California Real Estate Fraud Report

California’s three-strikes law is in for a test: it was not designed for white-collar crimes, but is going to be test on a man who is accused of scamming most elderly South Los Angeles residents out of their houses.

47 year-old Timothy Barnett is charged with 23 felonies, including identity theft, real estate fraud and theft from the elderly. His previous convictions/strikes were for two burglaries in 1997.

Max Huntsman, the attorney who supervises the L.A. County District Attorney’s real estate fraud division said about Barnett: “He has an almost magical ability to install confidence in people. He is a great menace to the community.”

Read the full article in the Associated Press.

Randall Guerra heads a non-profit group funded by the government to help distressed homeowners in the Fresno area. He said 8 to 10 homeowners are walking in to his office each walk for help after being ripped off either by foreclosure consultants, loan modification firms or the banks.

Loan modification firms charged upfront fees (now illegal) to borrowers for assistance in negotiating loan modifications. Either the company did nothing for the borrower or took his or her money knowing that the borrower could not qualify for a loan modification.

Sydney Ricks, an attorney who heads the Real Estate Fraud Division of the Fresno County District Attorney’s Office says “There’s a lot of desperation out there and the scam artists are targeting those people knowing there is a lot of anxiety.” Yet, while there is a backload of cases to process, the unit has only one attorney and one investigator.

Read the full article on ABC.

San Diego District Attorney Bonnie Dumanis told her audience during a recent public safety meeting that her office has almost doubled its caseload real estate fraud related cases. Her office filed 39 real estate fraud cases in 2009, compared to 20 cases in 2008.

The number of defendants, however, has practically tripled due to the focus on foreclosure fraud and loan modification fraud cases, which tend to have both more victims and more defendants.

Read estate fraud includes not only fraud in the purchase/sale of a home, such as intentionally failing to disclose material facts, but mortgage and loan fraud, appraisal fraud, foreclosure fraud, title fraud, escrow fraud, and now short sale fraud and REO fraud. The latter two crimes typically happen when the listing agent does not submit all offers to the bank or servicing company so that the offer of the agent’s own buyer becomes the highest or best offer. Expect to see many of these cases in the news in the near future.

Read the full article in the Voice of San Diego.

A San Diego judge sentenced a man who was convicted by a jury of 160 felony charges that included breaking the mortgage foreclosure consultant law, conspiracy, grand theft and rent skimming to a stunning 46 years in prison for ripping off his victims for more than $2 million.

William Jeffrey Hutchings, 63, who represented himself, had defended himself by stating he had started his business to “help” his victims, who, according to Deputy District Attorneys Stephen Robinson and William La Fond, numbered between 400-500. Hutchings and his co-defendants had marketed their ability to save the homes of defaulting homeowners through a land grant program in which the borrowers could either a a fee of $10,000 to place their property in a land grant or transfer their property to Hutchings, et. al. and then rent it back.  Almost every one of Hutchings’ clients lost their homes to foreclosure subsequently.

In a smart move, the San Diego District Attorney’s Office froze the assets of the defendants and was thereby able to offer some restitution to the victims.

Read the full article in the San Diego Union Tribune. San Diego District Attorney Bonnie Dumanis and San Diego County Sheriff Bill Gore were also interviewed by the San Diego Business Journal about foreclosure fraud and other real estate crimes in an article published May 31.

In a press release issued today, California Attorney General Edmund G. Brown announced that 9 men have been charged with operating a boiler room foreclosure fraud operation. The scam is reported to have fleeced some 1,500 homeowners out of more than $2.3 million by promising the desperate victims they would receive loan work-outs and modifications.

Four of the the men are already in custody: Gregg Scott Quinn, 37, of Camarillo, the ring’s sales manager; Juan Pierre Washington, 40, of Winnetka, a supervisor; Gary Arnold Eisenberg, 71, of Westwood, a top-performing telemarketer with the company; and Ira Itskowitz, 58, a sales manager. Eisenberg and Itskowitz have distinguished themselves by each having spent more than five years in federal prison for their previous fraud convictions.

Still missing are the four principal owners of the business: Niv Iskin, 30, of Reseda; Reviv Karpman, 38, of Tarzana; Tomer Kogman, 29, of Reseda; and Avraham Yechizkia, 34, of Encino; as well as a sales manager, Barel Iskin, 23, of Woodland Hills.

AG Brown’s office responsed to numerous consumer complaints against the defendants’ and their Canoga Park businesses at 8236 Remmet Avenue, Mason Capital Group, LLC and Gretchen Fox and Associates. Agents found a Las Vegas-style sales floor with casino-themed decor such as craps, poker and black jack tables fashioned into computer workstations. Top producing telemarketers received bonuses by spinning a roulette wheel.

As with all loan modification scams, this one preyed upon borrowers desperate to save their homes, who were enticed into relying upon false statements by the telemarketers that they had a “highly successful loan negotiation staff with over 20 years experience”, as well as paying upfront fees, a practice that is illegal unless performed by an attorney. Although Mason Capital Group and Gretchen Fox and Associates promised a guaranteed refund, in practice they refused almost all requests by dissatisfied clients to receive their money back.

The defendants have been charged with 97 criminal counts that include collecting advance fees for foreclosure consultant services, making false and misleading statements to induce homeowners to pay in excess of $400 for loan modification services, failure to remit business income tax returns, remitting false personal income tax returns and committing two or more felonies with White-Collar Crime Enhancement and Excessive Taking Enhancement.

Read the California Attorney General’s press release and the Declaration in Support of Arrest Warrants.

A mother-daughter team is sitting in Kern County jail after being unable to post bail of $1 million each.

Dawn Marie Kantin, 37, and her 69 year-old mother Alice Kantin, have been charged with dozens of counts of conspiracy, embezzlement, theft, notary fraud and forgery. The charges arise from a real estate fraud scheme in which at least 32 people were cheated out of $2.3 million from 18 homes that went into foreclosure.

Alice Kantin is the owner of Desert Air Real Estate Investments, Inc. in Bakersfield, a company that is not registered with the California Secretary of State.

The Kantins purportedly contracted with homeowners in default to take over their mortgage payments; instead all the homes were lost to foreclosure. In addition, 14 tenants with options to purchase the homes also lost their investments due to the foreclosures.

While mother Alice allegedly put the deeds of the distressed homeowners in her name or that of Desert Air Real Estate Investments while she searched for a renter to purchase the home, daughter Dawn Kantin allegedly busied herself with committing notary fraud. Dawn Kantin is not only not a licensed notary public in California; her application to become one was denied the California Secretary of State’s office because of “substantial and material misstatement or omission in the application” according to by Gordon Isen, Deputy District Attorney of the Kern County District Attorney’s Real Estate Fraud Unit.

Read the full article in the Bakersfield Californian.

Three people have been charged in an 83 count indictment by a Santa Clara County grand jury for loan modification fraud.  The crimes that are alleged include enticing homeowners in foreclosure by promising them principal reduction that involved selling the homeowners’ loans to investors (or straw buyers) and then reselling the home at a lower price back to the original homeowners.

Prosecutors allege that San Jose residents Rene Alvarez and Mariano Ortega, and Cydney Sanchez of Los Angeles, were part of a seven state scam that involved 400 homeowners and the theft of more than $2 million.

The district attorney’s office states that Alvarez and Ortega owned and operated M&R Contemporary Solutions Inc., a Campbell-based “foreclosure consulting” company from 2008 to 2009. Sanchez was the owner/operator of West Coast Mortgage and Horizon Property Holdings in Beverly Hills.

The only good news in this story is that M&R’s bank accounts were frozen so that the victims could receive restitution if the defendants are found to be guilty.

Read the full article in the San Jose Business Journal.

Attorney General Edmund G. Brown Jr. announced that two women who operated a phony foreclosure relief firm have each been sentenced to one year in jail and ordered to repay the homeowners they ripped by charging them upfront fees for foreclosure relief services that were never supplied.

The two, Marianne Curtis, 69, of Costa Mesa and Mary Alice Yraceburu, 46, of Riverdale, ran Fresno and Orange County-based Foreclosure Freedom and pleaded guilty last month to 71 criminal counts, including grand theft, conspiracy and unlawful foreclosure consulting.

Says AG Brown: “Curtis and Yraceburu shamelessly exploited homeowners desperate to avoid foreclosure, charging up to $1,800 in up-front fees for loan modifications that were never delivered.” “Today’s jail sentences send a warning shot to loan-modification consultants: If you swindle homeowners, you face serious time behind bars.”

Curtis and Yraceburu must also repay 36 victims a total of $32,040 and they are forbidden from working in the telemarketing and real estate industries.

Non-profit housing counselors certified by the U.S. Department of Housing and Urban Development provide free help to homeowners. To find a counselor in your area, call 1-800-569-4287.

If you are a homeowner who has been scammed, contact Brown’s office at 1-800-952-5225 or file a complaint online at: www.ag.ca.gov/consumers/general.php.

Read the Attorney General’s press release here.

The United Law Group’s offices in Irvine were the subject of a raid last week, as agents from the U.S. Postal Inspection, the FBI, U.S. Immigration and Customs Enforcement, the Orange County District Attorney’s Office, the Irvine Police Department and the Special Inspector General for the Troubled Asset Relief Program conducted a joint search of the law firm’s office in connection with a possible loan modification fraud scam.

According to the affidavit for the search warrant, Interviews with homeowners and former employees revealed that United Law Group charged upfront retainers ranging from $1,500 to $12,000 (!!!), yet investigators were unaware of any loan modifications that had actually been completed, save for the examples used in the firm’s advertising.

The California State Bar is also looking into at least one of the firm’s attorneys, Sean Rutledge, and have filed disciplinary charges against him for taking money from a homeowner but not making any effort to obtain a loan modification on the homeowner’s behalf.

Read the full article on the Orange County Register, aka OC Register.