Bailouts Spawn Mortgage Fraud

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Bailouts Spawn Mortgage Fraud


The business attracts struggling homeowners hoping to shed debts. But deals can involve misleading sales pitches, forgery and eviction.

March 19, 2006
David Jackson
Chicago Tribune

Her arms were withered, her memory a fog. Bedridden and suffering from profound dementia, 91-year-old Lillie Densler was in a nursing home last year when she signed away her only remaining asset: a sturdy brick house on Chicago's West Side.

Now, a well-known attorney, author and radio personality is at the center of fraud allegations stemming from the deal, which was part of a booming business in bailouts for struggling homeowners.

In bailout deals, a homeowner typically deeds his house to an "investor" for a year. The idea is that the homeowner can use that period to get out of debt, then repurchase the home with a fresh mortgage.

But often the home is lost in the process, not rescued.

The difficult-to-police business has become a breeding ground for mortgage fraud, government officials and legal aid attorneys say. Deals often involve misleading sales pitches, forgery and coerced clients.

Orchestrating the Densler home sale was money management expert Norton Helton, who hosted the weekly radio show "All Things Are Possible Now," which aired on WVON until late January. It was Helton who handed Densler the pen and showed her where to sign.

Helton vigorously defended his conduct in a series of Tribune interviews. "I'm a little guy out here on the radio trying to help other people," he said.

He purchased Saturday-morning airtime through a broker. But after learning about Helton's bailout practice from early editions of the Tribune, station president Melody Spann-Cooper said Jan. 28 that she would end WVON's relationship with him. "He is officially off the air," Spann-Cooper said.

At a Jan. 12 civil court hearing, Densler's court-appointed guardian ad litem filed a report saying Helton or someone working for him used a forged judge's order to complete the sale of Densler's home. Cook County Probate Judge Lynne Kawamoto immediately ordered the state attorney general to open a criminal investigation.

Helton told Kawamoto that he made sure Densler clearly understood the implications of the deed she signed.

"She seemed like she was fine to me, judge," he said in court.

The ongoing case puts an unflattering spotlight not only on the self-assured financial advisor, but also on the lucrative home-bailout market.

"It's at the leading edge of fraud out there," said Daniel P. Lindsey, an attorney with the Legal Assistance Foundation of Metropolitan Chicago. "People are sold on the idea that this is temporary -- that they will be able to buy back their houses. But it rarely works out that way. The homeowner winds up becoming a tenant and usually being evicted."

A 2005 report by the National Consumer Law Center estimated that "many, many thousands" of bailout clients have lost their homes to the advisors and investors who promised to save them. Authorities recently indicted multimillion-dollar bailout operators in California and New York.

Illinois soon may join the handful of states with laws aimed at the schemes. Atty. Gen. Lisa Madigan and state Sen. Jacqueline Y. Collins in January proposed a bill that would force Illinois bailout promoters to provide homeowners with a written contract spelling out their services and allowing the client to pull out before the services were completed. The bill also would provide penalties for violators.


http://articles.chicagotribune.com/2006-01-29/news/0601290428_1_home-scam-bailout-homeowner/2


(Page 2 of 2)

Radio host tied to home scam
Bailout deal costs woman, 91, her home
January 29, 2006
By David Jackson, Tribune staff reporter

MarTav has been accused of fraud in five pending civil lawsuits. One of its "real estate trackers," Jeffrey Davis, has served prison stints for aggravated robbery, burglary and other crimes. A MarTav attorney denied wrongdoing in court and declined to comment for this article.

Peter Schmiedel, a private attorney appointed by Kawamoto to investigate the Densler home sale, filed a report saying the sale was "completely illegal and should be set aside."

Helton has not been charged with any crime in the sale of Densler's home and he asserted his innocence in court as well as to the Tribune.

Lillie Densler, a thrifty woman devoted to her family and church, had owned the house in the 5500 block of West Augusta Boulevard for more than two decades. But as she passed the milestone of her 90th birthday, Densler had outlived her siblings and dearest friends. Her nephew Martin and his family moved to the second floor of the Augusta building in 1998, and Densler made him a co-owner of the property in 2001.

That year, a Cook County judge declared Densler a disabled adult ward of the court and appointed a private attorney to advise her on her rights.
Densler was moved into a nursing home, where Martin and his family continue to visit her every few days, according to court testimony.

A former public defender
Facing mounting bills, Martin turned to Helton for financial advice in the spring of 2005.

Helton, 44, said he grew up in Cabrini-Green and on Chicago's South Side. After briefly teaching high school, he began practicing law in 1993 and a year later became a Cook County assistant public defender assigned to night narcotics court.

He resigned from that job in 1996 after he was arrested for allegedly making a small heroin purchase in the 2900 block of West Roosevelt Road. Helton said he was on the street that night investigating a case. A judge tossed the charges, saying the officers did not have probable cause to arrest him.

As he rebuilt his career as a bankruptcy lawyer, Helton drew on his personal travails for an inspirational novel he promotes on his Web site.

His Web site also touts bailouts that "help homeowners get out of their financial dilemma and stay in their home."

"SAVE YOUR HOME!" the site urges.

In the spring of 2005, Helton launched his plan to save the Densler property. Densler and her nephew agreed to sell their home for $230,000 to an investor who would supposedly hold it for a year and then sell it back.

Because Densler had been declared a disabled adult ward, Helton needed a judge's order dismissing the guardianship to complete the sale.

Helton or someone working under him produced just such a dismissal order, according to Schmiedel's report.

The fabricated order dismissing Densler's guardianship was purportedly signed by Circuit Judge Kenneth Wright in September 2002. But when the order was shown to Wright, the judge said it wasn't his signature.

In addition, Helton or someone working for him faxed the title company an "Emergency Petition to Sell Personal Property" bearing Helton's name as "attorney for guardian"--a title he didn't actually have.

Standing before Judge Kawamoto on Jan. 12, Helton studied that emergency petition for several seconds and then suggested that one of his employees had fabricated the document.

"Judge, I didn't draft that," Helton said.

Densler and her nephew sold the building to 72-year-old South Side investor Maud Richardson. To complete the sale, Richardson secured two Fremont mortgage loans totaling $218,000.

Thousands of dollars missing

Several checks were cut at the closing, but it isn't clear where all the money went.

Roughly $136,000 went to pay off Martin's existing mortgage, which had accrued interest and fees. Apparently $10,000 was paid to the investor, Richardson.

Some $32,000 can't be precisely accounted for. And the remaining $40,000 went to a company run by Helton called Diamond Management.

Helton said in court that Diamond used that $40,000 to maintain the building and make mortgage payments. But Richardson received notices from the lender saying the mortgage payments were late or only partially made, Schmiedel wrote in his court report.

Helton said he welcomes Kawamoto's call for a criminal investigation.

"Whoever was wrong was wrong," Helton said. "They took money; that's on them."


Editor's note: Judge Kawamoto: Five years ago you reported this fraud to the  Attorney General's Office when it became apparent that the media knew about it. Why don't you report the numerous cases of transparent fraud that you rule on daily in your courtroom? Should you require enlightenment, your Probate Shark would be pleased to provide you with specific evidence. Your Probate Shark would like our Shark handwriting expert to examine the "forged" judge's order and compare with other valid judge's signatures. Lucius Verenus, Schoolmaster, ProbateSharks.com