More On The Use Of Multiple Corporate Hat-Wearing Dummy Assistant Vice Presidents By Lenders & Mortgage Servicers In Foreclosure Actions

The issue of employees of so-called foreclosure / bankruptcy services firms being allowed to sign legal documents (with said documents to be filed in court in connection with foreclosure actions) as officers of multiple, foreclosing financial institutions was the topic of several past posts.

Examples of how one company, Fidelity National Foreclosure Services and affiliates, of Mendota Heights, Minnesota, has made available dozens of its employees to foreclosing lenders & mortgage servicers to act as authorized corporate officers for the limited purpose of signing necessary documents to be filed in court in the effort to obtain foreclosure judgments can be found in the following documents filed in the Massachusetts land records.

To access the following five links below, first go to www.lowelldeeds.com, then come back to this page and click the following linked Book/Pages:(1)

• Book 21742/ Page 47 (Select Portfolio Servicing; Navigate to page 3 of this 4-page document for a list of "Designated Functions" that the "dummy" vice presidents are authorized to engage in on behalf of the foreclosing entity);
• Book 22010/ Page 5 (Wilshire Credit Corporation)
• Book 22699/ Page 93 (HSBC Bank)
• Book 22334/ Page 84 (Beneficial Massachusetts Inc.)
• Book 22224/ Page 98 (Household Finance Corporation II)

With respect to one of the Fidelity National employees whose name appears as an authorized corporate officer for all of the above listed companies (a certain Laura Hescott), a quick search of the online New York court cases reveals that Ms. Hescott receives mention in at least the following four foreclosure actions in her capacity as a vice president of one of the entities having some involvement in the foreclosure action:

• Deutsche Bank Trust Co. Ams. v Peabody, 2008 NY Slip Op 51286(U) [20 Misc 3d 1108(A)]; June 26, 2008, Supreme Court, Saratoga County, Nolan, J.; (Hescott was identified as vice president of Deutsche Bank, according to the decision);

• Deutsche Bank National Trust Company v. Harris, 2008 NY Slip Op 30308(U); February 5, 2008, Supreme Court, Kings County, Schack, J.; (Hescott was identified as vice president of Mortgage Electronic Registration Systems, according to the decision);

• IndyMac Bank, FSB v Bethley, 2009 NY Slip Op 50186(U) [22 Misc 3d 1119(A)]; February 6, 2009, Supreme Court, Kings County, Schack, J.; (Hescott was identified as vice president of both Mortgage Electronic Registration Systems and vice president of IndyMac, according to the decision);

• Indymac Bank, FSB v Boyd, 2009 NY Slip Op 50094(U) [22 Misc 3d 1112(A)]; January 22, 2009, Supreme Court, Kings County, Schack, J.; (Hescott was identified as vice president of IndyMac, according to the decision).

Note that in none of these four New York cases is it reflected that Laura Hescott, although signing documents as a vice president for one of the financial institutions, appears to actually be an employee of Fidelity National who is merely out on loan to the institution.

Thanks to Mike Dillon at GetDShirtz.com for the heads-up on the foregoing information.

(1) For evidence of additional similar arrangements between Fidelity National and other lenders and loan servicers in Massachusetts & New Hampshire (sorry, no direct links to the New Hampshire documents):

Massachusetts: first go to suffolkdeeds.com - then come back and click the following link:

• Book 44345 / Page 316 (Barclay's Capital Real Estate / HomEq Servicing).

New Hampshire:

First go to nhdeeds.com (Hillsborough County) - then do a "document search" for:

• Book 8000 / Page 2106 (HSBC Consumer Lending (USA) Inc., Beneficial Company LLC, & HFC Company LLC.);
• Book 8035 / Page 583 (Wachovia Mortgage Corporation; power of attorney that lists the functions that the "dummy" assistant vice presidents (employees of Fidelity National) are authorized to perform on behalf of Wachovia);
• Book 8037 / Page 142 (Beneficial New Hampshire Inc.);
• Book 8023 / Page 51 (Washington Mutual Bank Affidavit stating that Laura Hescott signed an assignment of mortgage as an assistant vice president for Washington Mutual);
• Book 7833/ Page 2052 (HSBC Mortgage Corp.; Laura Hescott signs foreclosure deed as "attorney in fact" on behalf of HSBC).

First go to nhdeeds.com (Rockingham County) - then do a "document search" for:

• Book 4922/ Page 2932 (Household Finance Corporation II);
• Book 4945/ Page 2067 (Beneficial Mortgage Company of New Hampshire). EpsilonMissingDocsMtg

Massachusetts AG Squeezes $60M Settlement From Goldman Sachs In Connection With Subprime Mortgage Probe

In Boston, Massachusetts, The Boston Globe reports:

• More than 700 Massachusetts homeowners struggling with subprime mortgages will have their monthly payments reduced - some by as much as 35 percent - as part of a $60 million settlement Attorney General Martha Coakley reached with Goldman Sachs Group Inc.

• Goldman Sachs owns those homeowners' mortgages through subsidiaries and has agreed to rewrite the terms of their loans in order to stave off legal action by Coakley. The attorney general has been investigating the role investment banks played in promoting subprime mortgages that borrowers ultimately couldn't afford.

***

• As part of the settlement, Goldman Sachs will reduce the outstanding balances of subprime mortgages for those 714 homeowners, most of whom live in Boston, Brockton, Lawrence, Springfield, and Worcester. Homeowners seeking to refinance or sell their properties could see a reduction in their first mortgages of up to 35 percent as well as much as a 100 percent cut in second mortgages.

• Reducing those loan amounts will cost Goldman Sachs $50 million. It has also agreed to have its subsidiary, Litton Loan Servicing LP, help qualified borrowers who are in trouble on their loans to avoid foreclosure. Goldman will also pay the state $10 million.

For more, see State reaches $60m subprime deal with Goldman Sachs.

For the Massachusetts Attorney general press release, see AG Coakley and Goldman Sachs Reach Settlement Regarding Subprime Lending Issues.

Mortgage Company Employees Accused Of Stealing Refinancing Proceeds Intended To Pay Off Existing Lien; Leaves Customer With Ruined Credit, Unpaid Debt

In New Orleans, Louisiana, The Times Picayune reports:

• A lawsuit filed in civil district court in New Orleans accuses a loan originator and branch manager at Allied Home Mortgage Capital Corp. of stealing money during a mortgage refinance and then conspiring with their employer to cover it up.

• The suit contains sensational allegations against Allied employees Terri-Lynn Killett and branch manager Shane Smith, who purportedly had money wired to a personal bank account that was supposed to be used to pay off a mortgage for customer Sarada LeBourgeois. LeBourgeois asserts that their actions ruined her credit, stuck her with a mortgage on a home she no longer owns and sullied her reputation in the real estate community, where she works as a marketing manager for a home warranty company.

***

• Allied Home Mortgage has moved to have the case transferred to federal district court in New Orleans, an action that LeBourgeois and her attorneys oppose.(1)

For more, see Lawsuit alleges that loan originator stole money from a client.

Go here, Go here, Go here, Go here, and Go here for other stories of trust account / escrow account theft of funds.

(1) Attempting to transfer a state court case to federal court is commonly used as a tactic by some defendants in civil cases to forum-shop for a friendlier venue, as well as to delay, discourage, and make more expensive, meritorious lawsuits for aggrieved plaintiffs. See:

• Erroneous Removal As A Tool For Silent Tort Reform: An Empirical Analysis Of Fee Awards And Fraudulent Joinder,
• Judge Says Firm Must Explain ‘Fraudulent’ Removals or Pony Up $25K (go here for court ruling / memorandum opinion),
• Moving Cases From State To Federal Court: A Defense Ploy To Make Filing Suit More Costly, Burdensome On Individual Plaintiffs? EscrowRipOffKappa

Forged Documents Used To Swipe $140K+ In Home Sale Proceeds, Infamous Ex-Long Island Car Mechanic Says In Civil Lawsuit

In Chatsworth, California, Courthouse News Service reports:

• Joey Buttafuoco, the former car mechanic who became famous after his underage girlfriend shot his wife in 1992, has filed a suit against a real estate agent and a home buyer that claims they cheated him out of the proceeds of a house sale. Buttafuoco and wife Evanka, in a Superior Court complaint, alleged that agent Ronald Berlinsky and LLC Investments, Inc. forged documents in connection with a $1.5 million house sale that purported to pay Berlinsky $62,000 for a "personal debt" and credit buyer Stewart Sank $75,000 for "funds paid by the buyer directly to the seller, outside of escrow."

• Most of the money from the sale was to go pay off loans against the property. The Buttafuocos told Berlinsky they needed to sell the property quickly to avoid a foreclosure, the suit said. After the sale, the plaintiffs say they should have received at least $143,293 but they did not get any of the money.

Source: Buttafuoco Says Documents Forged in $1.5M House Sale. TheftOfDeedMeta

Cops Barely Beat 4-Year Statute Of Limitations; Charge Realty Agent With Duping Client Into Signing Over Condo; Victim Now Lives In Homeless Shelter

In Long Beach, California, the Press Telegram reports:

• A felony embezzlement charge was filed [...] against a Long Beach real estate agent who allegedly conned a client into signing over his property, leaving the victim homeless. Donald Marshall Otis is accused of conning a former neighbor to sign over his Downtown Long Beach condominium, which the victim owned free and clear, in 2005 and then selling the property for more than $200,000, said Sgt. Rick Farfan, of the Long Beach Police Department's Forgery and Fraud Division. The victim, now 41, knew Otis as a neighbor and also knew Otis was a licensed real estate agent, Farfan said.

***

• Farfan said it appeared as though Otis used the mountain of paperwork home owners must sign when selling a property to disguise the deed transfer. The victim, he said, was very naive and easily led by the accused, like many victims of forgery and fraud. "Anyone who has ever sold or bought a home knows there is a lot of paper work, it's easy to lose track, especially if you don't know anything about (the process)," Farfan said. Adding to the scheme, Farfan said, was the fact Otis was a licensed real estate agent and therefore trusted.

***

• This case took about a year to put together, and was brought to the Los Angeles County District Attorney's Office for filing just before the four-year statute of limitations (for property crimes) was up, he said. Although the crime took place in 2005, police did not begin their investigation until 2008, when it was finally reported to authorities, Farfan said.

• The victim first went to an attorney in 2005, who sued Otis over the matter and won a default civil judgment for the victim last year. But with the money already spent and Otis not working or holding any property in his name, the victim has not recouped a single penny of his loss, Farfan said. "The really sad thing is our victim is now homeless," the sergeant said, adding that the man lives in a homeless shelter in Carson.

For the story, see Long Beach real estate agent charged with embezzlement.

Go here, Go here, Go here, Go here, Go here, Go here, Go here, and Go here for other posts related to deed or refinancing scams by forgery, swindle, power of attorney abuse, etc. TheftOfDeedMeta

Illinois Man Gets Five Years For Using Forged, Fraudulent Documents To Steal Homes From Elderly Widow, Deceased Man's Estate

From the Office of the Illinois Attorney General:

• Attorney General Lisa Madigan [last week] secured a guilty plea from a Calumet Park man on two counts of theft over $100,000 for forging documents as part of a scheme to sell real estate right out from under elderly victims and their estates. Judge Douglas Simpson of the Circuit Court of Cook County, 6th District, Markham, sentenced Adrian Garner, 38, of Calumet Park, Ill., to five years in the Illinois Department of Corrections as a result of [last week's] plea.

• During 2004 and 2005, Garner used fraudulent documents as part of two separate schemes to obtain real estate. In May 2005, Garner used forged documents to fraudulently establish that he possessed the power of attorney on behalf of Myrtle Hickson, a 76-year-old widow. Garner misled Hickson, who is now deceased, and her family into believing he would help renovate Hickson’s home and sell it for the family at a profit. Instead, Garner obtained the home’s deed by using the unauthorized documents with the alleged power of attorney for Hickson. Garner then sold the home to his father in June 2005, and transferred nearly $114,000 in profit from the transaction to his business account.

• In the second scheme, Garner executed and used fake documents in December 2005 to fraudulently obtain part of approximately $100,000 in proceeds from the sale of a deceased man’s Chicago home.

For the Illinois AG press release, see Madigan: Calmut Park Man Guilty of Defrauding Chicago Senior in Real Estate Scam.

Go here, Go here, Go here, Go here, Go here, Go here, and Go here for other posts related to deed or refinancing scams by forgery, swindle, power of attorney abuse, etc. DeedZetaTheft

Thieves Used Forged Signatures & Documents, Fraudulent Notarizations To Steal Two Tennessee Homes, Says Victimized Memphis Man

In Memphis, Tennessee, WREG-TV Channel 3 reports:

• It's not a burglary or a home invasion, but thieves across the Mid-South are on a mission to steal your greatest possession. They're looking for more than what's in your house -- they want the home itself. "I called 911, my son called 911. And we told the police officers, someone had broke into my house," Abdul Zarif said.But someone didn't just break into Abdul Zarif's North Memphis home, they stole it.

• Zarif says forged signatures and fraudulent documents cost him a second home, this time in Haywood County. Zarif blames two men -- Willie Lynch, the man who claims to own the house, and Talut El-Amin, the Notary Public who made it possible. When we first caught up with Lynch, he didn't have much to say. "I got deeds on it, I bought the house. That's all I'm gonna tell yall!" Lynch said. Talut El-Amin talked to us on the phone. He said he notarized the deeds for Abdul Zarif, but refused to talk to us on camera.

***

• The process of stealing a home is so simple, it just takes a few steps. All a thief needs is a blank deed, a forged signature, and a notary stamp. Once it's filed, the house is considered "sold". But new legislation, introduced after the WREG News Channel 3 Investigators exposed the problem, is designed to stop it. [...] As Zarif waits for help from Nashville, he's heading to court to fight for his homes. It's taken five months of trying to prove ownership of the property in Haywood County, but finally a judge agreed that Zarif is the true owner.

For more, see NC3 Investigates: House Stealing Scheme (New legislation could cut down on the problem, by raising penalties and jail time).

Go here, Go here, Go here, Go here, Go here, Go here, and Go here for other posts related to deed or refinancing scams by forgery, swindle, power of attorney abuse, etc.

(1) Reportedly, the house stealing bill is gaining support in Nashville will soon face a judiciary committee vote. You can keep tabs on the bill's progress by clicking here: http://wapp.legislature.state.tn.us/apps/BillInfo/Default.aspx?BillNumber=HB1637. DeedZetaTheft

New Mexico Couple Charged With Swiping Seven Properties Using Forged Deeds, Fraudulent Notarizations

In Valencia County, New Mexico, The News Bulletin reports:

• A former employee of the Valencia County treasurer's department and her husband have been arrested and charged with a slew of crimes involving felony fraud and forgery involving ownership of land in the county. On April 30, Gladys Vigil, a former clerk in the treasurer's office, and her husband, Victor Paul Vigil, were arrested on a criminal complaint filed in magistrate court by state police. Police allege the Vigils deeded property over to a company they owned without the knowledge of the current property owners. The initial investigation cites seven such properties and alleged false deeds.(1)

***

• [County Treasurer Dorothy] Lovato said all of the property was vacant, with no buildings. The criminal complaint charges that most of the property deed transfers were notarized by Gladys Vigil and signed by a Paul Vigil on behalf of Vigil Enterprises.

For more, see Ex-county employee charged with forgery (Complaint alleges woman, husband deeded property without owners' knowledge).

Go here, Go here, Go here, Go here, Go here, Go here, and Go here for other posts related to deed or refinancing scams by forgery, swindle, power of attorney abuse, etc.

(1) The investigation was triggered by a phone call from a woman who had not received a property tax bill for her deceased father's land and needed the information to complete the arrangements of his estate. Reportedly, the investigation revealed that the fraudulent deed transfer was puportedly executed by the father in 2006. Unbeknowst to the perpetrators, however, he died in 2005. DeedZetaTheft

2nd Co-Conspirator Goes Down In Metro Dream Homes' Alleged $70M Ponzi Scheme

From the Office of the U.S. Attorney (Maryland):

• Charlotte Melissa Josephine Hardmon, age 39, of Bowie, Maryland pleaded guilty [Monday] to conspiracy to commit wire fraud in connection with her participation in a massive mortgage fraud scheme which promised to pay off homeowners’ mortgages on their “Dream Homes,” but left them to fend for themselves, announced United States Attorney for the District of Maryland Rod J. Rosenstein.

***

• According to her plea agreement, beginning in 2005, co-conspirators targeted homeowners and home purchasers to participate in a purported mortgage payment program called the “Dream Homes Program.” In exchange for a minimum of $50,000 initial investment and an “administrative fee” of up to $5,000, the conspirators promised to make the homeowners’ future monthly mortgage payments, and pay off the homeowners’ mortgage within five to seven years.

For the entire press release, see Second Conspirator Pleads Guilty in $70 Million “Dream Home” Mortgage Fraud Scheme.

For the indictment of four of the other alleged co-conspirators, see U.S. v. Williams, et al.

Go here for earlier posts on Metro Dream Homes.

Mortgage Scammer Admits Running Home Equity Ripoffs To Perpetrate Ponzi Scheme

On Long Island, New York, ABC News reports:

• Peter Dawson was a mini-Bernie Madoff -- on the surface, a charming family man with a big house, on the make in working class neighborhoods of Long Island, N.Y. Now, he has been sentenced to state prison for at least five years for running an elaborate mortgage scam.

***

• Dawson admitted he ran a Ponzi scheme: He convinced his clients to take equity out of their homes and invest it in his hedge fund. But that "hedge fund" didn't actually exist, he said, and he pocketed the money. When he had to, he paid off old investors with new investors' money. During the housing boom, Dawson took advantage of desperate homeowners, eager-to-lend banks and lax regulations to steal millions.

For more, see Exclusive: Confessions of a Mortgage Scammer (Mini-Madoff Admits Crime But Blames Banks and Brokers for Not 'Stopping the Madness').

Owner Of Northern California Loan Modification Firm Faces Foreclosure, Files Bankruptcy; Some Customers, Ex-Employees Call Him A Con Man

In Northern California, KPIX-TV Channel 5 reports:

• Some customers and even former employees of the company called "Saving California", which promised to help save homes in foreclosure, have told CBS 5 Investigates the company didn't deliver on its promises and call the man who runs it a "con man."

***

• A CBS 5 investigation found customer after customer of Jeter's [...] loan modification company [...] complaining his company took their money and didn't deliver on its promises. [...] And anyone who wants money back from Jeter may have little chance of ever seeing it. Jeter's filed for bankruptcy.

***

• [His bankruptcy filings show] there's a debt of $1.75 million. What for? Jeter has a mansion at the top of a hill in Soquel. It also turns out the man who promised to save other people's homes didn't pay for his own; it's in foreclosure.

For more, see NorCal Loan Modifying Firm Owner Files Bankruptcy.

New Mexico AG Files Separate Suits Against Lenders, Mortgage Brokers For Actions That Left Elderly Homeowners Facing Foreclosure

In Santa Fe, New Mexico, KRQE-TV Channel 13 reports:

• New Mexico's attorney general is going after everyone from mortgage brokers to banks after accusing them of mortgage frauds that took advantage of two homeowners now facing foreclosure. In two civil lawsuits filed Friday morning the AG is asking a judge for immediate action to stop foreclosures on the two properties. Both incidents involve elderly residents.

• In one suit is based on a Los Lunas couple who said they gave money to their brokers and bank to pay off bills. They claimed that money never made it to creditors and that they were cheated and overcharged by their mortgage company. According to the AG the second case showed lenders ignored numerous red flags in working with a 78-year-old Chimayó woman who clearly couldn't afford her mortgage. The woman had filed a complaint with the AG's office alleging her signature was forged and other information on the mortgage application falsified.

For more, see AG casts wide net in mortgage suits (Fraud victims face foreclosure, AG says).

For the New Mexico AG press release, see Alleged Mortgage Loan Fraud Brings Two AG Lawsuits...Banks, Loan Servicers and Brokers Targeted.

Rule Of Caveat Emptor Has No Place In The Application Of Consumer Protection Statutes

In a recent court victory (go here for court ruling) against a foreclosure rescue operator accused of preying on financially distressed homeowners and using equity stripping techniques to rip them off, the Washington State Attorney General's Office successfuly applied its state's Consumer Protection Act in seeking to have the operator's conduct to be found in violation of the statute.

In its Trial Memorandum, the AG's office cited a decision of the U.S. Supreme Court in support of the proposition that the rule of caveat emptor has no application when applying consumer protection laws, and in my view, deserves highlighting here:

• There is no duty resting upon a citizen to suspect the honesty of those with whom he transacts business. Laws are made to protect the trusting as well as the suspicious. The best element of business has long since decided that honesty should govern competitive enterprises, and that the rule of caveat emptor should not be relied upon to reward fraud and deception.

FTC v. Standard Education Society, 302 U.S. 112, 116 (1937).

Debt Renegotiation Scams Not Limited To Foreclosure Rescue, Loan Modification Firms As Illinois AG Hammers Settlement Outfits In Separate Civil Suits

From the Office of the Illinois Attorney General and the Illinois Department of Financial and Professional Regulation:

• Attorney General Lisa Madigan and Acting Secretary of the Illinois Department of Financial and Professional Regulation (IDFPR) Michael T. McRaith warned consumers facing significant credit card debt about the risks of debt settlement offers as she announced two lawsuits filed against debt settlement firms.(1) Attorney General Madigan's lawsuits allege that these companies engage in deceptive marketing practices, charge excessive fees and do little or nothing to improve consumers financial standing.

***

• Madigan said her office has seen an increase in advertisements for debt settlement companies that promise to significantly reduce consumers credit card debt and provide them with an alternative to bankruptcy protection. Typically, after consumers enroll in debt settlement programs, the companies charge excessive upfront fees and advise consumers to stop paying their credit card bills. Despite this advice, the debt settlement companies fail to begin negotiations with consumers credit card companies for several months. As a result, credit card companies add fees and penalties to consumers credit card balances and often even begin collection efforts to recoup the debt, all of which puts the consumers in a worse financial situation. In many instances, while consumers were enrolled in debt settlement programs, credit card companies have sued the consumers to collect the balance on the consumers accounts.

For the entire Illinois AG press release, including a summary of the specific allegations against each outfit, see AG Madigan Sues Two Debt Settlement Firms (Attorney General, IDFPR Warn Consumers About Firms Promising to Reduce Credit Card Debt).

(1) AG Madigan sued the following defendants:

• 1st lawsuit: SDS West Corporation, an Aliso Viejo, Calif.-based debt settlement agency; Bruce Hood, the Chief Operating Officer of SDS West; SDS West's Chief Executive Officer, Raymond Dorso; Nationwide Support Services, Inc., an Irvine, Calif.-based debt settlement servicer; and Joanne Garneau, President of Nationwide Support Services.
• 2nd lawsuit: Debt Relief USA, Inc., a debt settlement firm based in Addison, Texas and Kelly E. Reilly, the President of Debt Relief USA.

NY AG Subpoenas Fourteen Debt Settlement Companies & One Law Firm In Nationwide Probe; Seeks To "Rein In A Renegade Industry"

From the Office of the New York Attorney General:

• Attorney General Andrew M. Cuomo [Thursday] announced a nationwide investigation into the debt settlement industry, subpoenaing fourteen debt settlement companies and one law firm.(1) Companies in the debt settlement industry often prey upon consumers who find themselves unable to keep up with credit card payments during these difficult economic times.

• “Today, millions of hardworking Americans are finding themselves imprisoned by debt. In response, a rogue industry has stepped in, offering consumers false hope, charging tremendous fees, and leaving them in a worse financial situation,” said Attorney General Cuomo. “Our mission is clear: to hold unscrupulous businesses accountable; to rein in a renegade industry; and to ensure that people are not victimized when faced with financial hardship.”

***

• The subpoenas include requests designed to uncover the companies’ fee structures, how many people have benefitted from the companies’ services, and what kind of relief the companies are actually providing.(2)

In what appears to be an attempt to literally squeeze the blood out of aggrieved debtors, at least one of these firms has been accused of suggesting to the debtors to sell their blood plasma as an additional source of funds to apply towards their debt settlement "program," according to the press release.

For the entire NY AG press release, see AG Cuomo Announces Nationwide Investigation Into Debt Settlement Industry (Subpoenas Fourteen Debt Settlement Companies and One Law Firm in Connection with Probe; Debt Settlement Companies Often Charge Huge Fees for Misleading Plans, Suggest Selling Blood Plasma to Raise Funds, and Leave Consumers in Worse Financial Shape).

(1) The fifteen firms receiving AG Cuomo's "invitations to cooperate" are:

• American Debt Foundation, Inc.; American Financial Service; Consumer Debt Solutions; Credit Answers, LLC; Debt Remedy Solutions, LLC; Debt Settlement America; Debt Settlement USA; Debtmerica Relief; DMB Financial, LLC; Freedom Debt Relief; New Era Debt Solutions; New Horizons Debt Relief Inc.; Preferred Financial Services, Inc.; U.S. Financial Management Inc. (d.b.a. My Debt Negotiation); and the Allegro Law Firm.

Cuomo is also currently investigating Nationwide Asset Services, Inc., based in Phoenix, Arizona, and Credit Solutions of America, Inc., based in Addison, Texas, according to the press release.

(2) According to the press release, the debt settlement plans are generally premised on consumers aggregating savings, over one to three years, from which both the payment of the company’s fees and any negotiated settlement are to be made. Yet most consumers who are targeted by these companies are unable to meet the savings requirements because of their precarious financial situation.

Some of the companies also urge consumers to seek additional sources of funds through means such as selling their blood plasma, mowing lawns, cutting down on car insurance, and borrowing from their neighbors and church. Even for those consumers who can meet the requirements set out by a plan, their amount of aggregated savings is ordinarily insufficient to settle their debts. As a result, many consumers find themselves worse off financially because of these debt settlement plans.

More On Now-Defunct, Alleged Attorney-Based Loan Modification Scam That Victimized 2000+ Homeowners

In San Francisco, California, SF Weekly recently ran a column on an alleged loan modification foreclosure rescue scam that clipped homeowners in foreclosure out of thousands of dollars and that is now out of business:

• The State Bar of California has taken over the law firm of Mitchell Roth, who had, in partnership with convicted felon Paul Noe II, convinced more than 2,000 troubled homeowners to fall for an apparent "foreclosure assistance" scam.

• The apparent swindle, fi[r]st described in the September, 2008 SF Weekly column "Facing foreclosure? Con man Paul Noe II has a deal for you," involved a boiler room of agents who would contact Spanish-speaking homeowners behind on their mortgage payments. Roth's canvassers would convince apparent victims they might save their homes by entering into a business deal with convicted con artist Noe, scion of a legendary con artist dynasty. Under the terms of the deal, Roth's employees would offer a complex contract to prospective clients. The deal required the client to pay monthly fees to a Noe-formed company. That company -- which happened to be partially owned by Roth's wife -- would in turn hire Roth as counsel for the client, supposedly to fend off foreclosure via lawsuits.

***

• Attorneys now suing him on behalf of former clients say the scheme involved Roth stringing homeowners along long enough to collect thousands of dollars in fees, then months later claiming to have lost the lawsuit, despite his best efforts.

For more, see State Bar Takes Over 'Son of Super Swindler' Law Firm -- 2,000 Con Jobs Too Late. UnauthPractOfLawTheta

Florida Man Cops Plea To Stealing Title To Vacant Homes, Then Pocketing $500K+ In Subsequent Mortgage Refinancing Proceeds

From the Office of the Florida Attorney General:

• Attorney General Bill McCollum [last week] announced that a Columbia County man has pleaded guilty to his involvement in a mortgage fraud scheme. [... Rory V.] Porter, 42, was arrested in November 2007 by the Alachua County Sheriff’s Office after detectives from the Alachua and Columbia County Sheriffs’ Offices discovered Porter’s involvement in a mortgage fraud scheme with elements of identity theft.

• The investigation revealed that, between May 2007 and August 2007, Porter befriended owners of homes which were free of any liens, vacant, and for sale. Using information he obtained through his relationship with the homeowners and from public records, Porter forged documents and recorded deeds to transfer the homes to his possession. He would then locate private lenders and borrow money using the homes as collateral. Authorities believe Porter stole homes in the Gainesville and Lake City areas worth in excess of $800,000 and obtained loans against those homes in excess of $500,000.

For the entire press release, see Columbia County Man Pleads Guilty to Mortgage Fraud Scheme.

NYC Woman Charged With Swiping Three Manhattan Apartment Buildings From Dead Ex-Boyfriend's Estate

In New York City, the New York Post reports:

• A former exotic dancer with a body for sin and maybe a brain for it, too, stole three Upper East Side apartment buildings from her late ex-boyfriend and brazenly started collecting rent, authorities said. Flora Soto Hernandez, 54, was arrested Thursday on 21 counts of forgery and fraud for posing as a landlady, officials said. She's now cooling her heels on Rikers Island, on $250,000 bail. The former blonde bombshell claimed her ex, a wealthy property owner named Fred Zeiss, left the buildings to her when he died in 2002.

***

• Zeiss' brother, Alan, says the deed conveyances are forgeries. "This is one of the most brazen yet ludicrous schemes I've ever seen," said Alan Zeiss' lawyer, Mark Bederow.

***

• She even attempted to sell one of the buildings, at 405 E. 90th Street, a source said. Alan Zeiss countered by placing a lis pendens on the property, a legal notice that should have kept Soto from trying to sell the building. But that didn't perturb Soto. "She marched down to the County Clerk's Office with fake affidavits and tried to get them removed," said Bederow.

For more, see BUILDINGS 'STOLEN' (BOGUS LANDLADY SCAMMED EX'S ESTATE: DA).

Go here, Go here, Go here, Go here, Go here, Go here, and Go here for other posts related to deed or refinancing scams by forgery, swindle, power of attorney abuse, etc. DeedZetaTheft

Foreclosed Arizona Homeowner Thwarts Lender's Illegal Lawsuit In Attempt To Collect Unpaid, Non-Recourse 2nd Mortgage Used To Purchase Home

From a press release from the office of Harper Law PLC:

• In a[n Arizona] foreclosure proceeding, the first mortgage is given preference over the subordinate or subsequent mortgages. In today's Arizona home market this process frequently leaves subordinate mortgages entirely unpaid after a foreclosure. Understandably, these lenders are pursuing all means possible to recover their losses, but oftentimes they have no legal recourse.

• Recently, Arizona Attorney Kevin Harper represented a homeowner who lost her home to foreclosure in late 2008. The lender on the homeowner's second mortgage filed a lawsuit to recover over $40,000 it alleged was owed on the second mortgage, which was money the homeowner used to purchase the house in 2006. Mr. Harper filed a Motion to Dismiss the lender's lawsuit pursuant to [Arizona statute] A.R.S. § 33-729(A), which states that a lender is barred from pursuing any action against a[n Arizona] borrower if the mortgage was obtained to purchase the [Arizona] home. After receiving Harper Law's Motion to Dismiss, the lender realized the futility of its action and immediately offered to dismiss the case and pay the client's attorneys' fees.

For more, see Arizona Real Estate Lawyer Warns of Frivolous Lawsuits by Second Mortgage Lenders.

California Man Charged With Selling House Out From Under Vacationing Homeowners

From the Office of the Santa Cruz County, California District Attorney:

• Santa Cruz County District Attorney Bob Lee announced [last week] that Raymond Tate was arrested today in connection with a deed dispute involving property in Ben Lomond owned by Tom Decker and his wife Maria McArthur.

• The case began when the couple came back from vacation to find someone living in their house. The occupant, Daniel Judd had a grant deed from the seller, California Housing Association LLC, signed by Raymon Tate, the owner of the California LLC. The only problem was that Tate's California Housing Association LLC, didn't own the property. In 2007 Tom Decker and Maria McArthur had formed a Nevada LLC with the name California Housing Association, and they were the true owners of the property. An investigation by the District Attorney's office revealed the names of the true owners and the deed scam.

• District Attorney Bob Lee commented, "To come home and find someone living in your house is bad enough, but to then to prove to law enforcement that you really own the house, just adds insult to injury." Tate formed his California LLC on 3/26/09 and then sold the Decker's property on 4/2/09 to Daniel Judd.

Go here for the April 28, 2009 press release.

Go here, Go here, Go here, Go here, Go here, Go here, and Go here for other posts related to deed or refinancing scams by forgery, swindle, power of attorney abuse, etc. DeedZetaTheft

Northern Virginia Loan Modification Firm The Target Of Media Scrutiny, Customer Protests

In Vienna, Virginia, The Huffington Post reports:

• [T]he FTC said several [loan modification] operations, which guarantee they can get lenders to reduce monthly payments and prevent foreclosure in return for an upfront fee, advertised their services under names designed to suggest government affiliation -- names like Federal Loan Modification Law Center and Bailout.hud-gov.us.

• One company that has not hidden behind such a title is The Shmuckler Group. Days before the Federal Trade Commission announced its crackdown, dozens of Shmuckler clients protested outside the company headquarters in Vienna, Va., saying the firm never came through on promises to modify loans after collecting thousands in upfront fees.

• "I think it's a scam," said Kristi Cahoon, director of a foreclosure assistance program at Legal Services of Northern Virginia, a non-profit law firm that provides legal help to low-income Northern Virginia residents. "Based on what I've seen it doesn't appear that they've done anything for the clients" after taking their money.

For more, see Shmuckler Group: Another Mortgage Rescue Firm Accused Of Scam.

See also:

• The Washington Post: Va. Mortgage Modifier Is Accused of Scheme,
• WUSA-TV Channel 9: Dozens Protest; Complain Mortgage Renegotiator Cost Them Their Homes.

(1) According to the story, Kristi Cahoon told the Huffington Post she has over 20 cases with Shmuckler clients and that she has filed complaints with the Virginia Bureau of Financial Institutions over Shmuckler's licensing. In March the Washington Post reported that Maryland Department of Labor, Licensing and Regulation is investigating the Shmuckler Group and that Shmuckler is up for disbarment in D.C. Shmuckler wrote in his letter that on March 30 the government raided his office, taking computers and files.

3 Accused With Stealing $4M In Escrow Funds; Title Insurer Takes $3M+ Hit; Used Photoshop Software To Create Altered Bank Statements, Say C. Fla. Cops

In Orange County, Florida, WDBO Radio reports:

• Orange County Sheriff's Economic Crime Unit arrested Michelle Worley [...] on grand theft charges. Deputies allege that between December 2004 and July 2006, Worley and the partners of Preferred Alliance Title, Patrick Torre and John Callaghan, misappropriated approximately $4 million in escrow funds. Investigators say the escrow funds were used to operate other businesses such as a real estate company, a restaurant and a magazine publishing company.

• The suspects, investigators say, were able to hide their fraud from Stewart Title Guaranty, by conducing fraudulent monthly bank reconciliation with altered bank statements. Stewart Title insured a number of real estate transactions which were closed at Preferred Alliance Title. After satisfying all of the lien holders and various other entities, Stewart suffered an approximately $3.1 million dollar loss.

Source: Three accused of multi million dollar fraud.

See also, Orlando Sentinel: Third suspect arrested in $4 million escrow-fraud case:

• [T]hey hid their activities from Stewart Title Guaranty, referred to as the "victim," by creating altered bank statements with Photoshop software, the Sheriff's Office's economic-crime unit said. EscrowRipOffAlpha

Title Agency Owner Cops Plea To Pocketing $3.4M In Escrow Funds From Real Estate Closings Intended To Pay Off Existing Lien Holders

From the Office of the U.S. Attorney (Maryland):

• Deborah Williams, age 56, of Pasadena, Maryland, the owner of a Severna Park title company, pleaded guilty [last Friday] to mail fraud related to a scheme to divert settlement funds to her own benefit, announced United States Attorney for the District of Maryland Rod J. Rosenstein.

***

• According to her plea agreement, [...] Deborah Williams used for her own benefit settlement funds from real estate closings that were deposited in Day Title’s escrow account and were intended to pay off the lien holders on those properties. [...] Williams attempted to conceal her illegal transactions by falsely representing on the settlement documents that her company had paid off lien holders, then sent the falsified settlement documents to the lender by commercial carrier. In fact, Williams either initiated stop payments of payoff checks that had been disbursed or intentionally failed to mail the payoff checks to the lien holder.

• Day Title’s failure to make the pay offs to the lien holders was not detected until sellers began receiving delinquency notices from their mortgage companies. The time delay between the settlement and the date when Day Title made the pay offs to the lien holders allowed Williams to replenish the escrow account with proceeds from new unrelated real estate settlements.

• A title insurance company that had issued policies through Day Title, began to receive claims from lien holders who had not been paid off and conducted an audit of Day Title. The title insurance company found over 16 properties where Williams had not paid off the lien holder. The company paid out a total of $3.443 million to these entities, as required under the title insurance policies that guaranteed that the buyer was receiving a title free of prior liens. As part of her plea agreement, Williams must forfeit $3.4 million, the amount she admits that she failed to pay to the lenders.

For the entire press release, see Pasadena Title Company Owner Pleads Guilty to Defrauding Lenders of over $3.4 Million (Diverted Real Estate Proceeds to Personal Use and Created False Settlement Documents). EscrowRipOffAlpha

Countrywide's Mozilo Attempt To Move Florida AG Suit To Federal Court Thwarted As District Judge Boots Case Back To State Court

From the Office of the Florida Attorney General:

• Attorney General Bill McCollum [last week] announced that his office has obtained a federal court order remanding the Attorney General’s lawsuit against former Countrywide CEO and Chairman of the Board Angelo R. Mozilo back to Broward County Circuit Court. The lawsuit, filed last June, addresses deceptive trade practices relating to Countrywide’s alleged practice of placing consumers in loans they could not afford or with rates which were false or misleading. Mozilo was named as a defendant.

***

• When the civil complaint was originally filed in Broward County Circuit Court by the Attorney General’s Economic Crimes Division, Countrywide and Mozilo sought to remove the action to Federal Court in Florida and the case was subsequently consolidated in the Southern District of California. Attorney General McCollum argued the case should be remanded to state court so Mozilo would be tried in Florida under Florida’s Deceptive and Unfair Trade Practices Act. Earlier [last] week, the Federal Court agreed with the Attorney General’s request and sent the case back to state court in Broward County.(1)

For the entire press release, see McCollum: Former Countrywide CEO, Board Chairman Must Stand Trial in Florida.

For the federal court order remanding the case back to state court, see State of Florida v. Countrywide Financial Corporation, et al.

(1) For more on erroneous removals of lawsuits filed in state court to federal court, see:

• Erroneous Removal As A Tool For Silent Tort Reform: An Empirical Analysis Of Fee Awards And Fraudulent Joinder,
• Judge Says Firm Must Explain ‘Fraudulent’ Removals or Pony Up $25K,
• Moving Cases From State To Federal Court: A Defense Ploy To Make Filing Suit More Costly, Burdensome On Individual Plaintiffs?

Sloppy Lender Lawyers Making False Statements Running Rampant In C. Florida Foreclosures? Chief Judge To Recruit Law Students To Review Court Files

In Central Florida, the Sarasota Herald Tribune reports:

• Foreclosure lawyers want to take back property as fast as possible, and sometimes they do not let the facts slow them down. In case after case, lawyers representing banks are giving false statements in court about who owns mortgages, or whether the homeowner is willing to negotiate, or whether they have completed all the legal steps to put a foreclosed house back on the market.

• The errors and fabrications in the court files are seldom caught by judges with hundreds of foreclosure cases before them.(1) The judges say they can only hope to catch a few of the offending lawyers in hopes of keeping the rest honest. The courts usually rely on defendants to point out problems in the cases against them.

***

• Nobody knows how common it is for foreclosure cases to be based on untrue statements or incomplete proof. More than half of all foreclosure defendants simply walk away, and never show up in court to defend themselves.

• A Sarasota attorney, Richard Kessler, enlisted a few friends to go through 180 foreclosure cases in Sarasota County looking for errors. They found three out of four cases proceeded with incomplete or improper documentation. For instance, the survey found that only one in 12 cases had the documents to prove the company foreclosing on the property was also the company holding the mortgage note. In half of the cases reviewed, the plaintiff said the mortgage note had been lost.

• Kessler contacted Haworth and offered to have his business double check the paperwork for the courts, proposing that his fee could be charged to the company filing the case. Haworth declined, saying he cannot add such a filing fee, and the courts have no money to pay for the service.

• Instead, Haworth is recruiting volunteer law students to review all the cases for foreclosure judges this summer to verify documents. "We think having cops on the beat will help," Haworth said.

***

• A judge in Miami fined Wells Fargo bank $95,000 late last year because of sloppy paperwork filed by Florida Default Law Group, one of a handful of companies that handle the majority of foreclosures in the state. Judge John K. Olson blasted Florida Default, saying the firm seemed to believe that "filing any old pleading without undertaking any investigation into its accuracy is perfectly acceptable practice."

For more, see Lies a new tool in foreclosure (Lawyers, in rush to regain properties, can exploit judges' workload).

Go here for other posts on sloppy foreclosures and assembly line lawyering.

For posts that reference the failure of mortgage lenders and their attorneys to file the proper paperwork when bringing foreclosure actions, Go Here, Go Here, Go Here, Go Here, Go Here, Go Here, and Go Here.

(1) In one case cited in the article, minutes after a foreclosure attorney told her everything was in order in a recent case, Circuit Judge Donna Berlin was ready to sign off. Then she happened to glance at the file, and realized that the two properties were in Miami, a few hundred miles outside her jurisdiction. "I didn't have time to go through and read it," Berlin told a group of attorneys at a meeting last weekend. "And it was not something that I normally look at." SloppyForeclosuresAlpha EpsilonMissingDocsMtg

California State Bar Testifies On Role Of Some Attorneys In Upfront Fee Foreclosure Rescue & Loan Modification Scams

In a U.S. House of Representatives hearing Wednesday entitled Legislative Solutions for Preventing Loan Modification and Foreclosure Rescue Fraud, Mr. Scott Drexel, Chief Trial Counsel of The State Bar of California testified as to the role that some attorneys are playing in scamming the public in foreclosure rescue & loan modification fraud. He pointed out to the subcommittee that since approximately November 2008, calls to The State Bar's toll-free telephone lines have averaged nearly 900 per month on the subject of loan modification and foreclosure rescue fraud, an annual rate of more than 10,000 telephone calls on this subject alone. Among other points made by Mr. Drexel in his prepared testimony are the following:

• [A]ttorneys have been complicit in loan modification and foreclosure rescue fraud in several respects. The key component of their involvement in fraudulent activities is their ability to demand and receive advanced fees for services.

• Regrettably, a certain number of attorneys are willing to engage in these fraudulent activities on their own.(1) In many cases, however, attorneys are approached by non-attorney foreclosure consultants who seek to work in concert with them. In exchange for the use of the attorney’s name and his or her ability to charge and receive advanced fees, the foreclosure consultant typically offers to perform most or all of the loan modification services and promises to either pay the attorney a specified amount for each loan modification or to provide an agreed-upon percentage of the fees received from the homeowner.

• The foreclosure consultants often prey upon new attorneys who are unaware of their ethical responsibilities and who, in the current economy, are having problems in attracting sufficient legal business.

• These consultants also appear to prey upon older attorneys who cannot afford to retire but who no longer have the energy or ability to maintain a large law practice by offering them a steady monthly income to supplement what the attorney can earn through his or her legitimate law practice.

• Besides the fraudulent aspect of the activities themselves, these arrangements violate numerous provisions of California’s Rules of Professional Conduct. For instance, rule 1-310 of the Rules of Professional Conduct prohibits a member of the State Bar from forming a partnership with a person who is not a lawyer if any of the activities of the partnership consist of the practice of law.

• Similarly, rule 1-320 prohibits a member or a law firm from directly or indirectly sharing legal fees with a person who is not a lawyer, with exceptions that are not applicable to the alleged services to be provided by foreclosure consultants.

***

• In the cases that the California State Bar has been investigating, we have typically encountered advanced fees for loan modification services ranging from approximately $2,500 to more than $10,000, with the average fee in the range of about $3,000 to $4,000.

• In most of the cases that the State Bar is investigating, the attorney and/or the foreclosure consultant perform few, if any, services in exchange for these advanced fees. In essence, these monies have been obtained from homeowners under false pretenses. At most, in exchange for these advanced fee payments, the attorneys or foreclosure consultants make a few, largely ineffectual, telephone calls to the financial institution that holds the mortgage.

Go here for the entirety of Mr. Drexel's prepared testimony.

*********************

In a related point, from the Committee on Professional Responsibility and Conduct ot The State Bar of California, see: ETHICS ALERT: Legal Services to Distressed Homeowners and Foreclosure Consultants on Loan Modifications.

In a related story, see SF Weekly: State Bar Takes Over 'Son of Super Swindler' Law Firm -- 2,000 Con Jobs Too Late (The State Bar of California has taken over the law firm of Mitchell Roth, who had, in partnership with convicted felon Paul Noe II, convinced more than 2,000 troubled homeowners to fall for an apparent "foreclosure assistance" scam).

Go here and Go here for other posts on the potential perils relating to attorneys and non-attorney loan modification firms joining forces to provide foreclosure-related rescue services.

(1) Mr. Drexel describes one particularly egregious case, in which the attorney and the foreclosure consultants with whom he is working have talked homeowners into providing them with bank account information before the homeowner has even signed an agreement retaining the attorney for loan modification services. The attorney then electronically withdraws funds from the homeowner’s bank account without any prior notice or authorization from the homeowner and before the homeowner has even decided to retain the attorney. UnauthPractOfLawTheta

Feds, Florida Foreclosure Rescue Operators Settle Civil Charges Of TILA, HOEPA Violations

The Federal Trade Commission recently announced:

• Two individuals who lured homeowners into high-cost, short-term loans secured by an additional mortgage on their homes have settled FTC charges that they violated federal law – and a previous court order against them. Thomas C. Little, an attorney, also settled contempt charges based on his role in facilitating the scam. The Commission sued them and seven other defendants in February 2008 as part of an ongoing effort to crack down on businesses that prey upon homeowners facing foreclosure.

***

• The settlements with Christopher Tomasulo and Bonnie Werner (formerly Bonnie A. Harris) resolve these charges and impose judgments of $2,791,040.40 each, which will be suspended based on their inability to pay. The full judgments against them will become due immediately if they are found to have misrepresented their financial condition.(2)

For the entire press release, see Mortgage Foreclosure ‘Rescue’ Defendants Settle FTC Charges for Deceiving Homeowners.

For links to copies of the initial lawsuits, the settlements, and the related press releases, see:

• FTC v. Safe Harbour Foundation of Florida, Inc., et al., and
• FTC v. Bay Area Business Council, Inc., et al.

(1) The defendants allegedly violated the Home Ownership and Equity Protection Act (HOEPA) by extending credit based on the value of consumers’ collateral without regard to their repayment ability, by requiring balloon payments after only six months, by providing negatively amortized loans that cause consumers to owe more at the end of the loan than at the beginning, and by failing to make required disclosures. The defendants also allegedly engaged in a number of violations of the Truth in Lending Act (TILA).

(2) Other defendants in these cases are: Silverstone Lending, LLC, a Florida limited liability company; Silverstone Financial LLC, a Florida limited liability company; Keystone Financial, LLC, a Nevada limited liability company; Southeast Advertising, Inc., a Florida corporation; MT25 LLC, a Nevada limited liability company; and Peter J. Porcelli, II, individually and as officer, partner, or member of Silverstone Lending, LLC, Silverstone Financial LLC, and Safe Harbour Foundation of Florida, Inc..

Ohio AG Wins $300K+ Judgment In Loan Modification Foreclosure Rescue Scam; Fires Warning Shots Against 10 Others With Subpoenas, C&D Orders

From the Office of the Ohio Attorney General:

• Ohio Attorney General Richard Cordray [Monday] announced that a foreclosure rescue scam company operating out of Cincinnati has been shut down and now owes more than $300,000 in damages and civil penalties. The default judgment issued out of Hamilton County Common Pleas Court demands that Foreclosure Solutions and owner Timothy Buckley pay $225,000 in civil penalties and $79,565 in restitution for scamming Ohioans facing foreclosure.(1)

***

• Also, in an unprecedented move, Cordray [Monday] issued 10 cease and desist demands with accompanying subpoenas to businesses suspected of operating rescue scams in Ohio. The cease and desists demand that the companies halt all predatory practices, and the subpoenas require information to substantiate current practices. The sweep is the first in a widespread investigation into rescue operations targeting Ohio. “This is a strong, preventative measure to keep foreclosure rescue scammers out of Ohio,” said Cordray. “It is a warning shot announcing that we have no tolerance for these predatory practices in our state.”

For the entire press release, see Cordray Puts Heat on Foreclosure Rescue Operations (Attorney General pursues more than $300,000 in restitution and penalties; Launches multi-state cease and desist sweep).

For the Ohio AG lawsuit, see State of Ohio v. Foreclosure Solutions L.L.C.

Go here for other posts and lawsuits against Foreclosure Solutions.

(1) According to the press release, from January 2003 through May 2008, Foreclosure Solutions solicited Ohioans who were going through foreclosure via direct mail and offered services to save their homes. The company then arranged in-person meetings and entered into written agreements with the promise to act as an agent to stop the foreclosure. After charging amounts ranging from $750 - $1,300 the company never provided the services promised and some Ohioans lost their homes.

NY AG Files Criminal Charges & Parallel Civil Suit Against Process Serving Firm & Its CEO Alleging Massive "Nail & Mail Sewer Service" Operation

From the Office of the New York Attorney General:

• Attorney General Andrew M. Cuomo [...] announced criminal charges against Long Island-based American Legal Process (“ALP”) and its CEO and President William Singler for a fraudulent business scheme in which the company allegedly failed to provide proper legal notification to thousands of New Yorkers facing debt-related lawsuits, causing them unknowingly to default and have costly judgments entered against them without the chance to respond or defend themselves.

• According to the court papers filed [...], ALP, as a legal process server, was hired by high-volume debt collection law firms in New York to serve legal papers, usually a summons and complaint, notifying individuals that they are being sued and must answer the complaint. ALP, however, allegedly engaged in “sewer service,” where process servers take advantage of individuals facing lawsuits by failing to properly alert them and denying them the chance to respond.

• As a result, thousands of judgments were allegedly obtained against unsuspecting New Yorkers, many of whom first learned they were being sued when they found their bank accounts frozen or their wages garnished. ALP allegedly covered up the fraud by falsifying sworn affidavits of service in courts across New York. The Attorney General’s Office also filed a parallel civil suit against ALP and Singler seeking a court order prohibiting them from engaging in improper service of process, monetary damages and substantial penalties.

***

• With respect to the notice sent to the law firm of Forster & Garbus, the Attorney General said: "I am putting all law firms on notice that they are responsible for the conduct of the companies they use to serve complaints and other legal documents. Law firms cannot turn a blind-eye to abuses perpetrated on their behalf.”

***

• According to the court papers [...], between January 2007 and October 2008, ALP claimed to have served 98,000 summons and complaints throughout New York State to New Yorkers alleged to owe debt. The majority of these were done through “nail and mail,” the method of service that is easiest to abuse. The Attorney General’s investigation revealed that thousands of legal documents were not properly served, or served at all, to the individuals they were intended for.(1)

For the entire NY AG press release, see AG Cuomo Announces Arrest Of Long Island Business Owner For Denying Thousands Of New Yorkers Their Day In Court (American Legal Process Provided “Sewer Service” to Thousands of New Yorkers Owing Debt According to Criminal Complaint and Civil Suit; Failed to Properly Notify the Individuals That They Faced Lawsuits As a Result, Individuals Would Unknowingly Default and Have Judgments Entered Against Them Without the Chance to Defend Themselves). Go here for version En español.

Go here for other posts on "sewer service" (a reference to the illegal process server practice of filing a sworn affidavit of proper service in court when none was actually made).

(1) Carolyn Coffey, an attorney with MFY Legal Services, a nonprofit provider of free legal services, said: “The consequences of sewer service are profound, especially on vulnerable New Yorkers. In MFY’s 2008 report, Justice Disserved, we documented many victims of improper service who had judgments unknowingly entered against them, often to devastating effect. [...] MFY applauds Attorney General Cuomo for taking the initiative to combat this illegal practice, especially because sewer service often injures the elderly, disabled and working poor of New York.” SewerServiceAlpha

Central Florida Loan Modification Firm Added To Florida AG Lawsuit Hit List; Accused of Pocketing Upfron Fees In Violation Of State Law

From the Office of the Florida Attorney General:

• Attorney General Bill McCollum [Friday] announced that his office has filed a lawsuit against an Orlando loan modification company alleging the company was committing foreclosure rescue fraud. Three Angels Community Action Network(1) and company president Sherrard A. Haugabrooks are named in the lawsuit filed [...] in Seminole County Circuit Court. The lawsuit specifically alleges violations of Florida’s Foreclosure Rescue Law, §501.1377. [...] The company allegedly charged homeowners an up-front fee generally equal to a monthly mortgage payment prior to providing loan modification services.

For the entire press release, see Attorney General Sues Orlando Loan Modification Company for Foreclosure Fraud.

For the lawsuit, see State of Florida v. Three Angels Community Action Network, et al.

(1) According to the press release, the company also does business as 3ACN; US Loss Mitigation Services of FL, Inc.; Appraisal Technology and Valuation Inc.; and 3ACN Loss Mitigation Services, Inc.

Washington AG Scores Big Win In Bogus Equity Stripping, Land Trust/Sale Leasebacks & Surplus Ripoffs; Foreclosure Rescue Operator Tagged For $4.2M

From the Washington State Office of the Attorney General:

• The Washington Attorney General’s Office declared a major victory for consumers today in response to a judge’s order that a notorious foreclosure rescue scammer must pay more than $3.2 million to victims he wronged plus $179,000 in penalties for violating the Consumer Protection Act.

• “Joseph Kaiser’s a cunning real estate investor who made his living by claiming to help people facing tax foreclosure – then taking their homes, land and money,” Attorney General Rob McKenna said. “Thanks to the hard work of our Consumer Protection Division, he will no longer be able to prey on struggling homeowners.” The Attorney General’s Office also obtained an order permanently stopping Kaiser from participating in real estate transactions with people facing foreclosure.

• Kaiser, of Tacoma, was the first foreclosure “rescuer” to be tried by the Attorney General’s Consumer Protection Division, which works to enforce a fair marketplace for consumers and businesses. He is the author of several books describing tactics for making quick profits from real estate and has conducted seminars to teach his methods for earning large amounts of money through deals involving distressed properties.

• Kaiser entered transactions with more than 300 property owners. No one has ever successfully regained their home from Kaiser. Assistant Attorneys General Jim Sugarman and Jake Bernstein represented the state in the trial, which included six days of testimony and arguments by attorneys on both sides during December 2008 and January 2009.

• “Kaiser’s victims were elderly, disabled or low-income individuals – people who trusted him to solve their foreclosure problems and were betrayed,” Sugarman said. “Kaiser portrayed himself to these people as an expert in saving homes facing foreclosure, when he is actually an expert in taking homes facing foreclosure.”

• King County Superior Court Judge Palmer Robinson ordered Kaiser to pay nearly $4.2 million including more than $780,000 to partially repay the state for the costs and attorney fees for bringing the lawsuit. It’s a significant finale to a case that began in March 2007 when the state filed civil charges against Kaiser and simultaneously settled with several of his colleagues.

• In its complaint, the state alleged that the defendants used public records filed with county treasurers to contact property owners with offers to help solve their foreclosure problems. Their real intent, however, was to obtain ownership of the home or to let the home be sold at tax foreclosure and then take the excess sales money that should have been paid to the homeowner.

***

• Trial Judge Michael Trickey called Kaiser’s contracts “grossly unfair.” “No fully informed person, not acting under compulsion, would enter a transaction with such onerous terms,” Trickey wrote in his decision [at paragraph 12].

For the entire press release(1), see Pay time for notorious foreclosure rescue scammer (Attorney General announces major victory in state’s case with Washington man who promised help but took homes).

See also, Seattle Post Intelligencer: Foreclosure guru hit with $3.2 million penalty ("I'm the Tiger Woods of foreclosure rescue" accused man claims).

(1) Relevant court documents and other case information:

• Case Background Fact Sheet,
• Restitution and Penalties Order – May 6, 2009,
• Injunctive Relief Order – Feb. 11, 2009,
• Findings of Fact and Conclusions of Law – Feb. 6, 2009,
• Plaintiff’s Trial Memorandum – Dec. 3, 2008,
• 3rd Amended Complaint re: Kaiser, G. Hobus Investments, Bobo Buys Real Estate, Pre Flop, Unclaimed Funds – December 2008,
• Consent Decree re: Fiscal Dynamics, Cumulative LLC, Northwest Assets, Walter Scamehorn, Tina Worthey, Arliss Morgan – May 11, 2007,
• 1st Amended Complaint re: Fiscal Dynamics et al – June 21, 2007,
• AGO News Release: “Attorney General McKenna Sues, Settles with Real Estate Investors for Mortgage Foreclosure “Rescue” Violations” – March 14, 2007.

FTC, Others Testify On Foreclosure Rescue & Loan Modification Scams

The Federal Trade Commission announced Wednesday:

• The Federal Trade Commission [Wednesday] told the U.S. House Subcommittee on Housing and Community Opportunity of the Committee on Financial Services that, with the rapid increase in mortgage delinquencies and foreclosures, the FTC has intensified its efforts to protect consumers from foreclosure rescue and loan modification scams. The FTC also recommended legislative and other remedies to enhance the agency’s effectiveness.

For the rest of the press release, see FTC Testifies on Efforts to Combat Foreclosure Rescue and Loan Modification Scams.

Go here to view the archived webcast.

Witness List & Prepared Testimony:

Panel One:

• Mr. James Freis, Jr., Director, Financial Crimes Enforcement Network, U.S. Department of the Treasury;
• Ms. Peggy Twohig, Associate Director, Division of Financial Practices, Bureau of Consumer Protection, Federal Trade Commission;
• The Honorable Martha Coakley, Attorney General of Massachusetts.

Panel Two:

• Ms. Lauren Saunders, Managing Attorney, National Consumer Law Center;
• Mr. Robert E. Story Jr., Chairman-Elect, Mortgage Bankers Association;
• Mr. John Anderson, Vice Chair, Federal Housing Policy Committee, National Association of Realtors;
• Mr. Scott Drexel, Chief Trial Counsel, The State Bar of California.

Standing-Lacking Rhode Island Mortgage Lenders Now Under Attack By "Produce The Note" Strategy

In Providence, Rhode Island, NBC Nightly News reports on Rhode Island attorney George E. Babcock, who reportedly has used the "produce the note" strategy in his effort to help 100% of his foreclosure clients slam the brakes on the loss of their homes through foreclosure. Florida foreclosure defense attorney April Charney makes a cameo appearance in the story.

For more (video only, approx. 2:16), see Lawyer Practices "Foreclosure Stoppage."

For posts that reference the failure of mortgage lenders and their attorneys to file the proper paperwork when bringing foreclosure actions, Go Here, Go Here, Go Here, Go Here, Go Here, Go Here, and Go Here. EpsilonMissingDocsMtg

California Regulator Shifts Over A Dozen Deputies To Investigate Loan Modification Outfits As Firms "Are Popping Up Like Weeds!" Says DRE Spokesman

In San Diego, California, the San Diego Union Tribune reports:

• Complaints about loan modification companies that charge hefty fees but provide little or no service are soaring statewide as distressed homeowners struggle to avoid foreclosure. While many firms are reputable, the state Department of Real Estate ["DRE"] is shifting resources to keep up with a mounting caseload of consumers who say they've been taken advantage of. There were very few complaints against loan modification firms last fall, but since then the number has climbed to about 500, said department spokesman Tom Pool.

• In response, the department has transferred more than a dozen deputies to enforcement duties. Loan modification companies “are popping up like weeds,” Pool said. “The best defense is consumer education. We are seeing more and more foreclosures every day. We are probably going to get a whole new crop of victims.”

For more, see Complaints to state soar over loan modification firms (Officials monitoring for-profit companies).

First Of Ten Defendants In Alleged San Diego-Area Land Grant Foreclosure Rescue Scam Cops Plea; 400+ Homeowners Victimized, Say Prosecutors

In San Diego, California, XETV-TV Channel 6 reports:

• A man accused with nine other people of stealing hundreds of thousands of dollars in a home foreclosure scam pleaded guilty Tuesday to seven felonies, including conspiracy and grand theft. Octavio Escatel, 29, will be sentenced to probation and a year in jail at a June 5 hearing before Judge Charles Gill.

• William Hutchings and wife Xiaoke Li, Edgar Martinez, Diego Gil, Shawna Landis, Joel E. Garcia, Stephen Mauer and Alex Olmos pleaded not guilty to more than 150 counts of grand theft, conspiracy and deceitful practices as a foreclosure consultant. They, along with a 10th defendant, Rose Napoli, had their trial set for Jan. 19.

***

• More than 400 homeowners in San Diego and Riverside counties were victimized, prosecutors said. Two methods were allegedly used to induce property owners in foreclosure to participate in a so-called land grant program, according to prosecutors. One method required homeowners to pay a one-time fee of up to $10,000 to put their property in a land grant, prosecutors said. The second method was a lease-back scheme, according to authorities. In both scenarios, the homeowners were typically evicted and retained no legally recognized title to their property.

For the story, see Man Preyed on Over 400 People in Home Foreclosure Scheme.

Evictions, Foreclosure, Consumer Debt To Be Addressed By NYC Legal Outreach Pro Bono Effort

In New York City, The New York Law Journal reports:

• With foreclosures and evictions on the rise and consumers increasingly saddled with debt, New York City officials are enlisting attorneys to volunteer their time for a new pro bono effort. Approximately 40 representatives from pro bono organizations, the court system, several bar associations and city law schools gathered [last week] at City Hall to kick off "NYC Legal Outreach."

• "This bottom line . . . is to figure out a way to harness pro bono legal help to those who really need it," Corporation Counsel Michael A. Cardozo told the group. [...] The city does not want to "reinvent the wheel" but rather "galvanize" more volunteers and add the "mayor's bully pulpit" to existing efforts, Mr. Cardozo said.

***

• Specifically, NYC Legal Outreach will focus on four "key" service areas: evictions, foreclosures, consumer debt and immigration, all areas that have mushroomed as a result of the financial crisis.

For more, see City Launches Program to Boost the Ranks of Pro Bono Attorneys.

Framingham Legal Services Group Scores $20K For Post-Foreclosure Eviction Defense Project

In Boston, Massachusetts, the Boston Business Journal reports:

• The Boston Bar Foundation has awarded $185,000 in grants to eight nonprofits that all work to prevent homelessness, the organization said Tuesday. Organizations that received grants include the [...] Metrowest Legal Services’ Post-foreclosure Eviction Defense Project, which received $20,000, [...].

Source: Boston Bar Foundation awards $185k.

Florida Statewide Volunteer Legal Program To Help Homeowners Avoid Foreclosure Nearing 1,000 Attorneys

In Tallahassee, Florida, the Miami Daily Business Review reports on the Florida Attorneys Saving Homes ("FASH") program, a pro bono effort to help financially strapped Florida homeowners nearing, but not yet in, foreclosure avoid the loss of their homes.

• [F]ASH has expanded to about 1,000 volunteer lawyers statewide and organized a roundtable discussion [last] week in Tampa with lending representatives. [...] “The demand has been so overwhelming that we’re in need of more lawyers,” said Adele Stone, a partner with Atkinson Diner Stone Mankuta & Ploucha in Fort Lauderdale who is on the FASH steering committee. One stated goal of the roundtable was to get more lawyers familiar with the principals of foreclosure defense.

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• “A lot of pro bono attorneys are using this time to gain familiarity with a new area of law. That way they can expand their practice” in the recession, said Jennifer Newton, the program’s director and a staff attorney with Florida Legal Services. The program operates out of Florida Legal Services in Tallahassee and is funded through The Florida Bar Foundation.

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• Not everyone in mortgage distress is eligible for the program. A home already in foreclosure isn’t eligible, and homes must be homestead property to be eligible. [...] FASH is one of many foreclosure public service programs involving lawyers across the state.

For more, see Mortgage Crisis: Program helps keep owners from losing homes.