Thursday, April 26, 2018

Hidden investors helped fund foreclosure fraud in Georgia scam tied to Sean Hannity, and the same scenario might have unfolded in our Alabama case

Sean Hannity, of Fox News
Unidentified investors in Georgia funded foreclosure fraud involving a real-estate broker connected to Fox News' Sean Hannity. Evidence suggests a similar scenario might have been at the heart of our wrongful foreclosure in Alabama.

That means well-heeled and hidden investors need to be identified -- in both the Jeff Brock case in Georgia (involving a Hannity shell company) and the Shuler foreclosure in Shelby County, Alabama (involving at least two house-flipping companies).

In our case, we plan to seek investors' identities via a federal lawsuit and a criminal complaint. We do not intend to sit back and let rich people get away with financing the theft of our house, via a wrongful, and possibly fraudulent, foreclosure.

While Brock pleaded guilty to fraud and conspiracy in the Georgia case and spent six months in federal prison, he did not conduct the scam alone; he had help on the front end from two conspirators who also pleaded guilty, and he had financing from investors who never have been held accountable for their role in stealing funds that, in a number of cases, should have gone to homeowners. From a report at the Daily Beast:

According to the government sentencing memorandum from when Brock was sent to federal prison for a scheme involving numerous rigged auctions, the payoff for the Lakewood Drive house was $3,770. The memorandum notes that the actual payoff money in all Brock’s crooked auctions came not from Brock himself but from investors who bankrolled his acquisition of foreclosed houses. He or, in his absence, his representative provided the investor invoices for what were described as “finder’s fees.”

“Brock did not use his own money to pay Doughty and Sullivan for not bidding competitively at the December 6, 2011 auctions; rather, he used money that outside investors had given him to acquire foreclosed properties,” the memorandum says, “To keep his investors informed, Brock instructed an employee to send them invoices documenting the payments that he made.”

The employee dutifully prepared an invoice documenting a $3,770 payoff for the Lakewood house. The sum seems altogether reasonable considering that county records show Brock paid only $21,130 for a house that had been purchased back in 1999 for $95,000 and subsequently carried a mortgage of $155,000.

The obvious question: Who are these investors who funded criminal activity? Right now, we don't know. From the Daily Beast:

The memorandum does not identify the investor who provided the payoff funds. Property records show that title to the house did pass from Brock to a Cobb County entity called The First Real Estate Corporation, though no purchase price is recorded and the property passed that very same day to one of Sean Hannity’s myriad shell companies, SPMKX GA LL.

Even so, however innocent he may be of actual wrongdoing, Hannity remains the beneficiary of a crooked scheme. Records show Hannity paid $54,000 for a house worth double that amount.

Whoever paid the payoff, the outcome of this deal is so messy you might think that Michael Cohen was involved. There is no indication that he had anything to do with it.

In our Alabama case, it's not clear that criminal activity was involved. But there is little doubt hidden investors were involved. By its very name, the entity that bought our home at auction (Spartan Value Investors) involves investors, and their identify is cloaked in secrecy. Roughly two weeks after buying the property, Spartan Value Investors "flipped" it to another outfit, called JAG Investment Strategies. Again, the name suggests unknown investors are involved.

Clayton Mobley, Spartan Value Investors
How do the numbers stack up in our case? Spartan bought our property for $74,359 and sold it to JAG for $98,500. That's a profit of more than $24,100 in roughly two weeks time. And our house had a market value of around $200,000. That's likely where investors made a nice chunk of change. And we made nothing, even though our house was a rare one that sold for more than the amount left on the mortgage.

There probably is not much worse in life than going through a foreclosure or an eviction -- and we have been through both. And when it appears the processes involved fraud or deceit . .  well, it's enraging.

Here is how the Daily Beast put it, in reporting on the Brock case in Georgia:

Along with describing how the investors provided the payoffs to secure a purchase price far below the actual value, the sentencing memorandum notes, “For the homeowner victims, these thefts occurred at a low point in their lives.”

The memorandum continues, “The money that Brock and his conspirators kept for themselves could have helped the victims get back on their feet, but Brock instead enriched himself.”

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