Wednesday, April 25, 2018

Sean Hannity's shell company is tied to real-estate broker who committed foreclosure fraud involving the kind of "house flipping" we experienced in Alabama


Sean Hannity
Fox News' Sean Hannity is connected to a real-estate broker who pleaded guilty in 2016 to federal charges of fraud and conspiracy related to foreclosed properties in Georgia.

That adds another area of common ground, which we began outlining in yesterday's post, between the Hannity story and our experience with a dubious foreclosure in Birmingham, Alabama. It also adds to the possibility that criminal acts were involved in the loss of our home, which we owned for roughly 25 years. We have obtained information about reporting possible foreclosure fraud to federal authorities, and my wife, Carol, and I plan to use it, pronto. We encourage other possible victims to do the same; contact information for appropriate federal agencies is at the end of this post.

Does all this mean our foreclosure was connected to the 20-plus shell companies that Hannity helped form via a wealth-management firm in Kennesaw, Georgia, just outside Atlanta? No. In fact, given that the value of mortgages in the United States tops $10 trillion, the odds that any one mortgage in the seven states where Hannity's shell companies operate (Alabama is one of them) is quite low. That includes our mortgage.

Even if our foreclosure proves to have no ties to Hannity -- and we don't know, one way or another, right now -- revelations about the broadcaster's real-estate empire shine light on the kind of shady actions that clearly were present in the loss of our home -- and might be widespread in the mortgage industry. That's especially true with yesterday's follow-up story by reporter Jon Swaine, of The Guardian, titled "Sean Hannity's real estate venture linked to fraudulent property dealer," focusing on a Georgia-based con artist named Jeff Brock. Writes Swaine:

Sean Hannity’s real estate venture bought houses through a property dealer who was involved in a criminal conspiracy to fraudulently obtain foreclosed homes, according to records reviewed by the Guardian.

In 2012, a shell company linked to the Fox News host bought 11 homes in Georgia that had been purchased by the dealer, Jeff Brock, following foreclosures. Brock transferred the properties to corporate vehicles that sold them on to the Hannity-linked company at a profit.

Brock pleaded guilty in 2016 to federal charges of bank fraud and conspiracy for his role in an operation to rig foreclosure auctions between 2007 and 2012. He was sentenced to six months in prison and had to pay more than $166,000 in fines and restitution.

What did Brock do? He and his conspirators rigged foreclosure auctions to enrich themselves and make sure other parties, who were legally entitled to a share of the funds (and this includes the homeowners, in many cases), got little or nothing. Here is how the U.S. Department of Justice described the scheme in a 2016 press release announcing guilty pleas:

Jeffrey Wayne Brock, David Wallace “Chuck” Doughty, and Stanley Ralph Sullivan each admitted that they agreed to rig auctions of foreclosed homes in Cobb County from June 2007 until January 2012. According to court documents filed in the U.S. District Court for the Northern District of Georgia, Brock, Doughty, Sullivan and their co-conspirators agreed not to compete for the purchase of selected foreclosed homes so that they could win the auctions for those homes with artificially low bids. The winning bidders then made payoffs to conspirators who had refrained from bidding against them. As a result, conspirators profited from money that otherwise would have gone to mortgage holders and other secured debt holders, and in some cases, to the owners of foreclosed homes.

“These defendants conspired to corrupt foreclosure auctions that should have benefited lenders and homeowners,” said Principal Deputy Assistant Attorney General Renata Hesse, head of the Justice Department’s Antitrust Division. “The Antitrust Division will continue to work with our colleagues at the FBI to pursue those who took advantage of disruption caused by the financial crisis to line their own pockets.”

Here's how Jon Swaine describes it at The Guardian:

In February 2012, the Hannity-linked company spent about $540,000 buying 10 single-family houses in Georgia’s Fulton, Cobb, Clayton and DeKalb counties, according to county records. It bought an additional DeKalb county property later that year for about $60,000.

The company was formed in Georgia days before the February purchases by an attorney for Hannity. It was registered to the offices of Henssler Financial, Hannity’s wealth managers. As a limited liability company (LLC), it was not required to report its actual owner to Georgia regulators. Hannity is not mentioned in the company’s publicly available filings.

Brock had bought the 11 Georgia houses in foreclosure auctions in 2011 and 2012, after the previous owners defaulted on mortgages. He transferred the properties to five LLCs. Brock was the registered agent for two of the five LLCs and a colleague at Key Property was the agent for another. Then the Hannity-linked company bought the houses from these five LLCs, paying a total of $600,000.

Notice the flipping of the foreclosed properties from one shady entity to another. That's how the conspirators in the Brock case, via a Hannity shell company, rewarded each other with funds that should have gone to someone else.

Clayton Mobley, of Spartan Value Investors
A similar scenario played out in our Alabama foreclosure. Our research indicates the vast majority of foreclosed properties are bought by banks, so they can seek the amount owed on the mortgage. That did not happen in our case. A Birmingham outfit called Spartan Value Investors -- founded and headed by Clayton Mobley -- bought our home at auction and quickly flipped it to another local outfit, called JAG Investment Strategies. A couple named Preston and Angela Crider wound up in our house, even though there is almost no way they could own it lawfully.

Why did these two entities go into flipping overdrive on our house? I don't know, but it smells funny. It also smells somewhat like the scheme Jeff Brock and his conspirators concocted, via Sean Hannity's shell company. Here is how we described the peculiar actions around our foreclosure in a September 2016 post:

In a standard foreclosure, the mortgage holder -- a financial institution of some sort -- buys the house, and the purchase price equals the outstanding debt on the house. In our research, we've found a number of articles on the Web quoting a mortgage veteran saying something like this: "I've been in the business for 35 years, and I've never seen a foreclosed property sell for more than the outstanding debt, and I've only seen a handful sold to someone other than the bank." (The price can be for less than the outstanding debt, which creates an unpleasant set of problems for the homeowner, but that didn't apply to us, so we will leave those issues off the table.)

Back to the thoughts of our imaginary mortgage professional, who would have had quite the experience at our foreclosure. The buyer was not the bank, Chase Mortgage; it was a house-flipping outfit, with roots in Tuscaloosa and an office on Birmingham's Southside, called Spartan Value Investors. (Roughly two weeks after we were out of the house, Spartan sold it to another house-flipping outfit, JAG Investment Strategies. JAG obtained a loan from Nowlin and Associates of Birmingham and apparently used that to remodel the house and get it on the market pronto, where a couple named Preston and Angela Crider bought it.)

The foreclosure on our home wound up being unlike anything our imaginary mortgage veteran had ever seen. Here's why:

Here's how things took a left turn with our foreclosure: In the days leading to the sale on the Shelby County Courthouse steps, we contacted Robert Wermuth, of the Huntsville law firm Stephens Millirons, which was ramrodding the proceedings. We wanted to know the outstanding debt on the property, and Wermuth sent us a document stating it was roughly $66,000. That includes a bunch of "fees" that mortgage holders and their lawyers love to tack onto such documents, so the real balance probably was somewhere in the $55,000 to $60,000 range. Regardless, we were having to deal with the higher figure. If we had been able to come up with $66,000, we would still be in our house.

We're not sure what happened on the day of the sale, but the property wound up selling for $74,359, which is more than $8,000 over the outstanding debt. . . .  Our house was in a fairly desirable area, and it was in pretty good shape considering the financial duress we had been under for years, due to loss of our jobs at UAB and Infinity Insurance, respectively. Did two or more parties get into a bidding war, driving up the price? Did some other unusual circumstance cause a sale unlike any our imaginary mortgage pro above had ever seen?

Remember the two circumstances our imaginary mortgage veteran had almost never seen? (1) A foreclosed property selling for more than the outstanding debt; (2) A foreclosed property being sold to someone other than the bank. Both of those events happened with our foreclosure.

Strange? Sure seems like it to me.

Did someone connected to the "flipping" of our home commit foreclosure fraud? We aren't sure, but we will contact the appropriate federal authorities about our experience -- and we intend to do it soon. We urge others who might have been victims of foreclosure fraudsters to do the same. Here is the contact info, as outlined in a DOJ press release about the Jeff Brock case:

Since fiscal year 2009, the Justice Department has filed over 18,000 financial fraud cases against more than 25,000 defendants. For more information about the task force, please visit www.StopFraud.gov. Anyone with information concerning bid rigging or fraud related to public real estate foreclosure auctions should contact the Washington Criminal II Section of the Antitrust Division at 202-598-4000, call the Antitrust Division’s Citizen Complaint Center at 888-647-3258, or visit http://www.justice.gov/atr/report-violations.

22 comments:

Anonymous said...

Imagine the stink Hannity would be raising if Obama had been involved in a scam like this.

Anonymous said...

So, Sean Hannity conducts business with a criminal. That should make his ratings at Fox News go up.

Anonymous said...

This is why broadcast shows about public affairs should be conducted by someone with real journalism credentials, and not a partisan shill.

Anonymous said...

I'm betting Hannity is using shell companies for reasons other than limiting his liability. He's trying to hide something.

Ben Bradlee said...

What would we do without The Guardian? US media is getting its arse kicked on this story.

Anonymous said...

If a black guy walks into a bank and steals money, he get's probably 15-20 years. But this white guy, doing business with Sean Hannity, gets barely a slap on the wrist. He and his conspirators were stealing, too.

Anonymous said...

But . . . but . . . Sean says he didn't know what this guy was doing.

Anonymous said...

Clayton Mobley looks like he should be coming in from recess.

Anonymous said...

Why would Spartan Value Investors buy your property, and then turn around and sell it to another flipper? I smell something.

Anonymous said...

Maybe Sean Hannity likes real estate over stocks because it's easier to get away with scams like this in real estate.

Anonymous said...

My guess on your foreclosure, LS, is that Spartan and JAG did a little rigging to make sure you couldn't appear at the courthouse steps and buy your own house.

Anonymous said...

Maybe someone was trying to raise hush money to make sure Liberty Duke stayed quiet about her affair with Rob Riley.

Didn't "Lady Liberty" make some money off this deal?

Anonymous said...

Schnauzer, I'd say throwing you in jail was all part of a plan to steal your house. Looks like it's worked so far.

Anonymous said...

Alabama is a non-judicial foreclosure state, so there basically is no oversight of the whole process. No wonder people get conned and cheated.

legalschnauzer said...

Having Alabama judges involved wouldn't make it any more fair. In fact, they probably would get involved in the cheating and make it even worse.

Anonymous said...

Here is a very good story from Daily Beast about the foreclosure fraud tied to Sean Hannity:


https://www.thedailybeast.com/sean-hannity-kept-getting-deals-on-properties-previously-owned-by-a-fraudster-specializing-in-foreclosures

Anonymous said...

If there is a foreclosure fraud problem in Atlanta, it stands to reason there would be a similar problem in Birmingham.

Anonymous said...

The raid on Michael Cohen's office and home likely will reveal a whole bunch of insights on Mr. Hannity's real-estate holdings.

legalschnauzer said...

@11:17 --

Yes, Liberty Duke made $8,000 of so off our foreclosure, which she was not remotely entitled to.

She's just a common thief.

Anonymous said...

Interesting stuff from Daily Beast article. Hidden investors help fund the foreclosure fraud that Jeffrey Brock pulled off, via a Sean Hannity company:


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.”

Anonymous said...

I would be willing to bet that Chase Bank was not the true owner of your mortgage note. Your loan was likely package with many other loans and sold off to investors as mortgage backed securities {MBS} Chase was more likely only servicing your loan, that is collecting your payments, paying the taxes, ins. Research {foreclosure fraud} and see for yourself what will go down as the biggest fraud in history. Wall st sold bad loans to investors, then bet against those same bad loans, collecting big time, then coned Washington into bailing them out, again collecting more money, all while never losing any of their own money. Then they have the balls to walk into court claiming a lost on your loan and then gets to collect money by foreclosing on a loan they never owned in the first place!!!! Our gov;t knows this but will do nothing because it would show the world how wall st played them for a fool. Chase never lost one dime due to your default, but they profited over and over from the fraud. At one time a person had to show the court that they were the injury party before asking for relief but not with wall street. It's all a big con job. I'm sorry that you were also a victim.

legalschnauzer said...

@9:28 --

Thanks for your insights. I would bet you are right on target. The system is ripe for abuse, as the Hannity story is making clear.

What is a victim to do? If you were a victim, what would you do?