Entries in foreclosure rescue fraud (24)

3:09PM

Kathleen Harps sentenced in foreclosure rescue fraud case

In the following press release by the FBI Field Office in Norfolk, VA it was annouced that Kathleen Harps, 51, of Chesapeake, VA, was sentenced today in Norfolk federal court to 54 months in prison for operating a foreclosure rescue mortgage fraud scheme.

Neil H. MacBride, United States Attorney for the Eastern District of Virginia, made the announcement after Chief United States District Judge Rebecca Beach Smith imposed the sentence. Harps previously pled guilty on August 23, 2011.

According to court documents, during 2006 Harps owned and operated the now defunct Hampton Roads businesses, New Beginnings Group, LLC, and IMAK Group, LLC, which specialized in “foreclosure rescue.” Through these businesses, Harps and others solicited homeowners in financial distress and facing foreclosure, to agree to sell their homes to Harps or straw buyers working with her. Harps promised the homeowners that, during a one year period after the sale, they could remain in their homes without having to pay the mortgage, while simultaneously putting their financial affairs back in order, so that they could buy back their homes at the end of the year. This, however, failed to occur. Instead, court records show that Harps and her straw buyers made assorted false statements to fraudulently obtain mortgage loans, upon which they later defaulted. As a result, foreclosures soon followed and the homeowners lost both their homes and substantial sums of homeowner equity, which was siphoned out of the closing transactions and paid to Harps’ businesses.

This case was investigated by the Federal Bureau of Investigation. Assistant United States Attorney Robert J. Krask is prosecuting the case on behalf of the United States.

A copy of this press release may be found on the website of the United States Attorney’s Office for the Eastern District of Virginia at http://www.justice.gov/usao/vae. Related court documents and information may be found on the website of the District Court for the Eastern District of Virginia at http://www.vaed.uscourts.gov or on http://pacer.uspci.uscourts.gov.

2:07PM

Las Vegas man pleads guilty in CA to a foreclosure rescue scheme

In the following press release United States Attorney Benjamin B. Wagner announced that George M. Eggleston, 63, of Las Vegas, pleaded guilty today before United States District Judge Lawrence J. O’Neill to three counts of wire fraud and one count of mail fraud arising from a mortgage foreclosure rescue scheme. Eggleston also agreed to the forfeiture of property and proceeds obtained as a result of such violations, including a personal money judgment in the amount of $364,899.                  

According to court documents, Eggleston targeted property owners who were facing foreclosure and offered to rescue them. Using the business names of Nexxus and Global Legal Associates, he advertised on his website and also got referrals from others individuals who marketed his services. Eggleston induced property owners to enter into a contract called the “Nexxus Engagement,” the terms of which required property owners to sign an “Offer and Agreement” and pay Nexxus a monthly fee of $1,000 for 60 months. The terms of this agreement also required the clients to sign a power of attorney giving Nexxus authority to negotiate with lenders and file lawsuits on their behalf.

Eggleston admitted in his plea that he told his clients that by using and managing attorneys, Nexxus and Global Legal Associates could negotiate with lenders and file lawsuits against lenders thereby stopping the foreclosure action. In fact, he did not provide the services, did not manage attorneys, and did not stop foreclosure actions. Instead, he used the money from the clients for his personal expenses. Eggleston also admitted that on February 14, 2007, he used false information on a mortgage loan application, causing a loss of $261,000 to SunTrust Mortgage when the home went into foreclosure.

Sentencing is scheduled for May 6, 2011 at 8:30 a.m. The maximum statutory penalty for each count of mail fraud and wire fraud is 20 years in prison, a $250,000 fine and up to three years supervised release following incarceration. The actual sentence, however, will be determined at the discretion of the court after consideration of any applicable statutory factors and the Federal Sentencing Guidelines, which take into account a number of variables.

The case is the product of an investigation by the United States Bankruptcy Trustee’s Office and the Federal Bureau of Investigation. Assistant United States Attorney Michele Thielhorn is prosecuting the case.

1:19PM

Three charged in Delaware foreclosure rescue fraud allegations

Jamaar Manlove is alleged to have run a criminal enterprise involving theft, money laundering, and forgery in which he preyed on vulnerable homeowners who faced imminent foreclosure. He and the co-defendants targetted struggling homeowners looking to sell their homes to third parties to avoid foreclosure based on the false promise that they can repurchase their homes.

Click to read more ...

1:24PM

Oregon DCBS issues Cease and Desist to accused foreclosure scammer

Anthony Schwartz, who owned REI Exchange, LLC and TMG Ventures, Inc. in the Portland area, raised nearly $850,000 by convincing buyers to purchase fractional interests in real estate land trusts from the sale of homes seized from owners unable to repay their loans. Schwartz, who was not licensed to sell securities, falsely represented that the unusual, unsecured investments were safe.

Click to read more ...

6:00PM

5 charged in PA based foreclosure rescue fraud scheme allegations

In the following press release it was announced that a 15-count Indictment was filed today against five defendants charged in a $14.6 million mortgage fraud scheme that resulted in at least 35 fraudulent mortgage loans. The announcment was made by United States Attorney Michael L. Levy, Special Agent-in-Charge of the FBI Janice K. Fedarcyk, and Pennsylvania Secretary of Banking Steven Kaplan. Charged are Edward G. McCusker and John Alford Bariana, owners of Axxium Mortgage, Inc [website likely to go offline] McCusker’s wife, Jacqueline, and Jeffrey A. Bennett and Stephen G. Doherty, owners of the Doylestown law firm Bennett & Doherty, P.C [website likely to go offline]

According to the indictment, the defendants targeted financially distressed homeowners facing foreclosure, falsely promised them help in saving their homes, engaged in real estate transactions with straw purchasers, and obtained dozens of fraudulent mortgages. The defendants took whatever equity the homeowner had left, funneled it through various shell corporations they controlled, used some of it to pay the new mortgages, and put the rest of the equity into their own bank accounts.

“Unfortunately, the downturn in the economy has given rise to unscrupulous predators looking to cash in on the misfortune of others,” said Levy. “This sort of fraudulent activity not only preys on desperate homeowners, it weakens our financial institutions, destroys neighborhoods by leaving properties abandoned, and devalues the homes of innocent neighbors. This office will investigate and prosecute those who victimize financially distressed homeowners.”

The indictment alleges that the defendants promised financially distressed homeowners that they would find an “investor” who would help them save their home. The defendants would then arrange for a straw purchaser to obtain a fraudulent mortgage and then transfer of the title of the homeowner’s residence to the straw purchaser. Using their company Axxium Mortgage, Edward McCusker and Bariana, along with Jacqueline McCusker obtained the fraudulent mortgages by submitting false documents to mortgage lenders and making false claims about the straw purchasers’ finances. The defendants also concealed from the lender the fact that the homeowner was going to continue to reside in the home and that the mortgage payments were going to continue to be made, in part, by the distressed homeowner and funneled through the straw purchaser. Bariana and Jacqueline McCusker each acted as straw purchasers for ten homes. The defendants also recruited at least seven other persons to act as straw owners in order to obtain additional fraudulent mortgages.

Bennett and Doherty participated in the scheme at the front and back end. Doherty solicited and referred distressed homeowners to Edward McCusker, and used fraudulent bankruptcy filings for some of the distressed homeowners to delay foreclosure until McCusker had obtained an investor and a mortgage. Bennett handled the closings for the real estate transfers, manipulating the information provided to the lender in order to hide the nature of the scheme until after the loan was funded.

“Governor Rendell and I are pleased when state and federal agencies can cooperate to protect consumers and deter improper and criminal activity,” said Pennsylvania Secretary of Banking Steve Kaplan. “U.S. Attorney Levy’s announcement today helps underscore our respective commitments to consumer protection and the Department of Banking’s ability to bring financial expertise to criminal prosecutions.”

“The type of criminal activity alleged in this indictment is particularly despicable in that it targeted those victims who were the most vulnerable financially and the most desperate for some type of assistance to avoid foreclosure on their properties,” said Special Agent-in-Charge Janice K. Fedarcyk of the Philadelphia Division of the FBI. “It also represents an affront to the millions of hard-working Americans who struggle every day to meet their mortgage obligations and keep their families in their homes. The FBI is committed to aggressively pursuing those who engage in schemes designed to illegally profit from the current economic situation of many of our fellow Americans.”

The defendants are charged with conspiracy to commit mail and wire fraud, mail and wire fraud, and conspiracy to commit money laundering. Doherty is also charged with bankruptcy fraud.

Defendants Edward and Jacqueline McCusker, Jeffrey Bennett, and John Bariana face maximum sentences of 240 years imprisonment, $3.25 million in fines, three years supervised release, and a $1,200 special assessment. Defendant Stephen Doherty faces a maximum sentence of 385 years imprisonment, $4 million in fines, three years supervised release, and a $1,500 special assessment. These are the maximum sentences that may be imposed if the defendants are convicted; the advisory United States Sentencing Guidelines call for a sentence less than the statutory maximum.

The indictment seeks forfeiture of the proceeds of the fraudulent scheme, which is alleged to be approximately $14.6 million.

This case was investigated by the Federal Bureau of Investigation and the Pennsylvania Department of Banking. It is being prosecuted by Assistant United States Attorney Nancy Rue.

1:35PM

Illinois AG files suit against three foreclosure rescue companies

Illinois Attorney General Lisa Madigan today announced three lawsuits against mortgage rescue fraud schemes operating in Illinois as part of a national crackdown with the Federal Trade Commission (FTC) and the U.S. Department of Justice.

“With home foreclosure rates steadily on the rise, we are working closely with our federal partners to leverage all available resources to stop mortgage rescue fraud,” Madigan said. “Homeowners who believe they are at risk of losing their homes need to know that free, legitimate help is available. These rescue fraud schemers are not going to help modify your loan, work with your lender or represent you in court. They’re simply going to take your money and run.”

Madigan filed complaints today in Cook County Circuit Court against the following defendants:

  • Loan Mod One, LLC, which has offices in Las Vegas, NV, and West Dundee, IL
  • Freedom Mortgage Team, Inc., of Chicago, and Nevrus Mehmeti;
  • Living Modifications Corp., of Schaumburg, Ill., and its owner, Tomasz Tomczyk.

With these new filings, Madigan has brought lawsuits against 31 mortgage rescue fraud schemes. To date, the Attorney General’s lawsuits have resulted in judgments in nine cases for more than $1.2 million in restitution for homeowners.

In each of today’s lawsuits, Madigan alleges that the defendants target at-risk homeowners and ask for an upfront fee to negotiate with mortgage lenders to reduce the payments and save consumers’ homes. According to Madigan’s complaints, however, after the fraudulent operations collect the upfront fees, they fail to negotiate or perform any services on behalf of the homeowners, leaving consumers at even greater risk of losing their homes to foreclosure.

All three lawsuits allege the defendants’ fraudulent tactics violate Illinois’ Mortgage Rescue Fraud Act, which prohibits companies from requiring upfront payment from consumers prior to completing all the terms of a mortgage rescue contract. The law also requires businesses to fully disclose to a homeowner the exact nature and terms of the proposed rescue services and the homeowner’s right to cancel the contract.

In each suit, the Attorney General is seeking a permanent injunction barring the defendants from engaging in mortgage rescue operations in Illinois. Madigan also is asking the courts to award restitution to consumers and to order each defendant to pay a civil penalty of $50,000, additional penalties of $50,000 for each act committed with intent to defraud, an additional $10,000 for each act committed against a senior citizen, and costs for the investigation and prosecution of the cases.

Madigan’s lawsuits illustrate how she is using her office’s enforcement authority to prosecute mortgage rescue fraud. Earlier this year, Madigan joined federal agencies in Washington, D.C. to discuss the importance of a coordinated federal and state effort to tackle this crippling economic issue.

In addition to her enforcement actions, Madigan said a critical component of the fight against mortgage rescue fraud is consumer awareness. The Attorney General urged homeowners to reach out to trusted sources for assistance. To prevent homeowners in crisis from losing their homes to foreclosure, Madigan urged them to immediately contact:

  • Attorney General Madigan’s Homeowner Helpline at 1-866-544-7151 for guidance on avoiding mortgage foreclosure;

  • A HUD-certified housing counselor for assistance in working out a solution with the lender (Madigan’s office can provide names and numbers for these counselors); and

  • Their mortgage company, whose contact information is found on their monthly mortgage statement.

Madigan also directed homeowners to her Web site at www.IllinoisAttorneyGeneral.gov, to access a Mortgage Rescue Fraud Brochure and her Illinois Mortgage Lending Guide, a resource manual containing step-by-step instructions for those struggling to make their loan payments and a list of HUD-certified counseling agencies that offer default counseling services. Homeowners who do not have easy access to the Internet should call the Attorney General’s Homeowner Helpline to quickly receive the guide or the brochure by mail.

Other states participating in today’s effort include: Arizona, Colorado, Connecticut, Florida, Georgia, Idaho, Indiana, Iowa, Kansas, Maryland, Michigan, Missouri, Nevada, North Carolina, Ohio, Oregon, Texas and Wisconsin.

Assistant Attorneys General Jennifer Franklin, Joshua Orenstein and Akeela White are handling the lawsuits for Madigan’s Consumer Fraud Bureau.

1:30PM

Connecticut AG charges Florida company in foreclosure assistance fraud allegations

 

Connecticut Attorney General Richard Blumenthal today (11/23/2009) announced he is suing FHA All Day.Com, Inc. for allegedly charging Connecticut homeowners tens of thousands of dollars and then failing to deliver on promises to help them avoid foreclosure.

Blumenthal sued the company in cooperation with Department of Consumer Protection (DCP) Commissioner Jerry Farrell, Jr. The lawsuit seeks restitution for consumers and civil penalties of up to $5,000 per violation of state consumer protection laws.

FHA All Day.Com, based in Delray Beach, Fl., allegedly began soliciting Connecticut customers by mail and the Internet in January 2009. The company claimed that for $2,500 to $4,500 it would negotiate with lenders to avoid foreclosure and reduce indebtedness.

FHA All Day.com promised one homeowner a refund of its upfront fee if it failed to obtain a mortgage modification and falsely told another it was authorized by the federal government to provide mortgage rescue services.

The company failed to win loan modifications, reduce indebtedness, give promised refunds or provide other mortgage rescue services, Blumenthal’s lawsuit charges.

Blumenthal said, “FHA All Day only did one thing all day: scam consumers. The company demanded upfront fees up to $4,500 — illegal since October 1 because of legislation I proposed — to help consumers save their homes. Far from helping homeowners escape debt, FHA All Day exploited them, taking their money and delivering nothing. Callously and cruelly, bottom feeder mortgage rescue schemes hit families when they are most vulnerable, desperate to save their homes. It conned consumers by falsely claiming connection to the federal government, building trust only to trash it.

“We will fight for restitution — money back to consumers manipulated and misused by FHA All Day — as well as stiff, severe penalties. We have zero tolerance for roving mortgage rescue scammers seeking to steal from homeowners in crisis.

“Upfront fees demanded by FHA All Day became illegal on October 1 thanks to legislation I proposed, making such rip offs harder. I will continue fighting for additional protections shielding homeowners facing foreclosure from greedy and grasping grifters.”

 

12:20PM

Texas AG obtains injunction against foreclosure rescue company

In the following press release Texas Attorney General Greg Abbott today took legal action to obtain restitution for a fraudulent “mortgage rescue” firm’s victims.

Dallas County 134th District Judge James M. Stanton granted an agreed temporary injunction barring Markus and Tyrone Bailey from deceptively operating the unlicensed businesses, Behind on Mortgage and Behind on Mortgages USA at 6060 N. Central Expressway in Dallas. The agreement requires the defendants to either reimburse all customers from whom it collected unlawful fees, or place these monies in a trust pending final judgment.

The defendants have been subject to a Nov. 2 temporary restraining order halting their deceptive practices that harmed struggling homeowners. While the Baileys never obtained a license as a mortgage broker from the Texas Department of Savings and Mortgage Lending, they nonetheless solicited distressed homeowners who had fallen behind on their mortgage payments.

The defendants visited homeowners facing foreclosure and pitched a way for them to obtain new loans, renewals, extensions of time to pay and modifications of existing mortgage loans. In return, the defendants required at least $1,000 in advance from homeowners and demanded they have no contact with – or make future payments to – their original mortgage servicers.

The defendants retained homeowners’ fees for services and provided no measurable foreclosure relief, nor did they negotiate with mortgage servicers. Thus, many homeowners who dealt with the defendants ultimately lost their homes to foreclosure action. The defendants even continued to operate unlawfully despite a late-October cease-and-desist order from the Department of Savings and Mortgage Lending.

In addition to restitution, the attorney general seeks civil penalties of up to $20,000 per violation of the Texas Deceptive Trade Practices Act, as well as attorneys’ fees. The attorney general contends the defendants also violated other provisions of the Texas Business and Commerce Code by failing to provide homeowners with a required option to cancel the in-residence solicitation. Defendants violated the Texas Finance Code by failing to obtain a license.

Homeowners who believe they have been deceived by similar fraudulent business practices may call the Office of the Attorney General’s toll-free complaint line at (800) 252-8011 or file a complaint online at www.texasattorneygeneral.gov.

Texans may learn more about buying a home and avoiding pitfalls and scams by reading an online bulletin from the Office of the Attorney General at this link: http://www.oag.state.tx.us/AG_Publications/pdfs/home_buying.pdf