Nevada Files Felony Charges for Mortgage Fraud

robo sign foreclosureThe Nevada Attorney General just filed felony criminal charges for mortgage fraud, but wait for it, so far it is just two little fish. From the press release:

The Office of the Nevada Attorney General announced today that the Clark County grand jury has returned a 606 count indictment against two title officers, Gary Trafford and Gerri Sheppard, who directed and supervised a robo-signing scheme which resulted in the filing of tens of thousands of fraudulent documents with the Clark County Recorder’s Office between 2005 and 2008.

According to the indictment, defendant Gary Trafford, a California resident, is charged with 102 counts of offering false instruments for recording (category C felony); false certification on certain instruments (category D felony); and notarization of the signature of a person not in the presence of a notary public (a gross misdemeanor). The indictment charges d efendant Gerri Sheppard, also a California resident, with 100 counts of offering false instruments for recording (category C felony); false certification on certain instruments (category D felony); and notarization of the signature of a person not in the presence of a notary public (a gross misdemeanor).

”The grand jury found probable cause that there was a robo-signing scheme which resulted in the filing of tens of thousands of fraudulent documents with the Clark County Recorder’s Office between 2005 and 2008,”said Chief Deputy Attorney General John Kelleher.

The indictment alleges that both defendants directed the fraudulent notarization and filing of documents which were used to initiate foreclosure on local homeowners.

The State alleges that these documents, referred to as Notices of Default, or “NODs”, were prepared locally. The State alleges that the defendants directed employees under their supervision, to forge their names on foreclosure documents, then notarize the signatures they just forged, thereby fraudulently attesting that the defendants actually signed the documents, which was untrue and in violation of State law. The defendants then allegedly directed the employees under their supervision to file the fraudulent documents with the Clark County Recorder’s office, to be used to start foreclosures on homes throughout the County.

The indictment alleges that these crimes were done in secret in order to avoid detection. The fraudulent NODs were allegedly forged locally to allow them to be filed at the Clark County Recorder’s office on the same day they were prepared.

The problem with this indictment is it's just for two low level employees, supervisors. Two title officers overseeing the robo-signing of documents, working for Lender Processing Services Inc..

Some are thinking these charges might lead to a flip, or going up the robo-signing food chain to get to those at the top who are perpetuating the falsification of documents in order to foreclose without legal process.

Naked Capitalism:

That strongly suggests that Masto is, as we suggested earlier, using these indictments as a wedge to go after much broader abuses in the servicing industry. LPS’s biggest business is its Default Services Group, which both managed the operations of foreclosure mills (people with knowledge of LPS charge that the firm even kicks out certain standard form documents for foreclosure mill attorneys to file) and also often acted as the arms and legs of servicers in other arenas (for instance, managing, or more accurately, mismanaging property seized in foreclosure).

LPS has always taken the position that anything it did was at the direction of and with the full knowledge of the servicers. If Masto is shrewd, her objective will be to audit LPSs’ software, since that will demonstrate pattern and practice, and it will be impossible for servicers to deny that processes embodied in ongoing, routinized activities were unknown to them.

We'll see, it seems strange to issue a press release on a felony charge flip. While robo-signing was big news in 2010, due to the lack of indictments, it's still going on. While these paper mills producing fake documents in order to foreclose on people caused banks to put a temporary hold on foreclosures, that temporary halt was lifted.

The MBA just released the latest mortgage and foreclosure survey data for Q3 2011. They show delinquencies only slightly drop while foreclosures increased, up to same levels as Q1 2011:

The seasonally adjusted delinquency rate for mortgage loans on one-to-four-unit residential properties fell to 7.99 percent in the third quarter of 2011.

The percentage of loans on which foreclosure actions were started during the third quarter was 1.08 percent, up 12 basis points from last quarter and down 26 basis points from one year ago. The percentage of loans in the foreclosure process at the end of the third quarter was 4.43 percent, unchanged from the second quarter and four basis points higher than one year ago.

The serious delinquency rate, the percentage of loans that are 90 days or more past due or in the process of foreclosure, was 7.89 percent, an increase of four basis points from last quarter, and a decrease of 81 basis points from the third quarter of last year.

Is the Nevada criminal indictment a slaughter of the token lambs, or will someone high up, making a killing on foreclosures, finally pay the price? Stay tuned....



robo signer found dead

day of sentencing and it's not clear if it's a homicide, suicide. She was the whistleblower for the above indictments.

Naked Capitalism has more.

End of rule of law

Courts are failing to "take decisive measures to sanction [injustice] and bring it to a halt" even when acknowledging "clear and convincing proof of ... fraudulent conduct."


Here's a quote from a comment to an article by Thomas A. Cox, attorney for an aggrieved Maine homeowner, published by (8 December 2011).

The underlying matter is a key case that has been decided on appeal in the Maine Supreme Court, FEDERAL NATIONAL MORTGAGE ASSOCIATION v. BRADBURY 2011 ME 120 (FEDERAL NATIONAL MORTGAGE ASSOCIATION, v. NICOLLE M. BRADBURY et al..)

Mr. Cox,

Your work is appreciated by those of us who are paying attention to end of the rule of law in America (and there is no other conclusion that can be rendered).

From the article --

The outrageous facts of this case cried out for a precedent setting ruling that such conduct must expose the perpetrator to serious and heavy contempt of court sanctions. A ruling fining GMAC Mortgage an amount of money proportionate to the hundreds of thousands of dollars it had saved by cutting corners in its affidavit signing practices was called for. The Maine Supreme Court didn’t see it that way, and missed an exceptional opportunity to send a message to the mortgage servicing industry that its fraudulent and unethical conduct will not be tolerated.

This case was a perfect opportunity to have the Maine justice system speak out loudly and clearly in favor of the rule of law, to demonstrate its willingness and ability to protect the little guy against corporate bullies, and to take decisive action to protect the integrity of our judicial system. Such a decision could have been a beacon of justice to homeowners everywhere and a precedent to be relied upon by courts all over the country in sanctioning the similar conduct that has been perpetrated in their courts. Yet our effort to achieve this has failed and my devotion to exposing this injustice has for the most part been for naught.

My faith in our courts’ willingness to protect individuals against what the Maine Supreme Court itself called the “fraudulent” and “unethical” conduct of the nation’s fifth largest mortgage loan servicer (which is also largely owned by the American people — Ally Financial, the parent of GMAC Mortgage, is 76 percent owned by taxpayers) is broken. Two days after this unfortunate decision, and exactly one and a half years after exposing this fraudulent and unethical conduct, I, as a lawyer who spent his entire career believing in our justice system, am left with a deep sense of despair and a lot of questions. If we could not succeed in obtaining justice in this case, what more can we possibly do? What will it take to cause courts to stand up to and halt this “serious and alarming lack of respect for the nation’s judiciaries” by America’s largest financial institutions?  Is my continuing effort to try to help homeowners in foreclosure really worthwhile? How can I possibly tell clients to believe that our justice system will protect them against the depredations of America’s financial industry? Why should I continue my volunteer efforts to expose injustice when the courts will not take decisive measures to sanction it and bring it to a halt when we provide such clear and convincing proof of such fraudulent conduct?

I have devoted my career to the legal system and to seeking justice for my clients. I believed in the integrity of the judicial system and its capacity to prevent fraud and injustice. It is sad to be nearing the end my career with that belief so deeply shaken.

(Thomas Cox is a retired bank lawyer in Portland, Maine who serves as the Volunteer Program Coordinator for the Maine Attorney’s Saving Homes (MASH) program. He represents homeowners in foreclosure, and assists and consults with other volunteer lawyers in providing pro bono legal services to these Maine homeowners.)


There is no need in this country for so-called tort reform.

The crying need is for judicial reform!

civil lawsuits, justice, the courts

I couldn't agree more. The court system is so stacked against the little guy,there just is no justice. Most small claims limits are too low and to sue, attorneys won't even take cases unless they are a million +. They the lawyer games are unbelievable, stretching out cases, 10, 20 yrs, hoping the plaintiff drops dead before there is any actual hearing or trial.

We haven't even gotten to the actual law yet.

A judge in Oregon ruled a blogger not covered under Journalistic protections. Well, they haven't been paying attention to social media and what's going on. Of course a corporation shouldn't be able to sue an individual for millions on libel, defamation and thus 100% ruin the rest of their lives financially. That's outrageous that a billion dollar corporation can sue an individual at all, never mind for such large sums.

I could go on and on about the misuse and abuse of the legal system in the U.S.