Saturday, August 24, 2013

Lehigh Valley Man Faces Forgery, Theft/Securing Execution Of Documents By Deception, Other Charges For Allegedly Ripping Off His 93-Year Old Uncle Of $200K+ Cash/Other Assets; Suspect Allegedly Abused POA To Drain Bank Accounts, Home Equity With HELOC While Since-Foreclosed Victim Was Confined In Nursing Home

In Lehigh Valley, Pennsylvania, The Express Times reports:

  • A Pen Argyl man is charged with 17 counts of theft and related crimes for depleting the life savings of his 93-year-old uncle by using power of attorney and converting property and money for his personal use, according to the Lehigh County’s District Attorney’s Office.

    Scott Lee Bartholomew, 52 of the 100 block of Acker Street, is accused of stealing more than $200,000 from his uncle, Wilbur B. Stiles, authorities said. The crimes happened from January 2006 to June 2012, the district attorney’s office said.

    Because he lost his home to foreclosure and his life savings, police said, Stiles is living in a veterans center in the Scranton, Pa., area.

    Bartholomew is being held in Lehigh County Prison in lieu of 10 percent of $200,000 bail.
    An investigation by South Whitehall Township police, with help from the Institute for Protective Services at Temple University, alleged that a minimum of $217,498 had been diverted from Stiles to Bartholomew, authorities said.

    According to an affidavit filed by South Whitehall police Sgt. Michael A. Sorrentino, Sorrentino conducted numerous interviews with agencies and individuals since December 2012 when investigators learned Bartholomew was acting with power of attorney for Stiles.

    Bartholomew did not make the required payments of $6,050 for the care of Stiles from March 2011 to April 2011, while Stiles was a resident of Cedarbrook Nursing Home in South Whitehall, officials said.

    Bartholomew gained control of Stiles’ finances and directed money from Stiles’ accounts to make unauthorized purchases of vehicles, Internet items and gaming purchases, authorities said.

    They allege Bartholomew made cash withdrawals, paid legal fees of an acquaintance, paid tax bills for property not owned by Stiles, and paid for cellphones and cellphone plans not used for Stiles.

    Additionally, police said, Bartholomew used the money on meals and entertainment for himself and others, and operational fees as an owner/operator of a sole proprietorship trucking company. None of it was reimbursed to Stiles’ accounts, police said.

    Investigators allege that Bartholomew converted Stiles’ savings account, insurance policy, retirement income, real estate, motor vehicles, personal property and savings bonds for Bartholomew’s personal use.

    Bartholomew also obtained a home equity line of credit and converted about $133,526 for his personal use, according to police. They also said almost $89,973 was taken from Stiles’ checking account.

    Bartholomew is alleged to have used the equity in Stiles’ residence for his personal gain. The property ultimately was placed into foreclosure, authorities said.

    Bartholomew was charged with four counts of theft by unlawful taking, three counts of theft by deception, five counts of receiving stolen property, one count of theft by failure of to make required disposition of funds and one count of access device fraud -- all third-degree felonies.

    He is also charged with one count of forgery and two counts of securing execution of documents by deception, police said.

Saga Continues For Maine Family Victimized By State Bureaucrats Who Allegedly Used Conservatorship Proceedings To Move In & Hijack Possession, Then Unload, Waterfront Home, Other Assets At Fire-Sale Prices Of Man Who Was Involuntarily Admitted To State-Run Psychiatric Facility While Giving Beloved Pet Date With 'The Euthanizer'

In Rockland, Maine, the Bangor Daily News reports:

  • The sale of a Rockland man’s waterfront home in Owls Head by the state for less than half its value was only the beginning of a nightmare that has seen an undetermined amount of valuable personal items sold for little in return, according to attorneys working on the case.

    “You couldn’t have dreamed this up,” said attorney David Jenny.

    Jenny, who lives in Owls Head and Maryland, is referring to the case that involves the sale of property belonging to William T. Dean Jr. and his sister Claire Dean Perry of Liberty.

    Dean was hospitalized in 2012 at the state-run Dorothea Dix Psychiatric Center in Bangor. He has since been released and lives in a group home in Camden, according to Jenny, who is a longtime friend of both siblings.

    Jenny said that the state has taken a man who had more than $650,000 in assets and virtually assured that he will he become a ward of the state because of its management of his estate.

    Attorney Cynthia Dill, who represents the sister in a lawsuit against the Maine Department of Health and Human Services, said in her legal career she has never seen a case like this.

    Not only does Dill say the state illegally sold the home owned by William Dean at 9 Castlewood Lane in Owls Head, but that it has since hired an auction company to sell the remaining family belongings and has done it with few records to show what has happened to the items or the money received from the sales.

    The Deans’ parents in 1972 bought the Castlewood Lane home, which has since been a place for family outings. Claire Dean Perry had been living in the Owls Head home while her brother resided at 298 Broadway, Rockland, which had been their parents’ primary residence and owned by the Deans since 1957.

    The state obtained conservatorship of Dean’s finances in September 2012, four months after he was involuntarily admitted to the state-run mental health hospital. When the state learned that back taxes were owed on both properties — $5,192 on the Owls Head home and $2,329 on the Rockland property — it sought and received permission from the Penobscot County Probate Court to sell the properties for a fair market price in order to cover those costs.

    An affidavit filed Sept. 5, 2012, in probate court by Janice Archer, a licensed social worker for DHHS who was Dean’s caseworker, stated that there was already a buyer interested in the Owls Head property. The name of the interested party was not listed and a call to Archer early Wednesday has not been returned.

    Claire Dean Perry was kicked out of the house and the locks changed, Dill said.

    Perry and other family members, however, contested the move by the state, saying they could raise the money to prevent both properties from going into foreclosure for nonpayment of the approximately $7,500 in property taxes.

    The state, however, moved ahead quickly and sold the Owls Head waterfront property to James Taylor of Danvers, Mass., and Owls Head for $205,000, less than half the $476,840 value placed on it by the town.

    The human services department moved the date of the sale up by a day to Jan. 9, knowing that the family was going to court the following day to block the transaction, Jenny said.

    The Owls Head property consists of nearly 1 acre with 100 feet of ocean frontage and a two-story, 1,000-square-foot home.

    After selling the Owls Head property, the state turned to disposing of the Rockland home. The state had reached an agreement with a party that was willing to pay $65,000 for the Rockland property that was assessed at $177,200 — again less than half its value. Dill said the potential buyers backed out after learning of the family’s looming legal challenge.

    The state surrendered its conservatorship in March. On Aug. 1, the probate court appointed Dean’s cousin, Pamela Vose of Union, as conservator over his remaining properties.

    But Jenny and Dill said that after the sale of the Owls Head home and before the change in conservatorship, there was a fire sale of possessions owned by both Dean and Perry for reasons they cannot understand.
  • Dill also noted that when state officials took control of Dean’s properties, they had his beloved cat, Caterpillar, euthanized without asking family members if they could care for the animal.

Friday, August 23, 2013

The Payday Playbook: How High Cost Loan Peddlers Fight To Keep Their Consumer Debt Traps Legal

Investigative reporter Paul Kiel writes in ProPublica:

  • [O]utrage over payday loans, which trap millions of Americans in debt and are the best-known type of high-cost loans, has led to dozens of state laws aimed at stamping out abuses. But the industry has proved extremely resilient. In at least 39 states, lenders offering payday or other loans still charge annual rates of 100 percent or more. Sometimes, rates exceed 1,000 percent.

    Last year, activists in Missouri launched a ballot initiative to cap the rate for loans at 36 percent. The story of the ensuing fight illuminates the industry’s tactics, which included lobbying state legislators and contributing lavishly to their campaigns; a vigorous and, opponents charge, underhanded campaign to derail the ballot initiative; and a sophisticated and well-funded outreach effort designed to convince African-Americans to support high-cost lending.
For more, see The Payday Playbook: How High Cost Lenders Fight to Stay Legal.

This article is part of an ongoing ProPublica investigation: Debt Inc.: Lending and Collecting in America (How lenders tempt consumers with high-cost credit products that go far beyond payday loans).

WV Attorneys Providing Free Legal Services To Low-Income Consumers Continue Hammering Banksters With Predatory Lending Lawsuits Alleging Ripoffs In Originating Home Loans

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

  • A lawsuit filed against Nationstar Mortgage LLC alleging predatory lending practices has been removed to federal court. Nationstar is formerly known as Centex Home Equity Company. Mark Greenlee was also named as a defendant in the suit.

    The lawsuit has been removed to federal court because the amount they are seeking exceeds the $75,000 requirement, according to a Notice of Removal filed July 25 in the U.S. District Court for the Southern District of West Virginia at Huntington.

    The loan amount was for $76,500, according to the Notice.

    Greenlee was also “fraudulently joined in this action and, thus, should be disregarded for diversity purposes,” according to the Notice of Removal.(1)

    Adam West first moved into his home in Hurricane in 1998, when he agreed to purchase the home pursuant to a land contract for $55,000, according to a complaint originally filed May 2 in Putnam Circuit Court.

    West claims in November 1999, when the land contract vendor began experiencing financial problems and West’s mother arranged to finance the remaining balance on the land contract.

    In early 2000, West sought to obtain a loan to repay his mother and closed on a loan with UC Lending on April 25, 2000, with a principal balance of $66,700, according to the suit.

    On Aug. 18, 2001, Adam West and Bethany West were married and she moved into the home with him, and the plaintiffs went to Lending Tree, an online service, to find a lender.

    The Wests claim a few days later, Nationstar contacted them to solicit them into a loan for refinancing and they asked for a fixed rate loan and Nationstar informed them an adjustable rate loan would be best for them.

    Nationstar arranged for Greenlee to appraise the Wests’ home, according to the suit, and Greenlee, who has a practice of providing inflated appraisals, provided them with an inflated appraisal and indicated their home was more than $76,000 when it was, in fact, worth approximately $55,800.

    The Wests claim after making payments for one year, they contacted Nationstar about promised refinancing, but Nationstar refused to refinance the loan.

    Nationstar refused to apply payments to the Wests’ account and charged them illegal fees, according to the suit.

    The Wests are seeking compensatory and punitive damages. They are being represented by Colten L. Fleu and Jennifer Wagner of Mountain State Justice.(2)
Source: Nationstar Mortgage suit removed to federal court.

(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.

See also, 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.

(2) Mountain State Justice is a non-profit public interest law office dedicated to pursuing impact and significant litigation on behalf of low-income West Virginians. MSJ provides free legal services in our areas of practice to qualifying individuals. MSJ's work currently focuses primarily on combating predatory lending and abusive debt collection techniques through individual and class action lawsuits..

Thursday, August 22, 2013

NC Appeals Court Leaves Sloppy Lender Holding The Bag By Voiding Wife's Loan Guarantee Given By Hubby Acting As Her Attorney In Fact; Bank Failed To Read Recorded Instrument, Missed 'Surprise' Provision In POA Making Husband's Authority Ineffectual

From a client alert from the law firm Poyner Spruill LLP:

  • On November 6, 2012, the North Carolina Court of Appeals ruled in a unanimous decision that several commercial guaranties were invalid when signed by an attorney in fact, pursuant to a power of attorney which contained a condition precedent that had net yet occurred. This case contains important lessons for lenders regarding transactions with attorneys in fact.

    In this case, the appellant-wife executed a durable power of attorney appointing her husband as her attorney in fact. The power of attorney was properly recorded with the Wake County Register of Deeds.

    After the execution and recordation of the power of attorney, the husband and his business partner, through various business entities, borrowed money from plaintiff-lender. The husband signed a series of commercial notes, unconditional personal guaranty agreements, and a deed of trust in his wife’s name, relying on the power of attorney. The notes went into default, and the lender/plaintiff commenced foreclosure proceedings. The sale of the collateral yielded less than the outstanding obligations, and the plaintiff sued the borrowers and guarantors – including the wife - to recover the deficiency balance. The trial court granted the plaintiff’s motion for summary judgment as to all defendants.

    On appeal, the wife argued that the power of attorney was ineffective, and she should not be bound by the guaranty executed by her husband as her attorney in fact.

    The power of attorney contained a provision titled “RESTRICTIONS ON EXERCISE OF POWERS BY ATTORNEY-IN-FACT” which stated that “the rights, powers, duties and responsibilities herein conferred upon my Attorney-in-Fact shall not be exercised by my Attorney-in-Fact until a physician has certified to my Attorney-in Fact that in his or her opinion I am no longer able…to handle my…affairs.”

    The Court of Appeals reversed the decision of the trial court, holding that no power of attorney ever vested in the husband, that the wife’s guaranty was invalid, and that the plaintiff was not entitled to recover from the wife as a guarantor.

    First, the Court of Appeals agreed with the wife that the power of attorney was ineffective because there was no evidence in the record indicating that the wife had been certified incompetent by a physician, which was a condition precedent to the effectiveness of the power of attorney. Since there was no evidence that the wife was certified incompetent by a physician, no power of attorney ever vested in her husband, and he had no authority to bind her to the guaranty.

    Further, the Court of Appeals held that the plaintiff was deemed to be on notice of any limitation or restriction contained in the power of attorney as it was in writing and “a third party who fails to inspect a POA’s terms does so at his own peril since he is deemed on notice of the limitations and restrictions contained therein.”

    Nor could the plaintiff argue that it justifiably relied on the husband’s representations of authority based upon the broad grant of authority and the third party reliance provisions contained in the North Carolina General Statutes. Despite the broad grant of authority contained in the statutes, the statutes did not override the restriction that the wife be certified incompetent by a physician. Here, the power of attorney conferred no powers upon the husband because the condition precedent never occurred.

    Likewise, statutes which generally protect third parties who rely on the apparent authority of an attorney in fact, did not apply because the plaintiff had constructive notice of the terms of the power of attorney, which was part of the public record, and the power of attorney indicated that there was no apparent authority for the husband to execute the guaranty on behalf of his wife.

Judge To Those Facing (Potentially Faulty) Non-Judicial Oregon Foreclosures: Avoid "Presumption Of Finality" - Don't Sit On Your Rights; Time For Properly-Noticed Homeowner To File Court Challenge Is Before The Sale, Not Afterward

In Portland, Oregon, LegalNewsline reports:

  • A federal judge ruled last month that an Oregon homeowner could not sue following a completed trustee sale of his property.

    Though MERS, the national mortgage registry, was not a party to the action, the plaintiff in the case — Alan Chen — alleged that the foreclosure was wrongful based, in part, on MERS’ role in his deed of trust.

    The named defendants in the suit included: Bank of America N.A., ReconTrust Company N.A. and Federal National Mortgage Association, also known as Fannie Mae.

    In Chen v. Bank of America N.A., Judge Owen M. Panner for the U.S. District Court for the District of Oregon dismissed the complaint with prejudice. He found that, in accordance with the Oregon Trust Deed Act, Chen received proper notice of the sale, which barred his post-sale challenges to the foreclosure.

    “Although plaintiff here had sufficient time to raise any of the current challenges before the sale, he chose instead to raise such challenges after the trustee’s sale and recording of the trustee’s deed,” Panner wrote in his five-page order, filed July 25.

    The judge further held that “plaintiff’s challenges to the trustee’s sale are barred, as plaintiff’s interest in the property was ‘foreclosed and terminated.’”

    Chen asked the court’s permission to amend his complaint to align his allegations with the recent Brandrup v. Recontrust and Niday v. GMAC decisions from the Oregon Supreme Court.

    In both cases, the state’s high court ruled MERS did not meet the statutory definition of trust deed “beneficiary” under Oregon law.

    Panner denied the request, finding an amended complaint “would be futile” because Brandrup and Niday dealt with pre-sale challenges to non-judicial foreclosure sales as opposed to Chen’s post-sale challenges, which are barred under state law.(1)
For the story, see Federal judge dismisses wrongful foreclosure complaint involving mortgage registry.

For the court ruling, see Chen v. Bank of America, N.A., 3:12-cv-194-PA (July 25, 2013).

(1) Judge Panner's discussion on the applicable law follows:
  • After briefings and arguments in this case, I issued an opinion in a case involving similar issues. See Mikityuk v. Northwest Tr. Servs., Inc., 2013 WL 3388536 (D. Or.). There, plaintiffs waited nineteen months after the sale before filing the complaint. Id. at *1. After examining both ORS 86.770(1), which states the trustee's sale "forecloses and terminates" one's property interest in certain scenarios, and the dual objectives of the Oregon Trust Deed Act, I concluded:

    "The legislature provided notice and reinstatement provisions to protect grantors against the threat of wrongful foreclosure. [Staffordshire Investments, Inc., v. Cal-Western Reconveyance Corp., 209 Or. App. 528, 542 (2006).] Voiding the sale here would encourage" grantors who receive notice of a sale to sit on their rights, rather than compelling grantors to bring pre-sale challenges to a trustee's sale. Grantors are wise to raise any challenges to non-judicial foreclosure proceedings, including challenges based on ORS 86.735, before the statutory presumption of finality contained in ORS 86.780. Post-sale challenges run the risk of being barred, as is the case here, because the grantors' interest in the property was "foreclosed and terminated" pursuant to ORS 86.770(1)."

    Mikityuk, 2013 WL 3388536 at *10.

    Like the plaintiffs in Mikityuk, plaintiff's challenges to the non-judicial foreclosure sale here are barred. As plaintiff received advance notice of the sale, his interest in the property was "foreclosed and terminated." ORS 86.770(1). Plaintiff's argument that notice here was ineffective because it was not signed and dated by a notorial officer is meritless. The time to make such a challenge is long passed. As discussed in Mikityuk, the notice provisions of the Oregon Trust Deed Act reflect the legislature's intent to provide those whose property interests could be affected by a trustee's sale sufficient time to act to protect those interests before the sale. 2013 WL 3388536 at *6 (citing Staffordshire Investments, Inc. V. Cal-Western Reconveyance Corp., 209 Or. App. 528, 542 (2006); NW Property Wholesalers, LLC v. Spitz, 252 Or. App. 29, 34 (2012)).

    Although plaintiff here had sufficient time to raise any of the current challenges before the sale, he chose instead to raise such challenges after the trustee's sale and recording of the trustee's deed. Plaintiff's challenges to the trustee's sale are barred, as plaintiff's interest in the property was "foreclosed and terminated." Mikityuk, 2013 WL 3388536 at *10; ORS 86.770(1). For the reasons discussed in Mikityuk, this action is dismissed, with prejudice.

    Additionally, plaintiff's request for leave to file an amended complaint [#46] is denied.. Plaintiff seeks to amend the complaint, purportedly to align with the recent Oregon Supreme Court opinions in Brandrup v. ReconTrust Co., 353 Or. 668 (June 6, 2013) and Niday v. GMAC Mortgage, LLC, 353 Or. 648 (June 6, 2013). Those opinions concerned MERS and the Oregon Trust Deed Act. An amended complaint, however, would be futile. Brandrup and Niday dealt with pre-sale challenges to non-judicial foreclosure sales. Neither case affects the outcome here, where plaintiff's claims are barred due to ORS 86.770(1). See Mikityuk, 2013 WL 3388536 at *1 n.2.