving Unsettled Issues Of WV Law

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

  • A lawsuit accusing Huntington National Bank of “flipping” is being moved back to where it was originally filed in December 2011.

    U.S. District Judge Gina Groh, of the Northern District of West Virginia, remanded the case back to Kanawha County Circuit Court on July 26. Groh had to decide whether she would hear the case because the claim could be listed as an asset in the plaintiff’s bankruptcy proceeding.

    This matter involves claims arising entirely under state law causes of action and raising unsettled questions of West Virginia law,” she wrote.

    “This Court lacks diversity jurisdiction, but has jurisdiction due to Plaintiff’s bankruptcy proceeding, in which any recovery could potentially serve as an asset.

    “Abstention and remand would not be unduly burdensome, nor would it be inconvenient for a West Virginia court’s judgment to be enforced in the bankruptcy court.

    “At the heart of the doctrine of abstention lies the concept of comity, and, under present circumstances, no pressing federal interest requires this Court to determine unsettled state law issues.”

    Groh, therefore, decided to abstain from the case and remanded it to Kanawha Circuit Court, where it was first filed in December 2011.(1)

    Gary Miller sued Huntington Banks, its mortgage group and three other defendants.

    Miller accused them of “flipping,” or using inflated appraisals and other unlawful practices to induce “unsophisticated” consumers into a series of unwise and expensive loans.

    Flipping maximizes fee income to banks, but strips homeowners of equity in their homes, pushing them into default and, in some cases, foreclosure.

    Miller contends he was “flipped” repeatedly by Huntington Bank, resulting in indebtedness that, he says, “ballooned” from $120,000 to $273,500 over five years and has brought him to the brink of foreclosure.

    Prior to filing the lawsuit, Miller filed for Chapter 7 bankruptcy in federal court for the Northern District of West Virginia. He listed his property but not any possible claims against Huntington Banks.

    The bankruptcy proceeding was discharged more than a year before the lawsuit was filed.

    However, his bankruptcy estate has recently been re-opened to administer the case as a new asset. Special counsel has been hired to pursue the claim.

    The defendants removed the case to federal court for the Southern District of West Virginia on April 20, 2012, and it was transferred to the Northern District to aid in the coordination of the case and the bankruptcy proceedings to ensure jurisdictional issues are properly resolved.(2)

    On May 21, 2012, Miller requested the federal court abstain from hearing the case and remand it to Kanawha Circuit Court. Huntington Banks opposed the motion.
Source: ‘Flipping’ lawsuit sent back to Kanawha court.

For the ruling, see Miller v. Huntington National Bank, N.A., Civil Action No. 3:12-CV-114 (N.D.W.V. July 26, 2013).

(1) See, generally, Erroneous Removal As A Tool For Silent Tort Reform: An Empirical Analysis Of Fee Awards And Fraudulent Joinder for more on the 'cat-and-mouse' games played by state court plaintiffs and defendants jockeying around to either move or block moves of state court cases into federal court.

(2) From the court ruling:
  • Defendants in civil actions may remove a matter from state to federal court if the latter forum has original subject matter jurisdiction. The Defendants removed the instant matter based upon allegations of both diversity jurisdiction under 28 U.S.C. §1332 and bankruptcy-related jurisdiction under 28 U.S.C. §1334(a)-(b).

    The burden of demonstrating jurisdiction for removal generally resides with the defendant. Wilson v. Republic Iron & Steel Co., 257 U.S. 92 (1921).

    Likewise, the plaintiff's role in the context of disputes about removability is also clearly defined: the plaintiff is the master of his or her claim. See Oklahoma Tax Com'n v. Graham, 489 U.S. 838 (1989). This means that, "if [the plaintiff] chooses not to assert a federal claim .. . or properly joins a nondiverse party, defendants cannot remove the action to federal court on the ground that an alternative course of conduct available to the plaintiff would have permitted removal of the case." 14B Charles Wright, Federal Practice and Procedure, §3721, p. 59 (2009).

    Moreover, as the Fourth Circuit has indicated, if federal jurisdiction is doubtful, the case must be remandedMulcahey v. Columbia Organic Chems. Co., 29 F.3d 148, 151 (4th Cir. 1994).

Monday, August 5, 2013

San Diego Judge: Now-Defunct City Agency's Behavior In Effort To Use Threat Of Eminent Domain As A Hammer Over Couple's Head To Wrestle Away Their Property “Constitutes Coercive Precondemnation Tactics & Unreasonable Precondemnation Conduct”

In San Diego, California, the Rancho Santa Fe Review reports:

  • Rancho Santa Fe attorney Steven McKinley has won a $1.99 million settlement for his clients, who alleged in a lawsuit that the city of San Diego’s redevelopment agency acted improperly when it sought to obtain their downtown property.

    The settlement, which was finalized July 24 when signed by Mayor Bob Filner, ends a legal saga dating back to 2004. At that time, the San Diego Redevelopment Agency — which is now dissolved — told La Jollans Chris and Margaret LaFornara that it wanted to buy their property at 14th Street and Market in the East Village, as part of a project to build a mixed-use residential and commercial development over a full city block.

    Rather than pursue the acquisition, however, the redevelopment agency put its efforts on hold for about five years, leaving a cloud over the property and preventing the LaFornaras from selling to anyone else, said McKinley.

    In 2011, the LaFornaras lost the property to foreclosure, and the redevelopment agency then bought the property from the bank at a reduced price, McKinley said.

    “So they never took my client’s property. They negotiated with my client in bad faith and kept him strung out for six years until he lost the property to foreclosure,” McKinley said.

    The two-phase trial began last December before Superior Court Judge William Nevitt. In March, Nevitt issued a tentative ruling siding with the LaFornaras.

    In a tentative ruling, Nevitt wrote that the redevelopment agency’s behavior “constitutes coercive precondemnation tactics and unreasonable precondemnation conduct.”

    A second phase of the trial to determine damages to be paid to the plaintiffs was set for this October, but instead, the city and the LaFornaras agreed to the $1.99 million settlement, McKinley said. Of that amount, $647,000 is for attorney fees.

    In essence, McKinley said the redevelopment agency announced it sought to acquire the LaFornaras’ property, then failed to move forward, causing the property to lose value. One potential buyer was willing to pay $3.4 million for the property, but backed off after learning of the redevelopment agency’s plans, McKinley said.

    The agency did offer the LaFornaras $1.2 million for the property in 2010, which, according to court documents, was less than its value as determined by the agency’s own appraisal.

    In his written ruling, the judge said the agency had made a “lowball offer” intended to “compel or induce an agreement on the price to be paid for the subject property.”

    Deputy City Attorney Carmen Brock, who oversaw the settlement for the city, declined to be interviewed for this story. She referred a reporter’s inquiry to the office of City Attorney Jan Goldsmith, which did not respond to a request for comment by press-time.

    Attorney Andrew Rauch, who represented the city as outside counsel in the case, also did not respond to a request for comment.

    More than 400 redevelopment agencies were established across the state in past decades. Their job was to eliminate blight from urban areas by promoting new development. Among their powers was to acquire private property, through negotiation or eminent domain, and then sell it to private developers for new projects.

    The state of California dissolved all of the redevelopment agencies in February 2012. Successor agencies were given the task of wrapping up their affairs, such as completing projects and paying off debts.

    In San Diego’s case, the city became the successor agency, according to the redevelopment page on the city’s web site. The city has “assumed the former agency’s assets, rights and obligations… subject to some limitations,” said the statement.

    In an email, Brock stressed that the settlement will be paid from the funds of the former redevelopment agency, and not the city’s general fund.

    The settlement was approved by the San Diego City Council, as well as state officials who are in charge of monitoring the dissolution of the redevelopment agencies and the state Department of Finance, said McKinley.

    Under state law, redevelopment agencies received a portion of the property taxes generated through new development in redevelopment areas, called “tax increment.” When Gov. Jerry Brown began the push to abolish redevelopment agencies, he argued that they diverted much-needed property tax revenue from other agencies, such as schools and cities.

    According to McKinley, the settlement should serve as a lesson for government officials about the proper use of their powers of eminent domain. “I just think it’s a huge vindication of property owners’ rights,” he said. “So often, these government agencies get carried away with the enormous power they have, there’s a tendency to abuse the power.”

Colorado's Largest Foreclosure Mill Sues State AG In Effort To Bury Billing Records, Thwart Probe Into Alleged Inflated Fee Racket

In Denver, Colorado, The Denver Post reports:

  • Colorado's most prolific foreclosure law firm — led by attorney Larry Castle — is the latest to file a lawsuit and formally ask a Denver judge to protect its records from a state investigation into its billing practices.

    The Castle Law Group filed its case late Friday in Denver District Court against Attorney General John Suthers to prevent turning over more than 700 e-mails the firm says are protected by attorney-client privilege.

    Castle has asked District Judge Kenneth Laff to review the e-mails and about 52 pages of documents in chambers to determine whether they fall under protection from disclosure.

    Suthers' office issued a subpoena to Castle's firm — once known best as Castle, Meinhold, Stawiarski,and then as Castle Stawiarski — in April seeking thousands of pages of documents in its investigation of attorneys' billing practices.

    The investigation centers on claims that lawyers representing banks and other lenders pad the expenses they're entitled to recoup, generating profits that investigators say are paid for by homeowners and taxpayers.

    Efforts to reach Castle were unsuccessful, and a spokeswoman for Suthers' office refused to comment.

    Several law firms have refused to cooperate fully with civil investigative subpoenas Suthers has issued since December, nearly all claiming attorney-client protection. Castle is the second to sue Suthers directly over the request for records that the lawyers say are privileged and protected from disclosure.

N. California City Puts Eminent Domain Squeeze On Banksters: 'Either Accept Our Offer To Buy Your Crappy Underwater Home Mortgages At Well Below Collateral Value By August 14 Or We'll Just Wrestle Them Away From You Through Condemnation Proceedings!'

In Richmond, California, CNNMoney reports:

  • The California city of Richmond said Tuesday that it's ready to take an extraordinary step in its bid to stop foreclosures -- threatening to wrest mortgages from the investors who now control them.

    As a first step, the San Francisco Bay city said it will work with an investment firm to try to purchase mortgages of underwater homeowners at a price well below their current balances. It would then try to get those loans restructured to make them affordable.

    But if the holders of the loans, who are mostly investors, refuse to sell by Aug. 14, the city said it will invoke eminent domain to seize the mortgages so it has more control over the process of making them affordable.

    Eminent domain is the legal principle that lets government entities purchase land or structures, usually from reluctant owners who don't want to sell. It is typically invoked for public uses such as parks, roads or utilities -- not mortgages.

    In the case of Richmond, the city argues that eminent domain is in the public interest because it could let people stay in their homes and help keep neighborhoods, especially minority communities and low-income neighborhoods, from fraying.

    "After years of waiting for a comprehensive fix, we're stepping into the void with a local principal reduction program," said Gayle McLaughlin, mayor of Richmond.

    The idea is controversial and reflects the frustration, seven years after the housing market started to collapse, of homeowners and officials in areas that are still reeling.

    The Richmond plan was proposed by a private backer, Mortgage Resolution Partners, which will find the money the city needs to buy the mortgages. It stands to profit by taking a cut when the loans are refinanced.

Another Ch. 7 Bankruptcy Trustee Successfully 'Strong-Arms' Lender Out Of Rights Under Homeowner's Mortgage Where Lack Of Proper Indorsement Rendered Promissory Note Unenforceable


  • A chapter 7 trustee sought to use his “strong arm” powers as a hypothetical judgment lien creditor, arguing that a mortgage could be avoided because the mortgagee (which was an assignee of the original mortgagee) was not entitled to enforce the note secured by the mortgage. Although the bankruptcy court did not avoid the mortgage lien, it did conclude that the trustee could sell the mortgaged property free of any claim by the mortgagee assignee.

    The debtors (the Dorseys) executed a note in favor of Popular Financial Services, LLC (PFS) that was secured by a mortgage given to Mortgage Electronic Registration Systems, Inc. (MERS) as nominee for PFS. The debtors executed an Affidavit of Conversion of Real Estate so that the mobile home encumbered by the mortgage was treated as real estate, and the mortgage properly perfected the lien on the mobile home.

    A couple of years later Vanderbilt Mortgage & Finance, Inc. (Vanderbilt) acquired certain installment loan agreements pursuant to a purchase agreement with the parent and an affiliate of PFS to purchase.  The schedule of contracts attached to the purchase agreement included a contract with one of the Dorseys, and the Dorsey note was identified as one of the notes that was transferred.

    Vanderbilt obtained possession of the Dorsey note, and MERS’ assignment of the Dorsey mortgage to Vanderbilt was recorded. However, unfortunately for Vanderbilt, there was no indorsement of the note from PFS to Vanderbilt, and PFS was not a party to the purchase agreement.
  • [I]n this case there was no dispute that the mortgage was valid and perfected. Rather the only challenge was to Vanderbilt’s right to enforce the note secured by the mortgage.
  • When asked for evidence that it had a right to enforce the note, Vanderbilt argued that the assignment of the mortgage and the purchase agreement were sufficient.
  • The assignment of the mortgage [] did not cure the problem. In this case the mortgage was granted to MERS as nominee for PFS. When it assigned the mortgage, it could only assign the rights granted by the mortgage, and could not transfer any right with respect to the note.

    In sum, Vanderbilt was not able to establish that it had a right to enforce the note, and therefore the mortgage. Consequently, the court concluded that the trustee was entitled to an order authorizing the sale of the property free and clear of any interests of Vanderbilt under the note and/or the mortgage.

    The court specifically did not determine that the mortgage was not perfected, “which means that it is a lien against the Real Property pending sale free and clear of liens, with liens to attach to the proceeds, pursuant to 11 U.S.C. 363(b) and (f).” It is not at all clear what this will mean when it comes time to distribute proceeds.

    PFS remained the only entity entitled to enforce payment of the note. However, it had assigned its rights under the mortgage. And in any event, the court noted in a footnote that the trustee had already obtained a default judgment against PFS holding that the bankruptcy estate had priority over the interests if any of PFS.

    Once again, the importance of paying attention to detail is brought home with a vengeance. The failure to include PFS as a seller under on the purchase agreement (and/or to indorse the Dorsey note to its parent or affiliate before the sale) caused Vanderbilt to lose all rights with respect to the note and the mortgage.

Sunday, August 4, 2013

Federal Jury Belts Credit Bureau For $18M+ In Damages Over Repeated Failures To Fix Consumer's Credit Report

In Portland, Oregon, The Oregonian reports:

  • A jury Friday awarded an Oregon woman $18.6 million after she spent two years unsuccessfully trying to get Equifax Information Services to fix major mistakes on her credit report.

    The judgement, likely to be appealed, appears to be one of the largest awarded to a consumer in a case against one of the nation's major credit bureaus.

    Julie Miller of Marion County, who was awarded $18.4 million in punitive and $180,000 in compensatory damages, contacted Equifax eight times between 2009 and 2011 in an effort to correct inaccuracies, including erroneous accounts and collection attempts, as well as a wrong Social Security number and birthday. Yet over and over, the lawsuit alleged, the Atlanta-based company failed to correct its mistakes.

    "There was damage to her reputation, a breach of her privacy and the lost opportunity to seek credit," said Justin Baxter, the Portland attorney who teamed on the case with his father and law partner, Michael Baxter. "She has a brother who is disabled and who can't get credit on his own and she wasn't able to help him."

    Tim Klein, an Equifax spokesman, said Friday that he didn't have any details about the decision from the Oregon Federal District Court. He declined to comment about the specifics of the case.
  • Miller first discovered a problem when she was denied credit by a bank in early December 2009. She alerted Equifax and filled out multiple forms faxed by the credit agency seeking updated information.

    In addition to requesting the changes, Miller had asked several times for copies of her credit report, the lawsuit alleged. Credit bureaus are required by law to provide reports to consumers for free annually and after that, for a small fee. On numerous occasions, Equifax failed to respond to Miller's requests.

    Miller had found similar problems in her reports with other credit bureaus. However, Baxter said, those companies had corrected their mistakes.

    The issue wasn't a result of identify theft, Baxter said. Instead, the information from another "Julie Miller" had simply been placed in the plaintiff's record by mistake. In at least one case, the lawsuit alleged, the plaintiff's private financial information was sent to companies inquiring about the other Julie Miller.

Federal Judge Gives Go-Ahead To Fair Housing Suit Accusing Wall Street Bankster Of Race-Based Discrimination In Connection With Buying, Financing Predatory Home Loans That Allegedly Targeted Minority Neighborhoods

In New York City, Housing Wire reports:

  • A landmark discrimination lawsuit, which alleges Morgan Stanley violated the Fair Housing Act by encouraging lenders to push high-risk mortgage loans on African-American borrowers, can move forward, a federal court ruled.

    The investment bank’s motion to dismiss the case was denied in part by Judge Harold Baer with the U.S. District Court in the Southern District of New York.

    In October, the lawsuit was filed by The American Civil Liberties Union, the ACLU of Michigan, the National Consumer Law Center and the firm of Lieff Cabraser Heimann & Bernstein. The suit was filed on behalf of Michigan Legal Services as well as five African-American homeowners in Detroit who were alleged victim’s of the bank’s practice of purchasing and financing predatory mortgages, which were later bundled into mortgage-backed securities.

    "Targeting communities of color with predatory loans is not acceptable. Morgan Stanley is not above the law," said ACLU Executive Director Anthony D. Romero. "Today’s ruling affirms that Wall Street banks must comply with civil rights laws, and that they will be held accountable if they do not."

    Not only is this the first lawsuit to connect racial discrimination to the securitization of mortgage-backed securities, it is also the first case where the plaintiffs are suing an investment bank directly rather than the subprime lender whose loans the bank bought, the plaintiffs allege.

    As the principal financier of the now-defunct New Century Mortgage Corp., Morgan Stanley orchestrated New Century’s focus on dangerous loans that placed many homeowners on a path to foreclosure, according to the suit.
  • In his ruling, Baer noted that, "Detroit’s recent bankruptcy filing only emphasizes the broader consequences of predatory lending and the foreclosures that inevitably result." The judge ruled that "Morgan Stanley—as a loan purchaser and mortgage securitizer—falls within the scope of the FHA. And as such, the FHA prohibits Morgan Stanley both from discriminating in 'making available' real-estate related transactions as well as discriminating 'in the terms or conditions of such a transaction.'"

    "This ruling gives us the opportunity to present our civil rights claims under the Fair Housing Act against Morgan Stanley in further judicial proceedings. We look forward to proving that investment banks, like Morgan Stanley, cannot maximize their profits at the expense of communities which are victimized by the toxic loans which the banks funded," said Stuart Rossman, director of litigation at the National Consumer Law Center.

Sovereign Citizen Accused Of Filing Billion$ In Phony Retaliatory Liens Against Federal Judges, Prosecutors, Court Officials Persists With Questionable Conduct On Eve Of Trial

In Chicago, Illinois, the Chicago Tribune reports:

  • On the eve of her trial on charges she slapped huge liens on then-U.S. Attorney Patrick Fitzgerald and other high-ranking federal court officials, Cherron Phillips showed just how unpredictable the proceedings could become when testimony begins.

    In an unusual hearing Friday, Phillips filed several unintelligible motions, questioned a federal judge on his loyalty to the Constitution and insisted that U.S. citizens would not comprise a jury of her peers.

    "I hesitate to rank your statements in order of just how bizarre they are," said veteran U.S. District Judge Milton Shadur, who at one point attempted to explain to Phillips the meaning of the phrase, "garbage in, garbage out." As Phillips continued to press him on his allegiance to the Constitution, Shadur finally cut her off.

    "Oh, come on!" he said. "I've had enough of this. We are in recess until Monday at 9:30."

    The Chicago woman is representing herself after rejecting advice from Shadur to have an attorney appointed by the court to help her.

    Phillips faces charges that she targeted Fitzgerald, then-Chief Judge James Holderman and other federal judges, prosecutors and court officials by filing bogus liens on their homes in 2011 that sought tens of billions of dollars.

    Prosecutors allege Phillips was retaliating after she was physically barred from the Dirksen U.S. Courthouse and forbidden from filing documents on behalf of her brother, Devon, who pleaded guilty in 2008 to drug conspiracy charges.
  • Phillips, 43, who also goes by the name of River Tali El Bey, has professed in court that she doesn't recognize the federal system. Her court filings reflect the ideology of sovereign citizens, a rapidly expanding anti-government movement whose adherents often file nonsensical, complex legal documents and refuse to accept or follow court rules.

    Their actions can stall legal proceedings for years and frustrate even the most even-tempered judges. States are responding by passing laws to ban such frivolous filings, and prosecutors are bringing criminal charges despite the painful effort of bringing them to trial.
  • Phillips' troubles at Chicago's federal courthouse stem from her allegedly disruptive behavior at proceedings for her brother's drug conspiracy case. She repeatedly tried to address the court and approach the podium to speak, according to court documents. She also filed documents with sovereign citizen overtones on his behalf, the records show.

    Phillips "has continually shown a pattern of behavior to delay and disrupt the administration of justice," reads the February 2011 executive order that finally barred her from the courthouse and from filing documents.

    A month after the executive order, Phillips allegedly went to the Cook County Recorder of Deeds office and started filing false maritime liens against those connected to her brother's case — some in the outrageous amount of $100 billion. A dozen liens in all were filed.

    Mark Potuk, senior fellow at the Southern Poverty Law Center, which has monitored hate groups for decades, said the filing of such documents is known as "paper terrorism" and it is clogging court systems around the country.

    "One of the classic sovereign techniques for attacking their enemies is these court filings," Potuk said.

    Potuk said the sovereign citizen movement is a shadowy underground without a central structure whose followers generally espouse a belief that most federal tax and criminal laws simply don't apply to them.

    There was a noticeable wave of sovereign citizen activity in the 1990s and then again half a dozen years ago, Potuk said.

    The tactics have spread across the Internet and through jailhouses, holding out some tantalizing promises of not paying taxes or avoiding foreclosure, all rooted in the premise that federal laws hold no sway, Potuk said. They also believe there is a secret treasury account for every citizen containing millions of dollars that can be accessed — if you learn how to file the right paperwork.

    "This is a strange netherworld of people who go from hotel seminar to hotel seminar selling absolutely baseless theories," Potuk said.
For the story, see Chicago woman's trial could get wild (Accused of filing bogus tax liens, she's poised to represent herself as sovereign citizen).