Wachovia (Wells Fargo) Sued, Could Owe $Millions$ for Role in Loan Modifier’s Scam (Complaint Attached)
By Alexandra Clough
Palm Beach Post Staff Writer
A major bank could be on the hook for millions of dollars lost by homeowners who sent money to a loan modification company that the Florida attorney general shut down in 2009.
This month, Wachovia Bank (now part of Wells Fargo Bank) was sued by a court-appointed receiver for FHA All Day.Com, a defunct loan modification company that operated in Palm Beach County.
The complaint was filed in Palm Beach County Circuit Court receiver Robert Furr.
The lawsuit says FHA All Day.Com received cashier’s checks from homeowners who thought FHA All Day would help them modify their loans if they sent an upfront fee, usually $2,000 to $3,000.
The lawsuit said FHA then cashed the checks at Boca Raton-based Swifty’s Market, rather than deposit the checks into a corporate account at a bank. (The lawsuit also names Swifty’s and a principal, Charly Sabat, who could not be reached.)
The lawsuit alleges Swifty’s then used its bank accounts at Wachovia to clear the FHA All Day checks. It alleges that Swifty’s cashed “potentially millions of dollars” of homeowners’ checks for FHA even though the checks indicated the funds were for loan modifications.
The lawsuit claims Wachovia never questioned the checks, never alerted the homeowners and never told authorities.
Check out the rest here…
Well, since the case was filed here in PBC we had it pulled…
h/t Foreclosure Hamlet
Some excerpts from the complaint.
This case is about illegal and fraudulent loan modification activities. Jason Vitulano, through companies he controlled, FHA All Day.com, lnc., Safety Financial Services, Inc., Housing Assistance Law Center, P.A. and Housing Assistance Now, Inc. (collectively “FHA”) engaged in illegal home loan modifications. As explained more fully, only a law firm is entitled to be paid an up front fee for loan modification. Unfortunately, notwithstanding the 1aw, scam artists like Vitulano and FHA used the economic and real estate crisis to their advantage by preying upon homeowners facing foreclosure. The abuses of these types of companies are well-known, having been reported by news magazines, newspapers and other media. In fact, an online search of the “FHA” or “loan modification” leads to many stories of fraud and illegal or at best questionable activities. Better Business Bureaus throughout the United States have received hundreds of complaints about FHA and other loan modification companies. Needless to say, anyone dealing with such a company must be on guard and aware of the risk of fraud and illegal activity. Unfortunately, Wachovia and Sabat were not just off duty when FHA came, they actively assisted in the scam.
Here is how it worked, FHA would get lists of homeowners facing foreclosgre and cold call these people (the “Homeowners”), or advertise their services online, claiming that for a fee,which would run from $2, 0 00 to many thousands of dollars, they could renegufie loan on much better terms. While this sounds good on its face, in practice it was merely a scam to obtain the up-front fee, which, as explained, was illegal to do so because these companies were not law firms.
How were Wachovia and Sabat involved? FHA was receiving literally thousands of deposit checks from the Homeowners that they needed to cash. Here is where Wachovia, Swiftys and Sabat come in. Instead of maintaining bank accounts and depositing the checks into those accounts, as any legitimate business would, FHA cashed the checks at a check cashing store, Swiftys. Charly Sabat was the principal of Swifty’s. The name Swiftys appropriately described its business. The word swifty is defined as slang for “a trick, ruse, or deception.” This is very significant and telling. What legitimate business, let alone one involving home loans or mortgages, would use a check cashing store, especially one who’s name is slang for a con, and not a bank?
After the checks were cashed at Swiftys, Swifty’s would endorse the checks and deposit the Homeowners’ checks in its accounts at Wachovia. In other words, tens of thousands, if not millions of dollars. in third party checks were me,.re ::i – -: : — Fl-:- : : :=—:: ::: -:r;.jjnri:s ;,,:rrr ri&$irke;r at a check cashing store and then deposited in bulk in wachor.ia accounrs.
Wachovia, with knowledge of this obvious fraud and improper activity, accepted checks from a check cashing store, made out to a company, FHA, which checks on their face alerted Wachovia that loan modification or other activity was occuring and that the checks were from third parties, some of whom were account holders themselves at Wachovia. Wachovia, ignoring this obvious fraud and with knowledge of this obvious fraud and improper activity went ahead and cashed the checks, provided operating capital and otherwise assisted Swiftys and FHA to perpetuate their fraud and breaches of fiduciary duty upon the Homeowners. But for Wachovia’s assistance. the scam would have ended.
WACHOVIA PROVIDES SUBSTANTIAL ASSISTANCE TO SABAT AND
SWIFTY AND FHA SCHEME TO FRAUDULENTLY MISAPPROPRIATE
THE HOMEOWNERS’ MONEY AND BREACH FHA’S FIDUCIARY DUTIES
TO THE HOMEOWNERS
Swifty’s and Sabat’s assistance was not all the help FHA received or needed to perpetuate the scheme. Unless Sabat had access to large sums of cash to give to FHA after it cashed the checks, and unless Swiftys and Sabat could deposit and receive payment on the Homeowner checks that were being cashed for FHA, Sabat and Swifty’s would not and could not continue to cash the Homeowners’checks for FHA.
Sabat and Swifty’s needed a willing bank that would look the other way and provide the necessary no questions asked policy so that Sabat and Swifty’s could deposit and receive payment on the tremendous number of Homeowners’ checks and, thus, to keep the scheme operating.
Wachovia provided the necessary “no questions asked” banking services despite its knowledge that Sabat and Swifty’s were aiding FHA’s scheme and were actively committing the illegal and improper actions and torts and breaches of fiduciary duties to the Homeowners here.
Swifty’s cashed potentially millions of dollars of Homeowners’ checks for FHA. Thus, in order to assist FHA in its theft and breaches ol fiduciary duty to its customers – the Homeowners, Sabat needed a ready supply of cash available at Swifty’s to cash the multitude of Homeowners’ checks. Without cash on hand, Swifty’s could not cash the Homeowner’s checks. Wachovia was only too willing to assist. Wachovia delivered and/or made available to Sabat and Swifty’s thousands of dollars, and potentially millions, in cash. Without this knowing and intentional supply of cash from Wachovia, the scheme could not have occurred and many, if not most, of the Homeowners would not have lost their up front payments and suffered the other damages that they ultimately suffered.
In addition to providing massive amounts of ready cash so as to perpetuate the torls (and crimes) described here, Wachovia provided other knowing assistance to Swifty’s, Sabat and FHA. This intentional, knowing and substantial assistance is evidenced by Wachovia’s complete failure to object or even question the obviously illegal and improper activity taking place through Swifty’s.
Full complaint below…