California Real Estate Fraud Report

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Archive for the 'Foreclosure fraud' Category

“Keeping My Property” Owner Charged with Defrauding Contra Costa Homeowners

June 20th, 2014 at 8:37am

Marc Stanley Cooper, 60, has been charged by the Contra Costa District Attorney’s Office with 21 counts of elder financial abuse, foreclosure fraud and grand theft.

Prosecutors said Cooper solicited homeowners in distress for money to negotiate a reduction in their mortgages but did not do so, instead defrauding the 15 homeowners.

“He is an experienced con man who promised individuals who were suffering with overly large mortgages that he could reduce their mortgages as well as modify their loans,” said Deputy District Attorney Ken McCormick, of the District Attorney’s real estate fraud unit. “In reality, he was embezzling and defrauding them.”

Read the original article in the Mercury News.

Wells Fargo “Smoking Gun” Foreclosure Manual Going on Trial

May 9th, 2014 at 7:38am

A plaintiff suing Wells Fargo has achieved an important pre-trial ruling that could affect other homeowners seeking to sue the banking behemoth for how it treats its borrowers in foreclosure.

U.S. Judge Allan Gropper of New York ruled that Wells Fargo’s Home Mortgage Foreclosure Attorney Procedure Manual will be allowed into court after attorney Linda Tirelli argued the 150-page manual was relevant to the bankruptcy case of Mota v. Wells Fargo because the bank was using the manual to “falsely create evidence of ownership” in the note. Just as interesting, the manual allegedly instructs the bank’s attorneys on how to proceed with a foreclosure, even when the bank is missing critical documents.

“(Wells Fargo) can no longer deny having procedures for endorsing notes or provide witnesses who lack knowledge about the procedures, which is what they have consistently done in the past,” Tirelli told HousingWire on Monday. “The procedure manual is raising a lot of eyebrows and rightfully so. I attended the National Association of Consumer Bankruptcy Attorneys convention April 11-13 … during which I spoke with many consumer attorneys from across the country who have run into the same problem of witnesses being provided by Wells Fargo who simply lack knowledge of the process or deny there is a process for obtaining endorsements on notes and creating assignments or affidavits of lost note.”

In a different bankruptcy case - Cynthia Franklin v. Wells Fargo - Tirelli has filed a motion to re-open discovery post-trial because she only discovered the foreclosure manual just after the trial.

Read the original article in HousingWire.

Three Men Convicted of Operating Fraudulent Mortgage Rescue Service

December 5th, 2013 at 8:45pm

Three Southern California men have been found guilty of conspiracy to commit mail fraud by a federal jury. The case was tried by the office of U.S. Attorney Benjamin Wagner.

Charles Head, 36; Benjamin Budoff, 46; and Domonic McCarns, 39, were accused by prosecutors of operating a large-scale foreclosure rescue scam. Head was convicted of three additional charges of mail fraud.

Prosecutors presented evidence that Charles Head led the scam under the entities Head Financial Services and Creative Loans. The firms operated from Orange County between March 2005 and June 2006 and received more than $5.7 million from distressed homeowners by promising them they could save their homes.

Read the original article in the Central Valley Business Times to learn how the foreclosure rescue scam operated.

Two Men Sentenced to Federal Prison for National Mortgage Rescue Fraud Scheme

September 18th, 2013 at 4:46pm

Two men who operated a nationwide network of businesses that purported to help distressed homeowners but were simply mortgage rescue frauds have been sentenced to federal prison.

Mark S. Farhood, formerly of San Diego, California, and Jason S. Sant of Lecanto, Fla., were sentenced to 11 years and six years, respectively, in addition to terms of supervised released. Each man was also ordered by United States District Judge Anthony J. Trenga to forfeit approximately $2 million to the federal government.

Farhood and Sant co-owned and operated Home Advocate Trustees, which also went by the names Walk Away Today, First Equity Trustees, Home Security Consultants, Sell Fast USA, Short Sale Buyer, USA Sell House Fast, and USA Rental Housing.

The remainder of this post is taken from the press release by the U.S. Attorney for the Eastern District of Virginia’s website.

Christy Romero, Special Inspector General for the Troubled Asset Relief Program (SIGTARP); Neil H. MacBride, United States Attorney for the Eastern District of Virginia; and Valerie Parlave, Assistant Director in Charge of the FBI’s Washington Field Office, made the announcement today after sentencing by United States District Judge Anthony J. Trenga. Farhood and Sant each pleaded guilty to conspiracy charges on May 10, 2013.

“Farhood should spend the next 11 years in prison thinking about how he preyed on and cheated 389 distressed homeowners out of their homes by ‘buying’ their homes in fake sales for $10 per property and then renting out the homes for $4 million, which he used to fund construction on his $1 million home in Costa Rica,” said Christy Romero, Special Inspector General for TARP (SIGTARP). “Farhood and his co-conspirator Sant, who was sentenced to six years in prison, hid their identities, stole identities of people whose pictures they found on the Internet, and exploited TARP’s housing program by submitting phony applications to stall foreclosures while they rented out the properties. When caught by SIGTARP and our law enforcement partners, Farhood tried to hide the proceeds of his crime, including the Costa Rica house and bags of silver coins, and tried have computer evidence of his crime deleted. SIGTARP will bring to justice all those who commit crimes exploiting the TARP bailout.”

According to court records, Farhood and Sant co-owned Home Advocate Trustees, which also went by the names Walk Away Today, First Equity Trustees, Home Security Consultants, Sell Fast USA, Short Sale Buyer, USA Sell House Fast, and USA Rental Housing. They marketed the businesses nationwide as purchasers of distressed real estate and a means by which vulnerable homeowners could avoid foreclosure and the accompanying negative effects on their credit. The companies told homeowners they were in the business of negotiating with lenders to purchase mortgage notes at a discount and falsely claimed to have been in business for seventeen years, to have experienced a 90 percent success rate in purchasing such notes, and to be the nation’s largest volume buyer of short sale and over-leveraged real estate.

As Sant and Farhood admitted in connection with their pleas, the businesses were a fraud, no such negotiations with lenders ever took place, and the scheme was merely a way for them to take possession of hundreds of residential properties, including homes within the Eastern District of Virginia, at virtually no cost and then reap millions of dollars in profits by renting the homes to unsuspecting tenants.

Farhood and Sant further admitted that as part of the scheme, they submitted fraudulent loan modification applications to mortgage lenders under the Treasury Department’s Making Home Affordable Program in the name of homeowners, without the homeowners’ knowledge or consent. Farhood and Sant used the fraudulent applications to stall foreclosures on the properties under their control and for which no mortgage payments were being made and to maximize the time period during which they could collect rental income.

The homes purportedly sold to Home Advocate Trustees and its related entities ended in foreclosure, harming the participating homeowners and commonly resulting in eviction of the tenants.

This case was investigated by SIGTARP and the FBI’s Washington Field Office. Assistant United States Attorney Paul J. Nathanson prosecuted the case on behalf of the United States.

Illinois Attorney General Lisa Madigan Sues Safeguard Properties, Contractor to Banks

September 12th, 2013 at 9:16pm

An article published in the New York Times paints a disturbing picture of how the major banks may be using “property preservation” companies to bully homeowners in distress, damage their properties and even chase them out of their homes.

Lisa Madigan, the Illinois Attorney General, is the first AG to take on property management companies hired by JP Morgan Chase, Bank of America, Citibank and other lenders. On September 10, she sued Cleveland-based Safeguard Properties, charging that the firm “unlawfully dispossessed legal residents of their homes by breaking into occupied houses, locking the occupants out of their homes, removing the occupants’ personal property, and shutting off the utilities in the home, often in the face of clear evidence that the property remains legally occupied.”  In stating that her office had received over 400 complaints about Safeguard Properties, Madigan’s complaint said that “Safeguard has misrepresented to homeowners and tenants that they are no longer entitled to live in their homes, when, in fact, the occupants are entitled to remain in their homes.”

In one example cited by the New York Times, homeowner Barry Tatum arrived at his house last December, only to find that both his front and back doors had been literally torn from their hinges, leaving his home and personal property exposed to the freezing temperatures. Tatum’s lender was Bank of America and Safeguard Properties was the management firm hired to “preserve” his property. Safeguard eventually replaced Mr. Tatum’s doors.

Illinois is not the only state where complaints about Safeguard have been reported; legal aid firms in California, Nevada, Florida, Michigan, North Carolina, Pennsylvania and New York echo those filed with the Illinois Attorney General’s Office. Some homeowners have filed their own lawsuits against Safeguard, accusing the company of trying to forcibly drive them out of their homes by damaging their possessions, changing locks and shutting off electricity.

Attorneys for homeowners in foreclosure, such as Adam Taub, say there is a financial incentive for property management firms to declare properties vacant because they make more money.

The core of the $26 billion National Mortgage Settlement by the attorneys general for 49 states was that the banks employed outside law firms to “robosign” foreclosures against homeowners without vetting the documentation. Under the settlment, banks are now required to police their third-party vendors and subcontractors.

Citing the 400 complaints her office has received, AG Madigan responded that the banks have “failed to supervise these firms.”

Read another article about Safeguard’s alleged business practices in the Plain Dealer.

Ripoff Report contains 38 complaints against Safeguard Properties across numerous states.

OneWest Bank Coughs Out 7-Figure Settlement for Dual-Tracking in San Luis Obispo Foreclosure Lawsuit

September 12th, 2013 at 4:27pm

A San Luis Obispo County couple who sued OneWest Bank, IndyMac Mortgage Services, U.S. Bank and GSR Loan Mortgage Trust has received a million-dollar-plus settlement and title to two of their houses that were foreclosed.

The case brought by Greg Rigali and Irene Rigali of Shell Beach could embolden other homeowners who have lost their homes to foreclosure to sue banks for the common practice of “dual tracking.” Dual tracking occurs when banks pursue foreclosure against homeowners in default while at the same time giving those homeowners the false belief they are working with them.

At the time their two homes were foreclosed the Rigalis thought they were negotiating with OneWest Bank to obtain mortgage modifications.

Rik Tozzi, an Alabama attorney, arrived in San Luis Obispo last May for a hearing on a motion to grant summary judgment to OneWest Bank. Instead of walking away with a win for his client, he listened as San Luis Obispo Superior Court Judge Charles S. Crandall said that the Rigalis had shown enough evidence to substantiate their claims of fraud, wrongful foreclosure, unfair business practices, quiet title, and intentional infliction of emotional distress to allow their case to go before a jury trial.

OneWest, which quickly settled, had picked up the original loan modification negotiations begun by IndyMac before it collapsed and was acquired by Steve Mnuchin and his investors for a steal at $1.55 billion. IndyMac had invited the Rigalis to modify the mortgages on both homes, including suspending or reducing their payments. OneWest sent a letter that included the following solicitation:

“Because you are a valued customer, we want to help you stay in your home. Reduce your monthly payment of principal and interest and bring your loan current.”  And “we propose to permanently modify your mortgage, bring past-due payments current, and provide you with an affordable monthly payment.”

But while the Rigalis were making payments in accordance with a June 2009 agreement with OneWest Bank, another division in the bank was beginning foreclosure, hence the dual tracking.

In July 2009, OneWest Bank assigned the Rigali’s trust deed to U.S. Bank, which foreclosed on their beach house property two months later, in September. The Rigalis then sued.

Greg and Irene Rigali were represented by attorneys Maria L. Hutkin and Jude J. Basile.

Read the original article in CalCoastNews.

Riverside County Proactive in Fight against Foreclosure Fraud

August 29th, 2013 at 7:43pm

Riverside County officials are taking extra steps to ensure that homeowners in default do not become the victims of real estate fraud.

The offices of District Attorney Paul Zellerbach and Assessor-County Clerk-Recorder Larry Ward will send out advisory letters to homeowners who are receiving a Notice of Default (NOD). The letters will be a further notification that the NOD was recorded and to warn homeowners to watch out for loan modification scammers, especially those that demand payment in advance, a practice that was outlawed in 2009.

Read the full article in the Press Enterprise.

Why the Obama Administration Doesn’t Prosecute Banks: a Hypothesis (Parts 1 and 2)

August 23rd, 2013 at 11:06am

William K. Black, J.D., Ph.D. is an Associate Professor of Law and Economics at the University of Missouri-Kansas City. According to his website Financial Sense, Dr. Black was the “litigation director of the Federal Home Loan Bank Board, deputy director of the FSLIC, SVP and General Counsel of the Federal Home Loan Bank of San Francisco, and Senior Deputy Chief Counsel, Office of Thrift Supervision. He was deputy director of the National Commission on Financial Institution Reform, Recovery and Enforcement.”

Recently, Dr. Black has written a 3-series set of essays that center around the theme that President Obama and his Attorney General Eric Holder refuse to prosecute “elite banksters,” a decision that follows the policy of the previous Bush Administration.

For your reference, please go to this link on the FBI’s website to read the “2010 Mortgage Fraud Report: Year in Review.” You will notice immediately when you enter the FBI’s website that it issued Mortgage Fraud Reports for five consecutive years, from 2006 through 2010, but has been awkwardly silent for almost three years.

This report can also be found, and is discussed, in my book “How to Commit Short Sale Fraud . . . and Get Away with It,” albeit from a different perspective. My own inquiry to the FBI confirmed that there have been no mortgage fraud reports by the agency since the 2010 report and the FBI apparently has no plans to publish any future similar reports. This fact alone gives credence to Dr. Black’s accusation that the Obama Administration, including the Department of Justice, has no interest in holding the banks accountable for the bulk of the mortgage crisis.

The first of Dr. Black’s articles is titled “The FBI’s 2010 Mortgage Fraud Report Reveals Why the Banksters Love Holder” and is published on New Economic Perspectives. I will attempt to summarize the key points of this first article, as follows:

- Both the Bush II and Obama administrations have had a hands-off policy with respect to prosecuting C-suite bankers for their role in precipitating the mortgage crisis, i.e., making subprime loans and “Liar’s Loans” not only possible but ubiquitous;

- Both administrations are adherents to the “cult of the Virgin Crisis” – that is, the mortgage crisis emanating from throwing caution to the wind and revising centuries-old tried-and-true underwriting practices was unforseeable, which many of us in the real estate and mortgage industries find incomprehensibly naive;

- As such, “the rule of law no longer applies to wide ranges of life and that crony capitalism will continue to reign.”;

- The Federal Reserve, the FDIC, the OCC (Office of the Comptroller of the Currency), and OTS (Office of Thrift Supervision) are all banking regulatory agencies, yet none of them contributed information regarding reporting of mortgage fraud to the FBI. Nor has the SEC proven to be anything short of worthless in protecting American citizens and residents from abuses (“control fraud“) by the banks;

- Honest appraisers and white-collar criminologists who approached the above agencies, including the FBI, to warn of post-Enron control fraud by banks were ignored.

- MARI, the Mortgage Asset Research Institute, “had warned the entire mortgage industry (and the FBI) that the incidence of fraud in liar’s loans was 90 percent.”

- Benjamin Wagner, the U.S. Attorney for the Eastern District of California, does not prosecute bank executives because he apparently doesn’t believe banks would deliberately underwrite fraudulent loans. “It doesn’t make any sense to me that they would be deliberately defrauding themselves,” says Wagner, quoted in Dr. Black’s article.

In his second article,  “The Incredible Con the Banksters Pulled on the FBI,” Dr. Black states what is obvious to all except state and federal prosecuting agencies: “banks will not make criminal referrals against their own CEOs.” Obviously, then, “criminal referrals have virtually vanished against the ‘accounting control frauds’ that drive our recurrent, intensifying financial crises. ” To prove his point, he cites the investigative reporting of Huffington Post report David Heath, as well as the 1993 article by George Akerlof and Paul Romer called “Looting: The Economic Underworld of Bankruptcy for Profit”. The sum of all three writers is that since there is no required reporting by banks of criminal activity of their executives, criminal behavior by bankers (aka “banksters”) is now “epidemic.”

Dr. Black posits that the above named federal regulatory agencies failed to provide the FBI with evidentiary findings of fraud, leaving the FBI dependent on either the non-existent self-reporting or that of whistleblowers. I can personally confirm that at least one of the offices of the California Department of Justice (California Attorney General) claims to be interested in prosecuting banksters to the exclusion of what they consider to be minor crimes, such as the expanding epidemic short sale fraud, but astoundingly thinks they are going to get evidence of said crimes from “insiders,” meaning whistleblowers. As evidence of the logic of their thinking, not a banker in California has been criminally prosecuted, to my knowledge.

So, with $25 million in its pocket from its 50-state settlement with the largest banks, what is the Office of the California Attorney General doing to protect homeowners by punishing banksters? As far as I can tell, very, very little.

And the FBI? According to William Black, the FBI got “conned” by the  Mortgage Bankers Association (MBA) – the trade association of the “perps,” by convincing the feds to “partner” with them on posters and alerts to warn lenders about how lenders are “victimized” by borrowers submitting fraudulent loan applications. In other words, if an individual borrower lies on a loan, this is a crime against the banks, but both sides were comatose in discussing the other side of the issue: that the banks engaged in robosigning, “lost” paperwork on homeowners’ loan applications, fraudulently foreclosed on homeowners and lied to investors about the toxic assets sold to institutional buyers. And certainly not a single sentence about control fraud committed by the banks, aka accounting fraud.

Coming: more reporting on William K. Black’s series of articles describing how state and federal government has abandoned homeowners by permitting control fraud by bank executives.

 

 

 

 

Investor Agrees to Plead Guilty

June 24th, 2013 at 7:48pm

Robert Williams, an Atherton, California investor, is the 31st person to plead guilty or agree to plead guilty to felony charges of bid rigging and mail fraud at public real estate foreclosure auctions in San Mateo County. Prosecutors in the U.S. District Court for the Northern District of California in San Francisco have been aggressive in pursuing individuals who conspire at these auctions in order to gain title and possession at more favorable prices than if the bidding were open and competitive.

“Collusion at these foreclosure auctions enabled the conspirators to present the illusion of competition, when they were actually thwarting the competitive process and profiting at the expense of lenders and distressed homeowners,” said Bill Baer, Assistant Attorney General in charge of the Department of Justice’s Antitrust Division. “The division remains committed to holding accountable those who illegally subvert competition at real estate foreclosure auctions across the country.”

“The legitimacy of an open, public real estate foreclosure auction is compromised when an individual or group conspires to commit criminal activity which impacts genuine intentions of good citizens,” said David J. Johnson, FBI Special Agent in Charge of the San Francisco Field Office. “We are steadfast in our continued partnership with the Antitrust Division in bringing those criminally responsible to justice.”

These crimes are being prosecuted under the Sherman Act. A violation carries a maximum penalty of 10 years in prison and a $1 million fine for individuals.

Read the original article in the Imperial Valley News.

Bank of America Employees Say They Were Told to Lie about Loan Modifications

June 20th, 2013 at 10:41am

The following story, as reported by NBC News, is no surprise to the thousands of distressed homeowners who have tried and failed to get home loan modifications under the government’s HAMP program (Home Affordable Modification Program). Realtors® who try to help homeowners with loan modificationsAlthough the bad guy in this story is Bank of America, I can safely say that homeowners whose loans are with all of the major big-name banks have experienced the same frustrations.

In sworn testimony in response to a Massachusetts lawsuit filed on behalf of dozens of Bank of America borrowers in 26 states, former employees of the bank have acknowledged that they routinely denied qualified borrowers a chance to modify their loans to more affordable terms.

That’s not the shocking part: Bank of America actually paid cash bonuses to its employees for pushing homeowners into foreclosure, this, according to affidavits filed as part of the lawsuits.

Simone Gordon, who worked in the bank’s loss mitigation department until February 2012, said “We were told to lie to customers. Site leaders regularly told us that the more we delayed the HAMP [loan] modification process, the more fees Bank of America would collect.” Gordon is one of six former employees who recounted stories where the bank deliberately thwarted the efforts of the homeowners, their housing counselors and attorneys.

Read the Affidavit of Simone Gordon.

William Wilson Jr., a manager in the company’s Charlotte, N.C., headquarters, said that the point of delaying or denying the HAMP loans to which many borrowers were qualified was so Bank of America representatives could upsell them to a more costly “in-house” loan modification. Rates for these bait-and-switch in-house loans were 3 points higher than the 2 percent rate available under HAMP guidelines, he said.

“The unfortunate truth is that many and possibly most of these people were entitled to a HAMP loan modification, but had little choice but to accept a more expensive and less favorable in-house modification,” he said.

Read the William Wilson Declaration.

The testimony of these employees makes clear why the government’s Home Affordable Modification Program, initiated in 2008, has been a dismal failure.

Bank of America has denied the allegations and issued the following statement: “We continue to demonstrate our commitment to assisting customers who are at risk of foreclosure and, at best, these attorneys are painting a false picture of the bank’s practices and the dedication of our employees,” a spokesman said in a statement. “While we will address the declarations in more depth when we file our opposition to plaintiffs’ motion next month, suffice it is to say that each of the declarations is rife with factual inaccuracies.”

© Copyright 2007-2014 Monique Bryher

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The information and notices contained on The California Real Estate Fraud Report are intended to summarize recent developments in real estate fraud, mortgage fraud, short sale fraud, REO fraud, appraisal fraud, loan modification scams, loan modification fraud and other real estate related crimes occurring in Los Angeles and California. The posts on this site are presented as general research and information and are expressly not intended, and should not be regarded, as legal advice. Much of the information on this site concerns allegations made in civil lawsuits and in criminal indictments. All persons are presumed innocent until convicted of a crime. Readers who have particular questions about real estate fraud, mortgage fraud and appraisal fraud matters or who believe they require legal counsel should seek the advice of an attorney.

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