As FlippingFrenzy.com was the first to report yesterday morning, a Buffalo, NY, landlord did indeed plead guilty to Grand Larceny in the Third Degree, a class D felony, and Scheme to Defraud in the First Degree, a class E felony, in connection with fraudulent real estate deals in upstate New York. Fifty-one year-old Robert Palano now faces two to seven years in prison, and in related civil actions has agreed to pay $1.5 million in restitution and penalties and to be permanently barred from owning investment properties in Buffalo. Michael Heigel, Palano’s real estate appraiser for many of his schemes, also plead guilty to charges and agreed to pay $55,000 in restitution.

A 15-month civil investigation by New York state’s Attorney General’s office revealed that, between 1998 and 2002, Palano fraudulently obtained more than $4 million dollars in mortgage loans on 104 rental properties he owned on the East Side of Buffalo. After pocketing the loan proceeds, Palano took off for Florida, leaving at least ten lenders with defaulted loans secured by properties worth far less than the debt, and renters being evicted through foreclosures.

The investigation revealed that Palano used Heigel to do all of his appraisals which were grossly inflated over the true market value.

The charges in the criminal case arise out of a series of 29 fraudulent loan applications submitted by Palano between March and November 2002 to GMAC Mortgage Corporation. According to legal documents, Palano lied on the applications when he declared that he was not at that time a party to any civil litigation. In fact, Palano was then the defendant in an unrelated mortgage fraud case brought by The Associates First Capital Mortgage Corporation.

By December 2003, Palano had defaulted on all 104 loans and as a result, lenders were left holding collateral that was inadequate to pay off the balance. The consequent foreclosures resulted in the eviction of dozens of families from the rental properties and caused further blight of the neighborhoods as boarded up houses were left vacant for months.

Many of the defaulted loans covered by the civil settlement had been resold by the lenders to Fannie Mae, the federally-chartered institution that buys mortgage loans for the purpose of increasing the availability and affordability of housing for low- and moderate-income Americans. The terms of the civil settlement require Palano to pay $1.4 million to Fannie Mae to reimburse its losses.

This is the second time New York’s Attorney General’s office has cited Palano in a mortgage fraud case. A 2001 investigation the found that Palano orchestrated a real estate scheme that targeted African-American, first time home buyers. In resolving that case, Palano agreed to pay $225,000 in restitution to his victims and The Associates First Capital Mortgage Corporation agreed to reduce the mortgages of 130 properties by a total of $1.6 million. The Associates First Capital Mortgage Corporation later civil action against Palano in this matter was the litigation he failed to report.

2006-04-27 04:40 When we think of real estate and mortgage fraud, we’re usually talking about the impact it has on homeowners. Well, I found an interesting announcement this morning on a Buffalo, NY, community-based blog called WNY Media Network, that in a round-about sort of way speaks to real estate fraud’s impact on renters too.

According to Buffalo housing activist Michele Johnson, Robert Palano–who New York State’s Attorney General once called a “maggot at the bottom of the housing market“–will be arraigned later today on unannounced charges. From the Around The Network section of the WNY Media Network blog:

Imagine you live on a small street in the city and within weeks 5 houses on your little street go into foreclosure, What effect do you think it would have on you? Now imagine you were renting a house, living there for years paying your rent on time and you get a knock on your door telling you that you have 30 days to vacate the premises.

This happened over 60 times in our city recently and all at the hands of 1 person. That 1 gentleman who owned over 100 rental properties in Buffalo, Most of them had been re mortgaged the year prior and it seems that several million dollars were made.

The mortgages were not paid and the houses went into foreclosure, Right around this time he left his Clarence NY home and moved to Florida and by some accounts may have been dabbling in real estate there too.

This gentlemen named Robert Palano paid a heavy fine perhaps 10 years ago I believe for mortgage fraud also. He also was found guilty of defrauding the Section 8 program of over $70,000 so history repeats itself….Perhaps as he’s arraigned this morning in front of The honorable Penny Wolfgang he will think about all the lives he has thrown into tailspins but I doubt it.

According to a January 2005 blog entry on Rachel Dollar’s MortgageFraudBlog.com, Palano indeed does have a questionable history when it comes to real estate deals. Dollar reports that Palano was fined $250K in 2002 in connection with allegations that he was running a scam cheating low-income homebuyers. He also received a federal sentence of five months in prison and a $125,000 fine in the early-1990s in connection with charges that he defrauded a home loan program.

If in fact today’s arraignment means that Buffalo renters and homeowners can finally put Palano out of business once and for all, then that’s a good thing. Buffalo has had a terrible time with real estate-related fraud. From Palano’s scams to the city’s Anti-flipping Taskforce’s attempts to get eBay to remove real estate listings on its site that are clearly nothing more than flipping schemes, Buffalo deserves a break. Here’s hoping today’s arraignment is just the start Buffalo needs to eradicate real estate fraud and the likes of Robert Palano!

2006-04-26 07:30 New York State’s Attorney General, Eliot Spitzer, announced yesterday afternoon that his office has charged eight people with lying on mortgage applications–for homes in Brooklyn, Queens, and Suffolk counties, New York–in a fraud scheme he says is valued at more than $200 million.

The eight people–named in an indictment that was unsealed yesterday in Kings County Supreme Court as the “Sandella Group”–apparently paid dozens of people to pose as homebuyers, faked their financial disclosures, and submitted inflated sale prices to lenders. The indictment states that the group failed to repay loans, pocketing upwards of $100,000 or more on EACH deal.

According to court-related documents obtained by FlippingFrenzy.com, the Sandella Group has been in operation since at least 2001, principally in Brooklyn, Queens and Suffolk County. Forty-three year-old defendant Louis Sandella is named as the Group’s leader; he was assisted by his brother, Michael Sandella, Danielle Moss Fontanez, and five others, including two real estate attorneys–defendants Gary S. Shaw and Ida D’Angelo.

The charges included in the indictment are: Criminal Enterprise, a class B Felony; Grand Larceny in the First and Second Degrees, a class B and C felony, respectively; Scheme to Defraud in the First Degree, a class E felony; and Falsifying Business Records in the First Degree, a Class E felony. If convicted of the top count, each of the eight case face sentences of up to 25 years in prison.

According to Spitzer’s office, a typical example of a Sandella Group scheme can be found in the January, 2004 sale of a house in Flatbush, Brooklyn. Although the true purchase price of the Flatbush property was $310,000, the Sandella Group falsely told the bank that the purchase price was $450,000, and applied to the bank for a loan in that amount. Sandella gave the bank false information about the financial condition of a straw buyer that it recruited as a front man in the transaction, and submitted a forged appraisal report. The group then pocketed the bulk of the inflated amount, and allowed the loan to go into default.

“The scams carried out by these defendants not only harmed targeted individuals and lending institutions, but had the potential to undermine the housing market in neighborhoods where they practiced their scheme,” Spitzer said in a written statement.

The Chinese thinker and social philosopher Confucius once said, “Choose a job you love, and you will never have to work a day in your life.”

Confucius must have been a REALTOR®, because that’s exactly how I feel, especially on a day like today. I’m in Chicago (starting last night thru Noon today) meeting with a group of top producing Realtors from across the country in town for a networking event.

I’ll tell you, as much as I live to help my customers buy and sell homes, I also enjoy connecting with other successful Realtors. There’s so much to learn and share with one another that I could literally spend all day every day doing exactly this… talking about the benefits of Blogging; discussing the rules of engagement for dealing with real estate and mortgage fraud; learning about other people’s successes when it comes to branding, marketing, and salesmanship, especially in a downwardly trending market; and covering strategy for helping ‘flippers’ (the good kind, not the four-letter kind).

Already I’ve had a chance to interact with:

- Jean Shine of The Shine Team (Harker Heights, Texas)
- Chip Neumann of Neumann Real Estate (Ridgefield, Connecticut)
- AJ Fischer of Aadvisor Realty (Naples, Florida) www.ajfischerteam.com
- Ivan Sher of The Shapiro/Sher Group (Las Vegas, Nevada)
- Bill Ryan of The Ryan Team (Chandler, Arizona)
- Char MacCallum of Char MacCallum Real Estate (Olathe, Kansas)
- Anita Padilla-Fitzgerald of MegaStar Financial Corp. (Denver, Colorado)

The eight of us had a great dinner last night at Gibson’s Steakhouse, and I’m really looking forward to reconnecting with everyone later this morning.

Thanks to REIPA Board member and Veros President/CEO Darius Bozorgi, who saw me speak at the 5th Annual NPRRA-REIPA Joint Conference in San Antonio earlier this month, I’ve been invited to deliver a Keynote Address at this year’s Predictive Methods Conference (PMC) in Dana Point, California. If you’re not familar with PMC, it’s the annual conference for mortgage lending executives, tech vendors, appraisers, academia and government regulators, all of whom gather to share their thoughts, questions, and insights about automated valuation models (AVMs), collateral risk management, and predictive analytics. Now that’s a mouthful, I know. Said differently, PMC is an informative conference delivering the latest advances and insights in collateral risk management and other mortgage technology, applications, techniques, standards and regulatory issues.

The focus of my address (like you couldn’t guess) is real estate and mortgage fraud. No other issue is as significant to the mortgage industry as fraud. The necessity to verify identity, employment, income, collateral and occupancy weighs heavy as, increasingly, more applicants push the edge of the envelope with both facts and risk. My address, titled “Ignorance of the Law is No Excuse: Recognizing, Avoiding, and Recovering from Mortgage Fraud,” will cover how to spot fraud and steer clear of gray areas in all real estate-related transactions.

One of the really neat things about speaking at this event is that one of the other Keynote speakers is Pro Football Hall of Fame member Joe Montana. According to one of the folks over at PMC, Joe will be talking about assessing risk and achieving success in the midst of chaos; a topic he’s very familiar with!

Click here for more information about PMC 2006. It should be a great event.

I’m headed to Indianapolis, Indiana, in a few weeks to keynote this event. In the meantime, I’m glad to hear that the Mayor of Indianapolis, Bart Peterson, and the state’s Attorney General, Steve Carter, are making plans to crack down on foreclosure-related fraud. According to my sources in Indiana, changes to state law will soon provide homeowners with significant protections from those “We Buy Homes” scams.

As we all know, there are people out there who prey on families who’ve fallen on hard times–namely, ‘foreclosure consultants’ who target homeowners who have been threatened with foreclosure. In a typical foreclosure-consulting scheme, homeowners pay consultants with hopes that the consultant can stop or delay foreclosure on their home. In reality, the consultant does not pay the mortgage, and the original homeowner ends up losing the home in spite of the fees paid to the consultant’s company. Indiana’s new rules governing foreclosures will empower homeowners with more information and place disclosure requirements on companies that engage in foreclosure-related activities.

Starting July 1, 2006, Indiana law governing foreclosure rescue would:

1. Require significant written disclosures to inform homeowners about critical aspects of
   the services they are purchasing.
2. Provides homeowners with a 3-day right to cancel an agreement with a foreclosure consultant.
3. Prohibits a company/individual from obtaining power of attorney from the homeowner.
4. Requires foreclosures consultants to obtain a surety bond of at least Twenty-five Thousand dollars ($25,000).

The new rules, which were officially put into place by Indiana House Enrolled Act 1114, increase penalties and enforcement abilities for consumers harmed by fraudulent foreclosure consultants. Specifically, the new rules allow a person damaged by a violation to bring an action to recover the greater of two times (2x) the amount of actual damages and attorney’s fees, and bring an action against the consultant’s bond to recover an amount equal to that of the damages.

Way to go, Indiana!

One of the things I’m most proud of in life–aside from my wife and children–is my designation as a STAR POWER® Star. If you’re unfamiliar with STAR POWER® Systems, Inc., here’s a quick overview:

Back in the late-1980s, one of the country’s top Realtors–Boulder, Colorado-based Howard Brinton–began a series of audiotape interviews with top producing Realtors from around the country. Howard’s idea was simple… capture the nation’s top producers talking about what specifically makes them successful, and then share that information with other Realtors interested in achieving the same levels of success. From those humble beginnings, STAR POWER® Systems was born. And those Realtors who Howard convinced to be recorded; well, those people are now officially known as the STAR POWER® Stars. According to Howard, a Star typically averages over $35 million in real estate sales volume and 200+ transactions per year, and they serve as the organization’s lifeblood when it comes to sharing the tips, techniques and strategies with the company’s international network of eager-to-grow agents.

In the 20 or so years since its inception, STAR POWER® Systems has grown to become one of the leading real estate education companies on the planet, offering conferences and niche training opportunities throughout the USA, along with highly focused training and educational materials for Realtors at any stage in their career.

So, what does any of this have to do with Real Estate and Mortgage Fraud? Good question (I was getting there .

Recently, Howard Brinton and I were talking about the problems associated with fraudulent real estate transactions and the need for more education around spotting, stopping, and reporting fraud. Howard and I decided the best way to tackle the issue from a STAR POWER® perspective was to generate content that makes everyone aware of the problem. Earlier this week, I worked with STAR POWER’s Strategic Marketing & Development Manager, Jeff Willner, on the first of what I hope will be many articles on real estate and mortgage fraud for STAR POWER’s Club newsletter; and later this month I’ll be flying out to Boulder to work in the recording studio with Howard to produce a series of high-quality audio CDs addressing the finer details associated with what the FBI calls one of the fastest growing white collar crimes today.

It’s nice to see an organization like STAR POWER® Systems taking real estate and mortgage fraud so seriously. To people like Howard and myself, it doesn’t matter how successful you are in this business… you still need to be able to spot, stop, and report fraud each and every time it happens.

Remember when you were old enough to comprehend your parent’s getting a new car? I can. The day my Dad came home with a brand new Buick Electra 225 (a ‘Duce and a Quarter’ he called it) was one of the proudest days of my childhood. If you’ve never seen a 225, it’s bigger–or longer, I should say–than anything on the road today (click here for a picture of what the Duce looks like). For a couple of weeks–at the ripe old age of seven or eight–I was for sure the proudest kid in my neighborhood. No one else’s Father had a Duce, and because of that, I thought I was the envy of every kid on my block.

All of that came crashing down though on the day my Father took us out for a drive along the highway. Between the on-ramp and the exit-ramp, I saw no less than a dozen 225’s that looked exactly like ours. I was heartbroken. Here I was operating on the assumption that my Dad had the only Buck Electra 225 on the planet, and with one drive down the highway, well, you know how the story goes. It’s funny how that works, isn’t it? The day you get a new car, it seems like every other car you see on the road is the same make and model as yours.

What does any of this have to do with the title of today’s post and real estate/mortgage fraud? Hold onto your pants, I’m getting there (said with a smile).

As I wrote yesterday morning, I’m in Kansas City visiting with a true real estate industry superstar, Char MacCallum. Later today I’ll be meeting with other Realtors who, like Char and myself, are top performers in their geographical areas. There’s so much to learn from one another and yet so little time to get it all in, but I’m trying.

Here’s the point of today’s blog entry:

I started my day off this morning by venturing out of my hotel for an exercise walk. Along the way I passed Restart, Inc., where dozens of people were waiting for day labor jobs. Then, when I got back to my hotel, I decided to hit the gym for some more intense exercise. On a wall in the hotel gym was a sign that said that using the gym is a great way to ‘restart’ your day. Finally, while looking over the menu in the hotel’s restaurant, I came across the same word, ‘restart;’ this time in reference to healthy choices on the breakfast menu.

Like I said before, I think its interesting how a word–just like my Father’s new car–can keep popping up and hitting you alongside your head. “Restart” is a great word. Every single day we have a choice to make. We can either pick up where we left off the day before–as many bad guys and fraudsters do when it comes committing real estate and mortgage fraud–or we can choose to restart by bettering ourselves and improving on our past performance. For me, I wake up each morning ready to build upon the previous day’s success. I’m not here in Kansas City because I’m satisfied with where I am in life. I’m here meeting with other Realtors because I want get better, and because I want to help others ‘restart’ their businesses as well.

2006-04-17 06:30

I’m in Kansas City, Kansas, today shadowing real estate industry superstar Char MacCallum of the Char MacCallum Real Estate Group. Char and her team of real estate professionals have been assisting Kansas City-area homeowners for nearly a quarter of a century. Last year alone, Char closed on more than 200 real estate transactions worth more than $24 million in sales. Like myself, Char is a STAR POWER® Systems “Star,” Certified Residential Specialist, and (CRS) Graduate REALTOR® Institute (GRI) designee. In addition, Char has earned the Senior Real Estate Specialist (SRES) and Accredited Buyers’ Representative (ABR) designees as well.

As I’ve said many times before, professionals–regardless of what industry they’re in–all too often tend to work in a vacuum. You know the type, don’t you? They’re the ones who walk around saying, “I know best” and “what can anyone else possibly teach me.” Well, Char and I feel differently. Regardless of how successful we are (or how successful other people say we are), we know that there are always new things to learn and areas in which we can improve our performance.

So, that’s that… I’m in Kansas City, and I’m looking forward to meeting with Char and talking with her and her team about Lead Generation, Customer Service, and Blogging, among other things!

In the meantime, I want to point out that the Detroit Free Press is now covering the Brenda and Terry Edwards mortgage fraud case. With a paid circulation of over 1 million readers, this weekend’s front page coverage of U.S. Bank National Association’s attempt to evict the Edwards’–who were victimized by real estate fraudsters–should help raise awareness in the metro-Detroit area of the dangers associated with real estate and mortgage fraud. Click here for the article, titled STEALING HOMES: Some people unknowingly sign away ownership, by Free Press real estate writer Suzette Hackney.

According to an article in the North Country Gazette, a New York police detective has been arrested and charged with among other things, acting as a straw buyer in real estate transactions. Forty-seven year old Leroy Nelson, of Floral Park, NY, is charged with two counts of offering a false instrument for filing, a class E felony; scheming to defraud, a class E felony; and two counts of filing a false tax return, a class A misdemeanor. From the North Country Gazette:

Prosecutors said that beginning in 2001, Nelson participated in a scheme with two other individuals, one of whom owed the NYS Department of Taxation over $200,000 in taxes. In order to help the tax delinquent “hide” property from the NYS tax authorities, Mr. Nelson became the “straw” buyer and owner of a house located at 237 Miller Avenue, Freeport, where the tax delinquent lived and is believed to still be living. Nelson thus became the titled owner of the property. Nelson lived there for a mere six months before moving out. At the same time, in 2003, despite the fact that title to the Freeport house was in his name, Nelson filed for bankruptcy in the Eastern District of New York, stating that he owned no real property, thereby making a false statement to the bankruptcy court.

Click here for the rest of the North Country Gazette’s article.

Detective Nelson’s arrest comes on the heels of another trusted official’s arrest for real estate-related fraud. As I reported on the 10th of March, an Assistant District Attorney in Pennsylvania was fired last month after a title insurance company filed a lawsuit alleging that he forged closing documents bearing the title company’s name on real estate transactions.

At this rate, I’m almost expecting a governor or member of Congress to be the next public official to be charged with real estate fraud!

For those of you following the Edwards’ case, here’s an article from one of our local newspapers (Catherine Kavanaugh reporting for the Daily Tribune):

The eviction hearing for longtime residents Brenda and Terry Edwards was postponed Tuesday so the judge can review a legal brief raising more issues related to their mortgage fraud case. The Edwardses have lived 32 years in a Hilldale Avenue bungalow. They paid it off in 1997, but the couple became tenants in the house last year following a home equity scam.

The Edwardses unknowingly gave away the 79-year-old dwelling when a shady lender slipped sales documents into paperwork the couple thought they were signing for a $10,000 home equity loan. The residents ended up selling their house to the lender’s accomplice who didn’t make any payments and let the property go into foreclosure. It was sold at auction last summer to U.S. Bank National Association for $137,724. The bank wants the couple out, while the Edwardses’ attorney, Scott F. Smith, is asking 44th District Judge Terrence Brennan to set aside the eviction.

“I want to give everyone a full opportunity to present every argument they have,” Brennan said.

While the motion to set aside the eviction is pending in district court, Smith said he will file for a quiet title in Oakland County Circuit Court. This process determines the rights of all parties who are in dispute over a property.

The Edwardses contend they never intended to sell their house. They said they did not receive a penny from the transaction set up by their lender, who allegedly walked away from the deal with at least $33,000 from a forged check cashed in the Edwardses’ name at a Novi bank.

Novi and Royal Oak police as well as the Federal Bureau of Investigation are looking into criminal aspects of the transaction while the property rights issues proceed in district and circuit courts. Friends and neighbors of the Edwardses showed up in court to offer their moral support. The couple’s daughter, Tracy Wallaert, said she appreciates everyone who has encouraging words for her parents.

“I figured people would follow this, but more like gossip as in look what the Edwardses’ are dealing with now,” Wallaert said. “But fortunately they really care. A lot of people think: This could be me. When you take out a loan you feel it’s a secure process.”

The Edwardses needed the home equity loan to pay back taxes. The lender did cover that debt but when it came to finalize how the couple would repay it, other documents, including a two-page warranty deed, were put in front of them to sign.

Ralph Roberts, a mortgage fraud expert, is helping the Edwardses through the legal process, and he said the seven-week postponement on the motion to set aside the eviction is the “second-best thing that could have happened.”

“We can go to the circuit court for other remedies,” he said. “Some parties have clean hands, some don’t. This will take time to sort out.”

I must say, having been present in the courtroom for yesterday morning’s proceedings, Judge Brennan did a really good job, and it was especially nice to see his genuine concern for Brenda and Terry. For my part, I attempted to talk to U.S. Bank National Association’s attorney about setting up a Rent Escrow account for the Edwards’ but they wanted nothing to do with that suggestion.

It’s a shame, really, because all indications are that the Edwards’ will win this battle. They were clearly taken advantage of, and if U.S. Bank National Association was smart, they’d be doing everything within their powers to help–not get in the way of–the Edwards reclaiming their property.

2006-04-11 08:15

I’m headed back to court this morning to assist with the Edwards’ case. We’re hopeful that by the end of this week, the Edwards’ matter will be cleared up entirely, allowing Brenda and Terry to continue to live in the house they’ve called home for the last 32 years (click here for a recent news story about the Edwards’ and today’s hearing). In the meantime, I think it’s worth mentioning another local real estate fraud-related case I’m consulting on… this one involving an elderly couple from my part of the state who were tricked by fraudsters into giving up four of their income-generating properties.

Back on the 1st of March of 2005, after running into significant financial difficulties, 82-year-old Claude Seay and his 79-year-old wife Rosalie decided it was time to refinance four of their rental properties. According to documents field with the Circuit Court for the County of Oakland (Michigan), Rosalie Seay called Oak Park, Michigan-based Modern Mortgage Corporation, where she was referred to mortgage broker Max Garza. Shortly after Rosalie’s initial telephone conversation with Garza, Garza and co-conspirator Todd McNeil came to the Seay’s home, and through deceit, material misrepresentations and trickery, convinced Claude and Rosalie to sign a blank ‘quit claim‘ deed.

The Seay’s, of course, never intended to give up their properties, and as you might have guessed by now, only received $3,500.00 from Garza/Modern Mortgage Corp./McNeil for what they believed were the proceeds from the refinancing. Unbeknownst to Claude and Rosalie, Todd McNeil re-mortgaged their properties for around $125,000.00 cash, which was obtained by fraudulent means and without any consideration whatsoever for Claude and Rosalie.

My role in the Seay’s case is similar to my role in the Edwards’ case. I’ve been researching and untangling real estate fraud-related matters for years, and in this case, I’m helping the Seay’s attorney understand the intricacies of the fraud that has been committed against Claude and Rosalie Seay.

Check back soon for updates on both the Edwards’ and Seay’s cases.

There are two types of crime in this world. The first is the type in which you know a crime has been committed against yourself or someone else and you’re not afraid to report it to the proper authorities. The second is the type where you’re not sure if you’ve been victimized and/or you’re too embarrassed to report it to the proper authorities. Unfortunately, real estate and mortgage fraud fall into the second category. All too often, victims of real estate and mortgage fraud-related crimes are under informed and/or too embarrassed by their situation, and for whatever reason they choose not to report the crime.

As regular readers know, a few weeks ago I wrote about Rebecca Hauck’s capture in Texas. Hauck, the alleged co-conspirator of real estate and mortgage fraud poster-child, Matthew Cox, is now in Atlanta, Georgia, where she faces a multitude of real estate-related fraud charges, including conspiracy, wire fraud, bank fraud, money laundering and use of stolen identities.

Soon after writing about Hauck’s arrest for my own blog (this blog, that is), I was asked by the good folks over a RealtyTimes.com to write a similar piece for their readership. What has happened since has been both unexpected and enlightening, especially when it comes to the type of crime where people are not sure if they’ve been victimized and/or they’re too embarrassed to report it.

It seems that the Rebecca Hauck arrest–along with my own writings about it–have spurred a number of people to come forward and inquire as to the possibility of they themselves being victims of Hauck and Cox-like transactions. Since I first wrote about Hauck’s arrest, I’ve received a number of inquiries from both consumers and other real estate industry professionals, all of who believe they may be victim s of related estate-related fraud.

Here’s an example of one such inquiry. This is from a fellow real estate professional whose name and some of the case’s specific details have been changed or omitted to protect individual privacy:

I am a real estate industry professional helping someone with forensic work in a divorce case. During the course of my work, I have come across what I believe are several fraudulent, recorded documents and transactions which have seriously harmed my client; some of which involve multiple and expensive real properties which appear to have had the cooperation of notaries and attorneys. In short, they appear to be very similar to the events outlined in your “Bonnie & Clyde” article.

There is really no way to put this delicately, but my client insists, and I am inclined to agree, that it seems that many of the attorneys in that locale are aware that this fraudulent activity is common practice when a person of considerable means has significant assets. There is great reluctance on the attorneys’ parts to expose or stop this activity or it bring to the attention of authorities. My client has been advised it would be “too difficult,” they are “divorce lawyers not real estate experts,” “impossible to prove,” “cause trouble,” “not worth it,” etc.

I’m wondering if you can help review the documentation and advise us? Would it be possible to discuss this matter immediately? Grateful for any assistance you can give.

In her wildest dreams, I bet Rebecca Hauck never imagined that her capture, arrest, and extradition would lead to more people coming forward as potential victims of real estate-related fraud. Image what Matthew Cox’s arrest will do!

Sorry for not blogging yesterday. I was slammed with meetings and preparations related to flying out to San Antonio, TX, later today for the NPRRA-REIPA Joint Conference.

There’s an interesting story in this morning’s Detroit News related to real estate and mortgage fraud. From a 1,200-word article penned by the News’ Paul Egan:

A severe backlog at the Wayne County Register of Deeds office is helping make Detroit and Wayne County one of the nation’s worst areas for mortgage and real estate fraud, experts say.

Deeds, mortgages and other real estate documents filed today at the Register of Deeds office in Greektown will not appear in the agency’s computer system for two to six months, because the busy office is behind in recording such transactions.

The problem is compounded because Wayne County does not maintain an entry book — a chronology of all real estate filings that is required by state law — that can be used as a safeguard to check on transactions waiting to be entered into the computer.

Together, the backlog and lack of an entry book mean real estate buyers in Wayne County can’t be sure they’re getting clear legal ownership to the properties they purchase or that the properties don’t come with hidden mortgages or other debts.

Click here for Egan’s entire article.

Wayne County’s Register of Deeds tells The Detroit News that that the logjam is nowhere near six months (he says it’s more like two months). Oh really? Here’s an FYI: This past Tuesday (April 4th) I personally checked with the Wayne County’s Register of Deeds office to see how far behind they were, and I learned that they were just now getting to work on paper filed back on the 15th of December of 2005. That’s nearly four months behind (not the two reported by the Register of Deeds, and not the six reported by the The Detroit News. Regardless, no matter how you slice it–six months, four months, or even two months; what’s the difference! It’s still an awful long time for real estate-related transactions to be recorded.

Simply stated, if we ever want to narrow the gap on real estate and mortgage fraud, we have to do something about systems like those in place at the Wayne County Register of Deeds office. On the positive side of this mess, Wayne County is scheduled to bring a new $5,000,000 computer system online by August, which the Register of Deeds indicates should eliminate the backlog altogether. In the meantime, fraudsters and scammers will continue to take advantage of the system, costing homeowners in my area of the state an untold amount of money and personal heartache.

2006-04-04 11:45
Jeff Testerman over at The St. Petersburg Times wrote an excellent article about Rebecca Hauck’s arrest and the continuing search for Matthew B. Cox. From Testerman’s article, titled Bonnie and Clyde with a new twist:

Hauck, 34, a former legal secretary who left behind a young son to join Cox, was arrested by the U.S. Secret Service last week in Houston. She awaits transfer to Atlanta for arraignment on a 42-count federal indictment that could subject her to more than 400 years in prison on charges of conspiracy, wire fraud, bank fraud, money laundering and use of stolen identities. …

… In Atlanta, U.S. government prosecutors hope Hauck will provide clues to Cox’s whereabouts. “Sentencing provisions provide for the possibility of leniency for cooperation,” said Gale McKenzie, an assistant U.S. attorney in Atlanta. “We would still very much like to know where Mr. Cox is.” …

… In Atlanta, Cox and Hauck established headquarters and adopted new identities for a new round of fraudulent loans, the indictments say. Cox stole the identity of Gerald Scott Cugno, a Tampa mortgage broker who had worked with Cox for several years. Hauck took the name of Michielle V. Joseph, a former in-law, before becoming Grace E. Hudson, who checked in to an Atlanta plastic surgery center for a $12,000 facelift to change her appearance, authorities said. …

… Officials were keeping mum this week about whether Cox and Hauck were still working together when she was arrested in Houston.

No one has covered the Matthew Cox and Rebecca Hauck story like Jeff Testerman of The St. Petersburg Times His in-depth investigative reporting has helped countless people, including real estate industry insiders like myself, stay on top of the situation. Click here for Jeff’s entire article.