March Lis Pendens Filings in Palm Beach County

In Palm Beach County, Florida, foreclosures continue to rise from the same period in 2011 while median home prices continue to fall. Here are the new foreclosure filings from three major banks for March 1st through March 24th.  Bank of America’s new filings in particular have increased significantly.  The median sales price for existing homes in Palm Beach County fell to a new low in January, 2012:  $175,000 - down from $421,500 in November, 2005.  Foreclosures drive down existing home prices and cause more defaults.  

LIS PENDENS FILINGS IN PALM BEACH COUNTY, FL
MARCH 1 TO MARCH 24

Wells Fargo

2012:  181
2011: 108
2010: 361
2009: 211
2008: 230

Deutsche Bank

2012: 69
2011: 47
2010: 143
2009: 178
2008: 345

Bank of America & BAC Home Loans Servicing 

2012: 251
2011: 37
2010: 582
2009: 212
2008: 129

NEEDED: PHOTOS OF BLIGHTED FORECLOSED HOMES

In neighborhoods across the country, banks, Fannie & Freddie are failing to maintain the homes that they acquire through foreclosures. Photos of such homes should be sent to the Attorney General in every state - with a demand that the Attorney General requires that the banks, Fannie & Freddie maintain these homes to prevent further destruction of neighborhoods and devaluation of remaining properties. Copies of such letters will be posted here on Fraud Digest (szymoniak@mac.com) and shared with the foreclosure prevention blogs.

Life Sentence

Bernard Madoff ’s sentencing is scheduled for today in Manhattan. Prosecution wants 150 years; defense has argued for 12 years.

Madoff is 71 years old, and many commentators have argued that any sentence over 20 years is likely to be a “life” sentence.

In reality, Madoff led a life of luxury. That is the difference when a 71-year-old is sentenced to life in prison compared to cases when the offender is 40. Madoff spent his life watching sunrises and sunsets from the deck of his yacht or his Manhattan penthouse. He had the satisfaction of providing his wife and children and other family members with every advantage and luxury. He traveled and enjoyed art, music and cultural experiences of every kind. He was so admired for his intelligence and expertise that people PAID for meetings with him.

It all came to a crashing, disgraceful end, but in terms of enjoying the fruits of his crimes, Madoff had over 20 years of such enjoyment. Even as it is ending, Madoff knows that his wife will walk away with $2 million and his children and other family members will keep the luxuries obtained, at least indirectly, through fraud.

Arguably, Madoff should spend as much time in prison as he spent committing his crimes. Even then, it will not be a “life” sentence, but a “life remainder” sentence.
For most of his life, Madoff lived like a king, and nothing can change that now.

In prison, Madoff will receive three meals a day and a warm, safe place to sleep. (This is federal, not state, prison). He will receive needed medical and dental care and have access to a library, a computer and even television shows and movies. He will wear clean clothes and have regular visits with his family members.

What is the fate of other penniless 71-year-olds? Stop by any homeless shelter.
The fate worse than prison is to put Madoff, penniless, on the streets of Manhattan or Palm Beach and require him to live only on his social security. That is the sentence Madoff imposed on thousands of his elderly victims.

Chooch

Once again, the 2004 movie “Chooch” is in fraud headline news. “Chooch” means “jackass” in Italian-American slang. The movie was about Dino Conditi, an Italian-American from Queens who acquired the name. “Chooch” was a box-office failure, grossing around $30,000.

Steven and Anthony Loglisci produced the film. They are the brothers of David Loglisci, a former official at the New York Pension Fund. New York Attorney General Andrew Cuomo has a keen interest in the firms that got NY Pension Fund investment business.

Someone yet unidentified from Riverstone Holdings LLC invested $100,000 in the film. After that investment, Riverstone received contracts to invest money from the New York state Common Retirement Fund. Pity the poor lawyers who must argue that this was not just another example of “pay-to-play.”

“My client, in addition to pension fund investments, has always been a keen supporter of independent cinema - and Chooch provided a real opportunity to express this interest.”

On June 9, 2009, Riverstone agreed to pay $30 million to come out from under NY Attorney General Andrew Cuomo’s microscope. The company also agreed to sign on to the AG’s Code of Conduct.

David Leuschen, a founder of Riverstone, was not included in the settlement agreement, and may be the chooch supporter.

An affiliate of another investment company, the Quadrangle Group, paid $90,000 for the Chooch DVD distribution rights.

Steve Rattner was a co-founder of the Quadrangle Group. Rattner is now leading the Obama administration’s efforts to restructure the auto industry. Expect that in the near future, every Chrysler mini-van will come equipped with Chooch in the onboard DVD player.

Gullible Americans

In order to win a sweepstakes, you must have first bought a sweepstakes ticket. Even this simple fact is lost on thousands of senior (and some younger) Americans who fall victim to sweepstakes telemarketing schemes.

These must be some of the same people who believe that everything you read on the internet is true. After they are told the good news that they won a big prize, they are told that to collect their prize money, they must first pay taxes or a service fee, usually by wiring money to a foreign country via Western Union. Internet technology makes it appear that the calls are from Washington, DC, or a local area code. The targets of this fraud are told the recipient of the money will be an agent of Lloyd’s of London or another well-known insurance company, but, of course, that is NOT where the money goes.

How often does this work? Restitution orders in cases brought by the FTC exceed $200 million.
“How shall we deliver your money? In an armored truck or straight into your bank account for the rest of your life?”

More recently, callers claim to be from the National Sweepstakes Bureau or the Federal Trade Commission or the U.S. Department of Commerce. The callers claim these agencies are supervising the pay-out. There is no National Sweepstakes Bureau. The FTC and Department of Commerce do NOT supervise foreign lottery payouts.

Variations of this fraud include using “prize” schemes to convince consumers to buy merchandise including vitamins, cosmetics, cleaning products and water filters. Targets are told that the more they buy, the better their chances of winning even more valuable prizes. Most prizes are never delivered - others are just sadly disappointing. A “big-screen projection system” prize has turned out to be a large plastic sheet to hang in front of a television to magnify the picture.

When does this happen? At what age does a formerly careful, educated person suddenly start believing telemarketers, government agencies and junk mail offers? I am much smarter than that and feel superior - I lost MY $200,000 in my 401K and real estate investments.

Young Criminals

Yesterday in federal court in Seattle, Washington, Derico Fuller was sentenced to 75 months in prison for a purely white-collar crime, conspiracy to commit bank fraud. He was also ordered to make restitution to various banks of $564,835. Fuller committed most of his crimes in 2006, when he was 25. He recruited even younger people to help him defraud the banks.

The scheme has been shown on television often enough and was similar to the bad check scheme shown in the 2002 film “Catch Me If You Can” where Leonardo DiCaprio played the role of Frank Abagnale, Jr., a 19 year-old check counterfeiter. In these crimes, counterfeit checks are made at home, using a computer or laser jet printer. Abagnale could convince tellers to cash his checks by dressing as a pilot and flirting. Fuller recruited people with established bank accounts to deposit the checks, then draw out the funds using ATM transactions before the banks could discover that the checks were forgeries. Why would ANYONE let Fuller use his or her bank account? In most cases, those cooperating were paid a small fee for their cooperation and were advised to tell the bank that their card had been stolen.

(Sidebar: This scheme would not have worked at my bank where every one of my checks is held for 10 business days, even though I have banked there for over 20 years, and even though the check has cleared much sooner. My bank enjoys the use of my money for a few extra days whenever possible.)

Abagnale served four years for his $2.5 million crimes, plus six months in a Swedish prison and one year in a French prison.
Considering inflation, 75 months seems about right. Actually, the judge adjusted the sentence upward because Fuller had more than 10 victim banks (a fact he disputed) and had a prior conviction (driving with a suspended license.)

I am NOT feeling sorry for Derico Fuller. I AM wishing that some of this prosecutorial zeal could be directed at bigger fish. I’d like to see the FBI makes some arrests where the bankers are the criminals, not the victims.

Where are the arrests of those who made billions selling - and insuring - asset-backed securities? What about the bankers and mortgage company executives who KNEW their empires were based on layer upon layer of lies?

I’m glad to be safe from Seattle criminal, Derico Fuller. I know that I’ll feel much better, however, the day that AIG’s Greenberg and Countrywide’s Mozilo wake up behind bars.

My Russian Waitresses

A few months ago, I spoke about insurance fraud and the underground economy at a conference in Myrtle Beach, South Carolina. At breakfast, our waitress was a beautiful young Russian woman who spoke passable English. The hostess at the restaurant was also a beautiful young Russian women who spoke passable English. For most of my stay, I noticed that the front-desk people were locals, but much of the remaining staff was not. I wondered what draws pretty young Slavic women to Myrtle Beach, of all places. There may be a traditional heart-warming immigrant story as the answer - perhaps an uncle settled successfully and sent for family members to help them start a life in the promised land USA.

But the indictment this month from a federal grand jury in Kansas City, Missouri, hints that the answer may also be very dark. Forced labor trafficking and labor racketeering charges were filed against twelve individuals and three companies. The immigrant workers were brought in from Uzbekistan and “given” jobs in hotels in 14 states. The defendants controlled their housing, paychecks, and lives by controlling their passports (or lack thereof) and threatening to send them back. It’s difficult to imagine the dire situation of these young women who were threatened with serious bodily harm if they did not cooperate. The organizers of this scheme bid on contracts at hotels - and could obviously win contracts by underbidding the competition.

Human trafficking is big business in the U.S. now. This is not just a matter of students who overstayed their visas - it is very dark and insidious criminal activity. I resolve to learn more about the Human Trafficking Rescue Project. I’d like to think of myself in history as being on the side of the abolitionists.

“Bipolar syndrome made me do it.”

Yesterday in federal court in Orlando, the Honorable John Antoon II sentenced Frank Amodeo of Mirabilis Ventures to 22.5 years.  Amodeo had blamed his crimes largely on bipolar syndrome.  In a sentencing memorandum, Amodeo also blamed his previous felony fraud on the same condition.

People who met Amodeo would probably agree that he had extreme delusions of power and grandeur. Strangely, Amodeo was no criminal mastermind.  He simply ran a PEO without paying over the millions of dollars in taxes he collected from clients. The real question is why was he allowed to do so much damage?  Tax quarter after tax quarter, Amodeo failed to pay taxes, but the IRS never shut him down.  This inaction let Amodeo spin the tale to prospective business partners that he had worked a deal with the IRS and was not facing imminent prosecution.

The Florida Board of Employee Leasing Companies also turned a blind eye to the craziness that was Mirabilis Ventures.  Amodeo was not charged with securities fraud, SUTA dumping, money laundering, or a menu of other possible felonies. Thanks to determined prosecutors and a savvy judge, the whole arsenal of crimes was not necessary.  What remains to be done is the post-game analysis.  What has Frank Amodeo taught us about preventing tax fraud by employee leasing companies?  It is an important question - and was apparently not asked in the dozens of prior cases where employee leasing companies failed to pay the employment taxes they collected.

In the end, Amodeo caused a tax loss of nearly $180 million. Preventive measures for this kind of tax fraud are long overdue.