Fraud

Mortgage Fraudsters Continue to Pay

Mortgage fraudsters continue to pay as can be seen in yet another federal trial. The FDIC and CFPB are hard at work with the DOJ and a host of others continuing to clean up the mortgage debacle from the 2008 Crash. I hope that the severe penalties and continuing cleanup will make other fraudsters think twice. It seems you can’t regulate ethics, but perhaps punishment will suffice.

After an 11-day trial, a jury found a husband and wife guilty of conspiracy and bank fraud that totaled $49.6 million.
Domenico “Dom” and Mae Rabuffo were convicted of participating in an elaborate scheme to defraud banks of tens of millions of dollars in connection with a development known as Hampton Springs in Glenville’s Big Ridge community. The crimes are alleged to have occurred between 2003 and 2008.
Dom Rabuffo, 77, of Miami, and Mae Rabuffo, 75, of Fort Lauderdale, Fla., and Williston Park, N.Y., were found guilty of conspiracy to commit bank fraud and wire fraud affecting a financial institution. Dom Rabuffo was charged with multiple counts of bank fraud.
Sentencing by Chief U.S. District Judge Kevin Moore is expected to take place Sept. 25. They each face a maximum of 30 years in prison for each count.
read more at the Sylva Herald

Counties Look at Lawsuits Saying they were Cheated Out of Mortgage Fees

An article from Bloomberg  says that Bank of America is among a group of lenders that may face a host of  lawsuits claiming that counties were cheated out of millions of dollars by MERS, a system used for more than a decade to register mortgages.

Dallas County District Attorney Craig Watkins said state attorneys general and county officials across the U.S. have expressed interest in his lawsuit against Mortgage Electronic Registration Systems Inc. and Bank of America, filed in Texas state court on Sept. 21. Dallas County could be owed as much as $100 million in filing fees, he said. Counties across the U.S. are financially strapped, and this would help bridge the gap in much needed revenues.

County Websites Being Hacked

Another  frightening case for  County officials. This time the Ventura County’s Online Credit Card Payment System in the Tax Collector’s office was foiled.  It appears to have been hacked from a location somewhere  in the Philippines, according to county officials, and it sent out emails to an unknown number of people who had previously paid their taxes online through the system.  The Ventura County, CA  Tax Collector, Steven Hintz, says received a “phishing” email, as he had previously used the online system to pay his taxes.  He knew it hadn’t been sent, and knew enough not to open it.  Others who did respond to paying their real estate taxes online may have a problem.  Read more at the LA Times and catch the news and video news report at KEYT News

In Illinois, workers couldn’t access the Cook County Recorder of Deeds website on April 12th. Worse, they complained they were being rerouted to sex sites. More at the Chicago Tribune While computers are wonderful and marvelous things, we must all take care when accessing information that was not sought from supposedly “official county sites.”

Twin City Attorney Disbarred

A Twin Cities lawyer who pleaded guilty last year to federal fraud and money-laundering charges, Trent C. Jonas, has lost his license to practice in Minnesota. Authorities said Mr Jonas siphoned about $5.3 million from more than 3,000 mortgage transactions through Jonas’ title insurance companies, Title Source and Zen Title.    More at The StarTribune

Real Source Title Owner Sentenced

Disbarred Attorney, Jason Fischer, was co-owner of Real Source Title, an agency with offices in: Burnsville and Mahtomedi Minnesota; Hudson, Wisconsin and Illinois. His underwriter was Old Republic National Title. Fischer admitted that he began illegally stealing money from his company’s escrow accounts to himself and other business ventures beginning in 2006 and continuing into 2009. Fischer drained the entire title agency escrow account leaving no funds to pay fifteen mortgages that Real Source Title was responsible to pay. This left the mortgagors with ruined credit and foreclosure issues on loans they thought were paid. Fischer admitted to his theft in Wisconsin State Supreme Court acknowledging that he misappropriated over $2 million dollars from his company’s escrow accounts including nearly $500,000 in a restaurant venture where Fischer had an ownership interest as well as around $350,000 for personal use. Fischer was sentenced to more than four years in federal prison for stealing more than $3 million from a real estate title and escrow company that he co-owned. More at MPLS STAR TRIBUNE

Minnesota Title Insurance Agent Goes to Prison for Fraud

October 7, 2010 – (RealEstateRama) — A 61-year-old Alexandria man was sentenced earlier today in federal court in Minneapolis on charges connected to a scheme to defraud mortgage lenders and others out of more than $800,000. United States District Court Judge Joan N. Ericksen sentenced Dale Charles Dodge, Jr., to 34 months in prison on one count of wire fraud and one count of engaging in a monetary transaction with property derived from unlawful activity, commonly referred to as money laundering. Dodge was indicted on September 15, 2009, and pled guilty on May 12, 2010.

In his plea agreement, Dodge admitted that from 2002 through 2005, he operated a title closing company under the names Premier Title & Abstract, Inc., and Verity Title & Abstract. As part of that operation, he maintained an escrow account, into which mortgage lenders regularly deposited loan proceeds for distribution at closings pursuant to the terms of the real estate agreements. He also contracted the services of a title insurer, who underwrote most of the real estate transactions closed through his company. Title insurers, often called underwriters, are liable to lenders, borrowers, and others if escrow and other transaction funds are improperly disbursed.

The plea agreement goes on to state that between 2002 and 2005, Dodge executed a scheme to defraud mortgage lenders and others out of large sums of money by diverting loan proceeds from the escrow account at his title company. The money was used for his personal benefit as well as the benefit of his company and others involved in the scheme. Specifically, Dodge fraudulently removed the funds or caused the funds to be removed from the escrow account to pay his salary and the salaries of company employees in addition to other non-escrow business expenses. Frequently, those expenses were paid through wire transfers from the escrow account to other accounts under Dodge’s control. Furthermore, Dodge admitted concealing those actions from his title insurer and mortgage lenders as well as from property sellers and purchasers.

Dodge’s fraud scheme caused losses of more than $800,000. Approximately $844.561.60 is owed to one specific mortgage lender, who mistakenly deposited money into Dodge’s escrow account. An additional amount is owed to First American Title Insurance Company, Dodge’s title insurer, which was required under law to pay certain outstanding escrow obligations for which Dodge was unable to pay.

Following today’s sentencing, Jose M. Martinez, Acting Special Agent in Charge of the Internal Revenue Service-Criminal Investigation Division’s St. Paul Field Office, said, “By taking deliberate steps to divert escrow monies and conceal these actions from others in the real estate and mortgage industries, Mr. Dodge committed mortgage fraud. This sentencing shows that this type of activity can have criminal consequences including a felony conviction and a prison term to serve.”

This case was the result of an investigation by the IRS-Criminal Investigation Division, the U.S. Postal Inspection Service and the Federal Bureau of Investigation. It was prosecuted by Assistant U.S. Attorney Tracy L. Perzel.

40 State Attorneys General to Investigate Mortgage Fraud; Bank of America Halts Evictions Nationwide; Senator Reid Calls for More Suspensions

Important Update on Foreclosure Issues for Title Insurers.  See Video of Ohio AG on Foreclosure Issues:

http://www.bloomberg.com/video/63535930/

Attorneys general in about 40 states may announce a joint investigation into foreclosures at the largest banks and mortgage firms, according to a person with direct knowledge of the matter.
State attorneys general led by Iowa’s Tom Miller are in talks that may lead to the announcement of a coordinated probe as soon as Oct. 12, said the person, who declined to be identified because a final agreement hasn’t been reached. The number of states may change because several are still deciding whether to join the investigation, the person said. New Mexico Attorney General Gary King said today in a statement that his state will join a multi-state effort.
Lawyers representing the banks are expecting a more widespread investigation…  See more at Bloomberg

Mortgage Fraud Years Away from Investigation

National Mortgage News reports that the high levels of fraud have created a tremendous backlog in investigation of fraud cases by the FBI. Cases currently being investigated go back as much as 5 years and with the continuing flood of foreclosures and foreclosure problems the FBI investigators are overwhelmed. Of particular concern are title companies, who have enlisted ill-prepared staff. Read more at National Mortgage News

$7.5 B Lawsuit Filed Against MERS

A RICO class action lawsuit against MERS and one of the Country’s largest foreclosure law firms, David J. Stern PA has been filed, demanding a Jury trial.  See ABA article here.
The court case alleges that MERS was created “in order to undermine and eventually eviscerate long-standing principles of real property law, such as the requirement that any person or entity who seeks to foreclose upon a parcel of real property: 1) be in possession of the original note and mortgage and 2) possess a written assignment giving he, she or it actual rights to the payments due from the borrower pursuant to the mortgage and note”

It also alleges that “part of the scheme was the use of words in ways inconsistent with their traditional meanings, and the creation of new terms which could be used to blur important distinctions between parties and their interests…” making it difficult to determine who had the right to receive payments and foreclose.

The 24 page lawsuit details a hilarious deposition by the attorney’s assistant who acknowledges signing documents as “assistant secretary,” and as “vice president” of MERS taken in the Defendant Firm’s office. He inquired of Ms. Samons how she could possibly have acted on behalf of MERS, and the meaning of the label “Assistant Secretary:” Part of the suit reads as follows:
Q: The question was you have no job duties as an assistant secretary of MERS, correct?
A: I do not have any job duties other than signing the assignments and mortgage. Does that help?
Q: Yes. Here, I’ll try to rephrase this. Do you attend any board meetings at MERS?
A: No, sir.
Q: Do you attend any meetings at all at MERS?
A: No, sir.
Q: Do you report to the secretary of MERS?
A: No, sir.
Q: Who is the secretary of MERS?
A: I have no idea.
[ . . . ]
Q: Where are the MERS offices located?
A: I can’t remember. Q: How many offices do they have?
A: I have no idea.
Q: Do you know where their headquarters are?
A: Nope.
Q: Have you ever been there?
A: No.
Q: How many employees do they have?
A: I have no idea.

She testified that her signatures on “these assignments,” which from all indications were and are at least several thousand in number, were in no way attestations that the statements contained therein were accurate or truthful. She further testified that she was the person with the most knowledge about the subject assignment…

To arrive at the estimated damages of $7.5 billion, plus costs and attorney fees, the suit claims that the measure of damages “is the average of the accelerated amounts demanded from the [Plaintiffs] in the subject complaints to foreclose.” Read the full suit here.

105 More Title Insurance Closings Undone

MANHATTAN—Laurence Lewitas, owner and president of Gotham Abstract LLC has been indicted for stealing more than $6.7 million from more than 105 real estate transactions. According to documents filed in court, Gotham was a title abstract company that, among other things, sold title insurance. By acting as a title agent for various title insurance companies. In one case, Gotham received $2.7 million from 38 King Street LLC, a group of owners of a residential property in Manhattan, to hold in escrow until 38 King was ready to complete the purchase of a new property. The money was never deposited into a separate escrow account, according to prosecutors. Within days of being deposited, the money was stolen and transferred among various accounts.

More at North Country Gazette.

Info On Home Closing

Home Closing 101: An Educational Initiative of the American Land Title Association