Real Estate Continuing Education Deadline is October 31!

 

It’s time again for all of us licensed Michigan real estate salespersons and brokers to renew our licenses since 2015 is a license renewal year.

According to the Michigan Department of Licensing and Regulatory Affairs (LARA), a licensee must complete at least 18 clock hours of continuing education per 3-year license cycle before the licensee can renew his or her real estate license.   Licensees must certify they have completed the required continuing education on their license renewal application.  The current real estate licensing cycle ends on October 31, 2015, which means that every real estate agent and broker needs to complete 18 hours of real estate con ed on or before October 31.

Remember that a minimum of 6 hours must involve law, rules, and court cases regarding real estate, although you can take more than the minimum since all law/legal update hours count towards the ultimate goal of 18 hours of continuing education credit.

Have you completed your 18 hour of Michigan real estate con ed yet?  It not, the time is now!

Let 1 Stop ConEd LLC (www.1StopConEd.com) help you get your hours from the comfort or your home of office.   There is no longer any reason to sit in a conference room for hours to complete your mandatory Michigan real estate continuing hours, when 1 Stop ConEd LLC provides interesting and informative home study courses that you can complete on your own schedule and from anywhere.

1 Stop ConEd LLC is a Michigan company that specializes in Michigan real estate continuing education courses.

1 Stop ConEd LLC will also save your Certificate of Completion for you, so if for any reason you misplace your certificate, just let us know and we’ll send you a new one.   Additionally, all of our courses fully and completely comply with LARA’s requirements for real estate continuing education course credit.  Our courses were prepared by licensed Michigan attorneys, who are also licensed Michigan real estate brokers, to ensure adherence to LARA’s regulations.  We absolutely guarantee that you will receive credit for any course you complete with us should you receive an audit letter from LARA.

Find 1 Stop ConEd LLC at www.1StopConEd.com. 

NEW Distracted Driving Ordinance in Troy!

Beginning today (Thursday, July 29, 2010), you can get ticketed for "distracted driving" in Troy, Michigan, based on Troy’s newly-enacted Distracted Driving Ordinance. This is a new Ordinance is designed to improve traffic safety and reduce the number of traffic accidents. Since so many real estate professionals like to multitask while driving, it is important to be aware of this new law, especially while driving through Troy.

The Ordinance is divided into three sections, as set forth in Sections of Chapter 106, Traffic, of the Troy City Code relating to distracted driving (Section 1.20.05). Those sections cover the following topics: (1) Texting, (2) Cell Phone Use, and (3) Common Disruptive Behaviors.

1. TEXTING

The Ordinance reads: “The physical manipulation of any 2-way wireless electronic communications device used for dialing numbers; or scrolling; or typing or entering multiple letters, numbers, symbols, or other text; or the sending, receiving, and reading of any non-voice data in the vehicle while the motor vehicle is in motion on any highway or street or place open to the general public within the City of Troy. As used in this subsection, a wireless 2-way communication device does not include a global positioning or navigation system that is affixed to the motor vehicle.” Troy City Code, Chapter 106, Section 1.20.05(1).

This section addresses texting and similar behaviors related to texting, such as dialing phone numbers or scrolling for and reading messages, music, Internet information, etc. This particular section is modeled after the State of Michigan texting law that took effect on July 1, 2010, so it shouldn't be a surprise to anyone who lives and drives in Michigan.

2. CELL PHONE USE

The Ordinance reads: “The physical manipulation or handling of any wireless entertainment or electronic communication device for the purpose of speaking into, or listening to voice data, while the motor vehicle is in motion on any highway or street or place open to the public within the City of Troy.” Troy City Code, Chapter 106, Section 1.20.05(2).

This section is specific to cell phone use. In an attempt to clarify this part of the Ordinance, the City of Troy published a document named "Clarification of the City of Troy Distracted Driving Ordinance” that explains that this is NOT a ban on cell phone use. The Clarification document explains that this portion of the Ordinance is merely meant to limit the type of cell phone you can use. If you have a hand-held device, you will need to pull off the roadway (including the shoulder) and find a safe location to place your call. This section allows for the use of a hands-free device such as a ear speaker/microphone combination plugged into the phone, a blue-tooth device, a sync system, and even the use of a speaker phone, as long as the phone can be secured without physically holding it. The operative words in this section are “the physical manipulation or handling,” which means that you cannot have a cell phone in your hand to talk into or listen to.

3. COMMON DISTRACTIVE BEHAVIORS

The Ordinance reads: “Any action by the driver of a motor vehicle that diverts his or her attention resulting in the failure to use due care and caution in the safe operation of a motor vehicle while the vehicle is in motion on any highway or street or place open to the general public within the City of Troy. Such action can include but is not limited to: eating, reading, writing, performing personal hygiene/grooming, physical interaction with pets, passengers, or unsecured cargo, any of which is done in a manner that prohibits the driver from maintaining direct physical control of the motor vehicle steering mechanism with at least one hand that is free of all other objects and used entirely to form a controlled grip on the steering mechanism.” Troy City Code, Chapter 106, Section 1.20.05(3).

The purpose of this section is to focus the driver on driving, so it deals with a multitude of driving behaviors that often inhibit a driver from maintaining the level of due care and caution that is necessary for the safe operation of a motor vehicle. Fortunately, the City's "Clarification of the City of Troy Distracted Driving Ordinance" helps explain some of this section as follows:

READING: Whether you are reading notes for a meeting, reading a map, or reading a novel, reading takes your focus off of the roadway. Consider the fact that you may be driving at 45 MPH, which equates to traveling about 66 feet per second. If you are reading something that takes your focus away from the roadway for even one second, you have traveled 66 feet blindly! A two- second distraction leads you to travel about 132 feet blindly, which is almost half the length of a football field! Too many things can happen during that time that you will not see, let alone be able to react to.

WRITING: Writing notes is a dangerous practice. Consider the time and distance example previously mentioned. You may have one hand on the steering wheel, but your focus is on writing information on a piece of paper or on an electronic device. This behavior takes your focus away from your primary objective, which is safe driving.

PERFORMING PERSONAL HYGIENE: Putting on makeup or shaving, are types of behavior that often require the use of a mirror and/or the use of two hands to get the job done. This is dangerous driving behavior.

INTERACTION WITH PETS AND PASSENGERS: Drivers who keep pets, particularly large pets, on their laps while driving are often prevented from having a clear view of the roadway or ready access to vehicle steering mechanisms, side and rear-view mirrors, turn signals, etc. The Ordinance does not mean you cannot have a pet with you in the vehicle, but you must be mindful that depending on the size of the pet and its location within the vehicle, your interaction with the pet could constitute a distraction to safe driving.

Passengers who distract the driver of a moving motor vehicle by engaging in distractive behavior like pushing, shoving, grabbing, fighting, swaying the vehicle by movements done from inside the cabin, leaning out of a vehicle, etc., all constitute a distraction for which the driver may be stopped.

Changing clothes, changing a baby’s diaper, and having balloons float within the cabin of a moving vehicle causing a visual obstruction, are just a couple of the ways that physical interaction with cargo can contribute to unsafe conditions.

See Troy City Council document entitled "Clarification of the City of Troy Distracted Driving Ordinance"

EXCEPTIONS TO THE DISTRACTED DRIVING ORDINANCE

The Distracted Driving Ordinance does not apply to a person who is using an electronic communication device to do one or more of the following:

a) Report a traffic accident, medical emergency or serious road hazard.

b) Report a situation in which the person believes his or her personal safety is in jeopardy.

c) Report or avert the perpetration or potential perpetration of a criminal act against the individual or another person.

d) Carry out official duties as a police officer, law enforcement official, member of a paid or volunteer fire department, or operator of an emergency vehicle.

Troy City Code, Chapter 106 (Traffic), Section 5.14(c).

SOURCE: Troy City Code, Chapter 106 (Traffic), Section 1.20.05; Troy City Code, Chapter 106 (Traffic), Section 5.14(c); Troy City Council document entitled "Clarification of the City of Troy Distracted Driving Ordinance"

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Please visit us at www.123ConEd.com for all of your Michigan real estate continuing education needs. We are the leading online provider of Michigan real estate continuing education. All of our courses are fully approved and properly certified by the State of Michigan, and are offered online.

Copyright © 123 ConEd LLC 2010. All rights reserved.

Fair Housing Lawsuit Settled for $82,500

Here is another example of a recent Fair Housing Act lawsuit brought by the United States Department of Justice (“DOJ”) against a housing provider. I try to post case summaries in order to provide timely updates to real estate professionals about the "dos and don'ts" under the Fair Housing Act, since fair housing is such an important issue.

Earlier today (Tuesday, July 6, 2010), the owners and operators of Ivanhoe House Apartments, an apartment complex in Ann Arbor, Michigan, agreed to pay $82,500 to settle a fair housing lawsuit filed by the DOJ alleging that they had discriminated against African-American home-seekers.

On March 3, 2010, the DOJ filed the fair housing lawsuit alleging that the apartment complex's property manager had racially discriminated in the rental and inspection of apartments. The case was developed through testing conducted by the Fair Housing Center of Southeastern Michigan (a private non-profit organization located in Ann Arbor). The lawsuit was based upon evidence generated by a series of fair housing tests conducted by the Center. In the tests, individuals posed as prospective renters for purposes of determining whether the defendants were providing equal treatment to similarly situated home seekers in compliance with the Fair Housing Act.

According to the lawsuit, the testing revealed that the defendants repeatedly and consistently treated African-American apartment-seekers less favorably than white apartment-seekers. Specifically, the complaint alleged that Ivanhoe House Apartments:

• Denied the availability of apartments for rent or inspection to African-American persons while at the same time telling white persons about apartments available to rent or inspect;

• Failed to provide African-American persons information about the availability of apartments to rent or inspect that is full, complete, and consistent with the information provided to white persons;

• Failed to provide to African-American persons the same terms, conditions, or privileges related to the renting of apartments as are provided to white persons; and

• Refused to accept or process applications by African American persons because of their race or color.

As a result, the DOJ alleged that the defendants had violated the Fair housing Act by:

• Refusing to negotiate for the rental of, or otherwise making unavailable or denying dwellings to persons because of race or color, in violation of 42 U.S.C. § 3604(a);

• Discriminating against persons in the terms, conditions or privileges of rental, or in providing services in connection therewith, because of race or color, in violation of 42 U.S.C. § 3604(b); and

• Representing to persons because of race or color that dwellings are not available for inspection or rental when such dwellings are in fact so available, in violation of 42 U.S.C. § 3604(d).

Under the terms of today’s settlement, the defendants are required to pay $35,000 in damages to three victims who were discriminated against because of their race . The defendants are also required to pay $7,500 in a civil penalty to the United States and to and pay $40,000 to the Fair Housing Center of Southeastern Michigan as damages for the non-profit’s efforts in testing and investigating the apartment complex. The settlement also requires the defendants and their employees to undergo fair housing training, conduct self-testing of the apartment complex, and provide periodic reports to the DOJ and the Fair Housing Center of Southeastern Michigan.

As every real estate professional should already know, the Fair Housing Act prohibits discrimination in housing based on race, sex, color, national origin, disability, religion and familial status.

SOURCE: U.S. Department of Justice press release and legal complaint and settlement documents (portions of press release used with the express permission of the DOJ)

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To learn more about fair housing issues (along with a variety of other real estate topics), please visit us at www.123ConEd.com. We are the leading online provider of Michigan real estate continuing education. All of our courses are fully approved and properly certified by the State of Michigan, and are offered online.

Copyright © 123 ConEd LLC 2010. All rights reserved.

$2.725 Million Settlement of Housing Discrimination Lawsuit

Here is another example of a recent Fair Housing Act lawsuit settled by the United States Department of Justice (“DOJ”). I try to post case summaries in order to provide timely updates to real estate professionals about the "dos and don'ts" under the Fair Housing Act, since fair housing is such an important issue.

On Tuesday, November 3, 2009, the DOJ announced the largest monetary payment ever obtained by the DOJ in the settlement of a case alleging housing discrimination in the rental of apartments. Los Angeles apartment owner Donald T. Sterling agreed to pay $2.725 million to settle allegations that he discriminated against African-Americans, Hispanics and families with children at apartment buildings he controlled in Los Angeles.

The lawsuit, filed by the DOJ in August 2006, alleged that the defendants, Donald T. Sterling, his wife Rochelle Sterling and the Sterling Family Trust, engaged in discriminatory rental practices on the basis of race, national origin and familial status (having children under 18) at various apartment buildings that they owned and managed in Los Angeles. Among other things, the lawsuit alleged that the defendants discriminated against non-Korean tenants and prospective tenants at buildings the defendants owned in the Koreatown area of Los Angeles.

The lawsuit alleged that the defendants violated the Fair Housing Act on the basis of race, national origin and familial status by refusing to rent to non-Korean prospective tenants, misrepresenting the availability of apartment units to non-Korean prospective tenants, and providing inferior treatment to non-Korean tenants. The lawsuit also alleged that the defendants refused to rent to African-American prospective tenants and misrepresented the availability of apartment units to African-American prospective tenants in the Beverly Hills section of Los Angeles. In addition, the lawsuit alleged that the defendants refused to rent to families with children and misrepresented the availability of apartment units to families with children throughout the buildings that they owned or managed. Additionally, the lawsuit alleged that the defendants made statements and published notices or advertisements in connection with the rental of apartment units that expressed a preference for Korean tenants and expressed discrimination against African-Americans and families with children.

In court filings, the DOJ presented evidence that the defendants' employees prepared internal reports that identified the race of tenants at properties that the defendants purchased in Koreatown. Additionally, the defendants made statements to employees indicating that African-Americans and Hispanics were not desirable tenants. The DOJ also presented expert analysis showing that the defendants rented to far fewer Hispanics and African-Americans than would be expected based on income and other demographic characteristics.

The defendants, who manage their apartments under the name Beverly Hills Properties, own and manage approximately 119 apartment buildings comprising over 5,000 apartments in Los Angeles County. The settlement also resolves two related lawsuits filed by former tenants at one of the properties. The two families, an African-American family and an interracial married couple with bi-racial children, alleged that the defendants demolished the private yards that had been part of their apartment and took other actions against them because of their race.

Under the terms of the settlement, the defendants are required to pay a $100,000 civil penalty to the United States. The defendants are also required to pay $2.625 million into a fund that will be used to pay monetary damages to persons who were harmed by the defendants’ discriminatory practices, including the tenants in the two related lawsuits discussed above. Any money left over would go to further fair housing education or enforcement in Los Angeles. The settlement must be approved by the court.

In addition to the payments in damages and civil penalties, the settlement agreement requires the defendants to take various steps to ensure non-discriminatory practices at their rental properties, including:

• Enjoining the defendants from discriminating on the basis of race, national origin, and familial status;

• Requiring the defendants to implement a self-testing program over the next three years to monitor their employee’s compliance with fair housing laws at their properties. The testing would be conducted by an independent contractor that would report the results to the defendants and the DOJ;

• Requiring the defendants to maintain non-discriminatory practices and procedures; and

• Requiring the defendants to obtain fair housing training through an independent contractor for their employees who participate in renting, showing or managing apartments at the properties.

Source: U.S. Department of Justice press release and legal complaint and settlement documents(portions of press release used with permission)

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To learn more about fair housing issues (along with a variety of other real estate topics), please visit us at www.123ConEd.com. We are the leading online provider of Michigan real estate continuing education. All of our courses are fully approved and properly certified by the State of Michigan, and are offered online.

Copyright © 123 ConEd LLC 2009. All rights reserved.

Flagrant Violations of the Fair Housing Act in Recent Lawsuit brought by the DOJ

Here is another example of a recent Fair Housing Act lawsuit brought by the United States Department of Justice (“DOJ”). I try to post case summaries in order to provide timely updates to real estate professionals about the "dos and don'ts" under the Fair Housing Act, since fair housing is such an important issue.

Last Friday (October 16, 2009), the DOJ filed a lawsuit against TK Properties L.L.C., its owner, and two employees (property managers), for violating the Fair Housing Act by discriminating on the basis of race. The lawsuit alleged that the defendants violated the Fair Housing Act by harassing and making discriminatory statements to an African-American family residing at Lakeport Village Apartments (located in Sioux Falls, South Dakota). In addition, the lawsuit alleged that the defendants intimidated white tenants who came to the family's defense.

Lakeport Village Apartments is a 48-unit apartment complex that is comprised of three buildings, each with 16 units. The complex is home to many families with children. On December 1, 2008, TK Properties hired Ann Wagner (hereinafter “Manager Wagner”) and Corey Anderson (hereinafter “Manager Anderson”) as on-site property managers.

On January 5, 2009, Michelle Chevalier, a white tenant at Lakeport Village, complained to Manager Wagner about noise coming from an apartment being rented by Charlotte and Untoma Gadsden (who lived there with their three minor children and one adult child). The Gadsdens are African-American. Tenant Chevalier and Manager Wagner went upstairs to speak to the Gadsdens. Charlotte Gadsden explained to Manager Wagner that her husband Untoma had just returned from the hospital and that the noise had been the result of his dialysis machine falling to the floor. Manager Wagner nevertheless yelled, "That's it, you're done, you're out of here, I've had enough," or words to that effect.

Following that confrontation, Manager Wagner urged Tenant Chevalier to file a false police report stating that the Gadsden's 17-year old son had attacked Tenant Chevalier. Tenant Chevalier refused to do so. Manager Wagner nevertheless stated she would file such a report, and told Ms. Chevalier that she needed her help in evicting the Gadsdens, whom she referred to as "nigger" tenants. When the police arrived, Tenant Chevalier denied that she had been threatened by the Gadsdens’ son and therefore no charges were filed.

Manager Anderson told Tenant Chevalier that, with regard to the maintenance requests of African-Americans, "them fucking niggers can wait, I'll get to them when I get to them," or words to that effect. Manager Anderson made the comment in the presence of Tenant Chevalier's children.

On February 11, 2009, Manager Anderson called the Sioux Falls Police Department and falsely reported that the Gadsdens' 15-year old son was attempting to steal change from the apartment complex's laundry machine. Scott Terveen (an owner of TK Properties) insisted that charges be filed. The charges were later dismissed.

On numerous occasions, white tenant Jenny Johnson heard Manager Anderson and Manager Wagner use the word "nigger" to describe black tenants, including the Gadsdens. On February 19, 2009, Tenant Johnson told another white tenant that she believed that Manager Anderson and Manager Wagner were racist. Manager Anderson, who learned of Tenant Johnson's allegations, responded by sending Tenant Johnson a text message that said, "Who in the hell do u think u r if u want 2 bitch about me and b nosy u know where I live." Manager Anderson also told another tenant that he would "punch [Tenant Johnson] in the mouth to shut her up," or words to that effect. The tenant told Tenant Johnson about Manager Anderson's threat.

Following Manager Anderson's text message and threat of assault, Manager Wagner and Tenant Johnson saw each other on the balconies of their respective units. Manager Wagner yelled, "Do you know the difference between a black person and a nigger? . . . They're niggers. They're niggers upstairs in 306," or words to that effect, referring to the Gadsden's unit.

On February 20, 2009, Tenant Chevalier, Tenants Gadsdens and Tenant Johnson went to the Sioux Falls Housing and Redevelopment Commission ("Housing Authority") to complain about the discriminatory conduct of Manager Anderson and Manager Wagner. Manager Anderson and Manager Wagner saw them leave the property. Later that day, Tenants Gadsdens and Tenant Johnson returned to their apartments to find that they and other tenants on their floor did not have heat.

The following day (February 21, 2009), Manager Wagner sent Tenant Chevalier a text message asking, "is it true you were with Jen [Tenant Johnson] yesterday at housing [Sioux Falls Housing and Redevelopment Commission]. we have never done anything 2 u or your family -- y r u against us?”

On February 22, 2009, Tenant Johnson received a voice mail message from Manager Wagner in which she yelled vulgarities and stated that she would use "every ounce in my body" to "take you out of here." Tenant Johnson felt threatened by the message and called the police the following day.

Defendants TK Properties and Scott Terveen (an owner of TK Properties) knew about Manager Anderson’s and Manager Wagner's discriminatory conduct, but failed to take corrective action. In February 2009, Tenant Johnson met with Michael Terveen (another owner of TK Properties) to complain about Manager Anderson’s and Manager Wagner's discriminatory conduct. Michael Terveen relayed Tenant Johnson's complaints to Scott Terveen.

Despite these complaints, Defendants TK Properties and Scott Terveen failed to curtail Manager Wagner’s and Manager Anderson's authority over the management of the complex and allowed them to continue on as managers. Both managers continued to live at the property rent-free and continued to serve as managers of the property until at least May 2009.

On February 26, 2009, Charlotte Gadsden, Untoma Gadsden, Chevalier, and Johnson, on behalf of themselves and their minor children, filed three discrimination complaints with the U.S. Department of Housing and Urban Development ("HUD"). Following an investigation, HUD determined that that reasonable cause existed to believe that the defendants had engaged in illegal discriminatory housing practices in violation of the Fair Housing Act. Accordingly, HUD issued a Determination of Reasonable Cause and Charge of Discrimination against Defendants.

On September 15, 2009, Tenants Gadsden, Tenant Chevalier, and Tenant Johnson timely elected to have these charges resolved in a federal civil action. As a result, the DOJ filed this lawsuit, on October 16, 2009 ,which is pending in the United State District Court of South Dakota.

The lawsuit seeks a court order declaring that defendants' actions violate the Fair Housing Act, prohibiting future discrimination by the defendants, awarding monetary damages to all persons harmed by the defendants' discriminatory practices and assessing a civil penalty to vindicate the public interest. The complaint is an allegation of unlawful conduct. The allegations must still be proven in federal court.

Source: U.S. Department of Justice press release and legal complaint (portions of press release used with permission)

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To learn more about fair housing issues (along with a variety of other real estate topics), please visit us at www.123ConEd.com. We are the leading online provider of Michigan real estate continuing education. All of our courses are fully approved and properly certified by the State of Michigan, and are offered online.

Copyright © 123 ConEd LLC 2009. All rights reserved.

Real Estate Professionals Arrested in Mortgage Fraud Scheme

Here is another example of a recent legal case involving mortgage fraud. I try to post case summaries in order to provide timely updates to real estate professionals on important issues.

On June 3, 2009, five people were arrested for their roles in a mortgage fraud scheme in the Washington State that bilked banks and property sellers out of more than $18 million. The arrests came as a result of an extensive investigation by United States Immigration and Customs Enforcement (“ICE”).

Humerto A. Reyes-Rodriguez, Alexis Ikilikyan, Micki S. Thompson, Mario Marroquin, and William S. Poff were indicted by a federal grand jury last month on charges of money laundering and conspiracy to commit bank and wire fraud (they were arrested on June 3, 2009). The indictment alleges that over a three-year period starting in 2004, they were responsible for 80 fraudulent loan transactions in communities throughout King County and Pierce County, Washington.

Mr. Reyes-Rodriguez and Ms. Ikilikyan were licensed real estate agents and mortgage loan originators. Mr. Poff is Ms. Ikilikyan's ex-husband and was a licensed notary and loan originator. Mr. Thompson was employed by Great American Escrow and acted as the closing officer for many of the fraudulent sales. Mr. Marroquin acted as a straw buyer and oversaw fictitious home repair companies.

According to court documents, the five defendants worked together to obtain financing from banks to purchase homes. At the same time, they convinced innocent home sellers to extend private loans to the buyer of the home to cover a portion of the purchase price.

The sellers did not know that the conspirators had already obtained financing from commercial lenders to cover the full cost of the home. When payments were not made, the properties fell into foreclosure. The homes were then sold for less than the total of all loans secured for the property. The sellers who had extended private loans to the buyers were left with nothing.

The conspirators also used straw buyers to purchase and resell properties and then submitted false information to the banks such as employment, income, citizenship status, assets and liabilities. They submitted bogus appraisals and hired fictitious home repair companies to do repair work on the properties. Proceeds from the home sales would go to the fake companies that had, in fact, done no work.

This case uncovered a group of real estate professionals who manipulated home sales for pure profit while some of the properties went into foreclosure and innocent private citizens were defrauded.

The conspiracy and money laundering charges are punishable by up to 20 years in prison and a $1 million fine. An indictment is merely a formal charge by the grand jury. Each defendant is presumed innocent unless and until proven guilty in court.

I will try to keep following this case and post an update when the case is ultimately resolved, hopefully with all of the defendants getting long prison sentences.

Source: U.S. Department of Justice press release (portions of press release used with permission)

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To learn more about a variety of real estate topics, please visit us at www.123ConEd.com. We are the leading online provider of Michigan real estate continuing education. All of our courses are fully approved and properly certified by the State of Michigan, and are offered online.

Copyright © 123 ConEd LLC 2009. All rights reserved.

Fair Housing Lawsuit Filed Alleging Racial Discrimination at Apartment Complex

Here is another example of a recent Fair Housing Act lawsuit brought by the United States Department of Justice (“DOJ”). I try to post case summaries in order to provide timely updates to real estate professionals about the "dos and don'ts" under the Fair Housing Act, since fair housing is such an important issue.

This afternoon (July 21, 2009), the DOJ filed a lawsuit against the owner and employees of Rolling Oaks Apartments, a 72-unit complex in Clanton, Alabama, for violating the Fair Housing Act by discriminating on the basis of race or color in the rental of apartments.

The lawsuit alleges that the employees told white testers that a selling point of Rolling Oaks Apartments was the lack of African American tenants and that they had adopted rental policies intended to discourage African American rental applicants. The lawsuit is based on evidence generated by the DOJ’s Fair Housing Testing Program, in which individuals pose as renters to gather information about possible discriminatory practices. The complaint also named the owner of the apartment complex.

The lawsuit seeks monetary damages for those harmed by the defendants’ actions, civil penalties and a court order barring future discrimination. The lawsuit is an allegation of unlawful conduct. The allegations must still be proven in court. I will try to follow this case and provide an update when the case is resolved.

Source: U.S. Department of Justice

It is important for all real estate professionals to remember that the federal Fair Housing Act prohibits discrimination in housing on the basis of race, color, religion, sex, familial status, national origin and disability.

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To learn more about fair housing issues (and many other real estate topics), please visit us at www.123ConEd.com. We are a leading online provider of Michigan real estate continuing education. All of our courses are fully approved and properly certified by the State of Michigan, and are offered online.

Copyright © 123 ConEd LLC 2009. All rights reserved.

Fair Housing Lawsuit Filed Against Mobile Home Park

Here is another example of a recent Fair Housing Act lawsuit brought by the United States Department of Justice (“DOJ”). I try to post case summaries in order to provide timely updates to real estate professionals about the "dos and don'ts" under the Fair Housing Act, since fair housing is such an important issue.

On Friday, June 19, 2009, the DOJ filed a lawsuit against the former owner and managers of Homestead Mobile Home Village, a mobile home park in Gulfport, Mississippi, for violating the Fair Housing Act by discriminating against black tenants on the basis of race or color. The lawsuit also names as a defendant Indigo Investments LLC, the owner of Homestead Mobile Home Park at the time of the alleged discrimination.

The lawsuit alleges that Edward and Barbara Hamilton, the former managers of the mobile home park, unjustly sought to evict a black couple and their five minor children who had moved there after being displaced by Hurricane Katrina. According to the lawsuit, the Hamiltons attempted to evict the family and other black residents for allegedly violating the rules of the park, but did not attempt to evict white residents for as many or more violations. The lawsuit also alleges the Hamiltons harassed and intimidated black tenants and that the defendants’ conduct constituted a pattern or practice of discrimination or a denial of rights to a group of persons.

The lawsuit arose from a complaint filed with HUD by two black residents of Homestead Mobile Home Village. The complainants also sought assistance from the Gulf Coast Fair Housing Center, a private, non-profit fair housing organization which provided additional information to HUD. After investigating the complaint, HUD issued a charge of discrimination and after one of the respondents named in HUD’s charge elected to have the case heard in federal court, the case was referred to the DOJ.

The lawsuit seeks monetary damages for those harmed by the defendants’ actions, civil penalties and a court order barring future discrimination. The lawsuit is an allegation of unlawful conduct. The allegations must still be proven in federal court.

Source: U.S. Department of Justice

I will try to follow this case and provide an update when the case is resolved.

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To learn more about fair housing issues (and many other real estate topics), please visit us at www.123ConEd.com. We are a leading online provider of Michigan real estate continuing education. All of our courses are fully approved and properly certified by the State of Michigan, and are offered online.

Copyright © 123 ConEd LLC 2009. All rights reserved.

Real Estate Professionals Arrested in Mortgage Fraud Scheme

Here is another example of a recent legal case involving mortgage fraud. I try to post case summaries in order to provide timely updates to real estate professionals on important issues.

On June 3, 2009, five people were arrested for their roles in a mortgage fraud scheme in the Washington State that bilked banks and property sellers out of more than $18 million. The arrests came as a result of an extensive investigation by United States Immigration and Customs Enforcement (“ICE”).

Humerto A. Reyes-Rodriguez, Alexis Ikilikyan, Micki S. Thompson, Mario Marroquin, and William S. Poff were indicted by a federal grand jury last month on charges of money laundering and conspiracy to commit bank and wire fraud (they were arrested on June 3, 2009). The indictment alleges that over a three-year period starting in 2004, they were responsible for 80 fraudulent loan transactions in communities throughout King County and Pierce County, Washington.

Mr. Reyes-Rodriguez and Ms. Ikilikyan were licensed real estate agents and mortgage loan originators. Mr. Poff is Ms. Ikilikyan's ex-husband and was a licensed notary and loan originator. Mr. Thompson was employed by Great American Escrow and acted as the closing officer for many of the fraudulent sales. Mr. Marroquin acted as a straw buyer and oversaw fictitious home repair companies.

According to court documents, the five defendants worked together to obtain financing from banks to purchase homes. At the same time, they convinced innocent home sellers to extend private loans to the buyer of the home to cover a portion of the purchase price.

The sellers did not know that the conspirators had already obtained financing from commercial lenders to cover the full cost of the home. When payments were not made, the properties fell into foreclosure. The homes were then sold for less than the total of all loans secured for the property. The sellers who had extended private loans to the buyers were left with nothing.

The conspirators also used straw buyers to purchase and resell properties and then submitted false information to the banks such as employment, income, citizenship status, assets and liabilities. They submitted bogus appraisals and hired fictitious home repair companies to do repair work on the properties. Proceeds from the home sales would go to the fake companies that had, in fact, done no work.

This case uncovered a group of real estate professionals who manipulated home sales for pure profit while some of the properties went into foreclosure and innocent private citizens were defrauded.

The conspiracy and money laundering charges are punishable by up to 20 years in prison and a $1 million fine. An indictment is merely a formal charge by the grand jury. Each defendant is presumed innocent unless and until proven guilty in court.

I will try to keep following this case and post an update when the case is ultimately resolved, hopefully with all of the defendants getting long prison sentences.

------------------------------------------------

To learn more about a variety of real estate topics, please visit us at www.123ConEd.com. We are the leading online provider of Michigan real estate continuing education. All of our courses are fully approved and properly certified by the State of Michigan, and are offered online.

Copyright © 123 ConEd LLC 2009. All rights reserved.

Lawsuit Filed Against Mortgage Lender Under False Claims Act

Here is another example of a recent legal case involving a fraudulent real estate scheme, this time committed by a mortgage lender. I try to post case summaries in order to provide timely updates to real estate professionals on important issues.

On June 9, 2009, the United States Department of Justice ("DOJ") filed a lawsuit against California mortgage lender Capmark Finance Inc., charging that Capmark violated the federal False Claims Act by making false statements on applications for federal mortgage insurance covering residential nursing homes. The lawsuit relates to a federal program under which the United States Department of Housing and Urban Development (“HUD”) guarantees mortgage loans used to acquire healthcare facilities such as hospitals and nursing homes.

The lawsuit alleges that Capmark made false statements in HUD applications to guarantee mortgage loans made to acquire the Canoga Care Center, a residential nursing home facility in California, and the Hudson Valley Care Center, located in New York. After accepting Capmark’s applications for mortgage insurance, HUD was forced to pay $25,895,701.21 when both the Canoga Care Center and Hudson Valley Care Center defaulted on their loans. Pursuant to the False Claims Act, the DOJ is seeking treble (triple) damages and penalties.

The lawsuit is an allegation of unlawful conduct. The allegations must still be proven in federal court. I will try to follow this case and provide an update when the case is resolved.

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To learn more about a variety of real estate topics, please visit us at www.123ConEd.com. We are the leading online provider of Michigan real estate continuing education. All of our courses are fully approved and properly certified by the State of Michigan, and are offered online.

Copyright © 123 ConEd LLC 2009. All rights reserved.

Attorney Sentenced to 5 Years in Prison in Mortgage Loan Fraud Scheme

Here is another example of a recent legal case involving a fraudulent real estate scheme committed by a real estate agent. I try to post case summaries in order to provide timely updates to real estate professionals on important issues.

On May 11, 2009, John A. Yanchek was sentenced to 60 months in prison and ordered to forfeit $7.6 million for conspiracy to commit loan fraud, bank fraud, and money laundering.

According to court documents, Mr. Yanchek was a licensed Florida attorney who did business as the law firm of John A. Yanchek, P.A., in Sarasota, Florida. Mr. Yanchek represented G & T Land Development LLC and Steeplechase Properties LLC, legal entities owned and/or controlled by his co-conspirators, that purchased and developed commercial real estate in the Sarasota area. Mr. Yanchek also functioned as a closing agent.

According to the plea agreement, Mr. Yanchek entered into a conspiracy to make false statements to federally-insured banks in connection with applications for commercial loans used to purchase vacant land for development. The object of the conspiracy was to obtain enough loan money to allow the conspirators to purchase the property without contributing any equity of their own and to receive excess loan proceeds for their personal use. Mr. Yanchek, as the closing attorney for the loans, made false statements to the banks regarding: (1) the financial resources of the borrower, (2) the amount and source of equity contributed by the borrower, (3) compliance with the seller's obligation to provide marketable title to the property, and (4) distribution of the loan proceeds.

Co-defendant Larry P. Nardelli was convicted on February 19, 2009, and is awaiting sentencing. Michael A. Tringali pleaded guilty and received a 41 month prison sentence. The third co-defendant Neil M. Husani remains a fugitive.

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To learn more about a variety of real estate topics, please visit us at www.123ConEd.com. We are the leading online provider of Michigan real estate continuing education. All of our courses are fully approved and properly certified by the State of Michigan, and are offered online.

Copyright © 123 ConEd LLC 2009. All rights reserved.

Real Estate Agent Sentenced to 46 Months in Prison in Scheme to Defraud Mortgage Lenders

Here is another example of a recent legal case involving a fraudulent real estate scheme committed by a real estate agent. I try to post case summaries in order to provide timely updates to real estate professionals on important issues.

On May 11, 2009, Oladipo Olafunmiloye, a real estate agent, was sentenced to 46 months in prison, to be followed by five years of supervised release, for bank fraud and money laundering in connection with a scheme to defraud mortgage lenders. At the sentencing, the judge found that Mr. Olafunmiloye’s fraudulent scheme incurred losses of $3 million and ordered him to pay restitution in that amount, as well as forfeit his interest in a Rolls Royce automobile and funds held in four bank accounts.

According to his plea agreement, Mr. Olafunmiloye owned a real estate company known as LAFA. From November 2004 to December 2006, Mr. Olafunmiloye organized a scheme in which co-defendants Sidney Okosun, Oyekunle Ikudayisi, Kolawole Aminu and others sought to fraudulently obtain mortgages and refinance loans to purchase properties for sale in Maryland and the District of Columbia that were owned by Mr. Olafunmiloye or LAFA. The defendants recruited individuals to act as purchasers who became owners of the properties in name only and made almost none of the payments related to the purchase of the properties, including down payments, closing costs and mortgage payments

Mr. Olafunmiloye supervised the submission of false statements on loan applications as to the straw buyers’ incomes and their intent to make the properties their primary residences, in order to induce mortgage lenders to make loans at more favorable rates. Mr. Olafunmiloye also provided capital to the other defendants in order to perpetuate the scheme. Once the purchase of the properties had been funded, Mr. Olafunmiloye defaulted on mortgage payments, which forced the lenders to foreclose, thereby incurring losses.

During the course of the scheme, Mr. Olafunmiloye also provided false information to obtain loans in his own name, including loans on five properties, all of which went into foreclosure, resulting in losses to the mortgage lenders of over $492,767. Finally, Mr. Olafunmiloye laundered money obtained from the fraud scheme, including 12 transactions from August 2005 to September 2006 totaling $308,311.

It’s amazing what some people will do to make money.

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To learn more about a variety of real estate topics, please visit us at www.123ConEd.com. We are the leading online provider of Michigan real estate continuing education. All of our courses are fully approved and properly certified by the State of Michigan, and are offered online.

Copyright © 123 ConEd LLC 2009. All rights reserved.

Fair Housing Lawsuit Settled for $130,000 + Retrofitting Costs

Here is another example of a recent settlement of a Fair Housing Act lawsuit brought by the United States Department of Justice (“DOJ”). I try to post case summaries in order to provide timely updates to real estate agents and brokers about the "dos and don'ts" under the Fair Housing Act, since fair housing is such an important issue.

Yesterday afternoon (Wednesday, May 20, 2009), the DOJ settled a Fair Housing Act lawsuit that was brought against the developers, architects, and professional engineers responsible for building four multifamily housing complexes in Spokane, Washington. The lawsuit alleged that the defendants designed and built the complexes in violation of the Fair Housing Act by failing to make the complexes accessible to wheelchair users and other persons with physical disabilities.

According to the lawsuit, the defendants each designed portions of one or more of the complexes without including required accessibility features in the designs. Since 1989, federal law has required that new multifamily housing contain certain features to make it accessible to and usable by wheelchair users and other persons with physical disabilities.

Under the terms of the settlement, the defendants will pay all costs related to making the apartment complexes accessible to persons with disabilities and will pay $120,000 to compensate individuals harmed by the inaccessible housing. The developer will pay a $10,000 civil penalty to vindicate the public interest and most of the defendants will undergo training on the requirements of the Fair Housing Act.

The retrofitting includes modifying walkways to eliminate excess slopes and level changes, providing accessible curb ramps, and parking and routes to site amenities, such as clubhouses, pools, mailboxes and trash facilities. The settlement also provides for the replacement of inaccessible knob door hardware with levers, the widening of inaccessible doorways, and the reconfiguration of bathrooms and kitchens to accommodate persons who use wheelchairs.

As all real estate professionals should already know, the Fair Housing Act prohibits discrimination in housing based on race, color, religion, national origin, sex, disability and familial status. Among other things, the Act requires that new multifamily housing development be designed and constructed with basic accessibility features, including accessible common and public use areas, accessible routes to and through apartments, doors wide enough for wheelchair users, kitchens and bathrooms with sufficient maneuvering space for wheelchair users, outlets and environmental controls in accessible locations and bathrooms with reinforcements for grab bars.

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To learn more about fair housing issues (and many other real estate topics), please visit us at www.123ConEd.com. We are the leading online provider of Michigan real estate continuing education. All of our courses are fully approved and properly certified by the State of Michigan, and are offered online.

Copyright © 123 ConEd LLC 2009. All rights reserved.

Fair Housing Lawsuit Filed Against Town

Here is another example of a recent Fair Housing Act lawsuit brought by the United States Department of Justice (“DOJ”). I try to post case summaries in order to provide timely updates to real estate agents and brokers about the "dos and don'ts" under the Fair Housing Act, since fair housing is such an important issue.

Yesterday afternoon (Tuesday, May 19, 2009), the DOJ filed a Fair Housing Act lawsuit against the town of Garner, North Carolina, and the town’s board of adjustment alleging that they violated the Fair Housing Act when they refused to allow up to eight men recovering from drug and alcohol addictions to live together as a reasonable accommodation for their disabilities.

The lawsuit also alleges that the defendants had engaged in a denial of rights to a group of persons or a pattern or practice of discrimination by failing or refusing to recognize their obligation to make reasonable accommodations. The home is chartered by Oxford House Inc., a non-profit organization that assists in the development of self-governing houses in which persons in recovery support one another’s determination to remain sober. The town of Garner permits up to six persons to live in the home, but has refused to consider requests by Oxford House to increase the number to eight.

The Fair Housing Act requires jurisdictions to make reasonable accommodations in their rules when necessary to provide persons with disabilities an equal opportunity to housing. As a result, the DOJ believes that the town should have granted the request to allow eight people as a reasonable accommodation.

This case arose as a result of a complaint filed with HUD by Oxford House. HUD conducted an investigation and referred the matter to the DOJ.

The lawsuit seeks monetary damages for the victims, a civil penalty and a court order requiring Garner to grant the requested accommodation and establish a procedure for considering future accommodation requests. The complaint is an allegation of unlawful conduct. The allegations must still be proven in federal court.

I will try to follow this case and provide an update when the case is resolved.

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To learn more about fair housing issues (and many other real estate topics), please visit us at www.123ConEd.com. We are the leading online provider of Michigan real estate continuing education. All of our courses are fully approved and properly certified by the State of Michigan, and are offered online.

Copyright © 123 ConEd LLC 2009. All rights reserved.

Real Estate Agent Who Participated in Property Tax Refund Fraud Sentenced to 37 Months in Prison

Here is another example of a recent legal case involving a fraudulent real estate scheme committed by a real estate agent. I try to post case summaries in order to provide timely updates to real estate professionals on important issues.

On May 7, 2009, Alethia Grooms, a licensed real estate agent, was sentenced to 37 months of imprisonment for her involvement in a $48 million property tax refund fraud scheme orchestrated by former District of Columbia Office of Tax and Revenue (“OTR”) manager Harriette Walters.

Ms. Grooms plead guilty on August 13, 2008, to Possession of Stolen Property, Conspiracy to Commit Money Laundering, and Conspiracy to Make False Statement in Connection with FHA Loan. She was sentenced to 37 months in prison, required to pay $650,929.19 in restitution, serve three years of supervised release, perform 300 hours of community service, and pay a $300 special assessment.

According to her plea agreement, Ms. Grooms participated in the theft and laundering of over $600,000 from the District of Columbia government through a D.C. property tax refund fraud scheme. Ms. Walters used her position at OTR to create false property tax refund vouchers that produced millions of dollars of fraudulent refund checks. From June 1989 through August 2007, Ms. Grooms and two of her friends received 17 fraudulent D.C. property tax refund checks, totaling over $460,000. Ms. Grooms also laundered an additional $145,000 in stolen D.C. funds through one of her bank accounts.

Ms. Grooms used her graphics design skills to help cover up the D.C. property tax refund fraud scheme. In June 2007, officials at SunTrust Bank became suspicious when a co-conspirator tried to deposit a $410,000 fraudulent D.C. check at that bank. The co-conspirator asserted that the money came from the co-conspirator’s participation in a tax sale auction at OTR. Ms. Grooms attempted to help the co-conspirator provide documentation by scanning a D.C. Real Property Tax Sale form with writing on it onto her computer.

In 2006, Ms. Grooms conspired with two OTR employees to commit mortgage fraud. Ms. Grooms was their real estate agent and assisted them with obtaining Federal Housing Administration (FHA) loans. In their loan applications, these individuals falsely claimed to have second jobs and inflated their bank accounts by $20,000. Using her graphics design skills, Ms. Grooms created bogus pay stubs and W-2 forms and forged bank statements.

In addition to her share of the proceeds of the fraudulent D.C. property tax refund checks, Ms. Grooms received cash, checks, and other items of value from Ms. Walters. In particular, Ms. Grooms received personal checks from Walters in the total amount of $42,300.

All eleven defendants in this conspiracy have plead guilty, and all but two have been sentenced. Ms. Walters, the ringleader of the conspiracy, is scheduled to be sentenced on June 16, 2009. She will likely receive a harsher sentence than did Ms. Groom.

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To learn more about a variety of real estate topics, please visit us at www.123ConEd.com. We are the leading online provider of Michigan real estate continuing education. All of our courses are fully approved and properly certified by the State of Michigan, and are offered online.

Real Estate Company Owners Sentenced in $35 Million Mortgage Fraud

Here is another example of a recent legal case involving fraudulent real estate loan schemes and bank fraud, all related real estate transactions involving real estate professionals. I try to post case summaries in order to provide timely updates to real estate professionals on important issues.

On April 16, 2009, the two owners (Jonathan Helgason and Thomas Balko) of a Minnesota real estate company were sentenced in federal court for mortgage fraud in connection with a scheme involving at least 162 properties, principally in north Minneapolis, and mortgage proceeds of approximately $35 million.

Mr. Helgason was sentenced to 96 months in prison and three years of supervised release. Mr. Balko was sentenced to 84 months in prison and three years of supervised release. Restitution will be ordered at a later date.

According to their plea agreements, Mr. Helgason, a licensed real estate agent, and Mr. Balko were the owners of numerous companies, including TJ Waconia, Total Title LLC, Complete Real Estate Services, Inc. and CityWide Management, LLC and Investor’s Warehouse LLC (collectively, “the TJ Group”).

From approximately 2005 to 2007, Mr. Helgason and Mr. Balko executed a scheme to defraud and to obtain money by means of false and fraudulent pretenses. Using the TJ Group, Mr. Helgason and Mr. Balko purchased approximately 162 properties throughout the Twin Cities metropolitan area, principally in north Minneapolis. They would then resell the property within a few weeks to an “investor” who would purchase the property, sight unseen, at a price set by Mr. Helgason and Mr. Balko without negotiation, often times $20,000 to $60,000 more than the TJ Group had paid.

According to the plea agreements, people were told by Mr. Helgason and Mr. Balko that the investors were simply “lending” their credit to TJ Waconia (one of their companies). In exchange for “lending” their credit, the investors would receive a kickback payment of about $2,500 and a promise of an additional payment after two years when the TJ Group was to repurchase the property from the investor.

Through the scheme, the defendants perpetrated a fraud on the lenders who were led to believe that the “investors” were the actual owners of the properties, when, in fact, the “investors’” ownership was in name only. During the two-year period during which the investor owned the property, the TJ Group was responsible for all payments and maintenance on the property. In some instances, Mr. Helgason and Mr. Balko also provided investors with funds to pay the buyer’s portion of the property purchase price and worked with others to provide lenders with false loan applications on behalf of the investors so that they would qualify for the loan.

The two men, on behalf of the investors, obtained approximately $35 million in mortgage proceeds to purchase the properties from the TJ Group. Ultimately, the scheme collapsed, and the TJ Group did not repurchase the properties or continue making payments to the investors in order to pay their mortgages. The investors were left owning properties with mortgages that exceeded their property’s market value.

This case was the result of an investigation by Federal Mortgage Fraud Task Force, including the Federal Bureau of Investigation and the U.S. Postal Inspection Service. It was prosecuted by the United States Attorney's Office.

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To learn more about a variety of real estate topics, please visit us at www.123ConEd.com. We are the leading online provider of Michigan real estate continuing education. All of our courses are fully approved and properly certified by the State of Michigan, and are offered online.

Convictions in Real Estate Loan Scheme Case

Here is another example of a recent legal case involving fraudulent real estate loan schemes and bank fraud, all related real estate transactions involving real estate professionals. I try to post case summaries in order to provide timely updates to real estate professionals on important issues.

On May 4, 2009, three people (Todd Gongwer, Lance Parker, and Joel Lee) plead guilty to conspiracy to commit bank fraud. Mr. Gongwer, a licensed real estate agent, also plead guilty to tax evasion. Mr. Parker also plead guilty to illegally structuring cash transactions.

According to the plea agreements and evidence presented during the plea hearings, from 2005 through 2007, the defendants and others negotiated and participated in real estate deals in which each of them purchased a luxury home for a falsely inflated purchase price from real estate builder Thomas Parenteau in exchange for an undisclosed or disguised kickback. Mr. Gongwer admitted to using nominees to purchase at least two other luxury homes for inflated prices with kickbacks.

In each transaction, the buyers misrepresented their income and assets in order to obtain approximately 90% financing of the inflated purchase price. The buyers, seller Mr. Parenteau and Mr. Parenteau’s real estate agent, Bonnie Helt, attempted to justify the inflated purchase prices by creating and signing false work change orders and addendums that created the appearance that the inflated price represented additional substantial work to be completed on the homes. However, no such agreement was actually intended by any party, and the documents were not disclosed to the lenders. The object of each transaction was to use the loan proceeds in excess of the actual purchase price to fund hundreds of thousands of dollars in kickback payments to the buyers. The loans associated with the real estate purchases of Mr. Gongwer, Mr. Parker and Mr. Lee have all gone into default.

Mr. Gongwer and Mr. Parker also admitted to conducting a similar transaction involving Mr. Parker’s purchase of 15 condominium units in three buildings located in Columbus, Ohio, from Mr. Parenteu’s associate and architect, William Tarcy. Mr. Tarcy plead guilty to conspiracy to commit bank fraud and agreed to forfeit assets related to the offense in March 2009. Mr. Tarcy’s sale of the condominiums also involved inflated purchase prices, fraudulently obtained financing by Mr. Parker, and substantial kickback payments to Mr. Parker as the buyer.

Mr. Gongwer accepted responsibility for causing a fraud loss between $2.5 million and $7 million. Additionally, Mr. Gongwer plead guilty to tax evasion for failure to report income he received. According to his plea agreement, Mr. Gongwer worked for RE/MAX Affiliates Inc. in 2004, and was paid approximately $158,333.32 in gross income. Mr. Gongwer deposited that income into nominee accounts in order to conceal his receipt of that income from the IRS. Mr. Gongwer also failed to file income tax returns for tax years 2000 through 2005. The tax loss caused by his conduct is between $200,000 and $400,000.

Mr. Parker and Mr. Lee each accepted responsibility for causing a fraud loss between $400,000 and $1 million. Mr. Parker also plead guilty to structuring transactions to avoid federal reporting requirements. During 2007, Mr. Parker engaged in cash transactions in amounts less than $10,000 for the purposes of withdrawing cash from his bank accounts in order to finance gambling vacations in Las Vegas and to avoid federal currency transaction reporting requirements.

Sentencing of all three defendants for a date after the July 2009 trial of Tom Parenteau, his accountant Dennis Sartain and his realtor Bonnie Helt, who were charged in April 2009 in a tax fraud and money laundering scheme. Mr. Gongwer faces a maximum sentence of 10 years in prison and a maximum fine of $500,000. Mr. Parker faces a maximum sentence of 10 years in prison and a maximum fine of $500,000. Mr. Lee faces a maximum sentence of five years in prison and a maximum fine of $250,000.

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To learn more about a variety of real estate topics, please visit us at www.123ConEd.com. We are the leading online provider of Michigan real estate continuing education. All of our courses are fully approved and properly certified by the State of Michigan, and are offered online.

Copyright © 123 ConEd LLC 2009. All rights reserved.

Fair Housing Act Lawsuit Filed Alleging Disability-Based Housing Discrimination

Here is another example of a recent Fair Housing Act lawsuit brought by the United States Department of Justice (“DOJ”). I try to post case summaries in order to provide timely updates to real estate agents and brokers about the "dos and don'ts" under the Fair Housing Act, since fair housing is such an important issue.

On May 7, 2009, the DOJ filed a lawsuit against Equity Homes Inc, PBR LLC, BBR LLC and Shane Hartung in federal court alleging that the defendants failed to provide accessible features required by the Fair Housing Act at six separate multi-family housing developments in Sioux Falls, South Dakota.

The lawsuit, which originated from a complaint filed with HUD, concerns six Sioux Falls complexes. The Fair Housing Act prohibits discrimination in housing on the basis of race, color, religion, sex, familial status, national origin and disability. Among other things, the Act requires that new multifamily housing developments be designed and constructed with basic accessibility features, including accessible common and public use areas, accessible routes to and through apartments, doors wide enough for wheelchair users, kitchens and bathrooms with sufficient maneuvering space for wheelchair users, outlets and environmental controls in accessible locations, and bathrooms with reinforcements for grab bars. The lawsuit alleges that the defendants failed to include certain of these required accessibility features at each of the six complexes.

When builders and designers construct homes without regard for accessible features, they are effectively shutting the door to persons with disabilities. Designing and constructing multi-family housing without basic features of accessibility violates the law and subjects the builders and designers to liability under the Act.

The lawsuit seeks a court order requiring the defendants to modify the complexes to bring them into compliance with federal laws and prohibiting future discrimination by the defendants, as well as monetary damages to compensate victims. The lawsuit filed by the DOJ is an allegation of unlawful conduct, and the allegations must still be proven in court.

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To learn more about fair housing issues (and many other real estate topics), please visit us at www.123ConEd.com. We are the leading online provider of Michigan real estate continuing education. All of our courses are fully approved and properly certified by the State of Michigan, and are offered online.

Copyright © 123 ConEd LLC 2009. All rights reserved.

MLS Antitrust Lawsuit Settled

Here is a summary of a settlement in an antitrust lawsuit that was brought by the United States Department of Justice (“DOJ”) against a MLS provider. I try to post lawsuit/settlement summaries in order to provide timely updates to real estate agents and broker.

On May 4, 2009, the DOJ reached a proposed settlement with Consolidated Multiple Listing Service Inc. (“CMLS”) that requires CMLS to change its rules to allow low-priced and innovative brokers to compete with traditional brokers in the Columbia, South Carolina, area. The DOJ alleged that the rules caused consumers to pay more for residential real estate brokerage services in the Columbia area.

A multiple listing service (“MLS”), like the one operated by CMLS, is a joint venture of real estate brokers that combines its members’ home listings information into an electronic database that is made available to all member real estate brokers. This database serves as a clearinghouse for the members to communicate important information among themselves, such as descriptions of the listed properties for sale and offers to compensate other members if they locate purchasers for those listings. In addition, the database allows member brokers who represent buyers to search for nearly all the listed properties in the area that match the buyer’s needs.

Because the MLS’s database is the primary source of home listings information on virtually every home listed for sale in a given area, access to the database – and therefore MLS membership – is critical for any real estate broker seeking to serve clients successfully in the MLS’s service area. Consequently, the rules adopted by the MLS governing who can be a member and how members must behave can have a significant impact on competition among real estate brokers in the area served by the MLS.

In May 2008, the DOJ’s Antitrust Division filed a civil antitrust lawsuit against CMLS in federal court, challenging policies and rules that restrained competition among brokers in Columbia in several ways. According to the lawsuit, CMLS imposed burdensome prerequisites to membership that prevented some real estate brokers, such as those who would likely compete aggressively on price, from listing homes for sale in the MLS’s database, ensuring that those brokers could not compete in the Columbia area. CMLS required applicants for membership to discuss the nature of their businesses with a committee of incumbent members and reserved the power to deny membership to brokers who they feared would compete too aggressively. CMLS also stabilized the price of brokerage services by forcing its broker members to provide a full set of brokerage services regardless of whether a client wanted the required services. The DOJ alleged that those rules prevented consumers from receiving the full benefits of competition, discouraged discounting, and threatened to lock in outmoded business models.

The proposed settlement with CMLS requires it to change those rules and prohibits it from adopting new rules that exclude real estate brokers from membership based on their business models or price structures. CMLS must allow any broker holding the appropriate license under South Carolina law to become a member and cannot continue to exclude brokers based on their business models. The settlement requires CMLS to repeal rules that denied Columbia-area home sellers the ability to hire a real estate broker to perform only the specific services the seller desired, at a lower cost than the seller would pay a traditional, full-service broker. CMLS also will repeal its requirement that its member brokers use only the single contract approved by CMLS, which blocked home sellers from alternative arrangements that allowed them to avoid paying any commission to their broker if the sellers found buyers for their homes.

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www.123ConEd.com is the leading provider of online real estate continuing education in Michigan. All of our courses are fully approved and properly certified by the State of Michigan.

Copyright © 123 ConEd LLC 2009. All rights reserved.

Criminal Charges in $70 Million “Dream Home” Mortgage Fraud Scheme

Here is another example of a recent legal case involving mortgage fraud. I try to post case summaries in order to provide timely updates to real estate professionals on important issues.

A federal grand jury has indicted four defendants for their participation in a massive mortgage fraud scheme that promised to pay off homeowners' mortgages on their "Dream Homes," but left them to fend for themselves. The indictment was unsealed on April 27, 2009.

According to the indictment, from 2005 to 2007, the defendants allegedly used corporate names such as "Metropolitan Grapevine LLC," "Metro Dream Homes," "POS Dream Homes," and "POS DH LLC" (collectively, “MDH”) to target homeowners and new home purchasers to participate in a purported mortgage payment program called the "Dream Homes Program." To participate, an investor had to provide a minimum of $50,000 for each home enrolled in the program, in addition to an "administrative fee" of up to $5,000. In exchange, the program promised to make the homeowner’s future monthly mortgage payments, and pay off the homeowner’s mortgage within five to seven years. Thereafter, the homeowner and MDH would own an equal interest in the home.

The indictment identifies the following people and alleges that Andrew Hamilton Williams, Jr. was the founder and owner of MDH; Michael Anthony Hickson was the chief financial officer; Isaac Jerome Smith was the president; and Alvita Karen Gunn was the vice president of operations. The information alleges that Carole Nelson was the chief financial officer of POS Dream Homes.

The indictment further alleges that Dream Homes Program representatives explained to investors that the homeowners’ initial payments would be used to fund investments in automated teller machines (ATMs), flat-screen televisions that would show paid business advertisements, and "Touch-N-Buy" electronic kiosks that sold telephone calling cards and other items. To give the Dream Homes Program a veneer of legitimacy and financial success, the defendants marketed the program through live presentations at luxury hotels in Maryland, Washington, D.C., and Beverly Hills, California, among other locations. The defendants allegedly told some of the investors that they should not worry about the price of the homes or monthly mortgage payments because MDH would make mortgage payments on their behalf.

The indictment alleges that the defendants failed to advise investors that:

• the ATMs, flat-screen televisions and kiosks never generated any meaningful revenue;
• the defendants used the funds from later investors to pay the mortgages of earlier investors (Ponzi scheme); and
• MDH had not filed any federal income tax returns throughout its existence.

The defendants also allegedly failed to advise investors that their investments were being used for the personal enrichment of select MDH employees, including the defendants, to:

• pay salaries of up to $200,000 a year as well as their mortgages;
• employ a staff of 10 chauffeurs and maintain a fleet of luxury cars; and
• travel to and attend the 2007 NBA All-Star game and the 2007 NFL Super Bowl, staying in luxury accommodations in both instances.

Nor were investors told that investor funds were allegedly used to:

• pay off investors in a prior failed ATM investment venture that Mr. Williams had founded called Bankcard Group;
• make multiple donations of up to $50,000 each to charitable organizations to allegedly give MDH the appearance of being financially successful; and
• fund investments in third-party businesses that had not been disclosed to investors.

On August 15, 2007, the Maryland Securities Commissioner issued a cease-and-desist order to Mr. Williams, MDH and other related companies directing them to immediately cease the offering and sale of unregistered securities in connection with their promotion of the Dream Homes Program. Despite that cease-and-desist order, the defendants continued to hold additional meetings in which they allegedly made additional misrepresentations about the financial success of MDH’s operations.

And, because these guys were not content to settle just for mortgage and bank fraud alone, they decided to also add perjury to the list of charges. On September 4, 2007, the defendants filed a legal challenge in federal court in Maryland to the cease-and-desist order. The indictment alleges that at a hearing on September 12, 2007, Mr. Hickson testified that the financial success of the Dream Homes Program did not rely upon new investor funds, when in fact Mr. Hickson knew that the sole source of meaningful revenue for MDH was new investor funds (hence, the perjury).

As a result of the scheme, more than 1,000 investors in the Dream Homes Program invested approximately $70 million. When the defendants stopped making the mortgage payments, the homeowners were left to attempt to make the mortgage payments MDH had promised to make in full.

An indictment is merely a formal charge by the grand jury. Each defendant is presumed innocent unless and until proven guilty in court. The four indicted defendants face a maximum sentence of 20 years in prison for the fraud conspiracy; 20 years in prison on each of the 15 counts of wire fraud (for a possibility of 300 years); and 20 years in prison for conspiracy to commit money laundering. Mr. Hickson also faces a maximum sentence of five years in prison for making false statements. Mr. Smith also faces a maximum sentence of 30 years in prison for bank fraud arising out of his alleged misrepresentation of his income in order to obtain a bank loan to purchase a new Bentley automobile. The indictment seeks forfeiture of the fraud proceeds, including $70 million.

This prosecution is being brought jointly by the Maryland and Washington, D.C. Mortgage Fraud Task Forces, which are comprised of federal, state and local law enforcement agencies in Maryland, Washington, D.C., and Northern Virginia. The Task Forces were formed to promote the early detection, identification, prevention and prosecution of various kinds of mortgage fraud schemes.

I will try to keep following this interesting case and post an update when the case is ultimately resolved, hopefully with all of the defendants getting long prison sentences.

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To learn more about a variety of real estate topics, please visit us at www.123ConEd.com. We are the leading online provider of Michigan real estate continuing education. All of our courses are fully approved and properly certified by the State of Michigan, and are offered online.

Copyright © 123 ConEd LLC 2009. All rights reserved.