Monthly Archives: June 2011

Last week we shared an article about Taylor, Bean & Whitaker executives being sentenced to prison for their part in a $3 billion fraud scheme that has been dubbed on of the biggest financial fraud schemes in U.S. history. Yesterday Paul R. Allen, Taylor, Bean & Whitaker CEO, was sentenced to three years in prison by U.S. District Judge, Leonie Brinkema.

The $3 billion fraud cost Taylor, Bean & Whitaker 2,000 employees their jobs. It also contributed to the collapse of Alabama-based Colonial Bank, the sixth largest banking collapse in U.S. History. The only thing Allen could say about his history making fraud was “I messed up. I messed up big,’ ‘There was no excuse for my behavior.’”

Allen’s lawyer tried to plead for leniency by arguing that he was CEO in name only and was kept out of the loop of the day to day operations by the fraud mastermind Lee Farkas. His layer said “Mr. Allen was not treated as a CEO. He did not function as a CEO. Sentence Mr. Allen the man, not Mr. Allen the title.” However, Judge Brinkema said “I can’t understand why in the world you didn’t stop it,” indicating she considered Allen’s title to be significant.

Read the full article at MSNBC.com.

Foreclosure via Facebook? With roughly 4 million foreclosures in the pipeline in this country, some legal experts say it’s just a matter of time until lenders win the right to serveforeclosure documents through the giant social network.

That day has already come for one couple in Australia. When they defaulted on a six-figure loan and couldn’t be found via a physical address or email, the lender’s enterprising lawyers located them on Facebook. The lawyers were able to verify the couple’s identities by matching up their names and birthdates — and, of course, the fact that they had “friended” each other.

Australian courts upheld the lender’s right to send foreclose notices via Facebook, citing the fact that the couple didn’t enable privacy protections on their Facebook accounts and were frequent enough visitors to the site that they would “reasonably receive notice as a result.

While Marc Rotenberg, president of the Electronic Privacy Information Center in Washington, says he is unaware of Facebook being used in the U.S. to deliver legal notifications, but “it’s bound to happen,” he said. “The real concern the courts have is whether it’s a fair notice that the person actually receives.” According to Bloomberg BusinessWeek, courts in New Zealand, Canada and the U.K. already have adopted the Australian example to avoid having cases stall when people can’t be located and served in person.

“There are people who exist only online,” Joseph DeMarco, co-chair of the American Bar Association’s criminal justice cyber crime committee, told the publication. The ability to serve documents by social-media networks would be useful, he said.

Facebook has taken heat before about its policies protecting the personal data of its 694 million users worldwide. Following the case in Australia, which happened in 2008, company spokesman Barry Schnitt said the company was pleased to see the Australian court validate Facebook as a reliable, secure and private communication medium. (Facebook did not respond to messages left by AOL.)

Is it appropriate to use social networks to find people and deliver legal papers to them via the network?

“No one likes to receive a legal service,” said Rotenberg. Legal service, after all, usually isn’t good news: Someone wants you for something. And yes, he adds, “There are going to be privacy concerns, but in some respects they’re almost inescapable.”

Email, by contrast, is generally not considered by courts to be a safe or reliable way to deliver legal notices. We get too much email, much of it winds up in spam and we don’t always open everything in our in-boxes. Legal notices delivered this way can easily be discounted with a simple “I didn’t see the email.”

But Facebook, said Rotenberg, is different. If you don’t have thousands of friends and you regularly post status updates indicating that you are active on the site, you lose the excuse that you likely overlooked the notice. Of course not everyone with a Facebook page visits the site regularly, but save it for the judge whether you’re one of them.

Bottom line: It’s probably going to be determined to be legal, just not likely to be popular. And should use of Facebook as an electronic process-server escalate as a norm, you can expect it would have some adverse impact on the site’s participation levels. In the meantime, if you don’t want the banks to find you, the best defense is enabling your privacy settings on Facebook and be mindful of the personal data you post.

This article is from AOL real estate.

ALEXANDRIA, Va. (CN) – A federal judge on Friday sentenced the former treasurer of Taylor, Bean & Whitaker to six years in prison and the former president to 2 1/2 years for their roles in what prosecutors have called one of the largest bank frauds in history.

The more than $2.9 billion fraud scheme contributed to the failures of Colonial Bank and Taylor Bean, previously one of the largest privately held mortgage-lending companies in the United States.

U.S. District Judge Leonie Brinkema handed down the sentences against former Taylor Bean treasurer Desiree Brown and former president Raymond Bowman.

Brown, 45, of Hernando, Fla., pleaded guilty in February 2011 to one count of conspiracy to commit bank, wire and securities fraud. Bowman, 45, of Braselton, Ga., pleaded guilty a month later to the same charge as well as one count of making false statements to federal agents.
Both admitted to conspiring with former Taylor Bean chairman Lee Bentley Farkas and others covered Taylor Bean’s operating expenses by misappropriating more than $1.4 billion from Colonial Bank’s mortgage division and about $1.5 billion from Ocala Funding, a mortgage lending facility the firm controlled.

Farkas faces sentencing on June 27 after a federal jury convicted him in April on 14 counts of fraud for his role in masterminding the scheme. He also faces a civil action filed by the Securities and Exchange Commission.

Other alleged co-conspirators who have pleaded guilty to their role in the fraud, include former Taylor Bean CEO Paul Allen and former analyst Sean Ragland. Two other guilty pleas came from former executives of Colonial Bank, which crumbled in the wake of the fraud. Catherine Kissick served as senior vice president and head of the bank’s Mortgage Warehouse Lending Division; Teresa Kelly was former operations supervisor for the same division.

Court documents showed that Bowman and Brown participated in the scheme from 2003 through August 2009.      After overdrawing on Taylor Bean’s accounts, the co-conspirators concocted sham reports to conceal then hole and moved their deficit to Colonial Bank, prosecutors said.

Colonial and Ocala bought about $1.5 billion each in what amounted to worthless mortgage loan assets, including loans that had already been sold to other investors and fake pools of loans supposedly being formed into mortgage-backed securities.

When Taylor Bean went under in August 2009, the shortfall accounted for $1.5 billion in debts. As a result of the fraud, Freddie Mac, Colonial Bank and Ocala Funding were holding worthless ownership interest in thousands of mortgage loans. Colonial Bank went under at the same time.

A few months before Taylor Bean the bankruptcy, Colonial Bank applied for $553 million from the Troubled Assets Relief Program, giving false information to the Federal Deposit Insurance Corp. to get TARP funds, the Justice Department said.
As part of the conspiracy, Colonial filed lied about its assets to the SEC and gave materially false financial data to the Government National Mortgage Association (Ginnie Mae).

This article is from Court House News Service

MINEOLA, N.Y. (CN) – TitleServ, one of the largest title agencies in the country, swiped $7.9 million from customers’ escrow funds, the underwriter WFG National Title Insurance Co. claims in Nassau County Court.
New Jersey Title Insurance Co. has filed a similar complaint against TitleServ, which “was authorized to write title insurance policies in at least 26 states, including New York, on behalf of plaintiff,” according to the complaint.
WFG says that “TitleServ was one of the nation’s largest title insurance agencies and was authorized to write title insurance policies on behalf of other title insurance underwriters in 47 states.” It also “engaged in escrow and settlement services on its own behalf.”
WFG National Title says it entered into an agreement with TitleServ on Dec. 29, 2010. In the first two months, TitleServ generated “unusually high” returns of $70,000, according to the complaint.
“During a routine telephone call between WFG and TitleServ, a senior vice president at WFG made mention of the unusually high level of premiums being paid so early in the relationship. The TitleServ representative stated that they would provide WFG with a million dollars in premiums,” the complaint states. “This representation struck the senior vice president as suspicious.”
At the time, WFG says, its representatives began to hear “rumors” that two or three other title insurance underwriters had quit their agreement with TitleServ in recent months.
“The high level of initial revenue and the statement made by representatives of TitleServ lend credence to this rumor,” the complaint states.
WFG says TitleServ was “evasive” when it tried to schedule an audit of the company in early March.
By the end of the month, TitleServ had refused to set a date, and WFG says it “became uncomfortable” and terminated their contract. WFG says that on April 3, Citibank and Chase told their mortgage managers to stop using TitleServ, which closed up shop five days later.
That month The Wall Street Journal and Long Island Business News reported that TitleServ had “ceased operations after Citibank and Chase had instructed its mortgage managers not to put any further business through TitleServ and that the banks had refused comment concerning their reasons for doing so,” according to the complaint.
“Based on TitleServ’s imminent closing, WFG dispatched two auditors to TitleServ’s Woodbury offices on Monday April 11, 2011, to begin an immediate audit of their books and records. Under the terminated agency agreement, WFG retained the right to conduct such an audit, as it standard in the industry.”
TitleServ refused to grant the auditors access, then “relented” four days later, after negotiations with its president James Conway III’s attorney, WFG says.
TitleServ’s President Conway and Chief Financial Officer Rocco Abbondandolo are co-defendants, along with 20 John Does.
WFG claims that TitleServ never gave its auditors “complete access to TitleServ’s books and records” to which WFG was entitled, but the partial review gave indications of “suspicious activity.”
“WFG’s auditors have concluded, despite the absence of all pertinent information, that there is suspicious activity in and among many of TitleServ’s accounts that bear the hallmarks of suspicious activity, including transfers of Escrow Funds to operating accounts,” the complaint states.
“For example, there are numerous inter-account transfers that do not appear to have a legitimate economic purpose. In addition, these transfers are done in round numbers (i.e. $700,000, $1.5 million), which is unusual and suspicious.”
In an April 15 phone call with WFG representatives, “defendant Conway acknowledged that approximately $6 million was missing from the TitleServ trust accounts. Conway was unable or unwilling to declare who or what was responsible for the missing trust funds,” the complaint states.
“Additional documents and information reveal that approximately $7.9 million is actually missing from TitleServ trust accounts related to WFG insured closings.”
The FBI raided TitleServ’s offices in Woodbury, N.Y., on April 27, and carried away boxes of documents.
WFG seeks damages for breach of contract, breach of fiduciary duty, unjust enrichment, fraud and conversion.
It is represented by Arthur Jakoby with Herrick, Feinstein of Manhattan.
Also named as defendants are Titleserv of Alabama, Titleserv of Florida, Titleserv of Michigan, Titleserv of New Jersey, and Titleserv of Virginia.

This article is from Courthouse News Service

By now, just about everyone in the South Shore business community has heard that the Ruskin-SouthShore and Apollo Beach chambers are planning to merge.

The week of May 20 about half of the Apollo Beach chamber’s 200 eligible members voted on the proposed merger, with 93 percent of them approving a move forward through the formation of a transition team. That team will be comprised of five board members: Greg Conley of TSI Inc., president; Jose Alvarez of Alvarez CPA; Ron Seagren of ServiceMaster 24 Hour, Ron Kobosky of Mosaic; and Mike Doherty of Dedicated Transport Solutions Inc., with chamber member Ron Satterfield as alternate.

The Ruskin-SouthShore chamber’s transition team is comprised of the following board members: Patti Thornton of SunTrust Bank, president; Joel Meek of All Bay Insurance; John Smith of H&R Block; Tony Zipperer of Zipperer’s Funeral Home & Crematory; and Ron Simpson of Weichert, Realtors — SouthShore, with the Rev. Charlie Lewis as alternate.

The group began meeting May 25 to resolve and agree on pressing issues before the proposed merger date of July 1, Conley said in his May 22 letter to members announcing the results of the vote. Those issues include staffing, integration of member services, finances, facilities, and board representation, he said.

Apollo Beach attorney Mike Peterson of Commerce Realty Services is legal counsel for the transition team.

Speaking of voting …

The annual Best of South Shore Readers Poll has begun, so if you haven’t already done so, get your ballot in today’sSouth Shore News & Tribune or online at http://tinyurl.com/readerspoll. Rules are available on both types of ballot, so check them out and get your votes in.

Paper ballots also will be published in the South Shore News & Tribune on June 8 and 15, which must be returned and postmarked by June 17.

Get your friends, staff, business associates, even your mama to have their say. Who knows? Your business could end up the Best of South Shore.

Congrats all around

Three Weichert, Realtors — SouthShore agents were recently honored by Weichert Real Estate Affiliates and Weichert Florida West Central Broker Council: Carol Newcomb and Susan Detweiler received certificates for their 2010 sales production, and David Madden was honored with the Outstanding Service Award, in recognition of his selfless support to the Apollo Beach office.

Owner and broker Colin Howgill said he was proud of their achievements in a “particularly testing market.”

The trio was recognized among more than 7,000 associates within the Weichert Real Estate Affiliates franchise.

For information, call (813) 649-1002.

Getting to know you

A group of South Shore area business people recently visited seven Ruskin and Sun City Center businesses and nonprofit groups to take an up-close and behind-the-scenes look during the first Tour de SouthShore of 2011.

The group of “tourists” included Ron Simpson of Weichert, Realtors — SouthShore, Robyn Payant of Payant Financial Services Inc., Sherill Shelley of Champion Self Storage, Gary Schumacher of Kaeser & Blair Inc., Connie Huber of the St. Petersburg Times, Kathy Wallin of K&B Travel, Deb Adams of M&I Bank, Betsy Martinez and Danny Cooper of the Suncoast Community Health Center and the Rev. Charlie Lewis of Christ Community Church.

Businesses participating as “stops” were Homewood Residences, Champion Self Storage, Scentsy, the National Weather Service office, South County Career Center, Wilhelm Heating & Air Conditioning and the Big Draw Studio.

The next Tour de SouthShore will be June 24, so if you’re interested in taking the tour and learning more about the community, call the chamber at (813) 645-3808.

This article is from TBO.com