9:12PM

Updating database

Over next few days we will be adding some older news to the site to ensure our searchable database is up to date and that searches you may want to conduct are looking at all the relevant information. This will mean the input of case news from June and July 2008 which you will receive as links in the Daily email. We apologise if you are already aware of the information you receive.

4:09PM

Springfield mortgage broker ordered to cease & desist

On August 29, 2008 the Massachusetts Dept of Consumer Affairs and Business Regulation issued a temporary cease and desist order to Post Road Funding, dba Millennium Mortgage of Springfield, Massachusetts. The Department alleges that they found evidence of documents being altered with white out and “cut and paste” in 8 loan files. In addition they allege that they found evidence of other issues including unlicensed employees, undisclosed fees and other matters. Please click here for the full entry on the Departments website.
2:08PM

Missouri AG announces several lawsuits

In the following press release Missouri Attorney General Jay Nixon announced that he is taking legal action to stop those who are preying on Missouri homeowners left vulnerable to mortgage fraud because they are facing foreclosure or other financial difficulties.

On July 28, 2008 Nixon launched Operation Stealing Home by filing seven lawsuits in Buchanan, Greene, Henry, Jackson, St. Louis, and St. Charles counties. The suits are aimed at individuals and businesses Nixon said had defrauded consumers through refinancing, advance fee and foreclosure consulting scams. In several of the cases, the consumers lost their homes and ended up much worse financially than they were before. Victims of the scams live throughout Missouri and several other states.

“As more and more families are threatened with foreclosure on their homes during these tough economic times, unscrupulous people will try to take advantage of them under the guise of help,” Nixon said. “With these lawsuits, we are working to stop the empty promises made to and the exploitation of homeowners who already are in dire straits.”

Nixon said the lawsuits send a strong message that his office will not tolerate mortgage fraud in Missouri. The Attorney General’s actions were supported by advocates for Missouri seniors and consumers.

“Anyone taking advantage of needy Missourians, especially seniors, in this way needs to be stopped,” said Dorothy Knowles, President of the Missouri Alliance of Area Agencies on Aging. “I am encouraged that Attorney General Nixon is taking this legal action to protect homeowners who are already facing difficult and frightening circumstances.”

“In this economic climate, elderly Missouri homeowners need to have confidence in their financial advisors and lenders,” said John McDonald, AARP’s Missouri state director. “Our hope is that a crackdown like this one will send a message to others who would try to take advantage of seniors who desperately need help with their housing situation.”

Four of the defendants operate what Nixon termed “foreclosure rescue scams.” They search foreclosure listings in publications or online and approach the homeowners with promises to stop the foreclosures by paying off the lenders.

The companies then convince the homeowners to deed their property over and rent it back from the company so they can still live in the home, on the premise that the rent goes to make the mortgage payment, plus a modest profit for the company.

Unfortunately, the homeowners discover that the companies are not using their rent payments to make mortgage payments, causing the lenders to initiate foreclosure proceedings. The defendants present the homeowners the choice either leaving their homes or buying them back from the company. In one such case, a consumer was told she would be thrown out of her home unless she paid the company $230,000, the value of the home.

Nixon is alleging in his lawsuits that these defendants carried out this type of scheme:

  • St. Anthony Avenue LC, based in St. Louis County. The lawsuit was filed in St. Louis County;
  • Private Funding Solutions, based in St. Charles, and its president, Mike C. Rothweiler. The lawsuit was filed in St. Charles County;
  • Brian J. Thompson, of Springfield, who does business as “All Decked Out”. The lawsuit was filed in Greene County; and
  • Access Mortgage and Financial Corp., of Lansing, Mich., and its agents, David Snyder and Josh Nowell. The lawsuit was filed in Henry County.

Nixon also is suing several mortgage companies as part of Operation Stealing Home. The companies promised homeowners - and in one instance, small businesses - that their loans for re-financing would feature terms they could afford. The consumers often were facing skyrocketing house payments because of their adjustable rate mortgages, and wanted to obtain more favorable loans.

What the homeowners often discovered, however, was that the actual terms were far different - and much less favorable to the consumers - than what the mortgage companies had promised. Some homeowners found that they were charged much higher fees at closing than what had been promised. In another case, the company failed to credit loan payments from consumers in a timely fashion and then charged late fee and filed credit reports indicating the consumer was delinquent with payments. Another defendant charged advance fees of as much as $30,000 for loans that were never obtained.

Again, Nixon said, many consumers who had been experiencing financial difficulties before they did business with these companies found themselves worse off after their dealings with the defendants.

Nixon is suing the following mortgage brokers:

  • Christopher E. Cosma, of St. Peters, and three companies for which he was an agent — America One Finance Inc., of Bellevue, Wash., Accredited Home Lenders, of San Diego, and Castle Point Mortgage Inc., of Elkridge, Md. The lawsuit was filed in St. Charles County;
  • Fouquet Financial Services Inc., located in St. Joseph, and its president, Joseph M. Fouquet. The lawsuit was filed in Buchanan County; and
  • Saxon Mortgage Services, of Austin, Texas. The lawsuit was filed in Jackson County.

Nixon is asking the courts to void the deeds the companies illegally obtained; to award restitution to consumers who suffered losses; to impose appropriate penalties; and to issue injunctions to prohibit the defendants from future violations of Missouri consumer protection laws.

Nixon said consumers - especially if they are already facing financial difficulties - should be extremely cautious when dealing with individuals or companies they are unfamiliar with in regard to home-financing issues:

  • Beware of anyone who asks you for a deed to your home in exchange for fixing your mortgage problem;
  • Be leery of any company that urges you to go ahead and sign confusing or unfavorable loan papers on the premise that you can always refinance later. This is a common tactic that usually traps consumers in undesirable loans which they cannot refinance;
  • Remember that it is illegal to require you to pay a fee in advance in order to obtain a loan;
  • Ask questions about any fees that appear in paperwork that you don’t understand or didn’t agree to pay;
  • Take your time to read the fine print. Don’t let anyone pressure you into signing quickly; and
  • If someone attempts to lure you into one of these scams, or if you have questions about certain practices, contact the Attorney General’s Office through its Web site, ago.mo.gov, or by calling the Consumer Protection Hotline toll-free at 1-800-392-8222.
1:08PM

Former title insurance rep arraigned on five count indictment

In the following press release Thomas J. Spota, Suffolk County District Attorney, announced that a Suffolk County grand jury has indicted an Islip Terrace woman for allegedly stealing escrow funds, mortgage settlement money and for writing a bad check to purchase business software. Christina Cidoni, 43, of 94 Oceanside Street, pleaded not guilty in Suffolk County court to two counts of grand larceny second degree and three counts of third degree grand larceny. 

At residential real estate closings in Suffolk County in 2003, Cidoni, as a title insurance company representative, deposited over $491,000 earmarked to pay off existing mortgages into her own business account.  The defendant told detectives she used the money to fund the operations of her business, Spectrum Settlement Group.

Cidoni’s employer at the time, Fidelity National Title Insurance Company of New York, eventually paid off both mortgages to settle the accounts. Cidoni’s two escrow fund thefts in 2004 involved stealing $10,000 in connection with the sale of property in Mastic Beach, and the theft of $5,000 associated with the sale of property in Dix Hills.

The indictment also charged Cidoni purchased proprietary title insurance computer software from a Saugerties, New York man and paid for the product by writing a worthless check for $11,310. Judge Martin Efman set cash bail for Cidoni at $15,000, or $30,000 bond.

12:38PM

NY men remortgage elderly mans home without permission

In the following press release Queens District Attorney Richard A. Brown announced on 8/22/08 that a Brooklyn man has pleaded guilty to fifth-degree criminal possession of stolen property in connection with the fraudulent sale of a retired New York City correction officer’s Cambria Heights house. The defendant, who works in his family’s fish market, was charged in the case along with his brother, who was employed at a Queens real estate brokerage firm. The brother is a fugitive who is being sought internationally.

District Attorney Brown said, “This defendant took advantage, allegedly along with his brother, of an elderly man’s poor health by swindling him out of his home. Fortunately, the victim, who suffers from dementia, was able to remain in his home and civil litigation is underway to ensure that he may remain there as the rightful owner. Fortunately, the scheme was uncovered after the victim’s eldest daughter, a New York City police officer, became suspicious of various transactions and reported the matter to my Economic Crimes Bureau.”

The District Attorney identified the defendants as Moses Brach, 31, of 182 Lynch Street in Brooklyn, and his brother, Joel Brach, 27, who lived at 137-68th 70th Avenue in Flushing and is believed to have fled to Israel. Moses Brach, who is employed at the family-owned 18th Avenue Kosher Fish Store in Borough Park, Brooklyn, pleaded guilty yesterday in
Supreme Court in Kew Gardens before Queens Supreme Court Justice Kenneth C. Holder to one count of fifth-degree criminal possession of stolen property. He was sentenced to pay $50,000 in restitution and his check in that amount was personally delivered to the victim hours later by the prosecution.

District Attorney Brown said that, according to the charges, 71-year-old Hoesey Walker sought the aid of Home Engergizer, Inc., a real estate brokerage company formerly located at 189-07 Jamaica Avenue in Hollis, in February 2007 to assist him in the purchase of real estate. Joel Brach, an employee of Home Energizer, allegedly handled the transaction involving Mr. Walker’s purchase that same month of two properties – one in Brooklyn and the other in Queens – for a total of $1,370,000.

The District Attorney said it was further charged that shortly after the purchase of the two investment properties, Mr. Walker’s daughter, New York City Police Officer Kim Walker, discovered that her father had begun to exhibit signs of dementia and did not understand the financial consequences of purchasing the two investment properties. Officer Walker also discovered, it was alleged, that her father’s primary residence at 114-121 228th Street in Cambria Heights had been sold.

It is further alleged that the Cambria Heights residence was sold in March 2007 to Joel Brach and his brother, Moses Brach, for $440,000 and that the equity proceeds from the sale of the house – $211,000 – were placed in a Wachovia joint banking account in which the two Brachs and Mr. Walker were listed as the account holders. An investigation by the District Attorney’s Office determined that the account had allegedly been opened in March 2007 in Joel Brach’s name only and then his brother’s name was added as an account holder, and then finally that Mr. Walker’s name was added as an account holder – unbeknownst to him and only after the sale of his residence.

Finally, it is alleged that Mr. Walker was not present at the closing, which took place at 8:00 p.m. at the defendant Joel Brach’s Flushing residence. As a result of the sale, it is alleged, a check was made payable to Mr. Walker in the amount of $211,000 – which was then deposited into the Wachovia account that the Brachs had established.

District Attorney Brown said that the existence of the check and the account came to light when a Wachovia representative contacted Mr. Walker and his family due to the suspicious nature of the deposit. At the request of the District Attorney’s Office, the account’s assets have been frozen and remain frozen.

The District Attorney noted that, as a result of the sale, a mortgage in the amount of $407,537 in the names of the Brachs was filed against Mr. Walker’s property and that mortgage is near foreclosure. Prior to the sale, Mr. Walker only had a mortgage of $187,633 on his property. The investigation was conducted by Detectives Jerome D. Pugh, Richard A. Lewis and Patrick F. Dolan of the District Attorney’s Detective Bureau, under the supervision of Sergeant John W. Kenna and Lieutenant Robert J. Burke, and under the overall supervision of Chief Investigator Lawrence J. Festa and Deputy Chief Investigator Albert D. Velardi. Assistant District Attorney Khadijah Muhammad-Starling, of the District Attorney’s Elder Fraud Unit, is prosecuting the case under the supervision of Assistant District Attorney Kristen A. Kane, Chief of the Elder Fraud Unit, and Assistant District Attorneys Gregory Pavlides, Bureau Chief of the District Attorney’s Economic Crimes Bureau, and Christina Hanophy, Deputy Bureau Chief, and the overall supervision of Executive Assistant District Attorney Peter Crusco and Deputy Executive Assistant District Attorney Linda Cantoni of the Investigations Division.
10:33AM

Realtor indicted in multi state fraud scheme

In the following press release Debra K. Mack, Special Agent in Charge of the Mobile Division of the Federal Bureau of Investigation, and Leura G. Canary, United States Attorney for the Middle District of Alabama, announced that on June 16, 2008, Robert B. Guest, Jr., age 44 (a resident of Palm Coast, Florida, who resided in Orlando at the time of the events in the case) pled guilty in U.S. District Court before United States Magistrate Judge Wallace Capel, Jr., to a one-count felony information charging him with conspiracy to make false statements to financial institutions, in violation of Title 18, United States Code, Section 371.

According to the plea agreement and information, beginning in the Fall of 2002, Guest began engaging in the business of buying and selling houses. Guest would purchase a house in an area of low property values, at first in Birmingham, Alabama, and, beginning in 2005, in Montgomery, Alabama. Guest also bought and sold houses in Orange and Seminole Counties, Florida, and Nashville, Tennessee.

Prior to buying a house, Guest arranged to resell the house to another individual (the “Investor”). Guest’s written contract with the Investor would provide that Guest would sell the property to the Investor for a price substantially in excess of the price Guest had paid for it. The properties were to be rented to “Section 8” tenants, and the rent payments were supposed to provide the Investor with enough funds to cover the amount of the mortgage, plus a profit. The Investors financed the purchase through a mortgage loan from either a bank or a nonbank mortgage lender. The Investor would apply for an “80/20” mortgage loan, which meant that the Investor was supposed to be paying 20% of the purchase price, with the lender financing 80%. The Investor and Guest had an unwritten side deal whereby Guest would immediately refund the amount of the down payment to the Investor, typically within 24 hours. Therefore, the economic reality of the transactions was that the Investor was buying the house for the amount of the loan, and the lender was providing 100% financing instead of 80%. Both the loan application submitted by the Investor and the closing statement signed by Guest and the Investor represented that the Investor was putting 20% down without disclosing the side deal.

Guest sold more than 200 houses pursuant to this scheme, approximately 100 of which were in Montgomery. The lenders for most of the Montgomery houses were Countrywide Bank, FSB and its affiliate, Countrywide Home Loans, Inc. Countrywide is expected to suffer a loss of more than $2 million as a result of these loans.

When he is sentenced on September 18, 2008, by United States District Judge Myron H. Thompson, Guest faces a statutory maximum penalty of 5 years imprisonment, an order of restitution, and a fine of up to $250,000 or, if greater, twice the loss to victims. Guest was released pending sentencing on a $25,000 unsecured bond, subject to the condition of electronic
monitoring.

Mack stated, “Mortgage fraud adversely affects the nation’s economy, victimizing both lenders and the community at large. The FBI is and will continue to aggressively investigate mortgage fraud schemes.”

Canary stated, “The guilty plea in this case shows that mortgage fraud is a problem not limited to areas that were part of the real estate ‘bubble.’ The Department of Justice is committed to investigating and prosecuting mortgage fraud wherever it occurs.”

The case was investigated by the Federal Bureau of Investigation and is being prosecuted by Assistant U.S. Attorney Andrew O. Schiff.
2:48PM

Austin area (TX) scheme ringleader sentenced

In the following press release United States Attorney Johnny Sutton announced that in Austin this afternoon (8/29/08), former Austin resident Cornelius Robinson (pictured below) was sentenced to 327 months in federal prison for masterminding a multi-million dollar mortgage fraud scheme. The overall conspiracy involved sixteen named defendants, at least 33 properties, 19 financial institutions and over $4.5 million in claimed losses.

“Mortgage fraud and other criminal schemes involving the housing market are serious crimes which we will aggressively prosecute. Today’s sentence is clear evidence that these scammers will be punished. The house of cards which Mr. Robinson deceptively built came crashing down on him today when he was sentenced to over 27 years in prison,” stated United States Attorney Johnny Sutton.

In March, Robinson was convicted of conspiracy to make false statements related to a loan, conspiracy to commit wire fraud, five substantive counts of wire fraud, 9 substantive counts of false statements related to a loan, one count of aiding and abetting the receipt of commissions or gifts from loans by a bank employee, conspiracy to commit money laundering and 7 substantive counts of money laundering.

From September 1999 to present, Robinson and his co-defendants participated in a scheme to defraud mortgage lenders, including federally insured financial institutions, with regard to loans acquired to purchase 33 properties in the Austin and San Antonio area. The scheme centered upon the use of real estate “flips.” That is, the defendants purchased property at one price and would immediately sell, or “flip,” the property to a “straw buyer” at a higher price. In doing so, the mortgage lenders were deceived as to the true nature of the transaction and the financial status of the “straw buyer.” The straw buyers did not make the subsequent monthly mortgage payments and all of the loans have gone into default. All of loans have been either foreclosed upon or are the subject of current foreclosure proceedings.

On August 8, 2008, Robinson failed to appear for his original sentencing hearing. Four days later, deputy U.S. Marshals tracked Robinson down and arrested him at a residence in rural Caldwell County. At the time, Robinson was in possession of a shotgun as well as a 9mm pistol.

This case was investigated by the Federal Bureau of Investigation and the Internal Revenue Service - Criminal Investigations. The case is being prosecuted for the government by Assistant United States Attorney Mark Lane.

12:49PM

Former Chairman & Exec Director Winston-Salem Housing Authority indicted

In the following press release on August 28, 2008 U.S. Attorney Anna Mills Wagoner for the Middle District of North Carolina announced that a federal grand jury in Greensboro has charged ERNEST HAROLD PITT, THOMAS PARRISH TROLLINGER, and JAMES REID LAWRENCE, in a scheme to defraud the Housing Authority of the City of Winston-Salem, NC (“HAWS”).

Resources:
News 14 Carolina Video News Report
Press Release
Indictment

The 10-count indictment, returned Tuesday August 26, 2008, alleges that the defendants acted to defraud HAWS by having it loan $414,000 to Forsyth Economic Ventures, Inc. (“FEV”), for the purchase of property (23 lots in the Lansing Ridge Subdivision) owned by East Pointe Developers, LLC (“EPD”), without disclosing to HAWS the financial interests of PITT and ROLLINGER in EPD, and without the knowledge or approval of the HAWS Board of Commissioners (“HAWSBOC”) or the FEV Board of Directors. At the time of the transaction, PITT and TROLLINGER were the sole managers of EPD, directed its operations and received the profits from it. PITT was also Chairman of the HAWSBOC and President of FEV. LAWRENCE was Executive Director of HAWS and Vice President of FEV. The indictment alleges that PITT and TROLLINGER each received $84,000 as a result of the transaction. PITT and LAWRENCE thereafter obtained a bank loan in the amount of $414,000 on behalf of FEV to repay HAWS, again without the knowledge or approval of the HAWSBOC and the FEV Board of Directors.

If convicted of the allegations in Count One of the Indictment, the defendants face a maximum of 20 years in prison. If convicted of mail fraud as alleged in Counts Six and Seven, the defendants also face a maximum of 20 years in prison. The money laundering charges contained in Counts Two through Five against PITT (2, 3, 4) and TROLLINGER (2, 5) carry a maximum 10 year prison sentence. LAWRENCE is charged in Counts Eight and Nine with making materially false statements during the ensuing investigation.

TROLLINGER is also charged, in Count Ten, with making materially false statements during the investigation of the transaction. If convicted of Counts Eight, Nine or Ten, those defendants face up to 5 years in prison. Conviction of any of the counts in the Indictment may also result in imposition of a $250,000 fine. The charges in this indictment are the result of an investigation conducted by the Federal Bureau of Investigation and the Department of Housing and Urban Development (HUD) - Office of Inspector General.

An indictment is not evidence of guilt. All persons charged with a crime are presumed innocent until proven guilty beyond a reasonable doubt.