Schuette subpoenas 3 mortgage processors over questionable documentation

The Michigan attorney general’s office has subpoenaed three mortgage processors as part of a state investigation of “robo-signing.”

Attorney General Bill Schuette said his office serviced Lender Processing, Fidelity National Financial Inc. and CT Corporation System with investigative subpoenas as affiliates of DocX, a mortgage service support provider. Schuette said he is seeking information about documents signed by DocX employees as “Linda Green.”

The subpoenas are part of a criminal investigation into questionable mortgage documentation filed with Michigan Register of Deeds offices, Schuette said in a statement. The subpoenas were approved June 13 by the state court in Lansing and require responses by June 30, Schuette said.

“Allegations of forged mortgage documents are very serious and require a thorough investigation,” Schuette said. “I will continue to work closely with federal and local authorities to find answers on behalf of Michigan homeowners.”

Schuette said he started the investigation in April after county officials across Michigan said they suspected assignment of mortgage documents filed in their offices may have been forged.

Source: Michigan Attorney General’s Office

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New email scam targeting IOLTAs

Royal Oak attorney Frank Cusumano Jr. has asked us to warn the legal community of new email scam targeting IOLTAs.

The scam begins like most others, with an email from someone outside of Michigan looking for local assistance in collecting on a sizeable note — in this case $480,000. The difference is that due diligence will find that the parties in the “dispute” are real entities and people.

In Cusumano’s case, the debtor is a local electrical company in Ypsilanti, A.F. Smith Electric, which is a real company. The creditor, a man named Ronald Nalewak, is a real person, too. The problem: there’s been no transaction nor dispute between the two.

The scam works like many others:

  • “Nalewak” asks if he can use the attorney’s name to try scare the other side into paying (which, of course, won’t happen because the dispute isn’t real), and if he can’t, he’ll bring the attorney into the case.
  • The attorney signs him to a fee agreement, and he sends two checks: one for the retainer fee, and a second check for $130,000 from the Bank of Nova Scotia made out in the attorney’s name.  The checks came from a Canadian address.
  • The tipster in this case asked for a completed W-9 form, and alerted Nalewak that when the check clears, he’ll mail it to the address in Pennsylvania, where Nalewak supposedly lives.
  • In this case, the tipster also asked for some clarification as to how Nalewak wanted to handle the balance of the payment and his involvement at this stage. In response, Nalewak asked him to wire the money to an account in Texas.

Cusumano thought something was off about the whole thing.

“If somebody owes $480,000, and it’s accruing interest of $111 a day, people don’t just say, ‘They’ll pay me when they get a chance,’” he said.

He also was concerned about the checks coming from the Canadian address, and broken English in the cover letter that was in the envelope with the checks. He tried contacting Nalewak about the whereabouts of the requested documents, but Nalewak said he was in Japan assisting the humanitarian effort.

After finding too much inconsistency for his liking, Cusumano contacted A.F. Smith, the alleged defendant, to inquire about the debt. The person at the electric company said they’ve been contacted by at least four lawyers in the last week about the scam.

He then contacted Wells Fargo, holder of the Texas account, which is doing a fraud investigation.

While some might consider it foolish to respond to such an emailed opportunity in the first place, Cusumano said it’s a pretty common method of first contact with a potential client.

“I always ask how they found me,” he said. “I didn’t get an answer to that. But in collection matters, people do send you emails if you have advertisements online that you do collection work in Southeastern Michigan.”

Cusumano hasn’t found much help from law enforcement here or in Canada. One Canadian Mountie essentially told him that hunting these people is futile because they cut off communication if you ask too many questions.

Fortunately, Cusumano didn’t get caught up in the scam, and hopes no one else does either.

“Sooner or later, he’s going to get somebody,” he said.

Don’t let it be you.

Detroit sues ex-monitor for fraudulent billing

I have an anti-Kwame news policy but feel obligated to pass this along:

Detroit— The city has sued former police monitor Sheryl Robinson Wood, who text messages show had an affair with former Mayor Kwame Kilpatrick, for more than $10 million in fees she received.

And in a new allegation, the city claims Wood and her former employers submitted fraudulent invoices to the federal court.

The filing is the latest attempt by the city to recoup fees after text messages revealed a relationship between Kilpatrick and Robinson Wood, who oversaw court-mandated reform of the city Police Department.

[The Detroit News]

For the record, Kilpatrick denied having an “affair” with Wood because, he said, it was only a one-night stand. At the time, Wood was a partner with the Baltimore, Md., office of Venable, LLP.

Big firms put crisis management on their practice rosters

Three of Michigan’s larger law firms recently launched crisis management teams, to help handle financial stresses in municipalities and school districts, in addition to maintaining corporate reputations.

First, Fraser Trebilcock Davis & Dunlap, P.C. is using the political, public relations and legal expertise of Daniel Cherrin in its Crisis Management, Litigation and Strategic Communications practice group.

The former communications director for the City of Detroit, Cherrin will lead a team of public policy attorneys and lobbyists in helping clients address major legislative challenges at local, state and federal levels.

In addition, he said, “We are equipped to assist clients in every aspect of a corporate crisis, from avoiding crises in the first place, to the initial response and serving as the onsite spokesperson, to assisting the company with any ongoing investigations and, if necessary, litigation or regulatory and legislative support.”

Warner Norcross & Judd LLP has started an Emergency Manager Law Team, with an online news and analysis resource to supplement it.

This comes in the wake of the state Legislature’s expansion of authority for government-appointed emergency managers under the Local Government and School District Fiscal Accountability Act.

Specialists in government affairs, municipal law, bankruptcy, financial services, litigation, labor and other related areas make up the team. A microsite,, will serve as a clearinghouse of information from state government, news reports and editorials, think tanks, research councils and other sources to provide up-to-date details on the law and its effectiveness.

The newest venture at Miller, Canfield, Paddock and Stone, P.L.C. is a Sustainable Government Initiative, to focus on helping municipalities and school districts address fiscal challenges and fundamental change, while capitalizing on opportunities for increased efficiencies and innovation.

“With the State moving quickly to impose new requirements, we can help clients develop strategic direction and find opportunities that may not be obvious,” said group member Amanda Van Dusen.

The group will offer assistance with consent, intergovernmental and shared services agreements; pension, benefit reviews, restructuring; litigation audits; and property transfers and alternative uses.

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Curses! Guy threatens suit after being removed from flight at Metro

Show of hands: Who hasn’t sat through a flight delay without hurling a few F-bombs? (Me, neither!)

Robert Sayegh of Brooklyn, N.Y., did just that, and was removed from his flight home at Detroit Metropolitan Airport [The Detroit News, which should be more careful in its headline writing]:

Robert Sayegh had a layover Sunday afternoon after attending a cousin’s wedding in Kansas City on Saturday. The 37-year-old TV producer and children’s book author said he and other passengers on Atlantic Southeast Airlines Flight 5136 to Newark, N.J., had been waiting at the gate for 45 minutes when he was overheard by a flight attendant telling a passenger next to him, “What’s taking so (expletive) long to close the overhead compartments?”

The plane eventually taxied to the runway, but soon returned, where airport police boarded the plane and Sayegh was escorted off.

“I’m like, ‘Are they throwing me off the plane?'” said Sayegh, who said he used the F-word twice. “This is the most ridiculous thing I’ve ever been through in my life. It’s embarrassing.”

Sayegh is considering suing the airlines for his “humiliation.” His embarrassment probably could have been contained to the dozens of anonymous people on his connector flight. If the incident was as low key as he claimed, most of them were probably unaware of it. But then he had to make a big deal about it, and now it’s in the press.

Sidewalks and SOL on judiciary committee’s agenda

The House Judiciary Committee is considering HB 4589, which would give municipalities the benefit of the “two-inch rule” for any sidewalk they maintain.

The “two-inch” rule creates a rebuttable inference that a sidewalk is properly maintained if the height difference between two slabs is less than two inches.

The legislation would apply the two-inch rule to sidewalks adjacent to municipal and state highways, in addition to sidewalks adjacent to county highways.

The bill also revises how the term “highway” is defined. Currently, the term means a public highway, road, or street that is open for public travel and includes bridges, sidewalks, crosswalks, trailways, and culverts on the highway and does not include an alley, tree, or utility pole.

The bill would delete the reference to “trailways” and “culverts” and add “an appurtenance” to the list of things that “highway” does not include.

The bill affects MCL 691.1401, MCL 691.1402 and MCL 691.1402a.

The committee will also consider SB 77, which would amend MCL 600.5805 and MCL 600.5839 to make actions against architects, professional engineers, and professional surveyors subject to the two-year statute of limitations on malpractice actions.

The legislation would remove language under which the period of limitations on actions against those professionals and contractors is governed by MCL 600.5839.

SB 77 would legislatively overrule the Michigan Supreme Court’s decision in Ostroth v. Warren Regency, 474 Mich. 36 (2006). In Ostroth, the MSC ruled that MCL 600.5805(14) unambiguously directs that the period of limitations for actions against architects is provided by MCL 600.5839(1). Moreover, the six-year period of MCL 600.5839(1) operates as both a statute of limitations and a statute of repose.”

Critics of Ostroth say the decision allows too much time in which to sue architects, professional engineers and contractors.

The committee’s hearing on the legislation is scheduled for June 16, 2011, 521 House Office Building, Lansing, at 10:30 a.m.

MSC to consider constitutionality of pension tax law?

Who wants to wait for a proper case to matriculate through the court system? Not Governor Rick Snyder and the Michigan Senate They want the Supreme Court to opine on the constitutionality of the pension tax, which exempts people born before 1946 [Saginaw News/Mlive]:

With no debate and a quick voice vote, the Senate this morning approved a resolution formally asking the Michigan Supreme Court to weigh in on the constitutionality of the tax bill it approved last month. Specifically: taxing public pensions, taxing retirement differently according to age and eliminating the personal deduction for those above a certain income.

Expecting lawsuits from public employee groups, particularly over whether taxing public pensions violates a Michigan Constitution provision barring the impairment of a pension benefit, Gov. Rick Snyder filed a similar request last week.

Eliminating the Michigan Business Tax and replacing the revenue with a host of income tax changes will cost certain pensioners born after 1945 some $340 million in new taxes. About a quarter of that is estimated to come from the pensions of public employees.

Of course, if the court does agree to hear the issue and strikes the new tax, one would find it highly unlikely that the Legislature could replace the tax before it is supposed to go into effect on January 1 of a major election year.