Real Estate Investor Defeats All Mortgage Fraud Charges

                          Real Estate Investor Defeats All Mortgage Fraud Charges

     The last remaining mortgage fraud charge against Carl Crankshaft (not his real name) was dropped
by the State on 10/21/14. This brought to a successful conclusion the ill-begotten prosecution.
The underlying facts in this case were not in any serious dispute. Ultimately, the State was forced
to drop all charges, because there was no evidence that the lender had ever served an assignment of
rents order on Crankshaft that would have prevented him from collecting rents. Any owner of real
property is entitled to the free enjoyment of the rights of ownership, including the collection of rents.
Without proof of proper service of a valid assignment of rents order, the State’s prosecution was
destined for failure.
     Crankshaft was first arrested in this case on 2/5/14 on five separate counts of third degree grand
theft. The defense would later determine that these warrants were obtained by a uniformed Fort
Pierce police officer with no specialized training in mortgages or mortgage fraud investigation. The
officer was approached an employee of the lender, New World Fiduciary, Inc. The employee
asserted that Crankshaft had been “stealing” rents on properties against which New World held
mortgages.
     New World claimed that it had filed a mortgage foreclosure suit against Crankshaft in St. Lucie
County Circuit Court. As part of that foreclosure suit, New World claimed that it had obtained an
assignment of rents order on 6/29/10 from the Circuit Court judge. While it was true that New
World had obtained such an order, New World neglected to inform the uniformed police officer that
the assignment of rents order was never served on Crankshaft.
     Crankshaft filed for Chapter 13 bankruptcy protection on 10/7/10. Despite the automatic stay
imposed by the Chapter 13 bankruptcy filing, New World continued to interfere with Crankshaft’s
possessory interest in the properties by soliciting rents from Crankshaft’s tenants. The bankruptcy
court entered an order on 2/11/11, which ordered New World to return to Crankshaft all monies
collected after the bankruptcy petition was filed. New World was further ordered to provide a full
accounting of all monies collected. New World did not appeal the entry of the bankruptcy order and
ultimately was required to repay all of the money it had illegally collected in violation of the
automatic stay. New World was forced by the bankruptcy court to return $12,385.75 and was
ordered to refrain from interfering with Crankshaft’s management of the properties.
     The uniformed police officer had no training or experience which would allow him to conduct a
proper investigation of the circumstances of the case. The defense could criticize a police agency
that would allow such unprepared and improper investigations to take place, but the real impropriety
was New World’s misuse of the criminal justice system to try and coerce an advantage in its civil
suit. This is just another example of mortgage lenders seeking to manipulate the judicial system.
     The State “picked up” the case by filing a 5-count Information on 3/3/14. Each count alleged a
separate grand theft “on or about June 29, 2010", in St. Lucie County, Florida. Attorney Garland
responded immediately by moving to dismiss the Information on due process and double jeopardy
grounds, because all five counts alleged exactly the same date, means, victim and location. Instead
of seriously examining the evidence and the legal basis for the prosecution, the prosecutor filed an
Amended Information on 4/8/14 realleging counts 1-5 exactly as they were and adding count 6. The
new charge alleged a 15-year felony theft of more than $20,000, but less than $100,000. At least the
new count alleged that the misconduct occurred at some time on or about 6/29/10 - 10/3/13. The
criminal case was assigned to Circuit Judge Robert E. Belanger, who had previously handled the
hearing on the assignment of rents matter in 2010. At the defense request, Judge Belanger recused
himself. The case was then reassigned to Circuit Judge Dan L. Vaughn. Fortunately, the case was
reassigned to another prosecutor, who was open to discussions of the rights possessed by a property
owner who’s property is mortgaged.
     After forcing Crankshaft to post an additional bond on the new charge, the State filed a nolle
prosequi of the first five counts on 5/8/14. At that point, only one mortgage fraud charge remained.
Attorney Garland outlined the long and complicated history of the bankruptcy proceedings to the
prosecutors in the case. By correspondence dated 5/13/14, Attorney Garland specifically requested
proof of service of the assignment of rents order:
          The defense is specifically requesting any and all proof that the [assignment of rents]
          order...was actually served on [Carl Crankshaft]. This order seems to be the entire
          basis for Mr. Arrieta’s contention that the Defendant was not entitled to the quiet
          enjoyment of his property, of which he was the sole and exclusive owner.
     By letter dated 6/24/14, Attorney Garland hammered on this issue again:
          The core of the prosecution seems to be the assignment of rents order entered on
          6/29/10. However, I see no evidence that the Defendant was served with a copy of
          the motion, the notice of hearing, or a copy of the executed order.
          If the State cannot produce evidence that the Defendant was properly served with the
          order, then there would be no basis for the prosecution. How could the Defendant
          be responsible to comply with an order which he never received?
The new prosecutor elected to drop all charges on 10/21/14. Case closed!

                                                            Comment
     This case is yet another example how mortgage companies have been permitted to abuse the court
system, both civil and criminal. When was the last time that a mortgage company was prosecuted
for submitting a false affidavit? Or for misrepresenting ownership of a note? The reality is that the
legal system has permitted large financial institutions to run roughshod over individuals who, of
course, have less economic power and ability to defend themselves. In this case, a financial
institution prevailed upon an untrained, uniformed police officer to initiate what, in the final analysis,
is a complex prosecution. The motives of the financial institution were, it seems, to employ any
device to coerce advantage in its foreclosure proceedings. After all, Crankshaft had succeeded in
preventing foreclosure on this property for over three years. Still, Crankshaft had used lawful means
- Chapter 13 bankruptcy - to avoid having his property sold at auction. It is clear that this criminal
case was not well-founded. The prosecutors - once being educated on the foreclosure and
bankruptcy processes - agreed and dropped all charges.