Acceleration

Editors Choice: What Does A Robe Mean to A Judge In Texas – in Particular Where There IS Fraud On the Court?

FRAUD ON THE COURT AND ABUSIVE DISCOVERY

Unbeknownst to many, federal courts have the power under the Federal Rules of Civil Procedure to set aside judgments entered years earlier that were obtained by “fraud on the court.”

Fraud on the court, however, can take many forms and courts and commentators agree that it is a nebulous concept. The power to set aside a judgment requires courts to strike a balance between the principles of justice and finality.

A majority of courts require a showing, by clear and convincing evidence, of intentional fraudulent conduct specifically directed at the court itself. This standard is flawed.

And courts that have adopted it are abdicating their solemn responsibility as the gatekeeper to justice because innocent victims seeking to set aside judgments obtained by abusive discovery find themselves as a square-peg trying to fit into a round hole.

The remedial and equitable nature of the fraud-on-the-court doctrine and the great public policy that it embodies militates against making that burden an impossible hurdle for victims of abusive discovery.

This Article suggests that courts depart from the heightened standard used to set aside judgments, particularly judgments obtained by abusive discovery. Specifically, this Article advances a four-step process to resolve the ultimate inquiry: whether the abusive conduct caused the court not to perform in the usual manner its impartial task of adjudging cases.

Under this standard, courts will more readily find that abusive discovery that undermines the integrity of the judicial process or influences the decision of the court constitutes a fraud on the court.

David R. Hague*

Hague, David R. (2016) “Fraud on the Court and Abusive Discovery,” Nevada Law Journal: Vol. 16 : Iss. 2 , Article 9.
Available at: https://scholars.law.unlv.edu/nlj/vol16/iss2/9

Palm Beach Gardens homeowner gets $18 million in foreclosure settlement

by Kim Miller 

Palm Beach Gardens homeowner and foreclosure fighter Lynn Szymoniak is slated to get $18 million from the nationwide settlement with the country’s five largest banks that was filed in federal court Monday.

Szymoniak, who was featured on the CBS news show 60 Minutes last year for the work she did uncovering the robo-signing scandal, said this morning that her gain from the settlement seems “surreal.”

“I always tend to discount everything until it’s signed,” she said. “I knew it was part of the settlement in February, but not how much.”

Szymoniak’s settlement is part of a larger $95 million agreement reached with the banks and Bill Nettles, the U.S. District Attorney of South Carolina. That agreement is written into the $25 billion nationwide settlement between 40 state attorneys general and Bank of America, JPMorgan Chase, Ally Financial, Wells Fargo and Citigroup.

South Carolina began investigating allegations in the spring of 2010 that banks were involved in a nationwide practice of failing to obtain required mortgage assignments.

The lack of appropriate assignments resulted in servicing misconduct and using false assignments to submit federal housing administration mortgage insurance claims, according to a press release.

The False Claims Act allows the government to bring actions against groups that knowingly use false documents to obtain government money or to conceal an obligation to pay money.

The lawsuit was initially filed by Szymnoniak under a whistleblower provision in the False Claims Act.

Under the act, the whistleblower is entitled to a share of the government’s recovery.

“By this agreement we are making an important first step to hold mortgage servicers accountable for fraudulent and abusive practices, not only in South Carolina but nationwide,” said Nettles.

“It also demonstrates the role that whistleblowers can play in working with the government to return dollars to the federal treasury and to expose wrongdoing.”

Florida’s struggling homeowners are one step closer to getting a share of the state’s foreclosure settlement – valued at $8.4 billion – after formal bank agreements were filed in federal court Monday.

The agreements with the nation’s five largest lenders are the culmination of a nationwide attorneys general investigation that began in the fall of 2010 with allegations that forged documents were used to repossess people’s homes.

Included in the settlement are JPMorgan Chase, Wells Fargo, Citigroup, Bank of America and Ally Financial.

The agreements, which outline strict new standards for handling mortgages, still need a judge’s approval. But Florida Attorney General Pam Bondi said the filing in the U.S. district court in Washington is a significant accomplishment.

The landmark agreement, considered the largest federal/state civil settlement ever obtained, was announced Feb. 14.

“Today’s filings pave the way for court orders that will provide substantial relief to Florida’s homeowners, hold banks accountable and reform the mortgage servicing industry,” Bondi said.

South Florida foreclosure defense attorneys were able to do only a cursory review of the hundreds of pages filed in court Monday, but at least two lawyers found positives for homeowners.

Royal Palm Beach foreclosure defense attorney Tom Ice, whose firm was instrumental in discovering the robo-signing issues that ultimately led to the nationwide investigation, said there are now higher standards for banks to complete a foreclosure.

“The requirements for providing documentation of loan ownership and good-faith verification to foreclose will undoubtedly make robo-signing more difficult,” Ice said.

“And in some cases, where the necessary documents and information is missing, it may create an insurmountable problem for the bank to foreclose quickly, or foreclose at all.”

Though the details of the settlements were not available until Monday’s court filings, critics have derided the agreements for releasing banks from state-sought civil and administrative claims, including claims for damages, fines, remedies and sanctions in relation to foreclosure wrongdoing.

But several other claims are not exempt from prosecution, according to Monday’s agreements. Those include criminal complaints, as well as claims against securities and securitization; claims against the Mortgage Electronic Registration System, or MERS; and claims of county or city records clerks.

Individual homeowners are still clear to file lawsuits against their lenders and generally will not be asked to waive that right if they receive aid from the settlement.

“I was most concerned that there would be some sneak releases for things that we think the banks should be held liable for,” said Roy Oppenheim of Oppenheim Law in Weston. “But they are not being released from suits against MERS or securitization.”

Oppenheim also noted that foreclosure processing companies, such as the now closed DocX, were not given “get-out-of-jail passes.”

Nationally, the $25 billion deal with the banks could provide up to $40 billion in cash, refinances and principal write-downs to homeowners.

Florida negotiated a special guarantee with Wells Fargo, JPMorgan Chase and Bank of America ensuring at least $4 billion will be awarded in the form of principal reductions, loan modifications and refinances for underwater borrowers.

Florida’s haul includes a $334 million payment to the state, 10 percent of which is considered a penalty. The attorney general has discretion on how to use the remainder, but it generally must go to foreclosure-rescue programs or fraud investigations.

About $171 million will be cash payments to Florida borrowers who lost homes to foreclosure between 2008 and 2011 and were victims of servicer abuse. An additional $309 million will refinance underwater borrowers current on their loans.

Ice said he is concerned about the enforcement provisions in the settlements, which he described as an “agreement to agree.”

“We don’t want this to go the way of the Florida Supreme Court’s requirement that banks verify their pleadings,” Ice said. “All that accomplished was that the banks began robo-verifying the complaints.”

 — Somewhere, presumably Georgia, lives a woman named Linda Green. According to investigators, her signature – and variations of it – appears on hundreds of thousands of questionable mortgage documents.

Linda Green has an impressive résumé. She has been a vice president of at least 14 banks and mortgage companies, including Wells Fargo and Bank of America. The documents with her signature are called mortgage assignments. By signing, she attests to the true owner of a mortgage, which proves that a bank has the right to foreclose on a home.

One of those homes belongs to Lynn Szymoniak, a Palm Beach Gardens lawyer who specializes in white-collar crime. Szymoniak, 61, has ferreted out economic crimes for years and federal prosecutors have called her as an expert witness in four trials. In July 2008, after negotiations with her lender over an increase to her ­adjustable-rate mortgage failed, she received foreclosure papers on her home.

What she saw “made no sense.” The company servicing her mortgage was in Dallas. Linda Green was in Alpharetta, Ga. S zymoniak launched an investigation of her own foreclosure.

“I did what I often do in cases,” Szymoniak said. “I find other documents that have been signed by the same person.” What she saw at the Palm Beach County Courthouse made her suspicious. She expanded her investigation of Linda Green to other counties: “Then I hit the mother lode .”

Linda Green’s signature varied widely in thousands of documents Szymoniak found. Szymoniak had uncovered the practice of robo-signing: employees at banks and mortgage servicing companies who sign sworn affidavits without any knowledge of the case. Linda Green is believed to be among the most common robo-signatures of them all.

“I have had training in this, but you don’t need training,” Szymoniak said. “It’s obvious to anyone that many people are signing for Linda Green.”

Lender Process Services Inc. confirmed that Green worked for its defunct subsidiary, Docx LLC, and does not now work for LPS. The Florida Attorney General’s Office is investigating LPS in connection with documents that “appear to be forged, incorrectly and illegally executed and false and misleading.”

Often, as in Szymoniak’s case, Green’s mortgage assignment was dated months after the case was filed, bringing into question the true owner of the note when the foreclosure proceedings began. Another document in her case was a copy of what appeared to be the top of her mortgage pasted to the bottom of another document.

As Szymoniak sees it, she has been the victim of at least four foreclosure schemes: Robo-signing. Forgery. Bogus documents. Fraud.

Szymoniak believes legions of distressed home­owners are being victimized by other methods that are tough to uncover and even tougher to avoid.

Indeed, 43,428 homes in Palm Beach County were in some stage of foreclosure last year, according to RealtyTrac.

“I wasn’t surprised,” former Florida Attorney General Bill McCollum said about the breadth, quantity and ingenuity of foreclosure fraud reported throughout the state. Since 2008, the Florida Attorney General’s Office has launched more than 150 mortgage fraud investigations. Seventy remain open, and more than 50 companies are still under review

The bulk of the attorney general’s ongoing investigations involve consultants and companies that collect upfront fees to assist with loan modifications. Upfront fees are illegal. Fees may be collected only after services are completed.

“It’s been clear for some time that there are people out there who are very creative,” McCollum said. “These people were associated with the industry in good times, and they know how to make money in this.”

Another explanation for the magnitude of the fraud is that some participants – the robo-signers and notaries – may not even be aware they are participating, said William Kovacic, who serves on the Federal Trade Commission and has studied the psychology of white-collar criminals.

“If the true nature were revealed in an unvarnished way, a number of people would refuse to participate,” Kovacic said.

“Part of the effort of the people who orchestrate these frauds is to assure the subordinates that what is taking place is legitimate.”

Even when they learn of the scheme, they are so far removed from the victim that they feel little remorse or responsibility, Kovacic said

‘Huge’ Number of Lawyers Accused In Civil and Criminal Mortgage-Related Fraud Cases

Originally Published 20 Sept, 2012 | Republished by LIT; 27 Feb, 2020

There is a disturbing trend among the proliferation of mortgage-fraud prosecutions and civil cases that followed the meltdown of the real estate market in recent years.

Many of the defendants are lawyers, reports the Wall Street Journal (sub. req.).

Joseph Dunn, who serves as executive director of the State Bar of California, calls the involvement of lawyers in perpetrating mortgage-related scams a “huge” problem.

Since 2009, the group has gotten over 11,000 mortgage-related complaints about attorneys. Over 100 California lawyers have been disciplined and another 200 or so are either facing legal ethics charges or being investigated.

Senior counsel Yolanda McGill of the Lawyers’ Committee for Civil Rights Under Law, in Washington, D.C., says a national database of 25,000 complaints about suspected mortgage-related fraud includes more than 6,000 complaints against attorneys and law firms.

An attorney is a key participant in a mortgage scheme, says Craig Howland, chief of the Federal Bureau of Investigation’s financial institutions fraud unit.

That’s because being able to point to a lawyer, who is sworn to uphold the law, “adds legitimacy” to the scam and thus can help ensnare potential victims.

Howland says there are a number of pending FBI probes concerning lawyers.

As previous ABAJournal.com posts detail, numerous fairly low-profile lawyers who closed real estate transactions involving mortgage fraud have already been held criminally accountable. That apparently may be due, at least in part, to the relative ease of proving mortgage-related fraud through inaccurate closing documents for real estate sales and misstatements made about the disbursements of funds at closing.

Meanwhile, as many observers have commented in news reports, high-level defendants in major cases involving the mortgage meltdown are few and far between, despite widespread real estate-related fraud and an explosion of so-called robo-signing of mortgage foreclosure documents filed by plaintiff lenders in recent years.

A number of attorneys also have been held accountable, through attorney disciplinary cases and civil suits, for operating foreclosure-rescue businesses that reportedly obtain hefty up-front payments from owners trying to save their homes, but offer little in return.

Current and former lawyers who made headlines over criminal charges, convictions and/or sentences within the past year include two who got prison terms of six and nine years in federal court in Chicago this summer; a New York attorney who operated a title company and was criminally convicted and disbarred over his role in a real estate developer’s $92 million mortgage fraud (a New York real estate closing attorney also lost his law license over the same developer’s fraud, although the lawyer apparently didn’t have any knowledge of the scheme); and a Connecticut lawyer who is also a rabbi who took a plea in a false-statement case for incorrectly reporting how funds would be disbursed at closing, in a case related to a disbarred attorney’s more extensive mortgage fraud. Two more New York closing attorneys were convicted at trial in July, but say they did nothing wrong and plan to appeal.

A New Jersey lawyer earlier this month got seven years and was ordered to cough up nearly $200,000 in a case in which his counsel says he was paid only his legal fee. And two Florida attorneys who worked for a law firm that closed condominium sales took a plea in a straw-buyer case and could get as much as five years when they are sentenced.

A Florida closing lawyer nearing retirement age who took a plea in a mortgage-related money-laundering conspiracy case told the ABAJournal last year that she hoped to avoid prison due to her extensive cooperation with federal authorities and efforts to combat mortgage fraud.

“I’ve tried to do the right thing. … I have cooperated with them, and I regret the decisions, and I wish that I had never stepped into this area,” she said. “But it did. It happened. Unfortunately.”

A federal judge reduced her sentence substantially from the six-and-a-half years that guidelines suggested. But she still got over two years.

“In my judgment, when you commit a multi-million-dollar fraud even in an otherwise law-abiding life, you can’t just say ‘I’m sorry’ and everything is forgiven,” the judge said.

Criminal Defense Lawyer Gets 6 Years, Real Estate Attorney Gets 9 in Federal Mortgage Fraud Case

July 12, 2012

Updated: On Tuesday, longtime criminal defense attorney Charles Murphy gave up his Illinois law license.

Before the end of the week he was sitting stone-faced in a federal courtroom in Chicago full of his supporters, awaiting sentence in a $9.2 million mortgage-fraud case.

U.S. District Judge Ronald Guzman gave the 65-year-old ex-attorney six years. Prosecutors had sought more than double that amount, contending that Murphy was a key figure in a flipping scheme. It involved the sale of 40 homes in low-income South Side neighborhoods at inflated prices between 2002 and 2006, often to so-called straw buyers who weren’t qualified or willing to actually make the loan payments, according to the Chicago Tribune:

Lawyer sentenced to 6 years in mortgage fraud

The sentencing of Charles Murphy started with a question that might have been on the minds of anyone who has followed the career of the veteran Chicago criminal defense attorney.

“I wonder what the heck Mr. Murphy is doing here?” Assistant U.S. Attorney Brian Netols said as the defendant awaited his fate on federal wire and mail fraud convictions for financing fraudulent real estate transactions.

U.S. District Judge Ronald Guzman sentenced Murphy to six years in prison, less than half the maximum sought by prosecutors.

Prosecutors said Murphy played an integral role in the $9.2 million scheme, in which about 40 residences in economically depressed areas on the South Side were bought and then resold at fraudulently inflated prices from 2002 to 2006. Four others also were convicted in the scheme, which relied on straw purchasers.

Murphy, 65, sat stone-faced in a federal courtroom packed with colleagues, friends and family, who had gathered to support him.

For years he was a familiar face at the Cook County Criminal Court Building at 26th Street and California Avenue, where he worked as a public defender before entering private practice.

After Netols asked why Murphy got himself involved in the fraud scheme, he answered the question in a word himself: greed. Netols also took issue with how the scheme targeted an already beleaguered community.

“He didn’t choose to flip houses in his Mount Greenwood neighborhood,” the prosecutor said. “He went over to Englewood. … As an experienced criminal defense attorney, he had all the evidence at the first transaction that he committed fraud. And he went for it.”

Murphy’s lawyer, Susan Shatz, spoke of his military record — he volunteered for the Marines during the Vietnam War — as well as his age and diagnosis of prostate cancer.

She also mentioned the numerous letters, including several from Cook County judges, that sought leniency.

“I would like to add my voice to the letters,” Shatz said. “I clerked for him myself. Mr. Murphy is a great mentor. He is a great friend. He helped many people, including me.”

Shatz contended that Murphy was duped by one of his co-defendants. She portrayed Robert Brunt, who was sentenced to 12 1/2 years this week for his role, as a slippery character who came to Murphy seeking a loan for his business and then drew him into the crooked scheme.

“Anybody can be conned by a con man,” she said.

In court papers, prosecutors argued that Murphy was the more sophisticated of the two, noting Brunt’s limited education.

Murphy addressed the judge briefly. Like the attorney he was until Tuesday, when he surrendered his law license, Murphy first asked to correct the record — Shatz had misstated the titles of his military medals. Murphy then thanked his wife.

“Whatever the outcome, I do understand I am fortunate in one regard — the support of my wife of 45 years,” he said. “Thank you, Patricia.”

Guzman said he considered Murphy’s age one of the “heaviest factors” weighing in favor of a shorter sentence. The judge seemed moved by Murphy’s military record as well.

“Clearly that has to count for something,” he said.

But Guzman pointed out the local and national impact of mortgage fraud schemes, particularly those that divert money set aside to help people with lower incomes purchase a home, as in this case.

In the end, Guzman was left questioning how Murphy joined in the fraud scheme after so many years in the criminal justice field.

“He had an education, a profession. He had a career. He earned a substantial income,” the judge said. “One must be left wondering how he found his way here.”

Another attorney who is a co-defendant in the case, 50-year-old John Farano, was sentenced to nine years on Wednesday:

Palos Park lawyer sentenced for mortgage fraud

A Palos Park attorney has been sentenced to nine years in prison and ordered to pay more than $1.3 million in restitution following his conviction last year for taking part in a multimillion-dollar mortgage fraud scheme, the U.S. attorney’s office in Chicago said Thursday.

John Farano, whose law license has been suspended, was also ordered to forfeit more than $2.3 million, according to a news release from the U.S. attorney’s office.

Farano, 50, and three other people were convicted of multiple counts of mail and wire fraud last December following a nine-week trial. The four netted about $5.45 million in fraudulently obtained mortgage loans, and the scheme involved paying kickbacks to a nonprofit organization to obtain some of the properties at a discount from the U.S. Department of Housing and Urban Development, the U.S. attorney’s office said.

The scheme involved at least 40 residential properties, primarily located in Chicago’s Englewood community, according to the news release.

Farano and another attorney, Charles Murphy, of Chicago, put up money to buy residences knowing they’d earn a profit from the fraudulently obtained mortgages, the U.S. attorney said.

Farano, who was sentenced Wednesday, was convicted of four counts of mail and wire fraud and five counts of theft of government funds, and is scheduled to begin serving his sentence Sept. 10, the U.S. attorney said.

During the trial, federal prosecutors said the scheme involved buying homes that needed extensive repairs and which were located in economically-depressed neighborhoods. Homes were bought using straw buyers and properties were resold at grossly inflated prices, often with little actual repair work being done on the homes, the government said.

Others sentenced Wednesday were Robert Brunt, of Chicago, who was president of Genesis Investment Group, and Tracey Scullark, of Chicago, a sales agent for Genesis. Brunt was sentenced to 121/2 years in prison and Scullark received 61/2 years. They were ordered to pay more than $1.6 million in restitution and forfeit $4.2 million in proceeds.

Farano — whose firm concentrates in criminal defense, personal injury and real estate — handled real estate closings in the fraudulent deals for Genesis, the government said. The lawyer also operated Big Dog Holdings, BD Financial Group and Capital Acquisitions, which provided the upfront money to buy the distressed properties, the government said.

An earlier Chicago Tribune article published when Murphy and Farano were convicted by a federal jury in December of five counts of mail and wire fraud explains the claimed scheme:

Lawyer found guilty in home mortgage fraud scheme

A federal jury convicted a veteran Chicago criminal-defense lawyer Thursday of taking part in a $9 million mortgage fraud scheme that took advantage of unqualified home buyers in economically depressed neighborhoods in the city.

Charles Murphy, 65, was convicted of five counts of mail and wire fraud in U.S. District Judge Ronald Guzman’s courtroom in the Dirksen U.S. Courthouse, according to the U.S. attorney’s office in Chicago.

Murphy and three others allegedly acquired at least 40 residences — often homes in need of extensive repairs — and quickly resold them at inflated prices.

Murphy, an attorney since 1974, and John Farano, 49, a lawyer from Palos Park, allegedly had financed the purchases. Robert Brunt, 45, and Tracey Scullark, 43, both of Chicago, allegedly recruited unqualified buyers by enticing them with false sales offers and promises of prompt repairs and renovations, according to court documents.

Prosecutors alleged that Murphy and others urged buyers to sign closing documents they had never seen and falsely inflated the amount of money posted by buyers for down payments, making it more likely lenders would approve loans.

The scheme allegedly took place from 2002 to 2006 and defrauded banks, mortgage lenders and the U.S. Department of Housing and Urban Development.

Farano, Brunt and Scullark were each convicted Thursday of multiple counts, while another defendant, Douglas Blanchard, was acquitted on the lone mail fraud count he faced.

Two others, Walter Jackson, 38, and Armani D’Aifallah, 40, both of Chicago, pleaded guilty in 2009 and testified for the prosecution at the trial, according to the U.S. attorney’s office.

Prosecutors are seeking forfeiture of at least $4.2 million from those convicted in the scheme.

Prosecutors said co-defendants worked together to sell homes purchased by Murphy and Farano to unqualified buyers. Lenders were then persuaded to grant mortgages based on loan paperwork that contained false information, such as inflated down payment amounts. The homes often needed work, and buyers were promised renovations that didn’t occur, according to court documents. Farano served as a closing attorney on some of the fraudulent deals.

Meanwhile, buyers were persuaded to sign on in order to get no-money-down or cash-back-at-closing deals, explains a press release (PDF) from the U.S. Attorney for the Northern District of Illinois. It notes that Farano was found guilty of four counts of mail and wire fraud and five counts of theft of government funds, but acquitted on three mail and wire fraud counts.

The Illinois Attorney Registration and Disciplinary Commission website shows that Farano’s law license was suspended on an interim basis pending further proceedings, on June 26.

A New York title attorney who is awaiting sentencing for his role in a Long Island real estate developer’s $92 million mortgage origination fraud in Nassau County was disbarred last week.

Federal Deposit Insurance Corp. is suing Ted Doumazios along with a closing attorney allegedly involved with him in arranging $1.2 million of the fraudulent loans attributed to convicted developer Thomas Kontogiannis, according to Courthouse News Service:

New FDIC Suit Looks for a Piece of the $92M Mortgage Fraud Pie

(CN) – The Federal Deposit Insurance Corp. has set its sights on four co-conspirators alleged to have played a relatively small role in the $92 million mortgage fraud that took out Washington Mutual Bank, filing a federal complaint that seeks to recover $1.2 million.

“The concerted action of all the participants in the scheme, including defendants, caused substantial losses to WaMu, which purchased the mortgages in justified reliance on the false representations and documentation created by defendants and other participants in the scheme,” the FDIC claims in Brooklyn, N.Y.

It says the schemers helped fraudulent mortgage sellers create bogus loans that were sold to WaMu and others for millions of dollars, without conveying, recording or insuring the property titles.
Named as defendants are United General Title Insurance, Clear View Abstract, its owner Ted Doumazios and New York attorney Thomas Cusack III.

The FDIC, which took over Washington Mutual after its collapse in September 2008, says the defendants conspired with other entities that made mortgage payments to WaMu to create the illusion of legitimate mortgage loans and conceal the fraud.

Doumazios’ $1.2 million scam represents a fraction of the massive $92 million fraud engineered by Long Island real estate developer Thomas Kontogiannis.

Both men pleaded guilty last year following their 2009 indictment along with seven others. Kontogiannis, who is not named as a defendant in the FDIC’s present action, controlled several entities that staged sales of properties in Brooklyn and Queens by recruiting straw buyers from among family members and employees.

“As part of the scheme, members of the Kontogiannis family acted with others, including the defendants named herein, using the artifice of separate and independent entities, to create fraudulent mortgage loans with seemingly appropriate documentation, to sell those fraudulent ‘mortgages’ to WaMu and others for millions of dollars, to retain the proceeds of the sale that supposedly were to be distributed to fictitious mortgagors and purchasers, and to fraudulently convey funds and properties in an effort to avoid detection and the claims of WaMu, and the FDIC as receiver, for the losses resulting from the scheme,” the complaint states.

“As a result of the scheme, WaMu purchased sham mortgage loans and suffered many millions of dollars in losses. WaMu purchased these loans in justifiable reliance on false representations and fraudulent documentation misrepresenting that each mortgage was given by a real mortgagor and borrower who were purchasing the properties at issue, that funds in the amount of the mortgage were dispersed to such borrowers, and that the loans were secured by a validly recorded first lien position on the properties.

“In fact, the mortgages purchased by WaMu, while appearing to be genuine and fully documented, were entirely bogus. The borrowers never purchased the properties, even though each loan package contained a signed deed purportedly conveying the property to the borrower. No funds were ever disbursed to the borrowers, even though each loan package contained a signed mortgage, closing statement and other HUD documents, signed by the straw borrower and identifying Cusack as settlement agent and attorney, stating that such disbursements of funds had been made. Titles to the properties were never conveyed or recorded, even though each loan package contained documents indicating that recordation had occurred. No real appraisals were prepared, even though each loan package contained a purported appraisal. No title insurance was ever procured, even though each loan package contained documents stating that such insurance had been or would be paid for and issued (including statements on official forms signed by title agents and title insurers).” (Parentheses in complaint).

The FDIC claims that Clear View and Doumazios, acting as agents for United General Title, “knowingly prepared and issued falsified title reports, title insurance commitments and certificates, and title insurance policies that they knew would be used to market the mortgages and to defraud WaMu into purchasing these fake loans.”

United General Title, a New York insurance underwriting company, provided Clear View with apparently legitimate policy and commitment documents to create the impression that the mortgages were genuine.

Moreover, the defendants assured WaMu that all mortgages had validly recorded deeds and insurance titles, according to the complaint.

“Instead, as a result of the fraudulent scheme, no such title insurance was secured, no mortgages were recorded, and WaMu was induced to purchase worthless and fictitious loans resulting in millions of dollars in losses,” the complaint states. “As detailed below, Doumazios has pled guilty to criminal charges of conspiring with Kontogiannis and others to commit bank and wire fraud against WaMu, using defendant Clear View in furtherance of that conspiracy.”

The FDIC adds: “As part of the closing of the mortgages on the properties, Doumazios and Clear View were required to ensure, among other things, that monies for title insurance premiums and real estate taxes were collected and paid, legitimate commitments for title insurance and title insurance policies were issued, and deeds and mortgages were properly executed and recorded. They did none of those things. Instead, acting with apparent authority to bind UGT, they issued fraudulent policies and commitments, failed to file the deeds and mortgages, and steered monies not to the fictitious purchasers and mortgagors, but instead to Thomas Kontogiannis or his controlled entities.”

Cusack, the closing attorney, also participated in the scheme by signing fraudulent closing forms, falsely reflecting title insurance, tax and insurance payments, and recording fees for each mortgage loan, the FDIC claims.

“The concerted efforts of the participants in the scheme, including defendants, created the appearance of a real mortgage, protected by title insurance and the recording of a first lien position on the subject property, in order to induce justifiable reliance by WaMu on the bona fides of the transaction,” according to the complaint. “The fraudulent mortgages were created by the participants in the scheme, with the intent to sell them promptly, and, in fact, the sham mortgages were sold to WaMu within days of the purported ‘closings,’” the FDIC added.

To facilitate the fraud, the bogus mortgages were buried among hundreds of valid mortgages that WaMu bought from the defendants and their co-conspirators over several years, according to the complaint.

The FDIC says WaMu, which sold most of the fraudulent mortgages to Fannie Mae, was forced to repurchase them when the fraud was discovered, and suffered huge losses.

WaMu said it learned about the scheme in 2007 as Kontogiannis was facing charges of laundering bribes to a U.S. congressman – a crime for which the 62-year-old is currently serving eight years in prison.

The FDIC seeks to recover more than $1.2 million that WaMu lost in buying the fraudulent loans, as well as compensatory and punitive damages for fraud.

It is represented by Alan Gallanty with Kantor, Davidoff, Wolfe, Mandelker, Twomey & Gallanty of Manhattan.

The FDIC sold Washington Mutual to JPMorgan Chase shortly after the takeover. WaMu’s closure and receivership in 2008 is considered the largest bank failure in American financial history.


and Reuters.

Doumazios pleaded guilty last year in federal court to wire fraud and conspiracy to commit bank fraud. While operating a title company, Clear View Abstract, he allegedly provided Kontogiannis with documentation showing that the real estate developer had clear title on properties when in fact he did not, as Doumazios knew.

Kontogiannis, was sentenced to nine years on the same charges earlier this month. The two men worked with others to perpetrate a scam that involved not only obtaining mortgages fraudulently from Washington Mutual and DLJ Mortgage Capital Inc. but selling those mortgages to secondary buyers at the financial institutions, Reuters reports.

Doumazios, the title company, closing attorney Thomas Cusack III and another corporate defendant are currently facing a related civil suit filed by the FDIC in federal court in Brooklyn. Kontogiannis is not a defendant in that suit.

It alleges that the lenders issued mortgages on properties based on a complete fiction—that straw buyers were the actual purchasers, that the properties had actually been conveyed to them, that funds had been disbursed as reflected on closing documents and that the mortgages were secured by a first-position lien and title insurance.

“In fact,” the suit (PDF posted by Courthouse News) says, “the mortgages purchased by WaMu, while appearing to be genuine and fully documented, were entirely bogus. The borrowers never purchased the properties, even though each loan package contained a signed deed purportedly conveying the property to the borrower. No funds were ever disbursed to the borrowers, even though each loan package contained a signed mortgage, closing statement and other HUD documents, signed by the straw borrower and identifying Cusack as settlement agent and attorney, stating that such disbursements of funds had been made. Titles to the properties were never conveyed or recorded,” the complaint continues, “even though each loan package contained documents indicating that recordation had occurred. No real appraisals were prepared, even though each loan package contained a purported appraisal. No title insurance was ever procured, even though each loan package contained documents stating that such insurance had been or would be paid for and issued (including statements on official forms signed by title agents and title insurers).”

The articles don’t include any comment from the defendants or their lawyers. A phone message left by an ABA Journal reporter this afternoon at a phone number listed for Cusack did not receive an immediate response. A number listed for Doumazios on several online legal directories was not in service.

Doumazios, who earned his law degree from Hofstra University, was admitted in 1993. He did not contest his disbarment, Reuters reports.

A June 2009 press release from the U.S. Attorney’s Office for the Eastern District of New York provides additional details.

A sole practitioner who worked as in-house counsel for companies controlled by a New York real estate developer has lost his law license for four years, because he failed to detect and stop mortgage-origination fraud by the developer that cost lenders $98 million.

There is no evidence that Thomas Cusack knew of criminal activity and he didn’t make any money from the scam, Reuters reports:

New York lawyer suspended for failing to stop mortgage fraud

NEW YORK, May 16 (Reuters) – A New York lawyer has received a four-year suspension for failing to detect and stop what a federal judge has called “one of the largest mortgage-origination frauds on record.”

The Appellate Division, Second Department, on Tuesday sustained 10 charges of professional misconduct against Thomas Cusack. Cusack is a solo practitioner who worked as in-house counsel for companies affiliated with Thomas Kontogiannis, a New York real-estate developer.

Kontogiannis pleaded guilty in October 2010 to conspiring to commit bank and wire fraud in a scheme to sell fraudulent mortgages to secondary buyers at several banks, including Washington Mutual and DLJ Mortgage Capital, a subsidiary of Credit Suisse AG.

In all, the scheme cost lenders $98 million, prosecutors said.

According to the disciplinary ruling, Cusack, acting as an attorney for companies controlled by Kontogiannis in mortgage-loan closings, failed to take proper steps to document and record the sales. That allowed Kontogiannis to later take out additional mortgages on the properties, the ruling said.

Cusack often caved under the influence of his client, improperly sharing legal fees and misusing funds in escrow accounts, the ruling stated.

There was no indication that Cusack knew that his clients engaged in criminal activity, nor did he profit from the scam, the ruling said. However, Cusack was neither candid about the circumstances surrounding the depletion of funds in his escrow account, nor willing to accept responsibility for his failure to perform usual and customary functions of a lender’s attorney, the ruling stated. “The evidence of his malfeasance is overwhelming.”

Cusack declined to comment on the decision. Edwin Mulhern, an attorney representing Cusack in the disciplinary proceedings, said his client was “duped” by Kontogiannis.

“He really didn’t know what was going on,” Mulhern said. “Perhaps he should have, but he didn’t.”

Cusack’s four-year suspension begins on June 15 and will run until Dec. 15, 2015, the ruling stated.

Last October, Kontogiannis was sentenced by U.S. District Judge Kiyo Matsumoto to nine years in prison. That sentence is being served concurrently with the remainder of an eight-year sentence Kontogiannis previously received for laundering bribes for former U.S. Congressman Randy “Duke” Cunningham.

The case is In the Matter of Thomas F. Cusack III, in the Supreme Court of the State of New York, Appellate Division: Second Department, no. 2009-05856.

For the Grievance Committee for the 10th Judicial District: Mitchell Borkowsky.

For Cusack: Edwin Mulhern.

(Reporting by Jessica Dye)

However, “the evidence of his malfeasance is overwhelming” concerning his failure to perform standard lender’s attorney functions, wrote the New York Supreme Court’s Appellate Division, Second Department, in a Tuesday opinion sustaining 10 professional misconduct charges against Cusack.

Cusack’s lawyer said he was “duped” by developer Thomas Kontogiannis, who pleaded guilty in 2010 to conspiracy to commit bank and wire fraud.

An earlier ABAJournal.com post provides additional details:

Lawyer Who Is Also a Rabbi Takes Plea in Mortgage-Fraud Case, Will Give Up Practice for 1 Year

After beating the rap in an earlier trial, a Connecticut lawyer has taken a plea in a mortgage-fraud case.

Rabbi David Avigdor, 58, pleaded guilty this week to making a false statement on to the U.S. Department of Housing and Urban Development concerning a real estate closing, the New Haven Register reports:

Attorney Admits Role in FHA Fraud Scheme – David Avigdor pleads guilty to making false mortgage statement to HUD

A New Haven, Conn., lawyer pleaded guilty Tuesday to making a false statement to the U.S. Department of Housing and Urban Development in connection with a real estate closing, the U.S. States Attorney’s Office said today in a statement.

David Avigdor, 58, acted as the settlement agent for the sale of 211 Lloyd Street form Marshall Asmar to Alicia Martineau for a sale price of $160,000, according to court documents and statements. The mortgage on the property was insured by the Federal Housing Authority Administration, an agency within HUD.

A HUD form that acted as the settlement statement for the transaction stated that the cash due to the seller was $144,763.42, and Avigdor signed the form certifying that it was a true account of the transaction. He also signed saying “I have caused or will cause the funds to be disbursed in accordance with this settlement.”

According to the State’s Attorney’s Office, Avigdor did not disburse the $144,763.42 to the seller like he said he did on the form, but rather disbursed $93,000 to the seller and $49,375 to Sheda Telle Construction, a fake construction company, according to instructions by Morris Olmer.

Avigdor admitted in court he made the statements on the HUD form with disregard of whether the statements were true or false, and with an intent to deprive the FHA information. He said he was unaware Sheda Tell Construction was fictitious, but admits there were red flags about the transaction.

According to U.S. States Attorney’s Office, Olmer and Asmar were convicted by a jury of, among other things, conspiring to defraud the FHA and wire fraud at a trial in April 2011 at which two other individuals, Rab Nawaz and Wendy Werner, were also convicted.

The jury could not reach a verdict on any counts against Avigdor.

A sixth defendant, former real estate appraiser Thomas Gallagher, pleaded guilty during the trial. Eight other individuals involved in the scheme pleaded guilty prior to the commencement of that trial.

The leader of the conspiracy, Syed Babar, was sentenced to 10 years in prison. Nawaz was sentenced to 90 months’ in prison, Olmer and Gallagher were each sentenced to 60 months, Asmar was sentenced to 52 months, and Werner was sentenced to 48 months in prison. A former mortgage broker, Nathan Russo, was sentenced to 30 months of imprisonment. The others convicted, including Alicia Martineau, who acted as a “straw” or nominee buyer for 211 Lloyd Street, have not yet been sentenced.

According to U.S. States Attorney’s Office, Avigdor faces a maximum term of imprisonment of one year and a $100,000 fine. As part of the plea agreement, he agreed to surrender his law license for one year, and agreed that if he is employed by a lawyer or performs work in a law office in the future, he will not perform or engage in any work representing buyers or banks in real estate closings. He also agreed to make a $20,000 payment toward restitution before sentencing, which is scheduled for June 29.

While acting as the settlement agent in the transaction, he incorrectly reported how the funds were disbursed, the prosecution said.

He faces a maximum sentence of one year and a $100,000 fine. Avigdor also agreed to pay $20,000 toward restitution prior to sentencing, to surrender his law license for a year and to refrain from doing real estate closings if he returns to practice.

Ex-Lawyer and Lawmaker Gets 5 Years for Handling Closings for Mortgage Fraud Ring

A former state representative and attorney in Connecticut who lost his law license years ago was sentenced this week to five years in federal prison for his role in a mortgage fraud ring.

Morris Olmer, 83, handled closings as a notary for the group. It allegedly included 14 co-conspirators who obtained $10 million in mortgage loans for residential property through a scheme that prosecutors said relied on fraudulent sales contracts, loan applications and property appraisals. The group even had a paper company that was paid to renovate homes without doing any work, according to the Capitol Watch blog of the Hartford Courant:

Former State Rep Among the Notables Caught in Mortgage Fraud Ring

An 83-year old former state representative, who lost his law license years ago for misconduct, was sentenced to 5 years in prison Monday for handling closings for a group of conspirators who concocted phony real estate deals in order to swindle more than $4.4 million from banks.

Morris Olmer, a Democrat who represented New Haven in 1967 and ’69 and a former member of New Haven’s Board of Alderman, was convicted by a jury in April of conspiring to defraud the government, eight counts of fraud involving money transfers and four counts of making false statement to investigators.

Federal prosecutors said Olmer was one of a 14 conspirators who obtained $10 million in residential real estate loans through “sham sales contracts, false loan applications and fraudulent property appraisals.” The conspirators are accused of dividing nearly half the money among themselves.

Olmer and three other members of the ring were convicted by a jury earlier this year. Seven others pleaded guilty to a variety of fraud-related charges, including the man prosecutors call the leader of the ring, Syed Babar, 28, of New London. Babar agreed to cooperate with authorities and became the government’s star witness.

The jury deadlocked on a verdict against a 14th alleged member, Rabbi David Avigdor, 57, who presides over New Haven’s Congregation Bikur Cholim Sheveth. Avigdor, a lawyer, worked for worked for Olmer, who maintained a law office in New Haven after his license to practice was revoked following a fraud complaint about four years ago. Prosecutors have said they will retry Avigdor

Another conspirator, 68-year old Thomas Gallagher of West Haven – former grand marshal of the New Haven St. Patrick’s Day parade and a member of the West Haven police commission – plead guilty to a charge of making a false statement midway through the trial. In return, prosecutors dropped more than a dozen other charges against him. He was given a five year sentence.

Gallagher was accused of manufacturing appraisals that inflated the value of the dilapidated homes the conspirators financed and transferred among themselves in distressed areas of New Haven, New London and other locations, mostly in eastern Connecticut.

Federal prosecutors said Babar arranged for straw buyers to finance and buy – at inflated prices – homes they had no intention of living in or paying for. When the deals closed, the conspirators split the loan amounts in excess of sale prices and walked away from about 30 properties, creating more blight in already struggling neighborhoods.

The conspirators created a paper contraction company called Sheda Telle Construction to launder money and justify home prices by with false claims of renovation work. Prosecutors said about $1 million in cash flowed into the company’s bank account, without any work ever being done.

Prosecutors said the ring operated between 2006 and 2010.

Five conspirators. Including Olmer, have received prison sentences of from four to 7 1/2 years in prison, Syed and seven others await sentencing. Babar is scheduled to be sentenced in November 28.

Another claimed co-conspirator, Rabbi David Avigdor, 57, who is also an attorney, was not initially convicted. He is, however, expected to be retried.

2 NY Lawyers Convicted in $25M Mortgage-Fraud Case

Two New York lawyers have each been convicted of 10 felony counts and acquitted of one felony count in what federal prosecutors described as a $25 million mortgage-fraud scheme.

Aaron Rabinowitz and Matthew Burstein, both 40, could get a maximum of 30 years when they are sentenced in November.

However, a lawyer representing Aaron Rabinowitz said his client and Burstein were only doing their jobs, reports Reuters:

2 Lawyers Convicted in Massive Mortgage-Fraud Case

NEW YORK, July 27 (Reuters) – Two New York lawyers were convicted Thursday of participating in a massive mortgage-fraud scheme that bilked $25 million from financial institutions and wholesale mortgage lenders, federal prosecutors said.

Aaron Rabinowitz and Matthew Burstein, both aged 40, were each found guilty on 10 felony charges, including conspiracy to commit bank and wire fraud.

The charges followed a nearly two-week trial before U.S. District Judge Allyne Ross, according to a spokesman for the U.S. Attorney’s Office for the Eastern District.

Rabinowitz and Burstein of Queens were each acquitted on one count of bank fraud.

The two lawyers were among six individuals charged in 2011 in connection with the long-running scheme.

According to the indictment, the defendants obtained millions of dollars in mortgage loans from major banks and lenders by submitting false information on loan applications to make “straw buyers” appear creditworthy. They also misled lenders about how much money was disbursed at property closings.

From 2001 until July 2010, defendants raked in commissions and fees from the mortgages. When the straw buyers stopped making payments, they defaulted on the loans, costing lenders millions, the indictment said.

Burstein and Rabinowitz represented buyers and mortgage lenders in transactions involving the mortgaged properties, prosecutors said.

“The defendants violated the trust placed in them as attorneys and further damaged the integrity of the real estate market,” U.S. Attorney Loretta Lynch said in a statement.

Both men are planning to file post-trial motions for a new trial, according to a letter filed with the court Friday.

“There was a massive mortgage fraud conspiracy where people made a lot of money, and these two defendants were not a part of the conspiracy,” said Roger Stavis, an attorney representing Rabinowitz. “They were only lawyers doing legal work and getting paid reasonable legal fees.”

Burstein and Rabinowitz each face up to 30 years in prison when they are sentenced on Nov. 26.

The other defendants in the case have pleaded guilty.

The case is U.S. v. Roldan et al., U.S. District Court for the Eastern District of New York, No. 10-623.

For the U.S.: Matthew Amatruda, Alexander Solomon, Evan Weitz and Robert Polemeni.

For Burstein: Gregory Cooper.

For Rabinowitz: Roger Stavis, Adam Felsenstein and Pamela Gallagher of Gallet Dreyer & Berkey.

(Reporting by Jessica Dye)

 

The two plan to file post-trial motions seeking a new trial in the Eastern District of New York case.

“There was a massive mortgage fraud conspiracy where people made a lot of money, and these two defendants were not a part of the conspiracy,” Roger Stavis told the news agency. “They were only lawyers doing legal work and getting paid reasonable legal fees.”

An indictment alleged that the two defendant lawyers participated in a scheme that bilked financial institutions of $25 million by persuading them to provide mortgages to uncreditworthy straw buyers with the help of falsified loan applications and misleading the lenders about how money was being disbursed at closings. Between 2001 and 2010, prosecutors say, the defendants earned commissions and fees from the claimed scheme, but the buyers eventually defaulted, costing lenders millions.

The other defendants pleaded guilty.

Closing Lawyer Gets 7 Years in $431K Mortgage Fraud; His Counsel Says He Earned Only His Legal Fee

A 46-year-old New Jersey real estate lawyer has been sentenced to a seven-year prison term and ordered to pay a $150,000 fine and $42,404 restitution for his role in a multidefendant mortgage fraud case.

Paul DiGiacomo pleaded guilty in May in Morristown Superior Court to second-degree money-laundering of stolen funds through his trust account, the Madison Eagle reports.

Apologizing the the court at sentencing on Thursday, DiGiacomo blamed the bad economy and his need to support his family, and noted that he is likely to be disbarred. His counsel, Vincent Basile, argued for a five-year term and questioned the amount of the fine, pointing out that DiGiacomo didn’t instigate the scheme and saying that he had profited only through his legal fee. (The amount isn’t give in the article.)

However, the judge said others hit hard by the downturn in the real estate market hadn’t turned to crime and reduced by only one year the eight-year term and $150,000 fine sought by the prosecution.

press release from the state attorney general’s office describes a complex scheme in which six individuals—including a mortgage broker, real estate agent and title company employees—worked together to arrange a short assignment of the $477,000 mortgage on a home in Newark whose owner had fallen behind on payments.

With DiGiacomo’s alleged help in negotiating with the holder of the mortgage, the group arranged a $220,000 short assignment of the $477,000 mortgage to a bogus property management company it controlled, the press release recounts. Meanwhile, the group arranged a purported “sale” of the same property to a dead man at an inflated price of $539,000.

It then applied for a $431,200 mortgage loan from another lender on the purported $539,000 sale, which was supported by a dossier of faked documents showing claimed bank and employment records for the dead buyer. Falsified closing documents purported to show that the original $477,000 mortgage had been paid in full at closing.

A live person posed as the “buyer” at the closing of the $431,200 mortgage. The seller’s purported signature was forged, and she was never told of the closing.

After paying off the $220,000 owed to the mortgage holder on the short assignment at the closing of the $431,200 mortgage, DiGiacomo reportedly wired the balance remaining at the conclusion of the transaction to a bank account controlled by two defendants.

“Home sales typically involve various professionals, including real estate agents, attorneys, title agents and mortgage brokers, who are responsible for providing multiple layers of review and oversight to prevent fraud,” said Attorney General Jeffrey S. Chiesa. “In this case, however, we had dishonest operators in every one of those roles, leading the unsuspecting lender to provide a $431,200 mortgage loan to a dead man. We will continue to work diligently to uncover such mortgage fraud schemes and send those responsible to prison.”

Five Plead Guilty in Scheme to Defraud Lender of $431,200; False Mortgage Loan Application Results in Loan Issued to Dead Man – Leader of scheme faces up to 10 years in state prison

TRENTON – Attorney General Jeffrey S. Chiesa announced that five people have pleaded guilty for their roles in a scheme, led by a Hudson County woman, to defraud a mortgage lender of $431,200 by filing a false loan application and purchasing a home in Newark in the name of a man who was deceased. The final defendant, a Morris County lawyer, pleaded guilty today.

The leader of the scheme, Genilza R. Nunes, 38, of Kearny (aka Leticia Wilchez, Geny Silva, Gena Nunez and Genilza Borges), pleaded guilty on May 8 to second-degree money laundering before Superior Court Judge Salem Vincent Ahto in Morris County. Under the plea agreement, the state will recommend that she be sentenced to 10 years in state prison, including two years of parole ineligibility, and be ordered to pay a $150,000 fine.

Today, Paul DiGiacomo, 46, of Madison, a lawyer who laundered stolen funds through his trust account, pleaded guilty to second-degree money laundering before Superior Court Judge Thomas V. Manahan in Morris County. Under his plea agreement, the state will recommend that he be sentenced to eight years in state prison and be ordered to pay a $150,000 fine.

“Home sales typically involve various professionals, including real estate agents, attorneys, title agents and mortgage brokers, who are responsible for providing multiple layers of review and oversight to prevent fraud,” said Attorney General Chiesa. “In this case, however, we had dishonest operators in every one of those roles, leading the unsuspecting lender to provide a $431,200 mortgage loan to a dead man. We will continue to work diligently to uncover such mortgage fraud schemes and send those responsible to prison.”

“In this troubled economy, we’re working hard to stop those who engage in financial fraud,” said Stephen J. Taylor, Director of the Division of Criminal Justice. “We’ve made it a priority to investigate and prosecute major white collar crimes, including complex mortgage fraud and money laundering cases.”

Three other defendants pleaded guilty during the past two weeks:

Lillian Veras, 40, of Kearny, (aka Lillian Urena) pleaded guilty on May 14 before Judge Manahan to second-degree money laundering. Veras, a real estate agent and notary, helped prepare false loan documents for the scheme and forged signatures. She faces a recommended sentence of seven years in prison and a $150,000 fine.
Maureen R. Stillwell, 50, of Somerville, an employee of Ideal Title Agency, LLC, who helped prepare false closing documents, pleaded guilty before Judge Ahto on May 8 to second-degree money laundering. She faces a sentence of up to seven years in prison and a $25,000 fine.
Sheila Zullo, 46, of Green Brook, the owner of Ideal Title Agency, LLC, pleaded guilty on May 7 before Judge Manahan to third-degree money laundering. She admitted that she illegally distributed the loan funds as escrow agent. She faces a recommended sentence of up to three years in prison and a $150,000 fine.
A sixth defendant, Nuno J. Sousa, 37, of Union City, agreed to be charged by accusation with third-degree securities fraud and was admitted by the court into the Pre-Trial Intervention Program in April. All six defendants who have pleaded guilty or entered PTI are required to pay restitution to the lender, Provident Funding Associates, equal to one-sixth of the $431,200 loan amount, or approximately $71,867 each.

Deputy Attorney General Marysol Rosero took the guilty pleas for the Division of Criminal Justice Financial & Computer Crimes Bureau. Detective Sgt. Louis A. Matirko and DAG Rosero conducted the investigation and were assisted by Deputy Attorney General Michael Rappa, Special Agent Tanya Chavez, Office of Inspector General, U.S. Department of Housing and Urban Development, Special Agent Robert Manchak, Office of Inspector General, Federal Housing Finance Agency, and Division of Criminal Justice Interns Andrew Davenport, Brittany Kieran and Cara Ogulin.

Nunes is scheduled to be sentenced on June 29. Her co-defendants are scheduled to be sentenced as follows: DiGiacomo on July 6; Veras on June 22; Stillwell on June 29; and Zullo on June 29.

Nunes, the mastermind of the scheme, acted as a principal of Leska Management, a bogus real estate management company. With Veras’ assistance, she arranged for the purchase of a home in Newark from a woman who had fallen behind in her mortgage payments. The seller owed $477,196 on her loan, but the holder of the mortgage, Kondaur Capital Corp., agreed to a “short sale” for $260,000 to a purported buyer identified by the defendants. A “short sale” is a pre-foreclosure sale where the mortgage holder agrees to permit the home to be sold for less than the amount due on the loan.

That sale was never completed. DiGiacomo, who held himself out as the attorney for both the buyer and Leska, told Kondaur the sale had fallen through. He then negotiated with Kondaur to assign the mortgage to Leska at a discounted price of $219,877. He never disclosed that, prior to assignment of the mortgage, the home was sold at an inflated price of $539,000 to a fictitious buyer created by the defendants. Nunes, with assistance from Sousa, a mortgage broker, fraudulently applied to Provident Funding Associates for a $431,200 mortgage loan and purchased the home using the identity of a deceased man whose last name was “Benazi.” Nunes created counterfeit bank records, employment records and false identification documents for Benazi for the loan application, and she had another man pose as Benazi at the closing. No payments were ever made to the lender on the loan. The seller was never notified of the closing, and her signature was forged on the closing documents.

Stillwell handled the closing for Ideal Title and assisted in the creation of false closing documents used to deceive the lender. She never collected monies due at closing from the buyer, and falsified HUD settlement statements to indicate that they had been collected and that the prior mortgage had been paid off. In her role as escrow agent, Zullo, the owner of Ideal Title, misappropriated loan proceeds by wiring $376,032 to DiGiacomo’s attorney trust account at Nunes’ direction. DiGiacomo used $219,877 of the misappropriated funds to pay for the assignment of the mortgage and wired the balance of $156,155, representing the net illegal profits, into a bank account controlled by Nunes and Veras. Stillwell, Zullo and DiGiacomo were all compensated for their participation in the scheme.

2 Florida Attorneys Take Plea in Federal Mortgage Fraud Case

Two lawyers from Orange County, Fla., have pleaded guilty to conspiracy to commit bank and wire fraud charges in a federal mortgage fraud case in Orlando.

Court documents say Daniel Hoskins, 42, and Alexander Zouzoulas, 56, worked for the Nate Hoskins firm, which had exclusive closing rights at three condominium projects, reports Central Florida News 13. They face up to five years in prison when they are sentenced.

The case involved a claimed conspiracy among multiple individuals involved in the projects to inflate sales prices of units and sell them to “straw buyers” who falsely said they intended to occupy the condos as their primary homes. Kickbacks were then allegedly paid after closing to purchasers and real estate agents.

“Both Hoskins and Zouzoulas allowed closings to occur on multiple condominium purchases, using a single straw buyer that reflected that the condominiums would be the buyer’s ‘primary residence,’ even though Hoskins and Zouzoulas knew or should have known this was false,” says a press release from the U.S. Attorney’s Office for the Middle District of Florida:

Orlando Attorneys Plead Guilty In Mortgage Fraud Scheme

FOR IMMEDIATE RELEASE
September 4, 2012

Orlando – Daniel Nathan Hoskins (42, Orlando) and Alexander Zouzoulas (56, Winter Park) have both pleaded guilty to conspiracy to commit bank and wire fraud.  Hoskins, who is suspended from practicing law, pleaded guilty today and Zouzoulas pleaded guilty on August 17, 2012.  Both men face maximum penalties of five years in federal prison.

According to court documents, from March 2006 through October 2008, Hoskins and Zouzoulas were licensed to practice law in the state of Florida.  Both men worked at Nate Hoskins, P.A. (NHPA), which had exclusive rights to conduct  residential real estate closings for three local condominium conversion projects. Hoskins and Zouzoulas conspired with individuals involved in the development of the three condominium conversion projects, to artificially inflate the sales prices of the condominium units through the use of nominee purchasers.  Nominee purchasers, also known as “straw buyers,”  obtained home loans on condominium units they had no intention of inhabiting.  They were usually paid a sum of money for the use of their identities and credit scores.  The straw buyers signed all of the documents required to purchase the condominium units, including forms falsely stating that the units would be their primary residences.

In furtherance of the  scheme, numerous straw purchasers and realtors received cash back, or “kick-backs,” after the condominium units were sold.  The illegal payments were disguised as “decorator’s allowances” or other miscellaneous charges on the closing statements. NHPA paid a 25% monthly fee to a co-conspirator involved with the development of the three condominium conversion projects for all of the closings done for units in the three developments.  These payments were not disclosed on closing statements.

Both Hoskins and Zouzoulas allowed closings to occur on multiple condominium purchases, using a single straw buyer that reflected that the condominiums would be the buyer’s “primary residence,” even though Hoskins and Zouzoulas knew or should have known this was false.  Both men scheduled closings on multiple condominium purchases by the same straw buyer in such a way to conceal from lenders the fact that the straw buyer had purchased multiple condominium units.  Hoskins and Zouzoulas also allowed payments to be made to shell companies that were established so that realtors could receive illegal kickbacks for participating in the scheme.  Neither disclosed, to lenders, the existence of the kickbacks or the disguised payments to straw buyers and realtors.

This case was investigated by the Federal Bureau of Investigation and the Internal Revenue Service Criminal Investigation. It is being prosecuted by the Assistant United States Attorney Daniel W. Eckhart.

“Both men scheduled closings on multiple condominium purchases by the same straw buyer in such a way to conceal from lenders the fact that the straw buyer had purchased multiple condominium units,” the release continues. “Hoskins and Zouzoulas also allowed payments to be made to shell companies that were established so that realtors could receive illegal kickbacks for participating in the scheme. Neither disclosed, to lenders, the existence of the kickbacks or the disguised payments to straw buyers and realtors.”

Hoskins is currently suspended from practice.

The News 13 article doesn’t include any comment from the two attorneys or their counsel:

Attorneys plead guilty in mortgage fraud scheme

ORLANDO —  Two Orange County attorneys have pleaded guilty to conspiracy to commit bank and wire fraud.

Forty-two-year old Daniel Hoskins, who is suspended from practicing law, pleaded guilty Sept. 4. Meanwhile, 56-year-old Alexander Zouzoulas from Winter Park pleaded guilty on Aug. 17.

According to court documents, the two men worked at Nate Hoskins, P.A. (NHPA), which had exclusive rights to real estate closings for three condominium conversion projects.

Hoskins and Zouzoulas conspired with people involved in the projects to artificially inflate the sales prices of units through the use of nominee purchasers or “straw buyers.”

The purchasers were paid money to use their identities and credit scores, and then signed documents falsely stating the units would be their primary residences.

Also numerous purchasers and relators were given kickbacks after the units were sold.

Hoskins and Zouzoulas face a maximum of five years in federal prison.

Teary Attorney Who Cooperated with Feds and Tried to Atone for Mortgage Fraud Gets Substantially Reduced 2.5 Years in Jail from Judge Kenneth Marra

Attorney Carol Asbury hoped to avoid prison for her role in a multi-million-dollar South Florida mortgage fraud, she told the ABA Journal last month.

Once she came to her senses and realized she had gotten seriously off track, she went to the feds and told them what she knew, helping them make a case against others, the 59-year-old said.

She also founded the Save My Home Law Group and worked to help homeowners facing foreclosure and paid $40,000 to sponsor the 4closurefraud.com blog, which helped expose the mortgage lender robo-signing scandal, reports the Palm Beach Post.

But that and the teary apology she made in court today wasn’t enough to negate what she did, a federal judge said as he sentenced her to two and a half years in prison in what was described by the newspaper as a $2.5 million mortgage fraud.

“In my judgment, when you commit a multi-million-dollar fraud even in an otherwise law-abiding life, you can’t just say ‘I’m sorry’ and everything is forgiven,” said U.S. District Judge Kenneth Marra. He gave Asbury a substantial reduction in the six-and-a-half-year term she could have gotten, due to her cooperation.

She pleaded guilty in September to conspiracies to commit money-laundering and mail and wire fraud.

The problem was, Asbury’s work as a title attorney helped others turn portions of the upscale Versailles development in Wellington into what the Post called a scavenger’s paradise as straw buyers defaulted on the mortgages used to purchase homes at inflated prices and squatters moved in. At one point, fraud was allegedly involved in the mortgages for half of the development’s 450 homes, although Asbury is not accused of responsibility for more than a fraction of the bad mortgages.

She and her husband said she was dealing with significant problems at home during the eight months in 2006 that she helped others defraud lenders by submitting fraudulent paperwork for mortgages that they didn’t qualify for. Asbury also told the ABA Journal last month that she relied too much on the work of non-attorneys rather than delving into real estate matters herself.

But, countered prosecutor Stephanie Evans, “This is not, ‘I did a couple of bad transactions.’ This is, ‘I engaged in criminal conduct over many, many months. I made lots of money and I helped others make millions.’ “

The Palm Beach Post article says Asbury has agreed to be disbarred. However, it appears from a Florida Bar directory that she is still currently in good standing and has not yet lost her license to practice law.

‘God-fearing’ former lawyer will serve 2 1/2 years in prison for Versailles mortgage scam

 — A former Lake Worth lawyer described as a God-fearing, church-going woman who merely made some bad decisions while dealing with personal strife, will serve 2 1/2 years in prison for her role in a $2.5 million mortgage scam that turned parts of Wellington’s tony Versailles community into a squatter’s paradise.

Surrounded by about 15 supporters, a teary-eyed Carol Asbury, 59, accepted hugs from well-wishers today after U.S. District Judge Kenneth Marra squashed her hopes of avoiding prison but gave her a break on a possible 6 1/2-year sentence because she helped bring down others involved in the scheme.

“In my judgment, when you commit a multi-million-dollar fraud even in an otherwise law-abiding life, you can’t just say I’m sorry and everything is forgiven,” he said.

He was referring to the tearful apology Asbury made to Marra, her friends, family and the law profession for fabricating loan documents to make lenders believe homes were worth far more than they actually were. Using straw buyers, she and others obtained inflated loans for homes in Versailles and then pocketed the difference between the loan amount and a home’s actual price. She admitted to her actions in September, pleading guilty to conspiracy to commit money-laundering and conspiracy to commit mail and wire fraud.

“For eight months of my life I made bad decisions. Please don’t let it define my life,” Asbury told Marra.

Her husband of 22 years, Wayne Asbury, echoed his wife’s pleas. “Carol has always been a giver, not a taker,” he said. During 2006, when she made “poor decisions,” she was dealing with his looming brain surgery, her live-in mother-in-law’s failing health and a high-school-age daughter who needed her help, he said.

Her attorney, Christopher Lyons, said Asbury has tried to atone. She founded Save My Home Law Group to help homeowners facing foreclosure. She spent $40,000 to sponsor a popular blog, 4closurefraud.com. It is partly credited for exposing the robo-signing scandal that pushed banks to temporarily freeze home repossessions. She also agreed to be disbarred.

However, federal prosecutor Stephanie Evans said that despite Asbury’s apparent remorse, she was key to the scam. “This is not, “I did a couple of bad transactions,’ ” Evans said. “This is, ‘I engaged in criminal conduct over many, many months. I made lots of money and I helped others make millions.’ ”

Her phony loan documents prompted others to pay far more for homes in Versailles than they homes were worth, Evans said. At one point, fraud was involved in about half of the mortages written in the 450-home community off U.S. 441. Unable to pay the steep mortages, people eventually defaulted and moved out. “Gang-bangers” and other squatters moved in, she said. The community is just now rebounding.

In all, about two dozen people were charged in connection with the scheme. Asbury is to report to prison on Jan. 6.

IN THE UNITED STATES DISTRICT COURT SOUTHERN DISTRICT OF TEXAS, HOUSTON DIVISION

 

Civil Action No. 4:18-cv-04543

 

 

 

Joanna Burke and John Burke

 

Plaintiffs,

vs.

 

Hopkins Law, PLLC, Mark Daniel Hopkins and Shelley Luan Hopkins,

 

Defendants.

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PLAINTIFFS MOTION TO STAY PROCEEDINGS

PLAINTIFFS REPLY TO DEFENDANTS RESPONSE TO PLAINTIFFS MOTION TO STAY PROCEEDINGS

Plaintiffs Joanna & John Burke (“Plaintiffs”) reply to Hopkins as follows;

“A judge who receives information clearly establishing that a lawyer has committed a violation of the Texas Disciplinary Rules of Professional Conduct should take appropriate action…” and “A judge having knowledge that a lawyer had committed a violation of the Texas Disciplinary Rules of Professional Conduct that raises a substantial question as to the lawyer’s honesty, trustworthiness or fitness1 as a lawyer in other respects shall inform the Office of the General Counsel of the State Bar of Texas or take other appropriate action.”2

Hopkins summary responses are shown below along with Burkes reply, which also addresses the reasons why the above cases and citations are very important in deciding the pending motion[s], addressing the violations; the dishonest and unlawful acts of the lawyers proceeding pro se before it, and this case in general;

1  See Hazel-Atlas Glass Co. v. Hartford-Empire Co., 322 U.S. 238, 246-47, 64 S.CT. 997, 1001-02, 88 L.ED. 1250 (1944) (attorney tampering with administration of justice requires vacation of judgment, whether or not behavior actually influenced outcome of trial); id. at 251, 64 S.Ct. lawyer in other respects shall inform the Office of the General Counsel of the State Bar of Texas or take other appropriate action.” 1003 (Roberts, J., dissenting) (“No fraud is more odious than an attempt to subvert the administration of justice.“); Great Coastal Express, Inc. v. International Brotherhood of Teamsters, Chauffeurs, Warehousemen Helpers of America, 675 F.2D 1349, 1357 (4th Cir. 1982) (“Involvement of an attorney, as an officer of the court, in a scheme to suborn perjury would certainly be considered fraud on the court.“), cert. denied, 459 U.S. 1128, 103 S.Ct. 764, 74 L.Ed.2d 978 (1983); H.K. Porter Co. v. Goodyear Tire Rubber Co., 536 F.2D 1115, 1119 (6th Cir. 1976) (“Since attorneys are officers of the court, their conduct, if dishonest, would constitute fraud on the court.“); 7 MOORE’S FEDERAL PRACTICE § 60.33, at 359 (2d ed. 1985) (Attorney’s loyalty to client “obviously does not demand that he act dishonestly or fraudulently; on the contrary his loyalty to the court, as an officer thereof, demands integrity and honest dealing with the court. And when he departs from that standard in the conduct of a case he perpetrates a fraud upon the court.“) – Synanon Foundation, Inc. v. Bernstein, 503 A.2d 1254, 1263 (D.C. 1986).

Hopkins: The Dodd-Frank Act and FDCPA has no bearing or effect on this matter.”

Firstly, there is the jurisdictional question; “The Court today holds that this Court and the federal courts below must refrain from exercising their jurisdiction to decide this lawsuit properly brought. It remands the case to the Court of Appeals and implies that a state court should be the one to determine two questions of state law to avoid a federal constitutional question which is also presented.” – Clay v. Sun Insurance Office, 363 U.S. 207, 213 (1960).

The Burkes argued [and not for the first time] that the State Court is the correct and only domain that should hear this lawsuit but remand was denied and also in the case of Ocwen, now on appeal. “It would be a temerarious man who described the constitutional question decided below as frivolous.” – Clay v. Sun Insurance Office, 363 U.S. 207, 213 (1960). This is cemented by the above US Supreme Court case. It also makes Hopkins arguments moot. The question itself is answered in (c) below.

2 Rule 3.03(a)(1) (prohibiting lawyers from “knowingly making false statements of material fact or law to a tribunal”), Rule 3.03(a)(5) (prohibiting lawyers from knowingly offering false evidence), Rule 8.04(a)(3) (prohibiting lawyers from “engaging in conduct involving dishonesty, fraud, deceit, or misrepresentation”). – See Case #18-0879, Supreme Court of Texas, 25th October, 2019, COMMISSION FOR LAWYER DISCIPLINE v. MARK A. CANTU

Hopkins: “The Burkes name calling (“Rogue Debt Collector”) and allegations regarding the status of Hopkins Law, PLLC and its attorneys simply have no foundation in the law.”

Unbonded debt collecting law firm[s] in Texas (with no surety bond as required by the State of Texas) e.g. Hopkins Law, PLLC, would fall squarely into this citation:

“In In re Lenahan, Gardin v. Lenahan, et al. 05-70108 MJK another “edge” was addressed. Rogue attorneys violated the FDCPA in attempting to collect their client’s debts. This Court ruled that damages arising from the willful and malicious conduct of the attorney/debtors were non-dischargeable in their bankruptcy case.” In re Greason, Case No. 07-00357K, AP No. 07-1077 K, at *15 (Bankr. W.D.N.Y. Mar. 10, 2009).

Hopkins:“The First Amended Complaint [Doc. 27] does not contest the constitutionality of the FDCPA, nor does it dispute the validity of Texas Finance Code §392. And “the court may reject the constitutional challenge…”.

Hopkins is dishonest. See Doc 27, footnote 1 and Doc. 28, p.15-19 [‘Hopkins Motion to Dismiss Amended Complaint’] wherein Hopkins responds; “…because they failed to post bond required by Tex. Fin. Code §392.101.” [“TDCA or TFC”]. Both reference Constitutional challenges. Hopkins exhausts from #28-37 of their motion defending and citing the FDCPA, TDCA and/or TFC discussing the Constitutional Challenge[s]. Secondly, per the docket this court has not issued the Constitutional Challenge letters to the AGs, they remain dormant. This, despite the fact the State of Texas and the unconstitutional CFPB has been on notice3 by the Burkes about the TFC Surety Bond question[s] and yet they have failed to answer the Burkes formal requests, and prior to the Constitutional challenge[s] raised here.

This case turns on the decision of Burke v. Ocwen, 5th Circuit;

The Burkes have and still argue Hopkins does not have authority to act for Ocwen4. Hopkins filed a reply to the Burkes Motion to Stay at the 5th Circuit Ocwen Case on Friday, 25th October. The Burkes replied on Monday via a Supplemental Pleading (with Exhibits) [and which this court can take judicial notice]. As stated in the appeal and which is relevant here; Hopkins’ 5th Circuit filing was more about themselves and alarmingly [if you’re the client] conflicts with Ocwens’ own stance in the Florida litigation with CFPB that “an Act” [Dodd-Frank] which is unconstitutional is “not a law” and their case should be dismissed, with prejudice. As such, Hopkins claims that the Ocwen Florida case is “irrelevant” to this case is farcical and absurd.

Hopkins: “The Burkes non-related intervention case somehow relates to this suit against its adversary’s [pro se] attorneys; And; The eleventh circuit case (the Burkes intervention in an appeal between Ocwen and the Consumer Financial Protection Bureau) involves no matters at issue in this case.”

First, see prior answers and generally, why the Ocwen/CFPB lawsuit is extremely relevant. Secondly, Hopkins filed an unauthorized Supplemental Response in Opposition to Motion to Stay [Doc. 14] wherein at p.2 they include EXHIBIT A, the CFPB v. Ocwen Florida case which they ‘judicially noticed’ this court and rely upon for their Motion to Dismiss. Absurdly, Hopkins now claim it is ‘non-related’ when they claim to be attorneys for Ocwen in the cases #4543 and #4544 before this court and/or on appeal.

3 See Supplemental Pleading and Exhibit Exhibit-Hopkins-TFC-Texas-Gov in the 5th appeal and Doc. 27, footnote 1 (as an example).

4 July 2019; Ocwen was issued ANOTHER cease and desist consent order from the STATE OF MAINE; ORDER, in part; “The Bureau finds that OLS had no authority to execute documents as an Attorney in Factfor legal entities which have had no corporate existence [similar to the case of Deutsche Bank v. Burke case before this court [correct decision(s) aligning with Maine] and the 5th Circuit [#15-20201 and 18-20026] incorrectly reversing this court and based on a fraud upon the court appeal filed by dishonest Hopkins] since March 13, 2012 at the latest and that OLS’s uses of those documents constitute violations of 32 M.R.S. § 11013(2).” See https://www.maine.gov/tools/whatsnew/index.php?topic=PFR-combined- press&id=1415353&v=article2019

The Ditech Bankruptcy. Hopkins: “A ruling by Judge Sim Lake in regard to a Ditech matter is just simply irrelevant.”

In re Ditech Holding Corp., Case No. 19-10412 (JLG) (Bankr. S.D.N.Y., 2019) Doc. 15, P. 423 of 1003 shows Hopkins Law, PLLC on the ‘List of Creditors’. This confirms (i) Hopkins holds a financial interest in Ditech rulings in this court and the Bankruptcy (ii) Hopkins Law, PLLC is for the first time in this case, confirmed as an attorney representing a known non-bank servicer, and or sub-servicer (“mortgage servicer”) (seeking payment of services) and casts further darkness over their claims per their Motion to Dismiss [Doc. 6] and repeated in Doc. 28, the Second Motion to Dismiss by Hopkins wherein they state they “act as counsel for those entities (“Deutsche” and “Ocwen”) in the litigation, appeals and all subsequent litigation…” Hopkins go on to provide a list of all ‘related’ cases.

The PSAs contractual agreements do not support Hopkins representing Ocwen and Deutsche at the same time without (i) a conflict of interest and (ii) providing this court the necessary proof they are (a) legally retained and (b) have yet to show authority in any and all of the lawsuits past and present, in this court by these corporations and despite the frequent disposals and purchases of MSRs over the years which the Burkes allege would prove the Burkes arguments that Hopkins and/or their ‘client[s]’ do not have legal authority.

The Burkes arguments are further solidified by the case in Maine, wherein Ocwen was issued a ‘cease and desist’ for the exact same reason as Magistrate Judge Smith ruled for the Burkes in this court in the Deutsche case, twice.

It is further confirmation that the Burkes have more than met their legal burden to ensure that Hopkins Second Motion to Dismiss is denied as the Burkes pleadings meet the standard to proceed to discovery and a jury trial.

Hopkins: The Burkes Believe the Stay will Provide Due Process

That is correct. “In Mullane v. Central Hanover Bank Trust Co., 339 U.S. 306, 314 (1950), this Court recognized that prior to an action which will affect an interest in life, liberty, or property protected by the Due Process Clause of the Fourteenth Amendment, a State must provide “notice reasonably calculated, under all the circumstances, to apprise interested parties of the pendency of the action and afford them an opportunity to present their objections.”” – Mennonite Board of Missions v. Adams, 462 U.S. 791, 795 (1983). – See OCWEN LOAN SERVICING LLC V. GONZALEZ FINANCIAL HOLDINGS CIVIL ACTION NO. H-13-2441, S.D. Tex., Doc. 42, holding when Due Process is raised in pleadings, it applies (affirmed by 5th Circuit #15-20176 for Deutsche and Ocwen).

Hopkins: This Court is biased against the Burkes

Hopkins perpetrated his first fraud on the court in the appeal in the Deutsche case.5 This system of fraud on the court was repeated in Howard v. PNC. Both are well documented and before this court. Hopkins also incites the court with lies and untruthful testimony as this court has personally witnessed and uses legalese and mischief to attack the Burkes integrity, calling them “vexatious litigants” who are filing a “baseless” lawsuit and are “personally attacking” Hopkins and the case should be dismissed “with prejudice” and so on. Hopkins deception, repetitive dishonest testimony and fraud on the court (“the System”) should be rejected by this court AND their violations reported.

5 This is also often referred to as falsification [of evidence] in courts. “It is well-established that falsification of [company] documents is a legitimate reason for termination [of Hopkins unlawful appeal in Deutsche v. Burke #15-20201]. See, Kiel v. Select Artificials, Inc., 169 F.3D 1131, 1135 (8th Cir. 1999); Ward v. Procter Gamble Paper Prods. Co., 111 F.3D 558, 560 (8th Cir. 1997); Price v. S-B Power Tool, 75 F.3D 362, 364 (8th Cir. 1996).” – Sornsen v. Wackenhut Corporation, 01-CV-1967(JMR/FLN), at *1 (D. Minn. Feb. 27, 2003).

Conclusion: 

On  Friday, the  States’  highest court  reminded  the  circuit in length and in particularity, addressing “federal judges” (who are also lawyers) in Texas of their Oath and legal obligations in reporting attorneys before them, who act in bad faith, malice, dishonesty and lack of integrity and trustworthiness.

See the Supreme Court of Texas case of COMMISSION FOR LAWYER DISCIPLINE v. MARK A. CANTU. The Burkes now ask the court to fulfill that obligation in this matter, so that due process and justice may be served. The Burkes motion[s] should be granted along with any and all other relief this court may provide.

RESPECTFULLY submitted this 29th day of October, 2019.

The “Justice” Department and their ‘BFF’s’ keep deleting LIT’s links so where possible, we find and repost them. These are a couple of posts deleted from the above article.

Nine Indicted In $92 Million Mortgage Fraud Scheme

FOR IMMEDIATE RELEASE
June 04, 2009

A federal grand jury in Brooklyn returned an indictment charging nine defendants with a mortgage fraud scheme that resulted in losses exceeding $90 million. The indictment alleges the defendants conspired to defraud Washington Mutual Bank (“WAMU”) and DLJ Mortgage Capital, Inc. (“DLJ”), a subsidiary of Credit Suisse, in connection with the development of two tracts of land located in Brooklyn and Queens by staging the sales of the same properties to straw buyers in order to obtain multiple mortgages on those properties. Thomas Kontogiannis, John Michael, Elias Apergis, Steven Martini, Nadia Konstantinadou, Stefan Deligiannis, Ted Doumazios, Edward Hogan, and Jonathan Rubin are charged with conspiracy to commit bank and wire fraud. In addition, Kontogiannis, Apergis, Konstantinadou, Deligiannis, Martini, and Doumazios are charged with bank fraud, and Kontogiannis and Konstantinadou are charged with money laundering and money laundering conspiracy.1

The indictment was announced by Benton J. Campbell, United States Attorney for the Eastern District of New York, Joseph M. Demarest, Jr., Assistant Director-in-Charge of the Federal Bureau of Investigation, New York Field Office, Richard H. Neiman, New York Superintendent of Banks, and Jon T. Rymer, Inspector General, Federal Deposit Insurance Corporation. The defendants’ initial appearances and arraignments are scheduled later today before United States Magistrate Judge Roanne L. Mann, at the U. S. Courthouse, 225 Cadman Plaza East, Brooklyn, New York. The case has been assigned to United States District Judge Kiyo A. Matsumoto.

As detailed in the indictment, from 2001 to 2003, Kontogiannis, a real estate developer, purchased and subdivided Loring Estates, located in East New York, Brooklyn, and Edgewater Development, located in College Point, Queens. Hogan and Rubin served as the architect and engineer, respectively, and were employed by Kontogiannis. Together, the three defendants obtained permits to construct multi-unit housing at Loring Estates and Edgewater Development.

To finance the projects, the defendants allegedly subdivided the tracts and staged sales of the properties financed by mortgage loans. The defendants prepared false loan files to create the appearance that the properties were being purchased by creditworthy homeowners, when, in fact, Kontogiannis recruited straw buyers from among family members and employees of companies he controlled, including the defendants Deligiannis, Hogan, Rubin, and Apergis. The indictment charges that Martini furnished fraudulent appraisals to support the price of the properties, even where the buildings had yet to be built or had fictional addresses; and Doumazios provided fraudulent title abstract reports and other documentation designed to indicate that the seller, a Kontogiannis-controlled entity, had clear title to convey and that the lender’s interest was protected by title insurance. The loans were financed by lenders controlled by Kontogiannis, including Interamerican Mortgage Corp., later known as CIP Mortgage Corp., (collectively, “Interamerican/CIP”) and Coastal Capital Corp. (“Coastal”), which was run by Kontogiannis’ nephew, John Michael. Stefan Deligiannis allegedly processed the fraudulent loans, which were subsequently sold to WAMU and DLJ.

As part of the fraud scheme, in an attempt to conceal the multiple sales of the same properties, Kontogiannis allegedly changed the addresses of properties located in East New York, Brooklyn, to addresses in neighboring Howard Beach, Queens. In addition, the indictment charges that Kontogiannis and Konstantinadou caused entities controlled by Kontogiannis to make monthly payments on the mortgages, ensuring that none of the mortgages became delinquent. However, the payments ceased in 2007, with approximately $92 million in principal outstanding on the fraudulent mortgages.

“Last year, we announced the formation of a task force comprised of federal, state, and local law-enforcement agents and investigators to address the burgeoning problem of mortgage fraud,” stated United States Attorney Campbell. “This case is another example of the results of our ongoing efforts, which include investigations and prosecutions of mortgage fraud schemes that harmed investors, lenders, and homeowners throughout the country.” Mr. Campbell expressed his grateful appreciation to the New York State Banking Department for its assistance.

FBI Assistant Director-in-Charge Demarest stated, “The indictment sets forth a soup-to-nuts mortgage fraud scheme that included false loan files containing phony information, fraudulent appraisals, fictional addresses, fake title reports, and phantom title insurance. This resulted in the defrauding of two financial institutions out of more than $90 million. The mortgage fraud task force was constituted to root out such operations, and it has been doing just that.”

New York Superintendent of Banks Neiman stated, “Our Criminal Investigations Bureau’s Mortgage Fraud Unit has done an outstanding job in identifying this fraud and developing the initial investigation. The results of our collaborative efforts should serve as a strong warning to individuals that participate in these large organized mortgage fraud rings that you will be caught and brought to justice.”

FDIC Inspector General Rymer stated, “The FDIC OIG is committed to its partnerships with others in the law enforcement community as we address mortgage fraud cases throughout the country. Now, more than ever, the American people need to be assured that their government is working to ensure integrity in the financial services and housing industries and that those involved in criminal activities that undermine that integrity will be held accountable.”

The maximum term of imprisonment for any defendant convicted of conspiracy to commit bank fraud is 30 years. The indictment also seeks forfeiture of the proceeds of the defendants’ bank and wire fraud activity and of property involved in money laundering, including a criminal forfeiture money judgment and money traceable to four commercial properties controlled by Kontogiannis worth at least $50 million.

The government’s case is being prosecuted by Assistant United States Attorneys Jonathan E. Green and Duncan Levin.

The Defendants:

THOMAS KONTOGIANNIS
Age: 60

JOHN MICHAEL
Age: 38

ELIAS APERGIS
Age: 32

STEVEN MARTINI
Age: 56

NADIA KONSTANTINADOU
Age: 45

STEFAN DELIGIANNIS
Age: 35

TED DOUMAZIOS
Age: 40

EDWARD HOGAN
Age: 60

JONATHAN RUBIN
Age: 43

_____________________________

1 The charges announced today are merely allegations, and the defendants are presumed innocent unless and until proven guilty.

FOR IMMEDIATE RELEASE October 15, 2010

PRESS RELEASE

 

LEADER OF $92 MILLION MORTGAGE FRAUD CONSPIRACY PLEADS GUILTY

 

Thomas Kontogiannis, a New York real estate developer who led a mortgage fraud conspiracy resulting in more than $90 million losses, pleaded guilty to conspiracy to commit bank and wire fraud in federal court in Brooklyn today. Kontogiannis admitted defrauding Washington Mutual Bank (“WAMU”) and DLJ Mortgage Capital, Inc. (“DLJ”), a subsidiary of Credit Suisse, in connection with his development of two tracts of land in Brooklyn and Queens. The proceedings were held before United States District Judge Kiyo A. Matsumoto.

The guilty plea was announced by Loretta E. Lynch, United States Attorney for the Eastern District of New York, Janice K. Fedarcyk, Assistant Director-in-Charge of the Federal Bureau of Investigation, New York Field Office, Richard H. Neiman, New York Superintendent of Banks, and Jon T. Rymer, Inspector General, Federal Deposit Insurance Corporation.

The indictment alleges that from 2001 to 2003, Kontogiannis purchased and subdivided Loring Estates, located in East New York, Brooklyn, and Edgewater Development, located in College Point, Queens. After the conspirators obtained permits to construct multi-unit housing, Kontogiannis staged sales of the properties financed by mortgage loans. He then directed others to prepare false loan files to create the appearance that the properties were being purchased by creditworthy homeowners, when, in fact, Kontogiannis sold the properties to family members and employees who acted as straw buyers. The mortgages were supported by fraudulent appraisals depicting finished homes when the buildings had yet to be built or had fictional addresses, and the mortgage files contained fraudulent title abstract reports and other documentation designed to indicate that the seller, a Kontogiannis-controlled entity, had clear title to convey and that the lender’s interest was protected by title insurance. The loans were financed by lenders controlled by Kontogiannis, including Interamerican Mortgage Corp., later known as CIP Mortgage Corp. and Coastal Capital Corp. After the loans were closed, Kontogiannis ensured that the mortgages and deeds were not recorded, thereby permitting him to “sell” the same property repeatedly. Kontogiannis eventually sold the loans to WAMU or DLJ.

In an effort to conceal the multiple sales of the same properties, Kontogiannis changed the addresses of properties located in East New York, Brooklyn, to addresses in neighboring Howard Beach, Queens. In addition, he directed others to make monthly payments on the mortgages, ensuring that none of the mortgages became delinquent. The payments ceased in 2007, with approximately $92 million in principal outstanding on the fraudulent mortgages.

Kontogiannis, along with eight other defendants, were indicted on conspiracy and bank and wire fraud charges in June 2009. Four other defendants have pleaded guilty to date.

“The scope of this fraud is staggering,” stated United States Attorney Lynch. “The defendant controlled every aspect of the mortgage lending process, right up to the sale of fraudulent loans into the secondary market.” Ms. Lynch expressed her grateful appreciation to the New York State Banking Department for its assistance.

FBI Assistant Director-in-Charge Fedarcyk stated, “Kontogiannis has added another conviction to his rap sheet by defrauding banks and others in his ninety-two million dollar mortgage fraud scheme. He thought he had the system figured out and now faces adding even more time to his sentence. This guilty plea is a step towards cleaning up the housing market, and the FBI will continue to vigorously investigate those that perpetrate this type of crime which affects all Americans.”

New York Superintendent of Banks Neiman stated, “This plea of guilty to one of the largest mortgage frauds directed by a single individual was made possible by seamless coordination between federal agencies and the state banking department. This degree of cooperative federalism, with each agency contributing specialized expertise, will restore confidence in the mortgage sector and the greater financial system.”

FDIC Inspector General Rymer stated, “The Federal Deposit Insurance Corporation Office of Inspector General (FDIC-OIG) is pleased to join the United States Attorney’s Office for the Eastern District of New York and our law enforcement colleagues in announcing this guilty plea. The American people need to be assured that their government is working to ensure integrity in the financial services and housing industries and that individuals and entities involved in mortgage fraud criminal misconduct will be prosecuted. Bringing these individuals to justice helps maintain the safety and soundness of the nation’s financial institutions.”

Kontogiannis faces up to 30 years’ imprisonment on the conspiracy count to which he pleaded guilty. Kontogiannis also consented to forfeiture of the proceeds of his fraudulent activity, including a criminal forfeiture money judgment and money traceable to four commercial properties he controlled worth at least $50 million.

The government’s case is being prosecuted by Assistant United States Attorneys Jonathan E. Green and Duncan Levin.

This law enforcement action is part of President Barack Obama’s Financial Fraud Enforcement Task Force. President Obama established the interagency Financial Fraud Enforcement Task Force to wage an aggressive, coordinated, and proactive effort to investigate and prosecute financial crimes. The task force includes representatives from a broad range of federal agencies, regulatory authorities, inspectors general, and state and local law enforcement who, working together, bring to bear a powerful array of criminal and civil enforcement resources. The task force is working to improve efforts across the federal executive branch, and with state and local partners, to investigate and prosecute significant financial crimes, ensure just and effective punishment for those who perpetrate financial crimes, combat discrimination in the lending and financial markets, and recover proceeds for victims of financial crimes. More information about the Financial Fraud Enforcement Task Force can be found at www.stopfraud.gov.

The Defendant:

THOMAS KONTOGIANNIS
Age: 61

Former State Rep Among the Notables Caught in Mortgage Fraud Ring

An 83-year old former state representative, who lost his law license years ago for misconduct, was sentenced to 5 years in prison Monday for handling closings for a group of conspirators who concocted phony real estate deals in order to swindle more than $4.4 million from banks.

Morris Olmer, a Democrat who represented New Haven in 1967 and ’69 and a former member of New Haven’s Board of Alderman, was convicted by a jury in April of conspiring to defraud the government, eight counts of fraud involving money transfers and four counts of making false statement to investigators.

Federal prosecutors said Olmer was one of a 14 conspirators who obtained $10 million in residential real estate loans through “sham sales contracts, false loan applications and fraudulent property appraisals.” The conspirators are accused of dividing nearly half the money among themselves.

Olmer and three other members of the ring were convicted by a jury earlier this year. Seven others pleaded guilty to a variety of fraud-related charges, including the man prosecutors call the leader of the ring, Syed Babar, 28, of New London. Babar agreed to cooperate with authorities and became the government’s star witness.

The jury deadlocked on a verdict against a 14th alleged member, Rabbi David Avigdor, 57, who presides over New Haven’s Congregation Bikur Cholim Sheveth. Avigdor, a lawyer, worked for worked for Olmer, who maintained a law office in New Haven after his license to practice was revoked following a fraud complaint about four years ago. Prosecutors have said they will retry Avigdor

Another conspirator, 68-year old Thomas Gallagher of West Haven – former grand marshal of the New Haven St. Patrick’s Day parade and a member of the West Haven police commission – plead guilty to a charge of making a false statement midway through the trial. In return, prosecutors dropped more than a dozen other charges against him. He was given a five year sentence.

Gallagher was accused of manufacturing appraisals that inflated the value of the dilapidated homes the conspirators financed and transferred among themselves in distressed areas of New Haven, New London and other locations, mostly in eastern Connecticut.

Federal prosecutors said Babar arranged for straw buyers to finance and buy – at inflated prices – homes they had no intention of living in or paying for. When the deals closed, the conspirators split the loan amounts in excess of sale prices and walked away from about 30 properties, creating more blight in already struggling neighborhoods.

The conspirators created a paper contraction company called Sheda Telle Construction to launder money and justify home prices by with false claims of renovation work. Prosecutors said about $1 million in cash flowed into the company’s bank account, without any work ever being done.

Prosecutors said the ring operated between 2006 and 2010.

Five conspirators. Including Olmer, have received prison sentences of from four to 7 1/2 years in prison, Syed and seven others await sentencing. Babar is scheduled to be sentenced in November 28.

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Laws In Texas is a blog about the Financial Crisis and how the banks and government are colluding against the citizens and homeowners of the State of Texas and relying on a system of #FakeDocs and post-crisis legal precedents, specially created by the Court of Appeals for the Fifth Circuit to foreclose on homeowners around this great State. We are not lawyers. We do not offer legal advice. We are citizens of the State of Texas who have spent a decade in the court system in Texas and have been party to during this period to the good, the bad and the very ugly.

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