Mortgage Elimination Scams

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Over the last several months several people have posted to TCI asking about Dorean Group's (among other similar products) claim to be able to eliminate mortgages.



One of the other services to which I subscribe is the DIRT newsletter which is run by the American Bar Association and is targeted at real estate lawyers and other professionals. So it was with some interest that I came across this very interesting summary of a case in Calilfornia which seems very similar to the Dorean Group's "program"



Thanks to Professor Patrick A. Randolph, Jr. the Elmer F. Pierson Professor of Law at the UMKC School of Law in Kansas City, Missouri who edits the DIRT newsletter for permission to use this summary.


MORTGAGES; DISCHARGE; FRAUD: Latest internet scam exposed in court, with homeowners victimized and perpetrators penalized.



The Frances Kenney Family Trust v. World Savings Bank, 2005 WL 106792 (N.D.Cal.1/19/05)



This (to the editor) astonishing report details an amateurish but elaborate internet scam whereby evildoer scammers preyed on homeowners already struggling with mortgage default, promising them that they would establish that their lenders’ loans were invalid because they had been funded with wire transfers (which the scammers characterized as “vapor money”). The scammers contacted the desperate homeowners over the internet, and extracted from them up front fees of up to $8000 in order to launch a major paper attack on their lenders.



They then created family trusts for the homes and obtained an assignment of the borrower’s rights in these properties for purposes of attacking the lender.



According to the court’s report, the attack consisted of a series of bizarre and incomprehensible devices, including payment of the defaulted note by a bond secured by an alleged letter of credit drawn on a Swiss trust company with $800 million in assets. Acceptance of such a payment, however, was designed to commit the lender to admissions or responsibilities that made the payment worthless to the lender.



The second step apparently involved burying the lender with a lengthy set of allegations which, according to the terms of the scammers’ communications, the lenders admitted to by failing to respond. Then the scammers would concoct a power of attorney from the lender (also allegedly authorized by silence), which the scammers used to execute releases of the mortgages in question. Borrowers were then urged to seek new loans against the property for the maximum possible amount. Apparently some lenders actually sucked in on such loans, relying upon the fraudulent title as cleared by the forged power of attorney. The proceeds of these new loans went largely to the scammers, but the homeowners got $50,000 and a promise from the scammers that their homes were now “free and clear,” despite the fact that they now were encumbered by the new mortgage loan and, of course still encumbered by the old mortgage loan. Apparently the scammers notion that the properties were free and clear was based on the notion that the new loans, as well, were carried out by wire transfer. (Of course, if the borrowers indeed were “free and clear” of loans

paid by wire transfer, they wouldn’t have needed to give the scammers all that money in the first place. (Some desperate people will believe anything. )



Ultimately, the scammers in fact did back up their claims by filing lawsuits against some of the lenders. It is not clear whether these were motions filed in connection with bankruptcy petitions filed by the trusts or straight lawsuits, but they all alleged that the lenders’ claims were invalid because funded with “vapor funding.” It also is not clear whether the lenders were all the original lenders or whether some were later lenders who relied on the forged powers of attorney.



This case involves attorneys’ fee claims in a number of these lawsuits. Faced with such claims, the scammers in fact had dismissed their lawsuits and their attorney had resigned. The court concluded here, though, that even with dismissed lawsuits, it still had jurisdiction to award attorneys’ fees to the various lenders. It commented: “ The Court here has seen the scam at work. Greater bad faith would be hard to imagine. Plaintiffs and their counsel have employed a smokescreen to burden various lending institutions and impose upon them litigation costs in hopes of extracting settlements.”



The court awarded fees to the victimized lenders in a total amount of about $50,000. From all appearances, the scammers would have obtained quite a bit more money than that from their prey. As the court suggests, this is really a matter for criminal prosecution.



Comment 1: Interestingly, one lender did make a bar complaint against the scammers’ attorney, but then dismissed when it was paid $10,000. The court ordered that copies of the order be sent to the California State Bar and the U.S. Attorney.



Comment 2: The editor regards these scammers as evildoers because of the injury they cause to already weakened homeowners. He calls them scammers because that’s what the court calls them. Are they criminals? Probably - but they probably will defend on the grounds that they themselves are true believers in this elaborate world of bogus theories that they have concocted, even though the court cites a number of cases that already have dismissed their fanciful claims.



There seems to be an underground network of these people out there exchange bizarre financial theories on the internet. So long as they only hurt themselves, one would assume that the financial penalties they pay may be adequate, even though the businesses with whom they deal probably lose more than they can ever recover. But businesses can always pass the cost of these sorts of things on to poor schlubs like us who apply for loans. What the editor doesn’t like particularly here is the victimization of these desperate homeowners, wringing from them cash and precious time that they might have used

to address their financial difficulties in a more straightforward manner.

Comments(2)

  • bigdredd15th February, 2005

    When a Bank writes a Treasuruer's Check to cover a Mortgage, it is a BAD CHECK. Here's why.......Banks write many checks every day, however, they fail to keep sufficient cash (FRN's) in their vaults to cover the checks written daily. This is known as 'check kiting', compounded by the fact that another Bank recieving this Check for payment accepts it without question. If you or I tried to do this, we would be in jail momentarily.



    Additionally, the loan involves no 'money' whatsoever, the loan is created out of thin air by a mere bookkeeping or computer entry. It's the old story, repeated decade after decade, that when one goes into a bank to borrow money (for whatvever reason) the implication is that one is actually borrowing money.....not so, it is a mere 'credit bookkeeping entry loan' secured by the Borrower's signature and pledged collateral. There is NOTHING of value put at risk by the Lender.



    Enter 'good faith', a necessary part of any valid loan transaction. In this instance, 'good faith' is ASSUMED by the borrower...he/she assumes they have borrowed 'money' when in reality they have given the phoney loan validity by THEIR giving value to the Bank (signature and collateral via a Mortgage and Promissory Note). The Promissory Note says the Bank can foreclose if payments are not received on schedule. Further, many Promissory Notes contain an 'acceleration clause'which means the Bank can 'call' the Note anytime it desires to do so, without Notice....the full remaining balance is due right now!



    So where is the 'good faith'? There is NONE on behalf of the Bank/Lender who has nothing at risk, yet can take the Mortgaged property at a whim. Further, because a Bank/Lender puts nothing at risk (just a simple bookkeeping/computer entry)it is not qualified to be a 'holder in due course' as it has given nothing of value and is charging interest on NON-EXISTANT funds!



    The issue of fraud was addressed early in our History by the U.S. Supreme Court in U.S. v. Throckmorton, 98 at 61, Page 65 which states: "Fraud, vitiates the most Solemn Contracts, Documents and even Judgements".

  • roberth14th December, 2006

    1968 Minnesota Trial Court's decision holding the Federal Reserve Act

    unconstitutional and void and holding the National Banking Act

    unconstitutional and void was never appealed or vacated?



    The answer is even the legal manipulators and corrupted high court

    judges can't get around this decision, figuring it better to just let

    the case of the First National Bank of Montgomery v. Jerome Daly die

    in the cold Minnesota snow along with Justice Martin V. Mahoney who

    was found suspiciously poisoned to death six months after he issued

    the ruling that exposed the illegality of what has been called the

    Queen of England's illegal banking scam.



    This decision, which is still good law, has the effect of declaring

    all private mortgages on real and personal property, and all U.S. and

    State bonds held by the Federal Reserve, National and State Banks to

    void.



    According to legal scholars and Bill Drexler, who worked on the case

    with Judge Mahoney, "This amounts to an emancipation of this nation

    from personal, national and State debt purportedly owed to this

    banking system. Every True American owes it to himself/herself, to

    his or her country, and to the people of the world for that matter,

    to study this decision very carefully and to understand it, for upon

    it hangs the question of freedom or slavery."



    Saying this was the most important jury decision of modern times,

    Drexler who was present in the Minnesota courtroom the day the

    decision came down, added:



    The banker testified about the mortgage loan given to Jerome Daly,

    but then Daly cross examined the banker about the creating of

    money "out of thin air," and the banker admitted that this was

    standard banking practice. When Justice Mahoney heard the banker

    testify that he could "create money out of thin air," Mahoney

    said, "It sounds like fraud to me." I looked at the faces of the

    jurors, and they were all agreeing with Mahoney by shaking their

    heads and by the looks on their faces.



    "Both Jerome Daly and Justice Martin V. Mahoney are truly the

    greatest men that I have ever had the pleasure to meet. The Credit

    River Decision was and still is the most important legal decision

    ever decided by a Jury."



    Daly, a small town mortgage holder who had taken on and defeated the

    Federal Reserve Banking System and money lenders, had this to say

    about the decision the Illumnati big shots kill for, as well as

    making any enterprising young lawyer think twice about tackling the

    Federal Reserve.



    The following is Daly's own written statement about Judge Mahoney's

    1968 ruling:



    "The above Judgment was entered by the Court on December 9, 1968.

    The issue there was simple - Nothing in the law gave the Banks the

    right to create money on their books. The Bank filed a Notice of

    Appeal within 10 days. The Appeals statutes must be strictly

    followed, otherwise the District Court does not acquire Jurisdiction

    upon Appeal. To effect the Appeal the Bank had to deposit $2.00 with

    the Clerk within 10 days for payment to the Justice when he made his

    return to the District Court. The Bank deposited two $1.00 Federal

    Reserve Notes.



    "The Justice refused the Notes and refused to allow the Appeal upon

    the grounds that the Notes were unlawful and void for any purpose.

    The Decision is addressed to the legality of these Notes and the

    Federal Reserve System. The Cases of Edwards v. Kearnzey and Craig vs

    Missouri set out in the decision should be studied very carefully as

    they bear on the inviolability of Contracts. This is the Crux of the

    whole issue. Jerome Daly.



    "Justice Mahoney denied the use of Federal Reserve Notes, since they

    represent debt instruments, not true money, from being used to pay

    for the appeal process itself. In order to get this overturned, since

    the bank's appeal without the payment being recognized was out of

    time, it would have required that the Bank of Montgomery, Minnesota

    bring a Title 42, Section 1983 action against the judicial act of

    Justice Mahoney for a violation of the Constitution of the United

    States under color of law or authority, and if successful, have the

    case remanded back to him to either retry the case or allow the

    appeal to go through.



    "But the corrupt individuals behind the bank(s) were unable to ever

    elicit such a decision from any federal court due to the fact that

    because of their vile hatred for him and what he had done to them and

    their little Queen's Scheme, had him murdered (same as them murdering

    him) just about 6 months later. And so, the case stands, just as it

    was.



    "Amazingly, if they hadn't been so arrogant about the value of their

    federal reserve notes and paid the Justice just 2 measly silver

    dollars, or else 4 measly half dollars, or else 8 measly quarters, or

    else 20 measly dimes, or else 40 measly nickels, or else 200 measly

    pennies, they could have had their appeal and would not have had to

    get blood on their hands.



    "As it is, they are now known for their bloody ways, and the day will

    come when the American people will reap vengeance upon them for such

    a heinous and villainous act.



    [ this information came from]

    For more informative articles, go to www.arcticbeacon.com

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