FCRA NOTICES MUST BE UPDATED BY JAN. 1, 2013
FACTS
Effective Jan. 1, 2013, all businesses, including employers, and consumer reporting agencies must update the Fair Credit Reporting Act notices mandated by the federal government to reflect that the Consumer Financial Protection Bureau has taken over enforcement of the FCRA from the Federal Trade Commission. Changes to the notices are generally stylistic and substitute CFPB references for FTC references.
MORAL
Your computer software should take care of this but it does not hurt to check and make sure it is done.
FTC SUES AMERICAN MORTGAGE CONSULTING GROUP AND MARK NAGY ATALLA IN CALIFORNIA FEDERAL COURT
FACTS
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The defendants telemarketed mortgage relief services to consumers nationwide, often stating that they were paid by the federal government to assist homeowners and obtain so-called “Home Saver” grants from the government to reduce consumers’ up-front fees, according to the FTC’s complaint. They also allegedly proclaimed themselves to be “a California Professional Legal Team,” sent documents to consumers from their so-called “Legal Department,” and referred to their operation in e-mails as a “law office.”
The defendants claimed they were virtually certain they could obtain loan modifications for their clients, and that the clients would receive a full refund if that did not happen, even though they did little or nothing to help consumers and they failed to provide refunds, according to the FTC.
Also, in violation of the MARS Rule, the defendants allegedly told consumers to stop communicating with their lenders, and failed to disclose that:
• Consumers would only have to pay the defendants if they accepted the terms of the mortgage assistance the defendants obtained from their lenders;
• The defendants are not associated with the government and their services are not approved by the government or the consumer’s lender; and
• Even if a consumer used the defendants’ services, the lender may not agree to change the terms of the consumer’s loan.
By their actions, the defendants diverted consumers in danger of losing their homes from pursuing authentic, government-affiliated programs, and duped them into paying thousands of dollars based on false promises and misrepresentations, according to the complaint.
A federal judge granted FTC’s request for a temporary restraining order and froze the defendants’ assets. (Case 8:12-cv-01561-DOC-JPR filed 9-18-12 cdca))
MORAL
Note the assets were frozen. He is not liable until the jury says he is but where is he going to get money to retain a competent lawyer? You will note if you read the complaint that the addresses are in Newport Beach, Calif. Anyone familiar with the defendants?
STATE BAR OF CALIFORNIA SHUTS DOWN ONTARIO LAWYER FOR ALLEGED FRAUD OF HOMEOWNERS IN FORECLOSURE
FACTS
On Sept. 27, 2012 the State Bar of California shut down the operations of Gary David Tracy of the Realty Attorney Group APC and Realty Group & Consulting LLC for allegedly defrauding homeowners in foreclosure by falsely promising them he could help save their homes. Mr. Tracy allegedly filed shell petitions in U.S. Bankruptcy Court on behalf of distressed homeowners many of whose homes had already been sold and that had no chance of being granted according to a State Bar press release.
Since February 2009 the Bar has disciplined more than 100 attorneys for their involvement in such schemes and has disbarred 22. The Bar said it has identified at least nine clients who paid money to Tracy’s firm and were “abandoned” including one woman who paid the firm $12,400 only to later be evicted.
The Bar’s complaint alleges Tracy abdicated all responsibility for his law practice to non-attorneys. He is also alleged to have formed an unlawful partnership with a non-attorney. These employees evaluated cases and provided legal advice and theory to client. In some cases, the firm prepared documents on behalf of the client but allowed them to be filed without the client’s knowledge and with alleged forged signatures according to the complaint.
Tracy had been sanctioned $10,000 in July 2012 by the U.S. Bankruptcy Court in the Central District of California in Santa Ana after it found his firm failed to identify itself as having prepared 80 bankruptcy filings before the court. (ladj92812p4. Statebarprrel92712)
MORAL
This is one reason why we do not recommend anyone for a loan modification reference. We are not aware of anyone that is reliable and in either event no one including attorneys is allowed to collect an advance fee for loan modifications.
THREE LA RESIDENTS INDICTED FOR REAL ESTATE FRAUD INVOLVING $3.5 MILLION
FACTS
On Oct. 2, three Los Angeles area residents were indicted by a federal grand jury in connection with a complex scheme that defrauded Bank of America and Fidelity National Title Co. out of $1.5 million.
On Oct. 5, the suspects were arrested at their homes by detectives from the Los Angeles County Sheriff’s Department’s Real Estate Fraud Team, and booked into the Metropolitan Detention Center in Los Angeles.
Those arrested are: Saliya “Sal” DeSilva; Nora Yefima; and Vahe Hayrapetian.
In July 2009, the owner of a residential property on Gould Avenue in La Canada-Flintridge defaulted on $3.5 million in loans which were secured by the property. Bank of America foreclosed on the property and took possession of it.
In February 2010, it is alleged that DeSilva contacted Bank of America posing as the prior owner, provided B of A with counterfeit documents, and convinced B of A that the foreclosure was improper. As a result, B of A rescinded the foreclosure, and DeSilva, a licensed real estate salesperson, listed the property for sale without the consent or knowledge of the prior owner.
In August, 2011, the property was eventually sold in a fraudulent short sale transaction after a title insurance company was given false information regarding the condition of the property, and was provided with counterfeit documents, including a fake B of A Short Sale Approval Letter stating that the bank had approved a sales price of $250,000.
The buyer used loan broker Hayrapetian to obtain a $1.5 million loan for the “purchase,” and the funds were wire transferred by the lender to Oshana Escrow in Encino.
Hayrapetian allegedly submitted materials false and fraudulent documents to the lender order to secure the $1.5 million loan.
It is also Oshana’s owner Yefima sent false documents to the title insurer, wire transferred a relatively small portion of the loan funds to the title insurance company for the fraudulent short sale, and then disbursed the rest of the funds, an amount exceeding $1 million, to several other parties who had nothing to do with the transaction.
The buyer of the property then defaulted on the loan which was fraudulently obtained by Hayrapetian, and since B of A never approved the short sale and continues to assert the validity of their $3.5 million in liens, there is insufficient equity in the property to compensate the subsequent lender for their $1.5 million loss. Fidelity National Title Co. insured the lender and may have to reimburse them for the loss.
The charges in this case include bank fraud and wire fraud. (lacosherdept. 10-12)
MORAL
If DeSilva did do it, I would say he is one smooth talker to convince B of A that it did a wrongful foreclosure.
CALIFORNIA FEDERAL COURT SEES CONVICTION OF ONE FOR MORTGAGE FRAUD
FACTS
On Oct. 12, Anthony Pierre Williams pleaded guilty to mortgage fraud charges in a federal court in Sacramento, Calif.
According to court documents, co-defendant Anthony Salcedo compensated Williams and co-defendant Sean McClendon for finding buyers for four properties owned by or associated with Salcedo. Some of the payments by Salcedo went to the buyers of the property, although the payments were never disclosed to the lenders as part of the purchase and sale agreements. In each instance, the buyers’ income and assets were falsified in order to qualify for the loans. All properties involved were foreclosed upon by the lenders, resulting in losses of more than $1 million.
The sentencing date for Williams has not yet been set. Williams faces a maximum statutory penalty of 30 years in prison and a $1 million fine. (usattcaed101212)
MORAL
Did you notice how active the federal prosecutors are in California lately? I have. There are active investigations ongoing in Southern California as well.
FLORIDA FEDERAL JURY FINDS REAL ESTATE ENTREPRENEUR GUILTY OF MORTGAGE FRAUD
FACTS
On Oct. 11, U.S. Attorney Robert E. O’Neill announced that a federal jury found Kessler Holzendorf guilty of conspiracy, mail fraud and wire fraud in connection to a mortgage fraud scheme. Holzendorf faces 20 years in a federal prison. His sentencing hearing is scheduled for Jan. 28, 2013.
Holzendorf was one of the masterminds behind a complex scheme to defraud a number of mortgage lenders on loans for high-end properties in the Jacksonville area. The scheme involved Holzendorf and others recruiting real estate professionals as investors who, with Holzenorf’s assistance, submitted false loan applications and inflated purchase prices for the sales. The loan applications included inflated sales prices, some false claims that investors were occupying the properties as their personal residences, and other false claims regarding the investors’ employment status and income levels. For each of the properties, lenders were tricked into believing that home improvements, usually noted as swimming pools, were being made to the properties. In fact, no improvements were ever made. Funds (ranging from $50,000 to $250,000) for these improvements were paid through title companies for sham invoices payable to a sham company controlled by Holzendorf. Following the closing, Holzendorf, who usually kept a fee, would return the funds to the buyers. As a result of the scheme, the lenders were tricked into providing substantial sums of money to the buyers at closing.
The scheme also included a real estate agent and a mortgage company affiliated with Holzendorf. Evidence introduced at trial showed that Holzendorf and other conspirators obtained real estate commissions of more than $339,000, mortgage broker compensation of more than $189,000, and illegal kickbacks to buyers of more than $1.1 million. (usattymdfl101112)
MORAL
The role of a good defense attorney is when someone involved with law enforcement asks questions you have a right to have your attorney present and you should say I would like my attorney present and those should be the only works you utter!
LAS VEGAS BUILDER CONVICTED OF MORTGAGE FRAUD
FACTS
On Oct. 12, a federal jury convicted Paul Wagner of mortgage fraud crimes at the conclusion of his 12-day trial. Wagner was the first homebuilder in Nevada to be prosecuted and convicted of mortgage fraud offenses since 2008.
Wagner was convicted of one count of conspiracy to commit bank fraud and wire fraud, six counts of bank fraud and three counts of wire fraud.
He allegedly sold houses at inflated prices so he could fraudulently obtain mortgage loans and defraud federally insured banks and lenders for more than $8 million.
The scheme began March 2007 and lasted through mid-2009. Wagner would offer large cash incentives to buyers, real estate agents and others to sell his homes. The incentives included Wagner paying buyers' mortgage payments for several months, paying buyers' down payments and giving large cash payments to real estate agents and others to find buyers for his homes. To pay for all the incentives, Wagner inflated the value of his homes by causing appraisers to draft false appraisals. He concealed the incentives from lenders, who officials say would not have made the loans had they known his methods.
Wagner used this scheme to sell 78 houses, many of which went into foreclosure when he stopped making payments. The tract homes he built were in the northwest valley.
He is scheduled to be sentenced Jan. 14, 2013. He faces up to 30 years in prison and a $1 million fine for each count. (101212las)
MORAL
A 20 year reputation down the tubes.
DALLAS LAWYER PLEADS GUILTY TO MORTGAGE FRAUD IN SAN ANTONIO FEDERAL COURT
FACTS
On Oct. 8, Richard Howard, a Dallas lawyer, pleaded guilty in San Antonio for his role in a scheme that left lenders holding the bag for more than $50 million in bad loans. As part of a plea deal, federal prosecutors will recommend to Chief U.S. District Judge Fred Biery that the sentence for Howard be capped at three years in prison.
Howard admitted that he aided Robert Brooks, who was the the main target in Texas' part of a 2010 nationwide mortgage fraud sweep called “Operation Stolen Dreams.”
An indictment in San Antonio charged more than 20 people and alleged that Brooks used several title and mortgage brokerage companies in a flipping scheme that included $50 million in mortgages.
From 2005 to 2008, Brooks obtained properties at about market value, then offered people $10,000 to $25,000 each to act as straw buyers for the homes at inflated prices. Using falsified documents, Brooks obtained mortgage loans for the straw buyers, then let the mortgages go into default a year later, the indictment alleges.
Brooks' scheme was aided by appraisers, title officers, escrow officers, mortgage processors and others who helped submit false documentation and information to lenders. (sanantonio.com 101012)
MORAL
If the judge buys off on the three year sentence I would say that Howard had one heck of a good lawyer. This is aside from the fact that Howard will probably lose his license to practice law.
THE INFORMATION CONTAINED HEREIN IS NOT LEGAL ADVICE. AN ATTORNEY SHOULD BE CONSULTED IF YOU DESIRE LEGAL ADVICE.
