Wednesday, May 2, 2018

Document from federal fraud and conspiracy case connected to Fox News' Sean Hannity provides an inside look at the ugliness of rigged foreclosures


Sean Hannity
What does foreclosure fraud look like from the inside? A document from a fraud and conspiracy case connected to Fox News host Sean Hannity provides the answer. It also raises this question: Did something similar happen during our dubious foreclosure in Alabama, one of seven states where Hannity has substantial real-estate holdings?

How sleazy can this get? Prosecutors in the Hannity-related case alleged that conspirators rigged public foreclosure auctions and then conducted second, private auctions among themselves. If that sounds sick to you, join the crowd. (Details are provided below.)

The document in question is a criminal information, which is pretty much the same as an indictment, in the Northern District of Georgia, styled United States v. Jeffrey Wayne Brock, et al. Brock is a real-estate broker who spent six months in federal prison after pleading guilty in a foreclosure-fraud scheme connected to one of Hannity's 20-plus shell companies.

Here is how the government set the scene for its case against Brock and his conspirators. This is  much like the scenario we encountered in Alabama and applies in hundreds of thousands of foreclosures across the country -- and many states likely have little oversight in the process:

When Georgia homeowners default on their mortgages, the mortgage holder, some of whom are financial institutions, can institute foreclosure proceedings through a nonjudicial public real estate foreclosure auction ("public auction"). These public auctions typically take place at the county courthouse. At the auction, an auctioneer sells the property to the bidder offering the highest purchase price. Proceeds from the sale are then used to pay off the mortgage and other debt attached to the property. Any remaining proceeds are paid to the homeowner.

The highest bid usually is equal to the amount owed on the mortgage, and the top bidder usually is a bank or financial institution. But that's not how it worked in our Alabama case. A house-flipping outfit called Spartan Value Investors (of Birmingham) bought the property at auction for about $8,000 more than was owed on the mortgage. In roughly two weeks, Spartan sold the property to another house-flipping company called JAG Investment Strategies (also of Birmingham) -- making a handsome profit of more than $24,100 in a very short time.

Did something underhanded unfold in our case? Well, we know it amounted to a civil case of wrongful foreclosure, which under Alabama law essentially means the foreclosure was conducted with an ulterior motive -- for a reason other than to collect on a debt. And that could have involved any, or all, of the entities involved in the process.

What about criminal wrongdoing in our case? Well, we don't have a definite answer on that. But we know some of the actions that landed Jeff Brock in prison sound familiar. Here is how the feds laid out specifics of Brock's scheme to rig the public foreclosure bidding process in Georgia. In lawyer talk, the section is titled "Means and Methods of the Conspiracy":

15. For the purpose of forming and carrying out the charged combination and conspiracy, defendants JEFFREY WAYNE BROCK, DAVID WALLACE DOUGHTY, and STANLEY RALPH SULLIVAN and co-conspirators did those things that they combined and conspired to do, including, among other things:

a. purchasing rigged foreclosure properties at public auctions at artificially suppressed prices;

b. negotiating payoffs with each other and with one or more co-conspirators in exchange for agreements not to compete at public auctions;

c. conducting secret, second auctions, open only to co-conspirators, to bid for title to rigged foreclosure properties;

d. awarding rigged foreclosure properties to co-conspirators who submitted the highest bids at the secret, second auctions;

e. transferring title to rigged foreclosure properties into the names of coconspirators who submitted the highest bids at the secret, second auctions;

f. distributing payoffs to co-conspirators that otherwise would have gone to financial institutions, homeowners, and others with a legal interest in the rigged foreclosure properties, in an amount based on a predetermined formula agreed upon by co-conspirators or through direct negotiations between co-conspirators;

g. making and causing to be made materially false and misleading pretenses and representations to agents of the foreclosing financial institutions and others involved in the auction and sale of the rigged foreclosure properties; and

h. causing artificially suppressed purchase prices to be reported and paid to financial institutions and others with a legal interest in rigged foreclosure properties.

Note highlighted item (c) above. In reporting on the Hannity story, I've seen no references so far to secret, second auctions that were open only to those in on the conspiracy. That is is a level of chicanery and deceit that makes the jaw drop.

Re: item (f)., it drives home the point that these are not victimless crimes -- and the victims are not faceless financial institutions that aren't likely to draw much sympathy. In quite a few cases, the victims include homeowners -- people who have worked to own and maintain a home, and after unfortunate circumstances that caused their mortgage to go into default, still were lawfully entitled to a share of foreclosure proceeds (depending on the amount of the bid, claims by creditors, etc.). These are people who need every penny to get back on their feet. But Jeff Brock and Co. flat-out stole their funds.

In our Alabama case, we timely paid on our mortgage for almost 25 years and would, by now, almost have it paid off if political thugs had not cheated us out of our jobs (me, at UAB; Carol, at Infinity Insurance) because of my reporting on this blog. The roughly $8,000 in excess of the mortgage debt legally was ours. But we did not see a dime of it. That is part of a federal lawsuit in what we call "The House Case," and we intend to report our experience to federal authorities for possible criminal prosecution.

We encourage others who might have been the victims of fraudulent foreclosures in Alabama to do the same. The U.S. Department of Justice (DOJ) has stated in public documents that Georgia has an ongoing problem with foreclosure fraud. There is no reason to think neighboring Alabama doesn't have a similar problem. When it comes to corruption and college football, Alabama almost always ranks near No. 1.

Here is information, from a DOJ press release, on reporting possible fraud related to a foreclosure:

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.

20 comments:

Anonymous said...

Hannity will have more problems when the Michael Cohen documents hit the fan.

Anonymous said...

After rigging the public auction, these crooks held their own second, private auction to divvy up the proceeds they stole? What bastards!

Anonymous said...

All so Sean Hannity can avoid paying taxes. Typical Republican.

Anonymous said...

Cohen docs will blow the Hannity empire to smithereens.

Anonymous said...

Can you imagine Walter Cronkite and John Chancellor in a scheme like this?

U.S. journalism has gone to hell.

Chuckles said...

Hannity makes Piers Morgan look like Edward R. Murrow.

Anonymous said...

These bastards are even bigger scum bags than I thought.

Anonymous said...

Good reporting, LS. I haven't seen anything about this document elsewhere. Gives the dirty details on bid rigging at foreclosure auctions.

Anonymous said...

Brock deserved way more than six months in prison.

Anonymous said...

Hidden investors funded this fraud. That's the real story here.

Anonymous said...

Hidden investors also are the story with Spartan Value Investors. Something smells fishy to me about that so-called "company."

Anonymous said...

Why would Spartan buy your property and flip it to another flipper in about two weeks? Strange.

e.a.f. said...

How about a speculators tax. that is what British Columbia, Canada has implemented to try to restrain flipping. It may work. it is aimed at foreign buyers who use the B.C. real estate market to launder money and make it.

A. 1:55 p.m. as to why Spartan would buy a property and flip two weeks later? that is actually how some companies operate. Some are inter connected. One is responsible for purchases in the public eye. then it is sold for a profit of some sort to another entity. In British Columbia the flipping took place between real estate agents and the vendor never knew there was an intermediate flipper making money, they the vendor lost out on. Laws were implemented to make that illegal.

Hannity is using flipping and others to hide what he does, in my opinion,. He is actually making a profit off of the misery of others, many who include his viewers, so in my opinion, he wants to ensure he has it both ways.

In British Columbia, Canada, flipping is a method of money laundering. It was also done in London, England. Foreigners take money from a bank, which specializes in money laundering or not asking questions as to where the money comes from, buys the house, then sells the house and the proceeds are clean. In police circles this is called "the Vancouver" model.

Buying real estate has been a favorite method of money laundering for several decades. Drug dealers do it, corporations do it, nasty people do it. It works because to figure out how it is done requires a lot of knowledgeable police officers who specialize in that type of crime. Those types of police officers are hard to come by in some places and in some places no one wants them.

As to this stopping any time soon, don't count on it. Its a great way for politicians or those in the public eye to conduct not so nice business without being called on it very often. I don't expect state governments to change laws to protect people because that is not who they are there to work for. They are there to work for their financial supporters.

Expect a great many Americans to loose their homes when the new tax laws Trump and the republicans passed which stipulates people will no longer be able deduct their interest on their mortgage from taxable income. As interests rise in the next couple of years watch the transfer of vast amounts of real estate/money from the working class to the financial elites.

e.a.f. said...

Americans have an opiod crisis on their hands. Some one is making a huge amount of money. How better to "hide" the money than through house flipping. Laundering it.
In British Columbia where the fent. crisis started and then spread across Canada because the then provincial government wasn't interested in stopping it (in my opinion)

This is how it works, broadly. The drugs are made in China, then shipped around by Chinese shipping companies. In Canada the destination is Vancouver, British Columbia and Calgary, Alberta. the money is then deposited in specific banks abroad, then the money is withdraw, houses purchased in high end Vancouver real estate. some times the houses sit empty, sometimes they are rented out cheaply, sometimes they are flipped.

Now what would be interesting is to see where these flippers of foreclosed houses are and then compare it to the high rates of fent. and opiod deaths. In West Virginia, which had the highest death rate due to these drugs, they found the most likely to die were men with out university education and worked in construction. Many people start taking these drugs to deal with pain brought on by a lack of medical care and the need to keep working.

It is always fun to find out where people who espouse "American/Christian" values get their money. Guys like Hannity are just as much a criminal in my opinion, as the gang banger, the stick up artist, the pimp, etc. Hannity just covers it up better. What is really entertaining is the President of the U.S.S. seems to think Hannity is a great guy. As they used to say, lay down with dogs, get up with fleas or you shall be known by the company you keep. Can't wait for Hannity, Trump, et al to be sleeping in a prison somewhere in the U.S.A.

legalschnauzer said...

e.a.f. --

As always, thanks for your insights. Interesting that BC has issued a speculation tax to cut down on fraud connected to house flipping. Doubt U.S. Republicans would let such a tax pass. And your point about house flipping as a form of money laundering for drug deals, especially related to opiods, is fascinating. Going to research this subject. Thank you.

Anonymous said...

Great comments, e.a.f. Money laundering, drug running, house flipping. If they all are tied together, that might add a whole new layer of ugliness to this story. Thanks for educating at least one clueless dude in Alabama.

e.a.f. said...

If you're interested in how the money laundering works you can goggle, The Gazetteer. Its a blog by RossK. He is a PhD, cancer researcher at the University of B.C. and also likes to play guitar and busks. He in our world is a leftie and wasn't fond of the previous provincial government. (Roger you will note under blogs RossK reads, your's is listed.

the other blog you can check is Norm Farrell's, In-sights.ca. Norm is the premier blogger on financial things in our province. if there is hidden money, Norm finds it. Once upon a time he was an accountant in the film industry. when he retired he took up political blogging and he also is left and an environmentalist.

If you want fast information regarding money laundrying, real estate, etc. The Gazetteers current and previous posts deal with it. One is about how heavy a hockey bag full of $20s can be if its $800K. Try dragging that into a casino to "launder" it. Yes that really happened. This is Canada and hockey bags are good for all sorts of things, including putting bodies in or going shopping.

When you see the name of Andrew Weaver, he is the new, current head of the B.C. Lieberal party, which isn't really liberal but more like Conservative and they were the party in office for the past 16 years until the New Democratic Party won the last election. The B.C. Lieberal party is our version of thuggery in government. Hey don't feel bad about what goes on in Alabama, our former B.C. Lieberal premier "gave" his bag man the provincial rail road.

You will note referances to David Eby. He is the current A.G. of the province and is very interesting man who really knows how to dig. Love the guy.

You will see a picture of fat guy, that is Rich Coleman the former government's Solicitor General. In the U.S.A. it would be with the A.G. dept. but we in Canada keep cops and jails separate from prosecution and the making of laws. So it was Rich Coleman who "piloted' some of those casinos into being and got rid of the gang unit, we think at the request of the former Premier, Christy Clark. She is now out of politics.

If you want to read The Gazetteer I would recommend you also read the comment sections because some times RossK replies with additional information and in one of those replies there is the "Vancouver model" video. It explains how it all works.

Do I think this is going on in the U.S.A. You bet you I do.

In Canada we do not have court house auctions. that is so American and uncivilized. In Canada, if your home is foreclosed on, you appear in front of a court Master, who determines whether it goes into foreclosure or not. You have the right to appear. Then if it goes into foreclosure the bank has the right to sell the property. they usually use a local real estate agent. Our banking system is different in that we have 5 big banks in the country and a 6th minor. we also have provincial credit unions and the largest is located in Vancouver, whose B. of D. is some times littered with lefties. Banks never.

So that is about it concerning how things work here. Casinos, money laundering etc. is mostly in Vancouver because we are closest to China, from whence cometh the fent. and its chemicals in case some one wants to manufacturer here.

Roger if you have any question, please feel free to write.

legalschnauzer said...

Thanks so much, e.a.f. Will check out those sites you mentioned.

You used the right word to describe the US foreclosure process -- uncivilized.

Going through a foreclosure has been, by far, the worst experience of my life -- with an eviction being a close second, having all your stuff thrown out on the street.

Both were way worse than being in jail for five months.

e.a.f. said...

I've lived in B.C. since being a toddler and I never was aware if some one lost their home due to not being able to pay their mortgage. I know it happened quite a bit during the early 1980s because interest rates were up to 20%. Many people had signed onto mortgages at 8% and by the time it got to 18% they couldn't afford to make the payments. People simply declared bankruptcy or turned over the keys to the bank/credit union and moved. There was never a court house auction. You can actually loose your house here and it can remain fairly private.

As to evicting people from rentals we have a Tenancy Act which requires evictions to go through their government dept. the act also gives the tenant the right to appeal. So an artibrator makes the decision. (employed by the Tenancy Dept.) If you don't pay rent, then they can evict you after 10 days, but if you come up with the money, then you can stay. If the person won't leave, the landlord has to go to the Supreme Court of British Columbia and get a Writ of Possession. If the court agrees with the landlord, the Court has a Court ordered Baliff conduct the removal of goods and change the locks. these are baliffs who have a reputation and do this work. they are not idiots. they are court appointed and most of the baliffs do a decent job. A land lord can request to have the police present but they are there only to maintain order. They are not involved in the actual eviction.

I think the big difference between the two states you had to deal in, and B.C. is we have an Act of the Legislature which governs the rules regarding tenants and landlords which gives both parties rights. What occurred to you would not have happened here in B.C. if it had it would have been on all the news station for the 6 o'clock news.

The other issue which comes to mind, is in the U.S.A. I've had the impression, tenants are seen in many cases as second class citizens. That some how you failed to purchase a home. I know there has been major political programs over the years involving everyone purchasing a home. In many cases that didn't work out because people could actually afford them. We have more of a history of tenants having some rights, There is a huge influence on our legal system from Great Britain.

The other thing which protects Canadians and those living in Canada is each province has a Human Rights Commission and the federal government has one also. Things which various people, organization, policitians, laws get away with in the U.S.A would never happen here because its a violation of Human Rights. if it does happen, its see you at the Human Rights Commission. the Human Right Commissions aren't a costly endeavour. you just fill out the forms.

One of the big factors in Canada is we have had a viable third political party in Canada. It has a socialist bent and most of the programs we have now started as part of the party platform for the C.F.F., WHICH became the N.D.P. it was started by a Minister in Sask.

Anonymous said...

Thank you Legal Snauzer for keeping us informed. I may have something to add to this , I am waiting to see how the cards are
played., but I will be in touch if they pick on me....I hate injustice and corruption.