FACTS
Approximately 5,250 people who have or had worked for the San Francisco bank since 2001 consented to joining the class with claims under the Fair Labor Standards Act. The class was allowed to pursue its action under the California Unfair Competition Laws and the fair Labor Standards Act. (ladj81010p10, In re Wells Fargo Home Mortgage Overtime Pay Litigation, 06-1770
MORAL
The loan officers will receive anywhere from $100 to $4,350 depending on hours overtime and months worked.
BROKER CAUSED HOME TO BE OVER-APPRAISED IN CALIFORNIA MAY COST THE BROKER $686,022
FACTS
In 2005 plaintiff Joel Klutch purchased a house in Oakland for $615,000 with a brokerage fee of $16,760. Klutch said he made the purchase based on the assurances of defendants Scott Kinney aka Karim Akil and Amy Schloemann aka Amy Kinney for whom he had been working as a notary, that the price was fair. Klutch later discovered the price was allegedly inflated and that the Kinneys benefited from the purchase. He then sued the Kinneys, HiddenBrooke Mortgage & Realty Inc., GLO Enterprise, Gregory Orr and Wanda Kidd for fraud.
Kidd and Financial settled out for $5,000.
Klutch claimed the actual value of the property was $455,000 with $160,000, the amount inflated going to GLO. Had he known of the inflated price he would not have purchased the property. Klutch also claimed that Scott Kinney assured him his monthly payment would not increase and if it did, Scott would pay the difference for one year. Klutch contended he received $46,000 to assist from Scott for nine or 10 months but not the entire 12 month period per the agreement.
Defendants Orr and GLO denied doing anything wrong and that Klutch admitted in his deposition as a notary he had been complicit in several previous fraudulent schemes with the Kinneys.
Kinney asked for $114,000 and punitive damages and costs.
The Alameda Superior Court said Kinneys, Orr, GLO and HiddenBrooke committed fraud and found them jointly and severally liable for $114,000 in compensatory damages, $70,836 in prejudgment interest, $1,186 in costs and $500,000 in punitive damages. Total $686,022. (v&s8810p8, Klutch v. Kinney, et al, RG07318277. 52410)
MORAL
Note that the prior conduct of Klutch did not affect his outcome. Note that fraud is not dischargeable in bankruptcy. Note that this can affect the ability of defendants to qualify for an MLD license and a unique identifier from NMLS and finally note that if the judgment is sent to DRE Sacramento as a complaint against the licensees, it is grounds for an accusation to be filed that could cause revocation of their respective real estate licenses depending on who has fraud found against them in the judgment.
EIGHT ARRESTED IN CALIFORNIA FOR REAL ESTATE INVESTMENT FRAUD
FACTS
On Aug. 12, 2010 a federal grand jury in Sacramento returned an indictment charging eight persons in a real estate investment fraud scheme operated under the name of Heaven Investments.
The following individuals are charged in the indictment:
AKBAR BHAMANI OF CARMICHAEL, CEO, HEAVEN INVESTMENTS; ALY KHAN BHAMANI OF CARMICHAEL, Vice President, Heaven Investments; ZAINULABIDIN AKBAR BHAMANI OF SHERMAN OAKS, Vice President, Heaven Investments; Laila BHAMANI OF TRACY, Finance Department, Heaven Investments FEROZA BHAMANI OF CARMICHAEL, Finance Department, Heaven Investments; KEN SARNA OF VALLEJO, Director of Operations, Heaven Investments; JOHN PIERRE QUINTANA OF DIXON, Director of Marketing, Heaven Investments; and SHAUN BHAMANI OF VALENCIA, Loan Officer, GLOBAL FINANCIAL & ASSETS INC.
The first seven defendants are charged with 15 counts of mail fraud and wire fraud in connection with the scheme to defraud investors of over $11.4 million through a company called HEAVEN INVESTMENTS HOLDING CO. HIHC was a family-run real estate development company in Sacramento that offered investors two principal types of investments. The first was called the Planned Income Program that promised to use investor money to acquire residential single-family dwellings that would be renovated and resold for a profit. The second was the Tenants in Common program that promised to use investor money to develop four pieces of property known as Mission Manor, Alder Heights, Walnut Acres, and the Hegenberger Hotel. Investors were promised a 12 – 15% annual return.
According to the indictment, the defendants claimed that the investment was safe because it would be secured by a deed of trust on the property in which the investor would be in no worse than second or third position and that the indebtedness on the property would never exceed 70% of the value of the property. In fact, the indictment alleges, HIHC had acquired the properties through 100% financing from private lenders. Further, the defendants’ promise was illusory because either HIHC failed to actually place the investor on the deed as promised or on those occasions when HIHC did put an investor’s name on the deed, the property frequently had multiple investor names and was leveraged by as much 300 to 400%.
The indictment also charges that the defendants led investors to believe that HIHC was more efficient than other development companies of its kind because it had its own in-house architectural staff and construction company. As a consequence, the defendants would routinely make promises that a particular property such as Mission Manor or Alder Heights would be completed within a few months. In fact, HIHC did not have a team of architects or a construction company and, after nearly three years of soliciting investors’ money, HIHC had not moved beyond the permit stage on any of the TIC properties.
