Missouri Wrongful Foreclosure: Trial Court Awards over $3 Million Including Punitive Damages and Quiet Title

For further information please call 954-495-9867 or 520-405-1688

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see Quiet title Wrongful foreclosure Punitive Damages Missouri judgment.1-26-15.pdf ocr

Missouri had been impenetrable. Things change. This case finds that neither the GSE nor anyone else in the chain had the power to enforce the paper because they did not really have ownership of the loan, that their title was false, that quiet title is granted to plaintiffs, that foreclosure was wrongful, that compensatory damages are awarded and that punitive damages would be awarded. Total Judgment $3 million +.

Important takeaways —

  1. The tide has turned. Courts are no longer looking the other way on intentionally sloppy foreclosures that cover up a larger fraud on investors. The courts are not clear on how that occurred, partially because nobody has been allowed to present  it, but they have enough of a feel of the situation to see that there is something fundamentally wrong with the mortgage origination and foreclosure practices.
  2. Quiet title can be awarded supported only by a finding that the mortgage is unenforceable. Whether this will stick on appeal is unknown. My view is that the mortgage stays although there is nobody (yet) claiming a genuine right to enforce it.
  3. At this point, if the foreclosing parties don’t have it right, it is viewed as an intentional or grossly negligent act, giving rise to compensatory damages, attorney fees, costs, and punitive damages.
  4. The value of a wrongful foreclosure case might be $3 million + which falls into line with other decisions.
  5. Judges are getting angry over the fact that they accepted false representations in the past.
  6. Judges are perceiving the difference between the debt and the paper that purports to describe the debt — i.e., the note and mortgage. While it is not expressed in so many words, this decision and others like it, sees the paper as largely fictitious even though there is a genuine debt out there. By implication, the courts are saying the debt has no paper that applies and that therefore nobody should be allowed to enforce the paper. It is close to declaring the mortgage void ab initio.

Damages Rising: Wrongful Foreclosure Costs Wells Fargo $3.2 Million

Damage awards for wrongful foreclosure are rising across the country. In New Mexico a judge issued a $3.2 million judgment (including $2.7 million in punitive damages) against Wells Fargo for foreclosing on a man’s home after his death even though he had an insurance policy through the bank that paid the remaining balance on his mortgage. The balance “owed” on the mortgage was $125,000. Despite the fact that the bank knew about the insurance (because it was purchased through the bank) Wells Fargo continued to pursue foreclosure, ignoring the claim for insurance. It is because of cases like this that people are asking “why would they do that?”

The answer is what I’ve been saying for years.  Where a loan is subject to claims of securitization, and the investment banks lied to insurers, investors, guarantors and other co-obligors, they most likely have been paid many times for the same loan and never gave credit to the investors. By not crediting the investors they created the illusion of a higher balance that was due on the loan. They also created the illusion of a default that probably never occurred. But by pursuing foreclosure and foreclosure sale, they compounded the illusion and avoided claims for refund and repayment received from third parties and created claims for recovery of servicer advances. In many foreclosures that I have  reviewed, payments received from the FDIC under loss-sharing were never taken into account. Thus the bank collects money repeatedly for a loss it never incurred.

This case is another example of why I insist on following the money. By following the money trail you will discover that the documents upon which the foreclosure relies referred to  fictitious transactions. The documents are worthless, but nevertheless accepted in court unless a proper objection is made based upon preserving issues for trial and appeal by proper pleading and discovery.

Lawyers should take note of this profit opportunity. Most homeowners are looking for attorneys to take cases on contingency. Typical contingency fee is 40%. If these lawyers were on a typical contingency fee arrangement, their payday would have been around $1.2 million.

I should add that for every one of these judgments that are reported, I hear about dozens of confidential settlements that are of similar nature, to wit: clear title on the house, damages and attorneys fees.

Wells Fargo Ordered to Pay $3.2 Million for “Shocking” Foreclosure

Identity Theft: The Nuclear Option

The purpose of this article is to support the prior conclusions expressed in my articles and appearances that in addition to being a Ponzi scheme, a necessary component of the illusion of a securitization plan was identity theft in which the identity of a person or entity is used for fraudulent purposes. The latest round of lawsuits and investigations center in on allegations by the Department of Justice and the Securities and Exchange Commission that the sale of mortgage bonds was fraudulent. We agree, and for more reasons than those reported to be in those lawsuits. Under Federal and State law identity theft occurs when the information is obtained for use in a fraudulent scheme, just as alleged by the department of justice.

I remind the reader that I have repeatedly made the statement that the money from the investor was diverted and misapplied just as the money from the insurance, credit default swaps, taxpayer and federal reserve was misapplied. Research below indicates that such behavior can be and in this case I would argue is criminal conduct with a right of private action for damages.  Thus I would argue that embezzlement and related crimes apply to the securitization scam.

There are many ways in which the damages to the homeowner can be recouped. this article suggests that one of them is through allegations of identity theft. The thief is the bank that set up the false securitization scheme. The victim is the homeowner who gave their name, SSN and other identifying characteristics so that the thief could use it in a variety of ways for trading and profit without the knowledge or consent of the victim. The information was obtained by falsely representing the nature of the transaction in which the alleged loan was closed. The damages are the value of the home, and any other out of pocket expenses or consequential damages to credit reputation etc. plus punitive, treble or exemplary damages.  The defendants are all of the people who knew or should have known or must known the details of the fraudulent scheme.

The interesting legal question that is not answered in the research document below is whether identity theft can be used defensively as part of affirmative defenses or whether it must be used offensively in a counterclaim or separate lawsuit. I would argue that it can be used defensively and that as such the statute of limitations would never apply. The purpose of the transaction was to obtain the homeowners personal financial information in a manner that was not disclosed to the homeowner at the time the information was obtained nor was it disclosed at the time of the alleged loan “closing”, and then the financial information was used for the purpose of selling fraudulent mortgage bonds to investors who now concede that they have no right of action against the homeowner.

The banks will  attack this defense on the same basis as the head of any other organized crime syndicate, to wit: that they had no idea that crimes were being committed in the securitization chain. This claim will not hold much water when it is disclosed that securitization chain is described in documents but was never used and that the banks directly control the movement of money and the fabrication of documents to give a false impression of the movement of money and transacting business.

If the United States Department of Justice wishes to press criminal charges it might find an easy path in identity theft.

I wish to acknowledge that the research presented below was done entirely by a legal intern from the law school at Florida State University. While the initial instructions came from me she performed the research without direct guidance required from me. While I don’t think I am permitted to use her name I would like to say for purposes of disclosure, I am thankful for the work that she performed in producing the information and commentary contained below.

Table of Contents

 

QUESTION 1: What is the definition of ID theft?2

 

a. ON THE STATE LEVEL2

 

b. ON THE FEDERAL LEVEL4

 

§ 1028A. Aggravated identity theft4

 

§ 656. Theft, embezzlement, or misapplication by bank officer or employee4

 

18 U.S.C.A. § 1028(a)(7)5

 

§ 6823. Criminal penalty5

 

§ 6821. Privacy protection for customer information of financial institutions5

 

QUESTION 2:  What can you sue for and/or what damages are you entitled to?7

 

DOCUMENT A8

 

DOCUMENT B13

 

772.11. Civil remedy for theft or exploitation13

 

DOCUMENT C14

 

812.012. Definitions14

 

812.014. Theft15

 

812.019. Dealing in stolen property15

 

 =====================================

QUESTION 1: What is the definition of ID theft?

 

 

 

a. ON THE STATE LEVEL

 

 

Identity theft is covered by FL Stat. §817.02 and §817.568.  §817.02 states that “Whoever falsely personates or represents another, and in such assumed character receives any property intended to be delivered to the party so personated, with intent to convert the same to his or her own use, shall be punished as if he or she had been convicted of larceny.”

 

 

 

§817.568 defines the “Criminal Use of Personal Identification Information.”  I will summarize, but at the end I will include the full text of the statute (see “Document A”).  In the summary below, any irrelevant sections have been omitted, and the particularly important paragraphs have been put in bold font. §817.568 does also specify that the definition of “person” can be found in FL Stat. §1.01(3), which says that, “The word ‘person’ includes individuals, children, firms, associations, joint adventures, partnerships, estates, trusts, business trusts, syndicates, fiduciaries, corporations, and all other groups or combinations.”  Which would reasonably include a bank.  With that in mind, here is the summary:

 

 

 

Subsection (1)(f) says that “personal identification information” is any name or number used to identify a specific individual.  This includes names, postal/email addresses, phone number, SS number, bank account number, credit/debit card number, unique electronic ID number, and “other number or information that can be used to access a person’s financial resources”, among other things.

 

 

 

 Subsection (2)(a-c) specifies the felonies that a person can be charged with if they commit “fraudulent use of personal identification information” by “willfully and without authorization fraudulently uses, or possesses with intent to fraudulently use, personal identification information concerning an individual without first obtaining that individual’s consent”.  Depending on the amount of the injury/fraud, and the number of individuals’ personal ID info that is fraudulently used, a person can be charged with first, second, or third degree felony. 

 

 

 

Subsection (4) says that if you use personal ID info without consent for the purposes of harassing that individual, then they’ve committed the offense of “harassment by use of personal identification information.”

 

 

Subsection (5) says that if the offense was “facilitated or furthered by the use of a public record…the offense is reclassified to the next higher degree.”

 

 

Subsection (9) describes the penalties and definitions for creating, using, or possessing with intent to fraudulently use, counterfeit or fictitious personal identification information.

 

 

Subsection (10) says that “Any person who commits an offense described in this section and for the purpose of obtaining or using personal identification information misrepresents himself or herself to be…an employee or representative of a bank, credit card company, credit counseling company, or credit reporting agency; or any person who wrongfully represents that he or she is seeking to assist the victim with a problem with the victim’s credit history shall have the offense reclassified.”  It then goes on to reclassify the offenses in subsections (a) through (d).

 

 

Subsection (13) describes the restitution the court may order.  It specifies that, “In addition to the victim’s out-of-pocket costs, restitution may include payment of any other costs, including attorney’s fees incurred by the victim in clearing the victim’s credit history or credit rating, or any costs incurred in connection with any civil or administrative proceeding to satisfy any debt, lien, or other obligation of the victim arising as the result of the actions of the defendant.”  The court may also issue orders necessary to correct the public record if need be.

 

 

 

Subsection (14) specifies who may bring the action to the court (any state attorney or the statewide prosecutor).

 

 

Subsections (15) and (16) describe the requirements for jurisdiction and venue.

 

 

 

Subsection (17) describes the statute of limitations. (3 years after offense occurred for subsections (2), (6), & (7).  1 year after discovery of offense by aggrieved party/person who has a legal duty to represent the aggrieved party IF the prosecution is commenced within 5 years after the violation occurred)

 

 

 

 

 


 

 

b. ON THE FEDERAL LEVEL

 

 

18 U.S.C.A. §1028A would probably be the most applicable.  The section on aggravated identity theft is in normal font, and the sections it references are indented and italicized. Andininand willweight of the dealgot a goalshouldI know I just can’t get a matter the house I think he’s out and mixing I know is onin better

 

§ 1028A. Aggravated identity theft

 

 

 

(a) Offenses.

 

(1) In general.–Whoever, during and in relation to any felony violation enumerated in subsection (c), knowingly transfers, possesses, or uses, without lawful authority, a means of identification of another person shall, in addition to the punishment provided for such felony, be sentenced to a term of imprisonment of 2 years.

 

 

(c) Definition.–For purposes of this section, the term “felony violation enumerated in subsection (c)” means any offense that is a felony violation of–

 

(1) …section 656 (relating to theft, embezzlement, or misapplication by bank officer or employee)…;

 

§ 656. Theft, embezzlement, or misapplication by bank officer or employee

 

Whoever, being an officer, director, agent or employee of, or connected in any capacity with any Federal Reserve bank, member bank, depository institution holding company, national bank, insured bank, branch or agency of a foreign bank, or organization operating under section 25 or section 25(a) of the Federal Reserve Act, or a receiver of a national bank, insured bank, branch, agency, or organization or any agent or employee of the receiver, or a Federal Reserve Agent, or an agent or employee of a Federal Reserve Agent or of the Board of Governors of the Federal Reserve System, embezzles, abstracts, purloins or willfully misapplies any of the moneys, funds or credits of such bank, branch, agency, or organization or holding company or any moneys, funds, assets or securities intrusted to the custody or care of such bank, branch, agency, or organization, or holding company or to the custody or care of any such agent, officer, director, employee or receiver, shall be fined not more than $1,000,000 or imprisoned not more than 30 years, or both; but if the amount embezzled, abstracted, purloined or misapplied does not exceed $1,000, he shall be fined under this title or imprisoned not more than one year, or both.

 

 

 

As used in this section, the term “national bank” is synonymous with “national banking association”; “member bank” means and includes any national bank, state bank, or bank and trust company which has become a member of one of the Federal Reserve banks; “insured bank” includes any bank, banking association, trust company, savings bank, or other banking institution, the deposits of which are insured by the Federal Deposit Insurance Corporation; and the term “branch or agency of a foreign bank” means a branch or agency described in section 20(9) of this title. For purposes of this section, the term “depository institution holding company” has the meaning given such term in section 3 of the Federal Deposit Insurance Act.

 

18 U.S.C.A. § 656 (West)

 

 

 

(4) any provision contained in this chapter (relating to fraud and false statements), other than this section or section 1028(a)(7);

 

18 U.S.C.A. § 1028(a)(7)

 

“…knowingly transfers, possesses, or uses, without lawful authority, a means of identification of another person with the intent to commit, or to aid or abet, or in connection with, any unlawful activity that constitutes a violation of Federal law, or that constitutes a felony under any applicable State or local law…”

 

18 U.S.C.A. § 1028 (West)

 

 

 

(8) section 523 of the Gramm-Leach-Bliley Act (15 U.S.C. 6823) (relating to obtaining customer information by false pretenses);

 

§ 6823. Criminal penalty

 

(a) In general

 

Whoever knowingly and intentionally violates, or knowingly and intentionally attempts to violate, section 6821 of this title shall be fined in accordance with Title 18 or imprisoned for not more than 5 years, or both.

 

15 U.S.C.A. § 6823 (West)

 

 

 

§ 6821. Privacy protection for customer information of financial institutions

 

 (a) Prohibition on obtaining customer information by false pretenses

 

It shall be a violation of this subchapter for any person to obtain or attempt to obtain, or cause to be disclosed or attempt to cause to be disclosed to any person, customer information of a financial institution relating to another person–

 

(1) by making a false, fictitious, or fraudulent statement or representation to an officer, employee, or agent of a financial institution;

 

(2) by making a false, fictitious, or fraudulent statement or representation to a customer of a financial institution; or

 

(3) by providing any document to an officer, employee, or agent of a financial institution, knowing that the document is forged, counterfeit, lost, or stolen, was fraudulently obtained, or contains a false, fictitious, or fraudulent statement or representation.

 

(b) Prohibition on solicitation of a person to obtain customer information from financial institution under false pretenses

 

It shall be a violation of this subchapter to request a person to obtain customer information of a financial institution, knowing that the person will obtain, or attempt to obtain, the information from the institution in any manner described in subsection (a) of this section.

 

15 U.S.C.A. § 6821 (West)

 

 

 

18 U.S.C.A. § 1028A (West)

 

 

 

 

 

 

 

 


 

 

QUESTION 2:  What can you sue for and/or what damages are you entitled to?

 

 

Under Florida law, §817.568(13)(a-b) specifies the restitution an aggrieved party is allowed to recover.  It states,

 

(a) In sentencing a defendant convicted of an offense under this section, the court may order that the defendant make restitution under s. 775.089 to any victim of the offense. In addition to the victim’s out-of-pocket costs, restitution may include payment of any other costs, including attorney’s fees incurred by the victim in clearing the victim’s credit history or credit rating, or any costs incurred in connection with any civil or administrative proceeding to satisfy any debt, lien, or other obligation of the victim arising as the result of the actions of the defendant.

 

(b) The sentencing court may issue such orders as are necessary to correct any public record that contains false information given in violation of this section.

 

 

The statute does not specify that you can sue the convicted defendant and recover the benefits they received from stealing your identity. 

 

 

Most the cases I am finding about recovering damages from a bank because of identity theft result from the bank losing the personal information or somehow making it accessible (often through a bank employee), and then the bank being sued under the doctrines of agency/respondeat superior.  Because they were the custodian of the information and they didn’t employ reasonable standards to safeguard the personal information, they are then the proximate cause of the plaintiff’s suffering and liable for damages.  Which is probably not quite the right situation here.

 

 

HOWEVER, I did find a (what I believe to be) legitimate way to recover damages from the banks.  Florida law allows for recovery of damages. If you read FL Stat. Ann. §772.11, “Civil Remedy for Theft or Exploitation” (see “Document B”), it states that, if you can prove a violation of §§812.012-812.037, you can recover treble damages as well as reasonable attorney’s fees and court costs.  You cannot recover punitive damages.  It also lays out special procedures you must follow before you may file an action for damages.  The sections that I believe are actually applicable are §§812.012 (“Definitions”), 812.014 (“Theft”), and 812.019 (“Dealing in Stolen Property”).  The best way for you to understand what I’m talking about would be to read the relevant sections (see “Document C”).  Essentially, my thought process is that if you can show the bank obtained the property by fraud in order to temporarily or permanently benefit from the property, or that the bank coordinated the theft of the property where the value of the property exceeds $3,000, you’ll have them for theft under 812.014.  Which would then allow you to recover damages under §772.11.  OR, if you show that the bank “initiates, organizes, plans, finances, directs, manages, or supervises the theft of property” and “traffics in such stolen property” AKA they “buy, receive, possess, obtain control of, or use property with the intent to sell, transfer, distribute, dispense, or otherwise dispose of such property”, then you would again be able to recover damages.  Just to be clear, “‘property’ means anything of value”, examples being “real property” as well as “tangible or intangible personal property, including…interests and claims”. 

 

DOCUMENT A

 

 

 

817.568. Criminal use of personal identification information

 

(1) As used in this section, the term:

 

(a) “Access device” means any card, plate, code, account number, electronic serial number, mobile identification number, personal identification number, or other telecommunications service, equipment, or instrument identifier, or other means of account access that can be used, alone or in conjunction with another access device, to obtain money, goods, services, or any other thing of value, or that can be used to initiate a transfer of funds, other than a transfer originated solely by paper instrument.

 

(b) “Authorization” means empowerment, permission, or competence to act.

 

(c) “Harass” means to engage in conduct directed at a specific person that is intended to cause substantial emotional distress to such person and serves no legitimate purpose. “Harass” does not mean to use personal identification information for accepted commercial purposes. The term does not include constitutionally protected conduct such as organized protests or the use of personal identification information for accepted commercial purposes.

 

(d) “Individual” means a single human being and does not mean a firm, association of individuals, corporation, partnership, joint venture, sole proprietorship, or any other entity.

 

(e) “Person” means a “person” as defined in s. 1.01(3).

 

(f) “Personal identification information” means any name or number that may be used, alone or in conjunction with any other information, to identify a specific individual, including any:

 

1. Name, postal or electronic mail address, telephone number, social security number, date of birth, mother’s maiden name, official state-issued or United States-issued driver’s license or identification number, alien registration number, government passport number, employer or taxpayer identification number, Medicaid or food assistance account number, bank account number, credit or debit card number, or personal identification number or code assigned to the holder of a debit card by the issuer to permit authorized electronic use of such card;

 

2. Unique biometric data, such as fingerprint, voice print, retina or iris image, or other unique physical representation;

 

3. Unique electronic identification number, address, or routing code;

 

4. Medical records;

 

5. Telecommunication identifying information or access device; or

 

6. Other number or information that can be used to access a person’s financial resources.

 

(g) “Counterfeit or fictitious personal identification information” means any counterfeit, fictitious, or fabricated information in the similitude of the data outlined in paragraph (f) that, although not truthful or accurate, would in context lead a reasonably prudent person to credit its truthfulness and accuracy.

 

 

 

(2)(a) Any person who willfully and without authorization fraudulently uses, or possesses with intent to fraudulently use, personal identification information concerning an individual without first obtaining that individual’s consent, commits the offense of fraudulent use of personal identification information, which is a felony of the third degree, punishable as provided in s. 775.082, s. 775.083, or s. 775.084.

 

(b) Any person who willfully and without authorization fraudulently uses personal identification information concerning an individual without first obtaining that individual’s consent commits a felony of the second degree, punishable as provided in s. 775.082, s. 775.083, or s. 775.084, if the pecuniary benefit, the value of the services received, the payment sought to be avoided, or the amount of the injury or fraud perpetrated is $5,000 or more or if the person fraudulently uses the personal identification information of 10 or more individuals, but fewer than 20 individuals, without their consent. Notwithstanding any other provision of law, the court shall sentence any person convicted of committing the offense described in this paragraph to a mandatory minimum sentence of 3 years’ imprisonment.

 

(c) Any person who willfully and without authorization fraudulently uses personal identification information concerning an individual without first obtaining that individual’s consent commits a felony of the first degree, punishable as provided in s. 775.082, s. 775.083, or s. 775.084, if the pecuniary benefit, the value of the services received, the payment sought to be avoided, or the amount of the injury or fraud perpetrated is $50,000 or more or if the person fraudulently uses the personal identification information of 20 or more individuals, but fewer than 30 individuals, without their consent. Notwithstanding any other provision of law, the court shall sentence any person convicted of committing the offense described in this paragraph to a mandatory minimum sentence of 5 years’ imprisonment. If the pecuniary benefit, the value of the services received, the payment sought to be avoided, or the amount of the injury or fraud perpetrated is $100,000 or more, or if the person fraudulently uses the personal identification information of 30 or more individuals without their consent, notwithstanding any other provision of law, the court shall sentence any person convicted of committing the offense described in this paragraph to a mandatory minimum sentence of 10 years’ imprisonment.

 

 

 

(3) Neither paragraph (2)(b) nor paragraph (2)(c) prevents a court from imposing a greater sentence of incarceration as authorized by law. If the minimum mandatory terms of imprisonment imposed under paragraph (2)(b) or paragraph (2)(c) exceed the maximum sentences authorized under s. 775.082, s. 775.084, or the Criminal Punishment Code under chapter 921, the mandatory minimum sentence must be imposed. If the mandatory minimum terms of imprisonment under paragraph (2)(b) or paragraph (2)(c) are less than the sentence that could be imposed under s. 775.082, s. 775.084, or the Criminal Punishment Code under chapter 921, the sentence imposed by the court must include the mandatory minimum term of imprisonment as required by paragraph (2)(b) or paragraph (2)(c).

 

 

 

(4) Any person who willfully and without authorization possesses, uses, or attempts to use personal identification information concerning an individual without first obtaining that individual’s consent, and who does so for the purpose of harassing that individual, commits the offense of harassment by use of personal identification information, which is a misdemeanor of the first degree, punishable as provided in s. 775.082 or s. 775.083.

 

 

 

(5) If an offense prohibited under this section was facilitated or furthered by the use of a public record, as defined in s. 119.011, the offense is reclassified to the next higher degree as follows:

 

(a) A misdemeanor of the first degree is reclassified as a felony of the third degree.

 

(b) A felony of the third degree is reclassified as a felony of the second degree.

 

(c) A felony of the second degree is reclassified as a felony of the first degree.

 

For purposes of sentencing under chapter 921 and incentive gain-time eligibility under chapter 944, a felony offense that is reclassified under this subsection is ranked one level above the ranking under s. 921.0022 of the felony offense committed, and a misdemeanor offense that is reclassified under this subsection is ranked in level 2 of the offense severity ranking chart in s. 921.0022.

 

 

 

(6) Any person who willfully and without authorization fraudulently uses personal identification information concerning an individual who is less than 18 years of age without first obtaining the consent of that individual or of his or her legal guardian commits a felony of the second degree, punishable as provided in s. 775.082, s. 775.083, or s. 775.084.

 

 

 

(7) Any person who is in the relationship of parent or legal guardian, or who otherwise exercises custodial authority over an individual who is less than 18 years of age, who willfully and fraudulently uses personal identification information of that individual commits a felony of the second degree, punishable as provided in s. 775.082, s. 775.083, or s. 775.084.

 

 

 

(8)(a) Any person who willfully and fraudulently uses, or possesses with intent to fraudulently use, personal identification information concerning a deceased individual commits the offense of fraudulent use or possession with intent to use personal identification information of a deceased individual, a felony of the third degree, punishable as provided in s. 775.082, s. 775.083, or s. 775.084.

 

(b) Any person who willfully and fraudulently uses personal identification information concerning a deceased individual commits a felony of the second degree, punishable as provided in s. 775.082, s. 775.083, or s. 775.084, if the pecuniary benefit, the value of the services received, the payment sought to be avoided, or the amount of injury or fraud perpetrated is $5,000 or more, or if the person fraudulently uses the personal identification information of 10 or more but fewer than 20 deceased individuals. Notwithstanding any other provision of law, the court shall sentence any person convicted of committing the offense described in this paragraph to a mandatory minimum sentence of 3 years’ imprisonment.

 

(c) Any person who willfully and fraudulently uses personal identification information concerning a deceased individual commits the offense of aggravated fraudulent use of the personal identification information of multiple deceased individuals, a felony of the first degree, punishable as provided in s. 775.082, s. 775.083, or s. 775.084, if the pecuniary benefit, the value of the services received, the payment sought to be avoided, or the amount of injury or fraud perpetrated is $50,000 or more, or if the person fraudulently uses the personal identification information of 20 or more but fewer than 30 deceased individuals. Notwithstanding any other provision of law, the court shall sentence any person convicted of the offense described in this paragraph to a minimum mandatory sentence of 5 years’ imprisonment. If the pecuniary benefit, the value of the services received, the payment sought to be avoided, or the amount of the injury or fraud perpetrated is $100,000 or more, or if the person fraudulently uses the personal identification information of 30 or more deceased individuals, notwithstanding any other provision of law, the court shall sentence any person convicted of an offense described in this paragraph to a mandatory minimum sentence of 10 years’ imprisonment.

 

 

 

(9) Any person who willfully and fraudulently creates or uses, or possesses with intent to fraudulently use, counterfeit or fictitious personal identification information concerning a fictitious individual, or concerning a real individual without first obtaining that real individual’s consent, with intent to use such counterfeit or fictitious personal identification information for the purpose of committing or facilitating the commission of a fraud on another person, commits the offense of fraudulent creation or use, or possession with intent to fraudulently use, counterfeit or fictitious personal identification information, a felony of the third degree, punishable as provided in s. 775.082, s. 775.083, or s. 775.084.

 

 

 

(10) Any person who commits an offense described in this section and for the purpose of obtaining or using personal identification information misrepresents himself or herself to be a law enforcement officer; an employee or representative of a bank, credit card company, credit counseling company, or credit reporting agency; or any person who wrongfully represents that he or she is seeking to assist the victim with a problem with the victim’s credit history shall have the offense reclassified as follows:

 

(a) In the case of a misdemeanor, the offense is reclassified as a felony of the third degree.

 

(b) In the case of a felony of the third degree, the offense is reclassified as a felony of the second degree.

 

(c) In the case of a felony of the second degree, the offense is reclassified as a felony of the first degree.

 

(d) In the case of a felony of the first degree or a felony of the first degree punishable by a term of imprisonment not exceeding life, the offense is reclassified as a life felony.

 

For purposes of sentencing under chapter 921, a felony offense that is reclassified under this subsection is ranked one level above the ranking under s. 921.0022 or s. 921.0023 of the felony offense committed, and a misdemeanor offense that is reclassified under this subsection is ranked in level 2 of the offense severity ranking chart.

 

 

 

(11) The prosecutor may move the sentencing court to reduce or suspend the sentence of any person who is convicted of a violation of this section and who provides substantial assistance in the identification, arrest, or conviction of any of that person’s accomplices, accessories, coconspirators, or principals or of any other person engaged in fraudulent possession or use of personal identification information. The arresting agency shall be given an opportunity to be heard in aggravation or mitigation in reference to any such motion. Upon good cause shown, the motion may be filed and heard in camera. The judge hearing the motion may reduce or suspend the sentence if the judge finds that the defendant rendered such substantial assistance.

 

 

 

(12) This section does not prohibit any lawfully authorized investigative, protective, or intelligence activity of a law enforcement agency of this state or any of its political subdivisions, of any other state or its political subdivisions, or of the Federal Government or its political subdivisions.

 

 

 

(13)

 

(a) In sentencing a defendant convicted of an offense under this section, the court may order that the defendant make restitution under s. 775.089 to any victim of the offense. In addition to the victim’s out-of-pocket costs, restitution may include payment of any other costs, including attorney’s fees incurred by the victim in clearing the victim’s credit history or credit rating, or any costs incurred in connection with any civil or administrative proceeding to satisfy any debt, lien, or other obligation of the victim arising as the result of the actions of the defendant.

 

(b) The sentencing court may issue such orders as are necessary to correct any public record that contains false information given in violation of this section.

 

 

 

(14) Prosecutions for violations of this section may be brought on behalf of the state by any state attorney or by the statewide prosecutor.

 

 

 

(15) The Legislature finds that, in the absence of evidence to the contrary, the location where a victim gives or fails to give consent to the use of personal identification information is the county where the victim generally resides.

 

 

 

(16) Notwithstanding any other provision of law, venue for the prosecution and trial of violations of this section may be commenced and maintained in any county in which an element of the offense occurred, including the county where the victim generally resides.

 

 

 

(17) A prosecution of an offense prohibited under subsection (2), subsection (6), or subsection (7) must be commenced within 3 years after the offense occurred. However, a prosecution may be commenced within 1 year after discovery of the offense by an aggrieved party, or by a person who has a legal duty to represent the aggrieved party and who is not a party to the offense, if such prosecution is commenced within 5 years after the violation occurred.

 

 

 

Fla. Stat. Ann. § 817.568 (West)


 

DOCUMENT B

 

 

772.11. Civil remedy for theft or exploitation

 

 

 

(1) Any person who proves by clear and convincing evidence that he or she has been injured in any fashion by reason of any violation of ss. 812.012-812.037…has a cause of action for threefold the actual damages sustained and, in any such action, is entitled to minimum damages in the amount of $200, and reasonable attorney’s fees and court costs in the trial and appellate courts. Before filing an action for damages under this section, the person claiming injury must make a written demand for $200 or the treble damage amount of the person liable for damages under this section. If the person to whom a written demand is made complies with such demand within 30 days after receipt of the demand, that person shall be given a written release from further civil liability for the specific act of theft or exploitation by the person making the written demand. Any person who has a cause of action under this section may recover the damages allowed under this section from the parents or legal guardian of any unemancipated minor who lives with his or her parents or legal guardian and who is liable for damages under this section. Punitive damages may not be awarded under this section. The defendant is entitled to recover reasonable attorney’s fees and court costs in the trial and appellate courts upon a finding that the claimant raised a claim that was without substantial fact or legal support.  In awarding attorney’s fees and costs under this section, the court may not consider the ability of the opposing party to pay such fees and costs. This section does not limit any right to recover attorney’s fees or costs provided under any other law.

 

 

 

Fla. Stat. Ann. § 772.11 (West)


 

DOCUMENT C

 

 

 

812.012. Definitions

 

 

 

As used in ss. 812.012-812.037:

 

 

(3) “Obtains or uses” means any manner of:

 

(a) Taking or exercising control over property.

 

(b) Making any unauthorized use, disposition, or transfer of property.

 

(c) Obtaining property by fraud, willful misrepresentation of a future act, or false promise.

 

(d)1. Conduct previously known as stealing; larceny; purloining; abstracting; embezzlement; misapplication; misappropriation; conversion; or obtaining money or property by false pretenses, fraud, or deception; or

 

2. Other conduct similar in nature.

 

(4) “Property” means anything of value, and includes:

 

(a) Real property, including things growing on, affixed to, and found in land.

 

(b) Tangible or intangible personal property, including rights, privileges, interests, and claims.

 

(c) Services.

 

(5) “Property of another” means property in which a person has an interest upon which another person is not privileged to infringe without consent, whether or not the other person also has an interest in the property.

 

 

(7) “Stolen property” means property that has been the subject of any criminally wrongful taking.

 

(8) “Traffic” means:

 

(a) To sell, transfer, distribute, dispense, or otherwise dispose of property.

 

(b) To buy, receive, possess, obtain control of, or use property with the intent to sell, transfer, distribute, dispense, or otherwise dispose of such property.

 

(9) “Enterprise” means any individual, sole proprietorship, partnership, corporation, business trust, union chartered under the laws of this state, or other legal entity, or any unchartered union, association, or group of individuals associated in fact although not a legal entity.

 

(10) “Value” means value determined according to any of the following:

 

(a)1. Value means the market value of the property at the time and place of the offense or, if such cannot be satisfactorily ascertained, the cost of replacement of the property within a reasonable time after the offense.

 

2. The value of a written instrument that does not have a readily ascertainable market value, in the case of an instrument such as a check, draft, or promissory note, is the amount due or collectible or is, in the case of any other instrument which creates, releases, discharges, or otherwise affects any valuable legal right, privilege, or obligation, the greatest amount of economic loss that the owner of the instrument might reasonably suffer by virtue of the loss of the instrument.

 

 

(c) Amounts of value of separate properties involved in thefts committed pursuant to one scheme or course of conduct, whether the thefts are from the same person or from several persons, may be aggregated in determining the grade of the offense.

 

 

 

Fla. Stat. Ann. § 812.012 (West)

 

 

 

 

 

812.014. Theft

 

 

 

(1) A person commits theft if he or she knowingly obtains or uses, or endeavors to obtain or to use, the property of another with intent to, either temporarily or permanently:

 

(a) Deprive the other person of a right to the property or a benefit from the property.

 

(b) Appropriate the property to his or her own use or to the use of any person not entitled to the use of the property.

 

(2) (a) 1. If the property stolen is valued at $100,000 or more…

 

 

(b) 1. If the property stolen is valued at $20,000 or more, but less than $100,000;

 

 

(6) A person who individually, or in concert with one or more other persons, coordinates the activities of one or more persons in committing theft … where the stolen property has a value in excess of $3,000 commits a felony of the second degree…

 

 

 

Fla. Stat. Ann. § 812.014 (West)

 

 

 

 

812.019. Dealing in stolen property

 

 

(1) Any person who traffics in, or endeavors to traffic in, property that he or she knows or should know was stolen shall be guilty of a felony of the second degree…

 

(2) Any person who initiates, organizes, plans, finances, directs, manages, or supervises the theft of property and traffics in such stolen property shall be guilty of a felony of the first degree…

 

 

Fla. Stat. Ann. § 812.019 (West)

 

 

 

 

 

Appraisal Fraud and Facts: Essential to Securitization Scam

The REMICS are mirror images of the NINJA loans — no income, no assets, no job

the borrower did not realize that the false appraisal and other deficiencies in underwriting had shifted the risk of loss to the homeowner and the investors

Editor’s Notes: Our economy and the economic structure in other countries is stuck because of the false appraisal reports that supported funding of at least $13 trillion (U.S. only) of loans that were so complex that the Chairman of the Federal Reserve, Alan Greenspan didn’t understand them nor his staff of more than 100 PhDs. They were intentionally opaque because complexity is the way you get the other side of the “deal” (the buyer) to accept your explanation of the transaction. It also is designed to avoid criminal penalties even when the scheme unravels. Getting a Judge or Jury to understand what really happened is a challenge that has been insurmountable in both civil and criminal cases and investigations.

As stated in the 2005 petition to Congress from 8,000 appraisers who did not want to “play ball” with the banks, the appraisers were faced with a choice: either they submit appraisal reports $20,000 higher than contract and earn more money for each appraisal and earn  more money through volume, OR they won’t work at all.

Developers, mortgage brokers, and the “originators” (sales organization that pretended to be the lender), sellers and homeowners needing cash in an economy where there wages and earnings were not keeping up with the cost of living —- all reacted with glee when this system went into action. As “prices” rose by leaps and bounds — fed by a flood of money and demands for more mortgages — everyone except the banks ended up crashing when the money stopped flowing. That is how we know that it was the money that made prices rise, rather than demand.

So most appraisers were both stuck and pleasantly enjoying incomes 4-10 times what they had previously received, and obediently submitted appraisal reports that were in fact unsupportable by industry standards or any other standards that a reasonable and rational lender would use — if they were lending their own money. By lending money from investors the risk of loss was entirely removed. The originators got paid regardless of whether the mortgage was paid, or went underwater or caused the homeowner to execute a strategic default.

By using the originators as surrogates at the closing, the appraisal report was accepted without the required due diligence and confirmation that would be present if you went to the old style community bank loan department. The fact is that there was NO UNDERWRITING involved as we knew it before the securitization scam. The “extra” interest charged to No DOC loans (usually 3/4%-1.5%) and the premium interest charged on NINJA (No income, no assets, no job) loans was sold to borrowers on the premise that the “lender” was taking a higher risk. But the truth is they didn’t do any due diligence or underwriting of the loans regardless of whether or not the borrower was submitting information that confirmed their income, assets and ability to pay.  Thus the premium for the “extra risk” was based upon a false premise (like all the other premises of the securitization PONZI scheme).

The normal way of judging the price of a loan (the interest rate) was the perceived risk composed of two elements: ability to repay the loan, and the value of the property if the loan is not repaid. The banks that foisted the securitization scam upon the world got rid of both: they did nothing to confirm the ability to repay because they didn’t care if the borrower could repay. And they intentionally hyped the “value” of the property far above any supportable level as is easily shown in the Case Schiller index.

This is where PRICE and VALUE became entirely different concepts. By confusing the homeowner and hoodwinking the investors with false appraisals, they were able to move more money into the PONZI Scheme, as long as investors were buying the bogus mortgage bonds issued by fictitious entities that had no assets, no income and no prospects of either one. The REMICS are a mirror image of NINJA loans.

The value of the property was not the same as the prices supported by the false appraisal reports. The prices were going up because of the sales efforts of the banks to get homeowners giddy over the the numbers, making them feel, for a few moments as though they were more wealthy than they were in reality. But median income was flat or declining, which means that the value was flat or declining.

Thus prices went up while values of the homes were going down not only because of the median income factor but because of the oversold crash that was coming. Thus the PONZI scheme left the homeowner with property that would most likely be valued at less than any value that was known during the time the homeowner owned the property, while the contract price and appraisal report “valued” the property at 2-4 times the actual value.

The outcome was obvious: when all was said and done, the banks would be holding all the money and property while the investors, taxpayers, and homeowners were all dispensable pawns whose losses came under the category of “tough luck.”

While this might seem complex, the proof of appraisal fraud is not nearly as difficult as the explanation of why the banks wanted false appraisals. In the civil actions for wrongful lending or wrongful foreclosure, the homeowner need only show that the lender intentionally deceived the borrower as to the value of the property.

And the lack of actual underwriting committees and confirmations is essentially the proof, but you would be wise to have an appraiser who can testify as an expert as to what standards apply in issuing an appraisal report, to whom the appraisal report is addressed (i.e., the “originator”). Then using the foundation for the standards apply it to the property at hand at the time the original appraisal report was issued. It might also help if you catch the “originator” getting a part of the appraisal fee (like Cornerstone Appraisals, owned by Quicken Loans).

The borrower testifies that they were relying upon the “lender” representation that the loan had been carefully reviewed, underwritten, confirmed and approved based upon market conditions, ability of the borrower to repay and the value of the property. After all it was the “lender” who was taking the risk.

Thus the borrower did not realize that the false appraisal and other deficiencies in underwriting had shifted the risk of loss to the homeowner and the investors whose money was used to fund the loan — albeit not in the way it was presented in the prospectus where the REMIC was the supposed vehicle for the funding of the loans or the purchase of the loans.

Everyone in the securitization PONZI Scheme got paid. When you look at it from the perspective described above then you probably arrive at the same conclusion I did — all that money that was made and paid and not disclosed to the borrower changes the dynamics of the deal and the undisclosed compensation and profits should be paid to the borrower who was the party with the real risk of loss.

And in fact, if you look at the Truth in Lending Act, THAT is exactly what it says — all undisclosed compensation (which is broadly defined by the Act) is refundable with treble damages. Why lawyers have not taken action on this highly lucrative and relatively easy case to prosecute is a mystery to me.

Because of the statute of limitations applied in TILA cases, the TILA cause of action might not survive, especially in today’s climate, although more and more  judges are starting to see just how badly the banks acted. I therefore recommend to attorneys to use alternative pleading and add counts under other federal statutes (RICO, etc) and state statutes of deceptive lending, and common law fraud. The action for common law fraud, is the easiest to prosecute as I see it.

The interesting aspect of this that will lead to early settlement is that the pleading is simple as to the elements of the cause of action and can easily survive a motion to dismiss, the facts are clearly going to be in dispute which makes survival on a motion for summary judgment a much higher probability, and in discovery you have a nuclear option: since your cause of action is for return or sharing of the unlawful booty that was paid, plus treble, punitive or exemplary damages, discovery into all the different parties who made money in the chain is far easier to argue than the usual defensive foreclosure case.

The other thing you have is the possibility of stating a cause of action to force the retention of the property, to protect the homeowner in the collection of damages rendered by the final verdict. A lis pendens might be appropriate, and the bond need not be much more than nominal because unless the bank or servicer has a BFP to buy the property, you can easily show that your client is already posting bond every month they pay the utilities and maintain the property.

The compensatory damages would be a measure of the difference between the actual value of the deal and the deal that was offered to the homeowner. In simple terms, it could be that the appraisal report was $250,000 higher than the actual value of the property. As a result, the damages include the $250,000 plus the interest paid on that $250,000 and where appropriate, the loss of the house in foreclosure, plus interest from the date of the fraud (i.e. the closing), attorney fees, and costs of the action.

This action might also have special applications in commercial property cases where the appraisals are known to have come in much higher than the owner or buyer had ever expected. In some cases the “appraisal” actually changed the terms of the contract on the assumption that the property was worth much more than the original offer.

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