Memphis Injury Lawyer Blog

The Memphis Tigers are seeded Number 2 in their region in the NCAA tournament. However, Tennessee has another noteworthy ranking in which, Memphis trial lawyers are justifiably pleased. Our state did not rank in the current Top 10 in alleged mortgage fraud. Woo Hoo! The number of reported incidents of mortgage fraud has reached an all-time high in other states even as the number of home loans being issued has shrunk, according to a report released Monday. Cases of reported fraud surged 26% from 2007 to 2008, according to the Mortgage Asset Research Institute (MARI). In its 11th report, MARI reports the state of the nation for the third quarter of 2008.

Rhode Island topped the list, followed by Florida, which had held the No. 1 slot in 2007. Incidents of fraud in Rhode Island were three times what would have been expected given the number of loans made last year, the report said, although the authors said they weren't sure why.

Next on the list were Illinois, Georgia and Maryland, which landed on the top-10 list for the first time in the study's 11-year history, up from No. 15 in 2007. The State of Rhode Island had the highest percentage of fraud on tax returns and financial statements. Not surprisingly, the FBI investigates mortgage fraud in two distinct areas: Fraud for Profit and Fraud for Housing. Fraud for Profit is sometimes referred to as "Industry Insider Fraud" and the motive is to revolve equity, falsely inflate the value of the property, or issue loans based on fictitious properties. Based on existing investigations and mortgage fraud reporting, 80 percent of all reported fraud losses involve collaboration or collusion by industry insiders. Fraud for Housing represents illegal actions perpetrated solely by the borrower. The simple motive behind this fraud is to acquire and maintain ownership of a house under false pretenses. This type of fraud is typified by a borrower who makes misrepresentations regarding his income or employment history to qualify for a loan.

The FBI lists several areas of suspicion:

MORTGAGE FRAUD INDICATORS

Inflated Appraisals
• Exclusive use of one appraiser

Increased Commissions/Bonuses - Brokers and Appraisers
• Bonuses paid (outside or at settlement) for fee-based services
• Higher than customary fees

Falsifications on Loan Applications
• Buyers told/explained how to falsify the mortgage application
• Requested to sign blank application

Fake Supporting Loan Documentation
• Requested to sign blank employee or bank forms
• Requested to sign other types of blank forms

Purchase Loans Disguised as Refinance
• Purchase loans that are disguised as refinances
requires less documentation/lender scrutiny

Investors-Short Term Investments with Guaranteed Re-Purchase
• Investors used to flip property prices for fixed percentage
• Multiple "Holding Companies" utilized to increase
property values

As the recession deepens, both real and imagined violations are likely to be investigated. Remember, if you are contacted by an investigating agency, a financial institution, or a lender, seek the advice of an experienced attorney in this area.

Posted by William M. Monroe | Permalink | Email This Post

Posted In: Business & Corporate Law , Crime and Punishment

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As a Memphis trial lawyer who handles both disputes over money and criminal law cases, I have found it quite interesting and distressing to see the rush to judgment in the press of those persons who have worked for or with Stanford Financial Group (SFG). Lives are and will be ruined for many Tennessee residents by what are, for the time being, only accusations. Having said that, the most innocent ones involved are the investors.

In order for an investor to recover his or her money, a Federal District Judge has appointed a Receiver Ralph Janvey bio. A Receiver's job (Order Appointing) is to gather and value all of the assets of a company which in this case is SFG. Then, subject to the Court's approval, a plan of distribution of assets and payment of trade creditors is worked out. If the Judge approves the plan then payments can begin. Typically, this is neither quick nor easy.

If you or a loved one is in need of recovering the investment, by Court order, you can not take any action to collect it at this time in a Tennessee court. In the Temporary Restraining Order (TRO) the Judge has prohibited any collection activity unless it is first approved through his Court. As a TRO is only valid for a short period of time, (This is supposed to protect those restrained from excessive harm if the TRO was issued based upon inaccuracies.) a hearing will be held on March 2, 2009 for a ruling as to whether or not the TRO will be extended and converted into what is called a Temporary Injunction. This hearing is open to the public and may give us all additional insights into what is on the horizon.

In the meantime, if you are one of the unfortunate investors, begin gathering all of the paperwork that you have concerning your investment. Make out a time line of the events leading up to your investment and a list of those persons(name, address, phone number, etc.) with whom you have dealt, as well. Last, the Receiver has set up a website (http://www.stanfordfinancialreceivership.com/) in order to keep us posted as to the progress of this matter and to pass on information that may assist you. The Receiver has hired a very prestigious and large law firm to handle the necessary legal matters concerning this situation. Respectfully, if you are not represented by a lawyer you will be in the uncomfortable position in trying to get your money back of the guy who brought a knife to a gunfight. To protect your future which is your most valuable asset, seek out an experienced lawyer without delay.

Posted by William M. Monroe | Permalink | Email This Post

Posted In: Business & Corporate Law

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There has been no shortage of legal gossip around the Memphis trial lawyer water cooler this week. Federal securities law is only slightly harder to figure out than the Internal Revenue Code if it is written upside down in arabic. The national news has been filled of late with the alleged looting of money from innocent investors who placed their savings with the likes of Bernie Madoff. Tennessee charities, retirement funds and individuals have lost enormous sums to this incredible Ponzi scheme. Now we have an alleged swindle that is far closer to home, Stanford Financial. I have yet to see any proof that this investigation (Yes, folks it is ONLY an investigation at this point.) is a bona fide pyramid fraud.

It is important to remember that no one has been proven to be negligent or reckless or even a little bit less than careful. One can only wonder if this media frenzy will pan out to be just that, i.e. the SEC trying to flex its governmental muscles that were so underused during the Madoff heydays. The 1933 and 1934 securities laws prohibit false or misleading statements or the omission of material facts, either of which induce a person to invest their money. A whole raft of regulations in this area of the law (and others) weave a web of control and oversight of this industry. Tennessee law provides for parallel regulation and enforcement similar to the federal laws. With this in mind one must ask: "How the #@%#$@#$@ (heck) do schemes like the Madoff fraud happen?"

Perhaps Charles Ponzi (actually Carlos) , after whom this scam was named, could tell us. For me, an accusation is merely that. An indictment is only an accusation and the filing of a lawsuit against these individuals and companies is only a "claim for relief". Certainly, not a certainty. Either way, this newsy issue must await judgment in the court of public sentiment unless and until this civil action is tried to a conclusion before a court of competent jurisdiction.

Posted by William M. Monroe | Permalink | Email This Post

Posted In: Business & Corporate Law

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