Report to the Real Estate Fraud Prosecution Trust Fund Committee

Report Period:
Budget years 2004-2005 and 2005-2006

Pursuant to:
Government Code section 27388 and San Francisco Administrative Code, Article XIII, Chapter X, Section 8.24-5

Report prepared by:
A. Alan Kennedy, Assistant District Attorney
San Francisco District Attorney
Elder Abuse & Real Estate Fraud Unit

Report date:
May 11, 2006

I. Purpose

Under Government Code section 27388(d), and San Francisco Administrative Code section 8.24.5(c), the District Attorney's Office must provide an annual report which details the real estate fraud cases investigated and prosecuted in the reporting period. This report covers the prior two reporting periods, as no Committee meeting was held in 2005.

II. Budget

A schedule of the revenue received, and expenses incurred, of the funds utilized by the District Attorney's Office from the Real Estate Fraud Prosecution Trust Fund, during the reporting periods, is at the end of this report.

III. Summary Of Real Estate Fraud Cases Handled By The District Attorney's Office Using The Funds Provided By The Real Estate Fraud Prosecution Trust Fund

A. Cases In Court

People v. Patricia Daniels. Ctn. 2182375, SCN 194855. In this case, defendant was a caregiver for the elderly victim in the last few months of life. After the victim died, the defendant filed forged documents at the Recorder's Office, including a fraudulent living trust of the victim, and a forged transfer deed, purporting to transfer victim's home to the defendant. Later in Probate Court, defendant submitted a forged will of the victim, also allegedly bequeathing all her property, including her house, to the defendant. Defendant was charged with numerous counts of elder abuse, fraud, forgery and filing false real estate documents. Defendant pled guilty on 10/25/05 and was sentenced on 12/7/05 to 3 years in state prison and ordered to pay $50,000 in restitution to the victim's estate. The victim's house, valued at $645,000, was recovered by the administrator of the victim's estate before defendant could sell it.

People v. Chiu Wah Chu. Ctn. 2183534, SCN 195919. Here, defendant was the husband of the victim, who, due to a diabetic seizure and coma, was a dependent adult. The victim owned a rental property as her separate property. Defendant, acting as her caregiver, took the victim/wife to a title company and got her to sign documents converting this separate property to joint property, and then to sign documents taking out a $300,000 second loan on this property. Defendant then took $180,000 of this loan money and used it to pay off credit card and gambling debts he incurred separately from the wife, and to give $50,000 to his mistress. Defendant was charged with numerous counts of fraud and dependent adult abuse. Defendant pled guilty on 8/3/05 and was sentenced on 8/25/05 to 16 months in state prison and ordered to pay restitution of $182,000 to the victim.

People v. Shaun Ryan. Ctn. 2256936. Defendant opened a $50,000 line of credit on realty owned by his wife separately, without her knowledge. He also forged her signature on a power of attorney form and had it notarized. Defendant then withdrew $11,000 on the credit line before he was caught. Defendant confessed to the scheme to the police inspector. Defendant's case goes to a preliminary hearing in June 2006.

People v. Sylvester Slojewski and Lucyna Slojewski. Ctn. 2093906 and 2096253, SCN 188313. Defendant Sylvester was a handyman who befriended the elderly victim. He remodeled victim's house and was paid over $100,000. He then opened up 7 credit cards in victim's name, and he and his codefendant wife Lucyna ran up over $40,000 in charges, including a trip to Europe. Defendants then hired an attorney to make up a new will and living trust for the victim, making themselves trustees and beneficiaries of her estate, including her home. They then moved the victim out of her own home. Defendant Sylvester pled guilty on 7/23/04 and was sentenced 8/17/04 and ordered to pay over $40,000 in restitution. Defendant Lucyna was ordered to perform community service hours as part of the disposition.

People v. Andreya Allen. Ctn. 2120861, SCN 190079. The victim, an elderly chronic alcoholic, had befriended the defendant when defendant, 40 years younger, was a child. After victim was found wandering the streets inebriated and unable to care for herself, defendant began to help with the victim's finances, gaining a power of attorney. Defendant then deeded victim's condominium to herself, and obtained a series of loans, giving money to herself. Loss was approximately $600,000. Defendant pled guilty on 5/28/04 and was sentenced 6/29/04.

People v. Vilma Peraza. Ctn. 1884500, SCN 176944. Defendant was a teller in a bank where the recently widowed elderly victim came to make a large cash deposit. The defendant followed the victim home and befriended him. She allegedly stole approximately $230,000 from the victim's bank accounts and had him sign a new will leaving his home to her. She later placed the victim in a board and care home and when he died, she tried to obtain his house by submitting the new will to Probate Court. In her first trial on the charges, in 2002, defendant was convicted of two counts of perjury, and the jury hung 11-1 for guilty on the remaining counts. Retrial on the remaining counts occurred in 12/04 and 1/05. Defendant was convicted of forgery and an additional count of perjury.

People v. Eugene Ganin and Anna Polovneff. Ctn. 2034575 and 2033744, SCN 191087. Defendants were caregivers for an elderly couple. After the husband died, defendant Ganin maintained sole control over the wife's bank account and wrote large checks to himself. The wife changed her will leaving her home and entire estate to the two defendants. The defendants sold the victim's home and deposited the funds into various accounts for their use. Defendant Ganin then moved the wife to a nursing home in Atwater, California, near a home he had purchased. The wife then died. Defendants were charged with elder abuse and theft, and tax fraud. Defendants pled guilty and were sentenced on 5/28/04.

People v. Ronald Young, John Murphy and Leslie Dillon. Ctns. 2125540, 2124327 and 2124325, SCN 190212. Defendant Young was suspected of forging his father's signature on a trust completed while he was in the hospital shortly before he died. Defendant Murphy was an attorney who drew up the trust and allegedly had the father sign it. Defendant Dillon was a secretary of Murphy's, and an alleged witness to the trust change. All three defendants completed hundreds of hours of community service as part of the disposition.

People v. Charles Cavaiani. Ctn. 2123310, SCN 190211. Defendant was an insurance agent who convinced an elderly cancer victim to purchase an annuity and to sign over her $850,000 home to his company, and ultimately to him. He then obtained a large loan while the victim had no idea he owned her home. A civil suit was eventually filed and a conservator was appointed for the victim. The house was then ordered returned to the victim. Defendant pled guilty on 5/24/04 and was sentenced on 9/28/04.

B. Cases Under Investigation

Police report #040195724. Victim is a dependent adult, who inherited his parents' Daly City home after their death. Suspect #1 befriends him while both are working at Salvation Army, and eventually she begins to assist him with his finances. This leads her to get him to obtain an equity loan of $120,000 on his house, to use as a down payment to purchase the house she and her family rent in San Francisco. Victim, at the direction of the suspect, then borrows $400,000 to complete the purchase of this house. Then suspect convinces victim to sell his Daly City property to another member of her family, and to move into an in-law unit at the San Francisco house he had purchased. The $259,000 he receives from this transaction is then withdrawn from his bank account within one month by the suspect, and her two fellow suspects, her husband and her sister.

Police report #041139042 and #040932974 Suspect caregiver gets victim to sell his apartment building. Then suspect gets victim to take $135,000 from these proceeds to be used to put a down payment on another property in victim's name. Then suspect, allegedly using undue influence, gets victim to grant deed the house to her. She then moves into the house, and has been making the mortgage payments ever since. Victim died in 2004. There is also a question about $150,000 in checks from victim's bank account made payable to suspect in 2004.

Police report #060306616 Suspect gets onto title of conserved elder's realty in one case, and in second case he allegedly moves elderly mother of his ex-girlfriend out of her home, and gets onto deeds of other residential and commercial properties she owns.

Police report #051003170 Victim gives power of attorney to suspect, who then takes out a $300,000 loan and buys a different home, allegedly using undue influence on victim.

Police report #051329669 Victim passes away and suspect executor of victim's estate allegedly takes out $500,000 loan on one of two homes in the estate.

Police report #050867941 80 year old victim, suffering from dementia, is befriended by suspects. Suspect #1 is a licensed real estate agent; suspect #2 is her daughter. Realtor suspect is trying to find a house for her young daughter to buy. Realtor gets a listing with victim to sell her house and then brings in daughter as potential buyer. Realtor arranges sale of victim's Sunset District house to daughter for $600,000 (approximately $150,000 less than fair market value, according to a later expert appraisal). When alerted by the victim's bank, the APS, Public Guardian, City Attorney and police get involved. Victim is quickly conserved and City Attorney has sued the suspects civilly.

Police report #050432544 70 year old victim owns home in Bayview District. She contracts with suspect licensed electrical contractor to upgrade the electrical system of her home. Suspect befriends victim and does many small favors for her, including giving her back rubs, gift cards, and food, and he also performs small jobs around her home. Victim then becomes convinced she is going to die and wants to sell her house and move back to her birth state of Alabama. She puts house up for sale. When suspect learns of her plans to sell, he contracts with victim to place himself on grant deed to victim's home, and to then have her sell her home to him for a price far below market value. The agreement also provided that if suspect resells the house, he agrees to split the proceeds with victim. Victim apparently did not have capacity to understand contract at its execution, and has vision impairment preventing her from being able to read the contract. Primary investigation pending by Contractors State License Board.

Police report #050641121 Suspect, allegedly using undue influence, changed joint ownership of victim's (suspect's mother) real property from victim and suspect as co-owners into suspect being sole owner via grant deed from victim. Suspect then took out loans on the property totaling approximately $400,000.

Police report #051068572 Suspect adopted son of victim and victim's husband allegedly uses undue influence and possible forgery to get title to his parents' home transferred into their and his ownership. A $400,000 loan is then taken out on the home to use as down payment on a $1 million home in Santa Clara County for suspect's wife. Notary stamp used to notarize grant deed putting suspect onto title was allegedly stolen.

Police report #040081509 Elder victim demented and living in board and care home. Title to victim's home was conveyed to suspect #2's brother, and now suspects #1 and #2 (husband and wife) live in victim's home, estimated to be worth $900,000. Suspect #2 is victim's goddaughter. $568,000 is also allegedly missing from victim's bank account.

Police report #040322159 Elderly victim signs 3 blank documents for suspect, and suspect then becomes trustee of trust in which victim's house is an asset.

Police report #041337581 Suspect is former coworker of elderly victim and suspect obtains a $250,000 equity line of credit on victim's home in both of their names, when victim's competency is questionable. Then suspect runs up $100,000 of withdrawals on the credit line. There was also a credit card issued on the credit line that suspect allegedly used. Finally, a student loan from Sallie Mae was obtained by suspect's son on which victim was purportedly the co-signee. Her signature on this was allegedly a forgery. This was for $42,000 and the money was used by the suspect's son to attend the San Francisco Culinary Academy.

IV. Training And Outreach

V. Legal Changes Affecting The Investigation And Prosecution Of Real Estate Fraud

1. AB 578 - This bill was signed into law into 2004 by the Governor. It authorized counties to record real estate documents electronically. The Attorney General's Office is also required to regulate the electronic recording systems counties set up to implement this. There was some initial concern raised about the heightened risk of fraud that may come from this change in the law, but it isn't clear yet that this has actually happened.

2. AB 2611 and AB 3095 - These bills, both signed by the Governor in 2004, clarified the knowledge requirement for violations of Penal Code section 368. Under existing law, the prosecution had to prove defendant knew his victim was an elder or a dependent adult. Now, the standard is that the defendant "knows or reasonably should know that a person is an elder or a dependent adult."

3. SB 1018 - This bill, signed by the Governor in 2005, takes effect on January 1, 2007. It will require that financial institutions become "mandated reporters" of suspected financial abuse of elders or dependent adults. This change in the law has been sought by prosecutors, law enforcement and advocates for the elderly for years. It is expected to increase the number of referrals of suspected elder financial abuse, including real estate fraud, once it takes effect next year. Representatives of financial institutions often are the first to know of unusual or suspicious activity in a client's account, but they have previously not been required to notify law enforcement or Adult Protective Services of any such situations.

4. SB 1609 - This bill is currently working its way through the Legislature. It would enact a number of important safeguards to ensure that borrowers of reverse mortgages are protected and fully informed of the terms of the transaction. The bill would make three significant changes:

(a) Mandate independent counseling from a HUD certified counselor for all reverse mortgage transactions.

(b) Require reverse mortgage contracts to be translated into the language it was negotiated in, pursuant to civil code section 1632.

(c) Prohibit annuities from being offered to a reverse mortgage borrower until after the three day grace period to rescind.

Because of their complex nature, reverse mortgages have become a breeding ground for lenders and brokers that prey on our non-English speaking California residents. In many cases, reverse mortgages are offered in conjunction with other financial products without regard to the senior's individual financial circumstances. Annuities are one of the most common of such financial products and can drastically alter an individual's financial situation. In some cases, an annuity is required with the purchase of a reverse mortgage. In others, seniors are pressured into buying an annuity or made to believe that it is standard for an annuity to be "thrown in." SB 1609 would not prohibit annuities from being offered to seniors altogether, but would simply create a clear separation between the purchase of a reverse mortgage and the purchase of an annuity.

Budget For The District Attorney's Office's Receipt And Utilization Of Real Estate Fraud Trust Fund Resources For Budget Years 2005-2006 AND 2004-2005

 

Summary of Real Estate fund for FY 2005-06
Beginning Fund Balance:	$294,526.00
Revenues:	$105,898.00	(As of April 26, 2006)
Prosecution Expenses:
Salaries:	$110,293.00
Fringe:	$22,717.00
Total Expenses:	$133,010.00	(As of April 26, 2006)
Balance:	$267,414.00	(As of April 26, 2006)
2005-06 Revenue Received
July	$10,695.00
August	$12,771.00
September	$11,817.00
October	$10,509.00
November	$11,611.00
December	$12,973.00
January	$9,438.00
February	$9,429.00
March	$11,934.00
April	$4,721.00
Revenue Detail thru April:	$105,898.00

 

Summary of Real Estate fund for FY 2004-05
Beginning Fund Balance:	$327,247.00
Revenues:	$131,003.00	(Through 06/30/05)
Prosecution Expenses:
Salaries:	$141,006.00
Fringe:	$22,718.00
Total Expenses:	$163,724.00	(Through 06/30/05)
Balance:	$294,526.00	(Through 06/30/05)
2004-05 Revenue Received
July	$14,927.00
August	$10,468.00
September	$12,757.00
October	$10,960.00
November	$10,261.00
December	$9,404.00
January	$10,540.00
February	$9,043.00
March	$12,610.00
April	$8,410.00
May	$10,711.00
June	$10,912.00
Revenue Detail:	$131,003.00