DA to expand real estate fraud program


Chief Deputy District Attorney Kelly Scott

Chief Deputy District Attorney Kelly Scott speaks to the Board of Supervisors on Tuesday about foreclosure and loan-modification fraud.


October 17, 2013 6:32 AM


The Santa Barbara District Attorney's Office is preparing to file charges in a major foreclosure consultant and loan modification fraud case that involves more than 25 victims and almost 100 alleged counts of grand theft, residential burglary and illegal foreclosure activities.


And on Tuesday, the Santa Barbara County Board of Supervisors voted unanimously to provide the District Attorney's Office with more money to investigate and prosecute those types of crimes, and seek out those who illegally offer loan modification or foreclosure services by requiring up-front money and not providing help to distressed homeowners.


In 2007, the board authorized the District Attorney's Office to establish a recording fee to fund a Real Estate Fraud Prosecution Program to educate homeowners as well as investigate and prosecute real estate fraud crimes. The fees are assessed at the Clerk-Recorder-Assessor's office when certain real estate paperwork is filed.


On Tuesday, the supervisors approved boosting the $3 fee to $10 starting in January.


The additional money will enable the department to have a full-time deputy district attorney, two investigators and an office professional to look into the crimes, Chief Deputy District Attorney Kelly Scott said.


"Right now we only have a mere fraction of an assistant district attorney, less than a quarter (time)," associated with the six-year-old fraud program, Ms. Scott explained. "Right now we only prosecute what we have the resources to investigate. With more personnel, we'll be able to engage in more community outreach, investigations and prosecutions."


Standing before the board on Tuesday, she told the supervisors that in the past three years - with a limited staff and resources - the program has received 100 referrals; completed 92 investigations; filed 28 criminal cases; aided 163 victims; and obtained six convictions.


The aggregate monetary loss suffered by the victims, she said, was $25.4 million.

People in the vulnerable and stressful situation of foreclosure can "fall prey to predators" who claim to be experts and ask for large sums of advance money to help the homeowner through the process.


Typically, those unlicensed "experts" abscond with the money and fail to deliver services, and the homeowners still lose their homes, Ms. Scott said.


"It's one example of the many real estate scams we're seeing in Santa Barbara County," Ms. Scott said. "We're seeing tragedies on a small and large scale committed on our citizens."

It is against the law, she noted, for people to require payment in advance for foreclosure services. Reputable agents are licensed and must provide contracts, she added.


In a case last year, the District Attorney's Office prosecuted broker Jessica Orca, who offered loan modification services and required up-front fees. Ms. Orca pleaded no contest to 12 felony counts of grand theft, three felony counts of engaging in prohibited practices of a foreclosure consultant, and two misdemeanor counts of unlawfully collecting advanced fees.


She was sentenced to two years in County Jail and five years probation.


Ms. Scott also told the board about the case of Walden Williams, which came to the fraud program via a victim.

The District Attorney's Office, she said, "didn't have the resources to investigate" the complicated case in the Santa Maria Dominion Ranch area.


But a victim sued Mr. Williams in civil court and gave her files to the fraud program, which filed criminal charges.

Mr. Williams was convicted last year of two felony counts of grand theft, two felony counts of the sale of land without a public report, and one misdemeanor count of false advertising. He was sentenced to six years in state prison and ordered to pay $2 million in restitution


In the soon-to-be filed case, Ms. Scott told the board that the North County incident includes more than 25 victims and close to 100 counts of alleged grand theft, residential burglary and illegal foreclosure activities.

The newly increased fee is charged when the county records such documents as deeds of trust, assignments of trust and requests for notice of default, Ms. Scott said.


The assessor's office estimates that in 2013-14, the number of documents subject to a fee will number about 68,400. The estimated revenue is $684,000 and the estimated cost of the expanded program is $669,000, Ms. Scott said.

Casey Nelson, a foreclosure assistance attorney with Legal Aid of Santa Barbara County, said all of his clients have been contacted at least once by potentially disreputable foreclosure companies. Of those, many were from outside the county and required advance payments.


"The bottom line on all these programs, these people have to pay back their mortgages," he told the supervisors. "If all their money is gone because it was absconded with by these groups, I can't save their homes."

He told the board that the fraud program "is the best. With the tiny staff they have, it's astounding what they've done."

Several public speakers implored the board to direct resources toward cases of recorded document fraud and to address predatory lending practices.


Amanda Marden urged the board to use the fee proceeds to combat "real estate fraud involving the largest number of victims." Such fraud, she said, "must include institutionalized fraud," that in her case, "put a cloud on the title of my property because of irregularities in my documents recorded at the recorder's office."


Board Chairman Salud Carbajal, who represents the 1st District, told the speakers that the issue before the supervisors was to "address real estate predators who portray themselves as helping the victim.


"Predatory lending has been and is a significant issue," Mr. Carbajal said. "The federal government has tried to deal with it. Our attorney general has tried to deal with it. She has pursued and been successful in getting banks to reach a settlement to address some issues."


The board will receive an annual report on the program.


email: nwallace@newspress.com









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