Archive for the ‘Mortgage Fraud’ Category

John Stewart Morrison IV, 55, Columbia, Maryland has been indicted on two counts of mail fraud as well as Clifford Michael Seibert, 57, Berlin, Maryland; and Seibert‘s company, Modular Homes Wholesaler, Inc. was indicted on two counts of wire fraud in connection with a mortgage fraud scheme. Each indictment also seeks the forfeiture of the proceeds of the scheme, alleged to be $431,317 for Morrison and $363,808 for Seibert. The indictments were returned on August 19, 2010 and recently unsealed.

According to their indictments, Morrison was a mortgage originator and Seibert owned and operated Modular Homes Wholesaler, Inc., Berlin, Maryland. Modular Homes arranged the construction and delivery of pre-fabricated modular homes.

According to Morrison‘s indictment, on November 17, 2005 Morrison contracted to buy Lot #1, Rexwood Dr., Glen Rock Borough, Pennsylvania from the original owner which disclosed to Morrison at least two documents detailing significant problems with the steeply graded parcel of land. In order for a home to be built on Lot #1, extensive soil and engineering work had to be done. The indictment alleges that Morrison failed to follow through on his purchase of Lot #1 and instead recruited P.H., who wanted to have a modular home installed on the site, to purchase the lot. Morrison allegedly failed to disclose the problems with the lot to P.H.

The indictment alleges that Morrison and another individual prepared a loan package in P.H.’s name to apply for a loan from a mortgage lender in the amount of $431,377, to finance the purchase of Lot #1 and construction of a home on the land. The package falsely represented P.H.’s monthly income. Morrison allegedly failed to disclose the problems with Lot #1 to the appraiser, thereby causing the lender to rely on a materially deficient appraisal. Still believing that the land could be built-upon without additional preparatory work, P.H. paid $115,500 for the purchase of the lot at the closing held on June 14, 2006. Morrison allegedly received $36,800 as a result of P.H.’s purchase, which amount was actually paid to the “Atlantic Group,” an entity that Morrison created and used to ensure that his name did not appear on the closing documents.

According to Seibert‘s indictment, he arranged for the construction and delivery of a modular home to Lot #1 on P.H.’s behalf. Seibert prepared a draw schedule in which the lender was to pay Modular Homes a percentage of the loan funds as various stages of completion were reached in the construction and delivery of P.H.’s home. Seibert listed the total price of all services related to the modular home as $363,808. After the closing, the title company mailed a check to Seibert for $35,380 payable to Modular Homes, in accordance with the draw schedule, to begin work on P.H.’s project, including preparing the lot for construction and delivery of the home. The indictment alleges that Seibert did little work, if any, on P.H.’s behalf during this time.

The indictment alleges that on or about August 7, 2006, Seibert requested that funds from the construction escrow account be wired directly to Modular Homes, rather than to P.H. Shortly thereafter, in order to persuade the lender to exempt him from the company’s general policy of paying for construction work only after receiving proof of an approved building permit, Seibert is alleged to have falsely advised the lender that Glen Rock Borough would not issue a building permit until after the foundation for the home was poured. Soon thereafter, in early August 2006, Seibert allegedly submitted his first draw request which falsely represented that the clearing and filling of the lot was complete, when in fact, no work had been done. Seibert then falsely advised the lender that the construction project had overrun in costs because the lot’s community development association was demanding that substantial engineering work be done. The indictment alleges that on August 30,2006, Seibert requested an advance payment of $18,575 for additional costs that would be incurred to meet the demands of the lot’s community development association, when in fact, the development association had made no such demands. Seibert‘s request resulted in the lender agreeing in late October 2006 to fund $16,675 of this request.

Morrison and Seibert each face a maximum sentence of 20 years in prison on each of two counts of mail fraud and wire fraud, respectively. Morrison was arrested today and had an initial appearance in U.S. District Court in Baltimore. Seibert is expected to have an initial appearance on Monday, August 23, 2010.

An indictment is not a finding of guilt. An individual charged by indictment is presumed innocent unless and until proven guilty at some later criminal proceedings.

The indictments were announced by United States Attorney for the District of Maryland Rod J. Rosenstein; Special Agent in Charge Richard A. McFeely of the Federal Bureau of Investigation; and Special Agent in Charge Ken Taylor of the Housing and Urban Development Office of Inspector General – Office of Investigations.

The Maryland Mortgage Fraud Task Force was established to unify the agencies that regulate and investigate mortgage fraud and promote the early detection, identification, prevention and prosecution of mortgage fraud schemes. This case, as well as other cases brought by members of the Task Force, demonstrates the commitment of law enforcement agencies to protect consumers from fraud and promote the integrity of the credit markets. Information about mortgage fraud prosecutions is available http://www.justice.gov/usao/md/Mortgage-Fraud/index.html.

United States Attorney Rod J. Rosenstein thanked the Maryland Department of Labor, Licensing and Regulation’s Division of Financial Regulation for its assistance in the investigation and commended Assistant U.S. Attorney Sujit Raman, who is prosecuting the case.

Noah Savings Mortgage and Liberty Law Firm have had settlement agreements drawn up that will provide refunds to Oregon homeowners and prohibit them from doing further loan modification work in Oregon.

The Oregon Department of Justice investigated allegations that Noah Savings Mortgage violated state law by collecting advance fees for loan modifications aimed at preventing foreclosure sales. The investigation also looked at allegations that Liberty Law Firm solicited to collect advance fees for loan modifications. Both companies cooperated with the investigation.

The settlement with Noah Savings Mortgage resulted in $6,500 in full refunds to two Oregon consumers. The company also must pay $5,000 to the Oregon Department of Justice and cease doing loan modification work in Oregon. The settlement, in which Noah Savings Mortgage admits no wrongdoing, was filed in Linn County, Oregon.

The settlement with Liberty Law Firm prohibits the company from doing modification work in Oregon. If any Oregon consumer complaints arise before August 20, 2010, Liberty Law Firm must pay restitution to those victims and $5,000 to the Department of Justice. Liberty Law Firm admits no wrongdoing; the settlement was filed in Marion County, Oregon.

Oregon Attorney General John Kroger made the announcement.

“This office is committed to stopping abuses in the mortgage industry that harm Oregon consumers,” said Deputy Attorney General Mary Williams.

Senior Assistant Attorney General Thomas K. Elden handled the case for the Oregon Department of Justice.

Oregonians should watch out for loan modifiers who ask for advance fees over $50 and check to see if a loan modifier is registered. Foreclosure consultants and loan modifiers cannot take advance fees in Oregon. Loan modifiers must register with the Oregon Department of Consumer and Business Services through the Division of Finance and Corporate Securities.

The Oregon Department of Justice and the Department of Consumer and Business Services work together to uproot abuses in loan modification.

Veronica Frazier, 42, Pearland, Texas, Robert Veazie, 35, Houston, Texas, and Felton Greer, 41, Houston, Texas, have been charged with fraudulently obtaining home purchase loans. The indictments were returned under seal on May 5, 2010, and were unsealed once the three defendants were in custody.

Frazier was charged in a five-count indictment with conspiracy and wire fraud arising from a scheme to defraud residential lenders in connection with individual condominium purchases in a building located at 917 Main Street, Houston, Texas, also known as “The Kirby Lofts.”

Veazie and Greer were each charged in a separate but related four-count indictment with conspiracy and wire fraud relating to the Kirby Lofts scheme, as well as in connection with other single-family home purchases in the Houston, Texas area.

Greer surrendered to FBI agents, while Veazie surrendered to the United States Marshals Service. Both appeared before U.S. Magistrate Judge Mary Milloy who allowed them to be released upon posting $50,000 bond. Frazier was arrested by FBI agents and is expected to appear before U.S. Magistrate Judge Nancy K. Johnson.

According to the allegations in the indictment returned last week, the Kirby Lofts transactions were sham sales. From about January 2006 to October 2006, Frazier recruited individuals with good credit to act as borrowers in applications for mortgage loans to purchase units in The Kirby Lofts and, with the assistance of co-conspirators, assisted these “straw borrowers” with providing false information and documents to induce lenders to fund purchases of units in The Kirby Lofts. The indictment also alleges Frazier and other co-conspirators submitted invoices for payment from loan proceeds and used the money to pay themselves and straw borrowers from loan proceeds.

The indictment against Veazie and Greer alleges they acted as “straw borrowers” in the Kirby Lofts scheme and also for other residential loans involving single-family residential properties in the Houston, Texas area. According to the indictment, Veazie and Greer received kickbacks from loan proceeds and provided false statements and documents to induce lenders to fund the purchase loans.

The maximum penalty, upon conviction, for conspiracy and wire fraud is 20 years in prison and a fine up to $250,000.

The investigation leading to the charges was conducted by the FBI. Assistant United States Attorneys Belinda Beek and Vernon Lewis are prosecuting the case.

Mary J. Fox Ianniello, 46, now of Los Angeles, California, pled guilty to her role in the bank fraud scheme involving Michael Cassadei and others where they used fraudulent loan applications, appraisals, settlement statements, and other false statements and documents to induce the former First Union National Bank of Delaware to finance the sale of Capital Region, New York residential properties to third parties in amounts well in excess of their actual value, with the participants in the scheme using the proceeds from the loans to purchase the properties in much lower amounts and retaining the bulk of the funds for themselves. Ianniello admitted in Court hat she engaged in various acts in furtherance of the scheme, including submitting false loan applications, executing false settlement statements and other documents, and assisting in the distribution of the loan proceeds.

As previously reported on Mortgage Fraud Blog, on February 17, 2010, Cassadei and appraiser Elmer J. “Joe” McIndoo pled guilty to involvement in the same scheme. All three defendants face sentences of up to thirty (30) years imprisonment, a fine of up to $1 million, or both, a period of up to five years supervised release to follow any term of imprisonment, and mandatory restitution and forfeiture of assets totaling approximately $135,148.45, subject to any apportionment by the Court. Based upon the estimates presented by the government in Court, Cassadei’s advisory sentencing guidelines range was approximately 41 to 51 months imprisonment, and the range for both Ianniello and McIndoo is up to approximately 27 to 33 months. Ianniello’ssentencing was set for July 13, 2010, at 1:00 p.m., before United States District Judge Thomas J. McAvoy in Albany, New York.

The announcement was made by Richard S. Hartunian, United States Attorney for the Northern District of New York, Rene Febles, Special Agent in Charge of the Office of Inspector General, U.S. Department of Housing and Urban Development in New York, John F. Pikus, Special Agent in Charge of the Albany Division of the Federal Bureau of Investigation, and Lt. John D. Durling of the New York State Police Special Investigations Unit.

The ongoing investigation in this matter is being conducted by the Office of the Inspector General of the United States Department of Housing and Urban Development, the Albany Division of the Federal Bureau of Investigation and the New York State Police Special Investigations Unit, with the assistance of the Internal Revenue Service, Criminal Investigation Division, the United States Postal Inspection Service, and the New York State Banking Commission. It is being prosecuted by the United States Attorney’s Office for the Northern District of New York.

Michael Hicks, 41, Quincy, Massachusetts, was sentenced in federal court for a mortgage fraud scheme in which he recruited straw buyers to purchase two properties in Dorchester, Massachusetts which ultimately went into foreclosure, causing a loss to the lenders of more than $1 million.

Hicks was sentenced to 42 months’ imprisonment to be followed by 3 years of supervised release. An order of restitution was deferred for up to 90 days because one unit of the foreclosed properties is scheduled to be sold at auction in March. Hicks pled guilty to one count of wire fraud and one count of money laundering on November 24, 2009.

At the earlier change of plea hearing and according to court documents, the prosecutor told the Court that had the case proceeded to trial, the evidence would have established that in August 2007, Michael Lee purchased a three-family dwelling at 162 Quincy Street, Dorchester, Massachusetts, for $400,000. He immediately converted the dwelling to three condominiums, which allowed Lee to sell the units individually. At Lee’s request, Hicks, through a Pennsylvania associate, recruited a “straw buyer” to purchase all three units. The straw buyer provided his identifying information to the Pennsylvania associate who forwarded it to Hicks. Hicks used this information, such as his name, address, date of birth and Social Security number, to apply for mortgages for the purchase of the three units at 162 Quincy Street. In the loan applications, Hicks falsely represented that the straw buyer intended to make each unit his primary residence, that he was self-employed as a contractor, and that he had an annual income ranging, in the various applications, from $156,241 to more than $379,152, all in an effort to secure mortgages for $370,000 for each of the three units. Hicks also created a fictitious business for the straw buyer, falsely verified the straw buyer’s employment status for the mortgage applications and arranged for false income tax returns to be submitted with the applications.

Hicks also arranged for a straw buyer for another multi-family dwelling at 3-5 Sexton Court in Dorchester, Massachusetts which was owned by Lee’s in-laws. For recruiting both buyers, Lee paid Hicks a total of $180,500 a sum which Hicks turned over to the United States prior to sentencing and which the Court ordered Hicks to forfeit.

Michael Lee also is under Indictment, charged with five counts of wire fraud, in connection with the scheme. His case is pending.

United States Attorney Carmen M. Ortiz, Steven Ricciardi, Special Agent in Charge of the U.S. Secret Service and Susan Dukes, Special Agent in Charge of the Internal Revenue Service – Criminal Investigations, Boston Field Office made the announcement.

The case was investigated by the United States Secret Service and the Internal Revenue Service. It was prosecuted by Assistant U.S. Attorney Sandra S. Bower of Ortiz’s Economic Crimes Unit.

Kevin Lafavers, 46, formerly of Indianapolis, Indiana, was sentenced to 33 months in federal prison, and Donald T. Brown, 67, Lebanon, Indiana, was sentenced to 27 months in prison. Both were sentenced following Lafavers’ guilty pleas to conspiracy to commit wire fraud and wire fraud and Brown’s guilty pleas to conspiracy to commit wire fraud and money laundering. These proceedings concerned the defendants’ participation in a multi-million dollar mortgage fraud scheme operated by Robert Penn in the Indianapolis, Indiana area.

As previously reported on Mortgage Fraud Blog, between November 2003 and August 2005, at least 136 fraudulent loans, totaling $16,613,850.00, were obtained by Robert Penn and his numerous business entities, assisted by Lafavers and Brown and others. The loans were obtained from Argent Mortgage Company, The MoneyStation, and People’s Choice Mortgage/Countrywide Home Loans.

The mortgage fraud schemes carried out by the defendants were accomplished as follows. Participants in the schemes, including Lafavers, located properties and arranged to purchase them at a fair market value generally by means of an option agreement or unrecorded land contract. Other participants in the scheme located straw purchasers who invested their good credit, but no money, to be the purchasers of these properties at a much higher price than that negotiated with the seller. Co-conspirators, including Brown, funded the down payments.

Lafavers was employed by Penn to locate properties for sale, negotiate the purchases of those properties, and enter into option agreements and land contracts with the sellers on behalf of Penn and his businesses. Lafavers generally received $1,000.00 per property located. Lafavers also attended some property closings on behalf of Penn’s companies and received checks that represented illegal proceeds. Lafavers’ sentence reflected his involvement in approximately 19 fraudulent loans. The total amount of those loans was $3,771,000.00.

Brown was primarily involved in funding down payments for investors on the fraudulent real estate transactions. Brown used a bank account, which was maintained by him and his son in the name of Brown Funding Inc. to fund the down payments. Brown obtained down payment checks and provided those checks to the title company, or to another co-conspirator, to be used for the closing. After the property closing, Brown received repayment of the checks from the fraudulent loan proceeds. In addition, Brown Funding Inc. received a fee of $1,000.00 – $3,000.00 for each down payment provided. The sole purpose of Brown Funding Inc. was to fund down payments for investors.

Brown borrowed some of the money for these down payments from individuals who he knew, but did not tell these people that they were in fact funding a fraudulent real estate scheme. Brown also added investors’ names to the Brown Funding Inc. bank account in order to convince the lenders that the investors had access to money which they did not have. Brown’s sentence reflected his involvement in approximately 113 fraudulent loans, including 86 Windsor Village loans. The total amount of those loans was $12,541,000.00.

According to Assistant U. S. Attorney Susan Heckard Dowd, who prosecuted the cases for the government, Circuit Judge David F. Hamilton also ordered Lafavers to serve three years on supervised release, and Brown to serve two years on supervised release following their incarceration. Judge Hamilton also ordered the defendants to pay restitution as follows: Lafavers – $ 1,475,851.63, Brown – $ 9,985,004.15.

The sentencing follows a lengthy investigation conducted by Special Agents of the Internal Revenue Service – Criminal Investigation Division, with the assistance of the Federal Bureau of Investigation. Judge Hamilton previously imposed sentence on six other individuals charged in the scheme as follows: Robert Penn, 84 months’ imprisonment; Mark Roth, 43 months’ imprisonment; Timothy Brown, 37 months’ imprisonment; Stephen Scott Brown, 37 months’ imprisonment; Jerry Jaquess, 30 months’ imprisonment; Tamara Scott, 24 months’ imprisonment.

Jeffrey L. Levine, 68, Atlanta, Georgia, pleaded guilty in federal district court to causing materially false entries that overvalued bank assets to be made in the books, reports and statements of Omni National Bank. Such practices contributed to the over 500 foreclosures and an additional 500 non-performing loans, which resulted in at least $7 million in losses to the FDIC.

Levine was Executive Vice President, the second largest bank shareholder, and head of the Community Redevelopment Lending Department at Omni National Bank from 2000 through October 12, 2007. To keep non-performing loans current on paper, Levine and others at Omni failed to disclose many exceptions to their policies and procedures which resulted in Omni being exposed to a greater risk of loss. Practices that went unreported included: diversion of loan proceeds escrowed for rehab; excessive credit concentrations to a single borrower; funding additional loans for Omni foreclosures at ever-increasing amounts; and failing to create sufficient reserves for those questionable loans or to properly record them on Omni’s books and records.

Before takeover by the FDIC on March 27, 2009, Omni was headquartered in Atlanta, Georgia with branch offices in Birmingham, Alabama; Tampa, Florida; Chicago, Illinois; Fayetteville, North Carolina; Houston,Texas; Dallas,Texas and Philadelphia, Pennsylvania. Omni borrowed Fed Funds at low rates to make high-interest, short-term loans through Levine’s Community Redevelopment Department to borrowers with less than stellar credit and often no steady employment or formal education. Such Omni borrowers were supposed to purchase and rehab distressed properties for prompt resale or Section 8 rental in run-down, inner-city neighborhoods. Borrowers were expected to do most of the rehab themselves within a few months of the loan, and qualify for a loan to purchase a second property only when the first property was sold, or ready for sale. Omni, its regulators and investors relied on the expected increased value of the property after rehab to be we! ll in excess of the loan amount. The Redevelopment Department generated a significant portion of the Omni profits reported on its books and reports, although the facts now show that those profits were materially overstated.

Levine and others were well aware that none of the foreclosed properties could be sold on the open market for the amount of the outstanding Omni loans. A number of foreclosures were never disclosed on the Omni books as required, and some properties were resold up to five times at ever-increasing amounts. The actions of Levine and others at Omni resulted in an overvaluation of bank assets, which in turn misled Omni’s outside auditors, its Office of the Comptroller of the Currency regulator, its FDIC insurer, the Securities and Exchange Commission, and Omni shareholders. Such practices contributed to the over 500 foreclosures and an additional 500 non-performing loans, which resulted in at least $7 million in losses to the FDIC.

The evidence showed that the HUD Section 8 Program and its tenants also suffered, because many of the Omni funded distressed properties were not rehabbed, but rather, stood vacant or were inhabited by squatters for years, corrupting other Section 8 properties and the community. Even if rented, the frequent Omni foreclosures resulted in unstable housing for Section 8 tenants, as well as increased crimes resulting from the vacant properties and transient tenants. 

Levine was charged in a Criminal Information on December 22, 2009, with making, and causing others to make, materially false entries that overvalued bank assets, in the books, reports and statements of Omni National Bank, and pleaded guilty to this charge. He could receive a maximum sentence of 30 years in prison and a fine of up to $1,000,000. In determining the actual sentence, the Court will consider the United States Sentencing Guidelines, which are not binding but provide appropriate sentencing ranges for most offenders. Sentencing is scheduled for March 23, 2010, at 2 p.m., before United States District Judge Jack T. Camp.

Additional Omni-related prosecutions to date include:

●Mark Anthony McBride, 43, East Point, Georgia, as previously reported in Mortgage Fraud Blog, pleaded guilty on April 4, 2009, to fraudulently obtaining millions of dollars in mortgage loans from Omni and other lenders.  McBride is scheduled to be sentenced on March 2, 2010 at 2 p.m., before United States District Judge Jack T. Camp. McBride remains in jail while awaiting sentencing.

●Brent Merriell, 37, Atlanta, Georgia, as previously reported on Mortgage Fraud Blog, was indicted on December 15, 2009, with six counts of aggravated identity theft and false statements in connection with his request to the FDIC for permission to “short sale” 14 properties for $2.2 million less than the Omni funded outstanding loans. Merriell was facing foreclosure on each of the properties when the charges allege that he submitted “short sale” requests supported by forged and counterfeited sales contracts and loan commitments in the names of four people whose identities had been stolen. Merriell has pleaded not guilty to the charges and remains in jail awaiting trial. No trial date has been set.

●Delroy Oliver Davy, 37, Lithonia, Georgia, as previously reported on Mortgage Fraud Blog, was charged in a Criminal Information on December 18, 2009, with bank fraud and conspiracy to commit bank, mail, and wire fraud in connection with a scheme to fraudulently obtain millions of dollars of mortgage loans from Omni and other lenders. At his initial appearance Davy waived indictment and announced his intention to plead guilty to those charges in January 2010. The plea hearing will be before United States District Judge Jack T. Camp. The hearing date has not yet been set.

These cases are being investigated by Special Agents of a Mortgage Fraud Task Force for Omni-related cases, which includes FDIC-OIG, HUD-OIG, the Postal Inspection Service, the SIGTARP, and the FBI. The Task Force is continuing a number of Omni-related investigations, including inquiries related to Omni’s application for Troubled Asset Relief Program (TARP) funds.

Acting United States Attorney Sally Quillian Yates said, “This case demonstrates the damage that can result when senior bank officials ignore rules and regulations designed to protect a bank by identifying problem loans. Bank executives and those in critical and knowledgeable positions will be held accountable when they deliberately circumvent the systems designed to reveal the true condition of their bank to its regulators, insurers and investors.”

Federal Deposit Insurance Corporation (FDIC) Inspector General Jon T. Rymer said, “The FDIC is tasked with liquidating the assets of failed banks such as Omni. Therefore, the FDIC OIG aggressively investigates and prosecutes fraudulent activities that undermine the integrity of the financial services system and impede the FDIC’s efforts to maximize recoveries. We are pleased to have partnered with our law enforcement colleagues in bringing about this successful action.”

Martin D. Phanco, Postal Inspector in Charge of the Atlanta Division said, “This investigation uncovered a fraudulent scheme which benefited the defendant and other individuals. The U.S. Postal Inspection Service mission is to protect the U.S. mail system from criminal misuse like that demonstrated in this case.”

Special Inspector General for the Troubled Asset Relief Program (SIGTARP) Neil Barofsky said, “There were many reasons for our financial crisis, including fraudulent schemes like the egregious conduct admitted today. SIGTARP is committed to working with its law enforcement partners to root out these crimes whenever they can be discovered.“

Department of Housing and Urban Development (HUD) Inspector General Kenneth M. Donohue said, “Families receiving Section 8 rental subsidies should expect safe, decent and sanitary housing. In this case, poor stewardship and management of the properties has negatively affected the neighborhoods and the entire community.”

Assistant United States Attorneys Gale McKenzie and Christopher Bly are prosecuting the case.

Owners of Real Estate Investment Company Indicted for Conspiracy

Three separate Superior Court lawsuits have been filed in Kennebec County, Maine, against out-of-state businesses and their principals: Elect Group, LLC, Anthony Ferlanti and Emmanuele Zuccarelli (Florida); Help Modify Now Debt Solutions, Inc., Help Modify Now, Inc. and Chas Bain (California and Nevada); US Advocate Law Group, P.C. and Jeff Nemerofsky (California).

These lawsuits allege that the defendants used deceptive and unfair practices in marketing so-called “debt settlement” services, in the form of foreclosure rescues and mortgage modifications, and that they failed to register as debt management services under Maine law. The suits seek the recovery of fees paid by Maine consumers to these defendants, as well as civil penalties and costs.

The defendants allegedly charged Maine consumers more for their debt settlement services than allowed for by Maine law. The State alleges that the defendants’ illegally high upfront charges ranged from $1,000.00 to $4,300.00. Maine law prohibits debt management service providers from charging more than a $75 set-up fee and for charging more than 15% of the amount by which the consumer’s debt is reduced as part of each settlement. The State also alleges that the defendants misrepresented the benefits of their programs to consumers and refused to provide refunds when consumers asked for them after the defendants failed to prevent foreclosure. As a result, many Maine consumers found themselves in more dire financial straits than they were before they engaged the defendants.

Maine’s Debt Management Services Act requires that providers of debt management services register with the Superintendent of the Bureau of Consumer Credit Protection and obtain a $50,000 surety bond for the protection of consumers. The defendants named in the recent lawsuits have never registered nor have they procured the required surety bond.

The three lawsuits follow investigations conducted by staff in the Attorney General’s Office and at the Bureau of Consumer Credit Protection within Maine’s Department of Professional and Financial Regulation, which licenses debt management service providers.

Superintendent Will Lund of the Bureau of Consumer Credit Protection stated that his agency has filed Cease & Desist Orders against 19 separate unlicensed debt management providers in the past 6 months, and that his staff has recovered more than $25,000 in restitution for Maine consumers during that time.

Attorney General Janet Mills and Superintendent Lund advise homeowners facing foreclosure that they now have a right to mediate with their lenders during the court proceedings. Homeowners should not hesitate to ask for mediation; this is an informal opportunity to resolve a foreclosure problem under the guidance of a court-approved mediator.

“A person’s home is not just their largest financial asset; it is the bedrock of their family, their anchor in the community, their children’s future and their legacy. These foreclosure rescue schemes take advantage of people threatened with foreclosure by demanding large upfront fees and doing little or nothing in return,” said Attorney General Mills.

“I am pleased to join a national effort to protect homeowners from unfair and deceptive practices. Maine homeowners need to know that there is legitimate help for those concerned about foreclosure. I encourage Maine consumers to talk to Maine registered non-profit counselors and to avoid paying fees to any entity without checking the state’s registry. Many times a homeowner can negotiate on their own without paying any fees to a debt management company. The money spent on these ‘debt solution’ services is better spent on paying down debt and negotiating with banks and other creditors,” Mills stated.

“We hear every week from consumers who have found unlicensed companies on the Internet and who have sent funds to those companies without receiving any benefit,” Superintendent Lund commented. “We will continue to work with the Attorney General and other partners to stop violations of laws and to protect the public,” he said.

Susan Feaman, Ellis Grove, Illinois, formerly of Perryville, Missouri, has pleaded guilty to charges of interstate transportation of stolen property and identity theft.

On March 6, 2006, a detective from the Perryville, Missouri, Police Department obtained a search warrant for the residence of Susan Feaman in Perryville. The warrant was based upon Feaman’s criminal conduct in using forged prescriptions to obtain controlled substance prescription drugs. In executing the search warrant, officers seized materials relating to the forged prescription conduct, as well as materials reflecting Feaman’s use of her mother’s name and social security number. Her mother has lived in another state for many years. In the time frame from October 1, 2005, to December 31, 2005, Feaman used the the name, social security number and credit worthiness of her mother to obtain a loan in the amount of $145,000, to purchase the residence in Perryville, Missouri. In addition to the residential loan, Feaman used her mother’s identification information to obtain credit cards and to make credit transactions with approximately twenty-five companies. She made $271,000 in fraudulent credit purchases and other transactions in 2005 and 2006.

As part of the investigation in this case, Feaman was prosecuted in Perry County on felony charges relating to the forged prescriptions. She plead guilty and was sentenced to four years in the Missouri Department of Corrections. She served that sentence and was paroled.

From April 1, 2009, through April 12, 2009, Feaman stole a series of Steuben Crystal glass figurines from the Sallie Home store in Ladue, Missouri, which she took to her home in Ellis Grove IL. She sold some of the items on E-Bay and kept some others. The figurines had a value of $15,120.

Feaman now faces a maximum penalty of ten years in prison and/or fines up to $250,000 for interstate transportation of stolen property and 15 years in prison and/or fines up to $250,000 for identity theft. Sentencing has been set for February 5, 2010.

Acting United States Attorney Michael W. Reap commended the work performed on the case by the United States Secret Service, United States Postal Inspection Service, the Perryville and Ladue Police Departments and Assistant United States Attorney James E. Crowe, Jr., who is handling the case for the U.S. Attorney’s Office.