Wednesday, February 27, 2008

Liberty Acceptance of Provo, Utah Under Investigation, from KSL NBC News Utah

Watch the NBC Television Video HERE

Liberty Acceptance of Provo Utah is now under federal and state investigation as reported bt KSL a local NBC Affiliate. Mark Steinegal stated that this scheme is nothing more than a method of deawing in more customers to look at more properties. through an Auction Scheme. The scam required the buyers who put hundreds of thousands of dollars down to "Lease" the subject property first. The titles of the homes are all held by a mans relative named Mark Craner who manages Liberty Acceptance.

Further, The borrowers were told bt Craner that the money that they believed was going to be the down payment on their dream home went to a Texas Land deal that "simply went bad"

In an e mail sent to a KSL Investigative Reporter Mark Craner stated:

" I appreciate you looking into the other side of the situation. As you are aware Lease Option Contracts with the desire to help people buy homes... and are difficulties. Liberty Acceptance contacted those families affected due to the difficulties of the times." (Sic)

Here is a KSL copy of this story

Home for auction! It's a sign of the times. In fact, the Utah Division of Real Estate expects more and more auctions to pop up as the real estate market fizzles.

Division Director Mark Steinagel tells KSL-TV it's a way for desperate owners to sell their homes. "It is kind of the buzz of a better deal, a better price and drawing more customers to look at properties," says Steinagel.

Brian and Carrie Clark Herriman resident Carrie Clark says bidding at auction saved her $100,000 on a new home. "It looked like an opportunity," says Clark.

Andy Bunker of Lehi says it saved him $100,000 as well. "I mean, we moved right in," says Bunker. "I was going to retire into this house," he added.

Both families say it was all possible through a Utah County company called Liberty Acceptance. After the auctions the families say they paid the company large sums of money. Bunker says he paid $221,000, while Clark says she put down about half that amount. "I gave them a $100,000, which was all of my savings at that time," says Clark.

Both families figured the more they put down, the less they'd owe. Clark thought the mortgage amount on the home she won would be about $191,000. Andy Bunker figured he would owe around $80,000.

Andy Bunker Families were so thrilled to get the great deals they were willing to go along with what came next, the unusual contracts. Before they could actually purchase the homes they had to lease them from Liberty Acceptance. But instead of signing the contracts, families say they wish they would've ripped them up.

KSL has found four families who now face losing the homes they're in. What happened? Families thought the deal was supposed to work like this: they make their monthly payments to Liberty Acceptance, and in turn the company pays the mortgage.

But last fall, Liberty Acceptance suddenly stopped passing the money on. Overnight, the families found the mortgages in default.

What makes their situation worse is unlike a normal real estate deal, they have no title to the homes. According to county records, the titles are held by relatives of the man who manages Liberty Acceptance. Now the Bunkers and the Clarks worry they could lose their homes.

The bad news just got worse when the company called about all the money the families had put down. Carrie Clark's husband, Brian, says the phone call went something like this, "‘Sorry things didn't work out, we invested all your money in another investment opportunity in Texas that didn't work out.'"

Brian Clark is a real estate agent. He says he took one look at the contract, and he knew it was trouble. His wife Carrie got the home before they were married, and now she is suing Liberty Acceptance for breach of contract. In a court hearing last month, Liberty Acceptance manager Mark Craner admitted under oath that Carrie's $100,000 went to other investments and the company now claims it's insolvent.

KSL Investigative Reporter Debbie Dujanovic went to Liberty Acceptance in Provo to get the company's explanation. Craner wasn't in, but responded to Dujanovic's questions by e-mail. Craner pointed out that nothing in the contracts actually required Liberty Acceptance to forward the families' payments to the mortgage companies. He added the payments that didn't go to the mortgage were returned to the families, except for one, which went to attorney's fees.

Liberty Acceptance says it is trying to retrieve all that down payment money it invested and give it back to the families. The company also said it's helping the families buy the homes at reduced prices. But families thought they were already doing that, and now they're hoping state investigators will take a closer look at their cases.

This case is pending litigation in the Third District Court in Salt Lake County Case 070408550 in front of Judge Adkins.

Further Investigative details to be posted.

A KSL 5 Eyewitness News HD Investigation, Posted by Robert Paisola

It's a hot new trend. They thought they were getting a good deal on a new home. Now they're fighting to keep their homes. And it's not their fault. They made the payments. So where did their money go?
KSL 5 investigative reporter Debbie Dujanovic follows the paper trail and tracks down the company... tonight at 10 on the KSL 5 Eyewitness News HD.

Tuesday, February 26, 2008

Live From NPR- Your Mortgage...Just Walk Away, With a Smile! Robert Paisola Reports is a Western Capital Approved Site

The Web site for You Walk Away is cheery and reassuring. There's a photo of a happy family in a park, smiling. Another family, also smiling, is packing up boxes.

"Are you stressed out about mortgage payments?" asks the site rhetorically. "Is foreclosure right for you?" it queries, but doesn't wait for an answer. "You are not alone — over 2.9 million homes have foreclosed in the last three years," it says. The not-so-subtle message: Foreclosure need not be a shameful, life-ruining experience. In fact, the company will gladly hold your hand through the foreclosure process—for a fee, of course.

Foreclosure, we're told, is a last resort, an option that no responsible homeowner would ever choose. But some distressed homeowners — no one knows exactly how many — are doing just that. They're voluntarily walking away from their mortgages, engaging in a practice the mortgage industry calls "ruthless default."

But is it really ruthless — or just good businesses sense? Some economists argue it's definitely the latter.

Sometimes, they say, walking away from your mortgage makes economic sense, especially for homeowners who find themselves "upside down" — that is, they owe more on their mortgage than their house is worth. In those cases, "voluntary foreclosures are not by themselves evidence of a newfound irresponsibility on Americans' part," says Nicole Gelinas, writing in The Wall Street Journal .

Separating the economics of foreclosure from the morality (and the stigma) is not easy, though.

"We need a culture of responsible consumers and homeowners," says Gail Cunningham, spokeswoman for the National Foundation for Credit Counseling, echoing a deep-seated American belief that one should always honor financial obligations.

The current housing crisis is different, argue some economists: Since some financial institutions sold these loans in a deceptive manner — for example, by approving people for loans they couldn't really afford — then why should homeowners feel obliged to honor their commitments?

The Virtues of Self-Interest

Most homeowners avoid foreclosure for selfish, and not necessarily moral, reasons. Foreclosure leaves a large black mark on a homeowner's credit rating. It might be as long as 10 years before they can qualify for another mortgage.

But Gelinas — a financial analyst and contributing editor of City Journal — argues that if enough people walk away from their homes, then banks won't blacklist all of them.

"Many walkers are going to want to buy houses again some day; and when they do, lenders are going to want to make money lending them money to do so (hopefully requiring a good down payment)," she says.

One thing that is certain: Foreclosures are on the rise. The Mortgage Bankers Association estimates that roughly 900,000 Americans were in the foreclosure process as of Sept. 30, 2007 — the most recent data available. That's an increase of 72 percent from the same period a year ago. Cities in California, Ohio, Florida and Michigan posted the highest foreclosure rates in the U.S., according to RealtyTrac, a private firm.

Traditionally, most people who foreclose on their homes do so because they lost their jobs or were hit with unexpected medical expenses. But the subprime mortgage crisis is different. Seven out of 10 people foreclosing on their homes are healthy and gainfully employed, according to John Taylor, president of the National Community Reinvestment Coalition. They simply can't afford to make their monthly payments.

Helping Others Walk Away

The spurt in foreclosures has spawned a cottage industry of firms who smell a business opportunity amid the misery. You Walk Away is getting the most attention, with some 25,000 daily hits to its Web site. (The firm won't disclose how many customers it has.)

For a fee of $995, the company offers services such as a "protection kit." For instance, they'll send a letter that "stops lenders from harassing the homeowner." They'll also put distressed homeowners in touch with a lawyer and an accountant to discuss their options. They'll advise people in the midst of foreclosure how long they can legally live in their homes, tempting people with the prospect that, "You WILL be able to stay in your home for up to 8 months or more without having to pay anything to your lender!"

Chad Ruyle, the company's co-founder, says they are not encouraging people to pursue foreclosure but merely helping them through the process once they have made that decision.

"We're not causing the foreclosure problem," he says. "The problem was already there." Or, as his business partner Jon Maddux puts it, "You can't blame a divorce lawyer for a divorce."

Red Flags

Firms like You Walk Away, though, have raised red flags with credit counselor and consumer watchdogs. Ellen Schloemer, director of research at the Center for Responsible Lending, says borrowers would be better off hiring their own attorneys and accountants, rather than relying on those provided by You Walk Away.

"Just look at the picture [on the company's Web site]," Schloemer says. "It shows people enjoying a day in the park. But foreclosure is no day in the park."

It takes a decade to recover from a foreclosure, she says, and there's not much anyone can do about that. The company, she says, paints a misleading picture of the foreclosure process.

"The real solution is to help people before they're forced into foreclosure," she says.

John Taylor, of the National Community Reinvestment Coalition, says he's concerned that the company might not help customers explore all of their alternatives before going into foreclosure.

"I would rather see people who are facing foreclosure fighting to keep their home, and keep it as long as possible, because help is on the way," he says.

On Tuesday, in fact, the Bush administration announced a new initiative aimed at helping homeowners about to lose their homes. For qualified homeowners, it will freeze the foreclosure process for 30 days. Dubbed "Project Lifeline," the new program will be available to people who have taken out all types of mortgages, not just the high-cost subprime loans that have been the focus of previous relief efforts.

Those efforts, of course, are about avoiding foreclosures, not facilitating them.

"Walking away from one's home should be the absolute last resort," says Gail Cunningham of the National Foundation for Credit Counseling. "However desperate a situation might become for a homeowner, that does not relieve us of our responsibilities."

But there is one category of homeowner, she says, where foreclosure does make sense: people who bought their homes "with their hearts and not their heads."

"For people who may never be able to afford their home, then walking away is a viable option," she says. "If long term, you're not going to be able to sustain the mortgage payment, then you're fooling yourself and should get out of that situation and move on to life after foreclosure."


California's housing market may be entering a scarier phase: the
point at which homeowners walk because the house isn't
appreciating, not because they can't afford it. Banks are worried.
A Federal Reserve survey in January 2008 found that loan officers
"are concerned with borrowers' reduced motivation to retain
possession of their properties."
And Calculated Risk, a blog, posted a quote from Wachovia Bank's
January 2008 conference call: "One of the challenges is... a lot of
these current losses have been coming out of California... from people that have otherwise
had the capacity to pay, but have basically just decided not to because they feel like they've
lost equity, value in their properties, and ... we're just going to have to see how the patterns
unfold here."
Bank of America CEO Kenneth Lewis said, "There's been a change in social attitudes toward
default ... We're seeing people who are current on their credit cards but are defaulting on
their mortgages ... I'm astonished that people would walk away from their homes."
If income indicates ability to pay, down payment is an incentive to pay - skin in the game.
In California, lenders are generally barred from getting money from a defaulting borrower.
The lender gets the house and that's it, even if the borrower has $1 million in the bank. Only
judicial foreclosure allows the lender to get the borrower's other assets, but it's slow,
expensive and encourages a defense of loan origination fraud. Buying a house with little
down is like having your cake and eating it, too. If the house appreciates, you keep the
riches; if it doesn't, you walk and lose only what you put down, often nothing. It's wrong to
insure such losses with taxpayer money.
Laws limiting investor liability are everywhere. If you own stock in a company that goes
bankrupt, you don't feel a moral obligation to pay the company's creditors, because the law
limits your liability. But the government doesn't guarantee those creditors' losses - and it
shouldn't do so in the housing market, either.
Visit, a company that sells kits explaining a homeowner's right to
walk if the house isn't a good deal anymore. And "60 Minutes" recently featured a couple
who explained they could afford their mortgage payments, but the house was "worth less,"
so why pay?
Who loses if the trend grows? The biggest loser will be mortgage bond investors, and next is
originating banks and investment banks (because investors will try to sue for fraud and
misrepresentation). Homeowners who put zero or 5 percent down lose little more than
outsized hopes of future riches. And as notes, eight months of "free rent"
will help them feel better.
Now that Congress has passed higher loan limits for Fannie Mae, Freddie Mac and the
Federal Housing Administration, Americans will lose because investors facing losses can get
paid by Fannie, Freddie and FHA.
In the future, Congress should require California to allow lenders to garnish wages of
affluent borrowers who walk away from their homes. It's dishonest to have it both ways: (1)
federal tax money backstops investor and bank losses when homeowners walk away from
homes, and (2) California law allows homeowners to walk away without liability - even if
they have money to pay. It's not that the California statute is bad alone; it's that it's wrong
for federal taxes to guarantee huge loans without homeowners guaranteeing those loans too.
Gov. Arnold Schwarzenegger wrote last Monday, "Unfortunately, the California families most
hurt (by inability to get affordable mortgage credit) are in lower- and moderate-income
brackets." Then, he magically ties this to raising the loan caps to $729,750. But 2006
California median family income was $64,563. This isn't an anti-poverty plan.
Even Marin, California's top 2006 county for median family income, was $99,713 - too low
to benefit from the higher caps. I see how politicians could confuse median family income,
because they don't hang out at places where they'd meet a median income earner.
The new increase in the loan caps is nothing more than a handout. It's welfare for the
wealthy - a group that tirelessly touts free market principles. Raising the caps is morally
wrong, and it's also bad policy.
Sean Olender is a San Mateo attorney.

Monday, February 25, 2008

United First Financial- The Next Franklin Squres-Posted by Robert Paisola

Mr. Paisola,

I could not believe what I was reading but I found this company based in UTAH. Another Franklin Squires Scam!

this is just gearing up and already people are signing up. $3500 plus $500 gets you the software.

The new scam from Utah! Ron legrand just endorsed it.

United First Financial hosts regular seminars around the country to discuss the power of the Money Merge Account. The informational MMA seminars are designed to give you a robust introduction to our software and our expert financial agents. Our expert financial team will demonstrate how the proprietary online software will work for you, answer any questions you may have, and get you on the path to financial freedom as quickly as possible.

The Money Merge Account consists of three major components:

1. Your Existing Primary mortgage

The existing mortgage on your home is the foundation for the Money Merge Account.

2. An Advanced Line of Credit (ALOC)

The Money Merge Account program uses an advanced equity line of credit as a vehicle or a tool to drive the program. The equity line of credit must have the capacity to operate similarly to a primary checking account and be set up with an open-end interest calculation (rather than a closed-end interest calculation). Combined with the Money Merge Account's web-based system, this creates a formula in which the money in your line of credit account generates an interest cancellation on your primary mortgage.

3. MMA software

The online Money Merge Account system makes a virtual connection between your bank account, the advanced line of credit, and your primary mortgage. Each time you transfer income into your account, it registers as a decrease to your mortgage balance. By decreasing your mortgage balance, you now lower the balance on which interest accrues. By decreasing the balance on which interest accrues, you increase the portion of your monthly payment which is credited toward your principal pay down. The algorithms in the proprietary Money Merge Account system are systematically programmed to create the highest interest savings possible in the least amount of time under this system.

Five Easy Steps to Becoming Mortgage Free:

1. Fill out the Money Merge Account work sheet

2. Activate your Money Merge Account

3. Deposit Your Paycheck
Deposit your paycheck into your current checking and/or savings account. As soon as the funds clear, the amount you designate is transferred from your checking and/or savings account into your Money Merge Account managed line of credit. Because the line of credit is connected to your home, the money transferred from your checking and/or savings accounts decreases your mortgage balance, thus reducing the balance in which interest builds.

4. Pay Your Bills
Throughout the month, you pay your bills using your Money Merge Account managed line of credit. With this account, money is immediately available through checks, debit cards, and ATMs*. The amount left after bills have been paid remains against the balance of your mortgage until you need it, keeping your mortgage balance as low as possible, further reducing mortgage interest charges.

5. Follow the system
Follow the promptings of the online Money Merge Account system to maximize your savings and pay your mortgage off as quickly as possible.*

We encourage homeowners to do their homework and to get the facts in deciding if the Money Merge Account is right for you. *Please keep in mind that not all banks provide the same terms and services with their lines of credit. Please inquire with your bank as to what services they provide with their lines of credit. United First Financial does not provide financial or investment advice

Friday, February 22, 2008

RICH DAD Robert Kiyosaki talks with Casey Serin on Mortgage Fraud, By Robert Paisola

Casey Serin Facing Foreclosure , Posted by Robert Paisola

A Comment on The Russ Whitney Organization to the Associated Press, Posted by Robert Paisola

Dear Investigator,

I am reviewing the saved email from victims of the Whitney secret alliance.
The Florida State Attorney Generals office has reached a settlement agreement with the Whitney Information Network, a parent company of several other companies that advertise through infomercials and free seminars. This settlement should address all the different complaints including yours.

My Personal Experience: It is no accident when it takes 21 days to view, question and inspect the services from all the Whitney Training Academies. All Whitney companies are well trained in refund denial. They have a department dedicated to the whole BBB and FTC process. Students sign an agreement that promises to abide by the consumers 3 day right to a refund under the Consumers Protection Act, enforced by the FTC. This puts the student at ease while (Your Gurus Name Here) creates a gross discrepancy between his oral representations and the facts. Ya, he lies.
Dissatisfied consumers will receive more than $1 million in refunds as a result of the state's investigation and settlement. I would like to do more then just get a refund. This is a deliberate theft by deception. All Whitney organizations have a department that meets once a week to make a decision regarding your refund request. And, of course, you didn't request a refund in the time you agreed to when you signed the student agreement. The agreement now becomes a receipt for the 3 ring binder and not the training.

ATTN: Your free seminar guru may threaten to sue you for sharing your experiences on the internet. These defamation law suits will leave no doubt, in the mind of the judge, that a theft by deception has occurred. Please save all the advertising used by the free seminar and (your gurus name here). Your Gurus defamation law suit will bring us one step closer to the final solution to this global problem. $1,000,000 will not be enough to pay us all back, or impress (Your Guru) and the secret Russ Whitney alliance.

Please follow this link to read the news release.,infomercial


Thursday, February 21, 2008

Rick Koerber Owes Me Money!, Posted by Robert Paisola

I did some web design work for rick back in early December and he never paid me for my services rendered.
I have documentation and the source files completed and original in my possession including a record of the creation of the site. Is there anyway I can join the law suite and receive restitutions?
Or would I be better off on my own in court?

- Alex -

Alex Johnson
(801) 471-9476

==Our Suggestion- Count your blessings he does not owe you millions!

Thursday, February 14, 2008

More BS from the FreeCapitalist, From Active Rain Blog

More BS from the FreeCapitalist


FranklinSquires Companies, LLC announced Monday February 11th 2008 that it was downsizing its operations (including those of two of its portfolio companies New Castle Holdings, LLC and Hill Erickson, LLC), closing the doors of its corporate headquarters at 85 Eastbay Blvd in Provo, UT and refocusing a much smaller operation in a yet to be announced location. In November and December of 2007 the company had announced a series of reorganization efforts to help the company focus on its core areas of competence.

Throughout 2007 the company struggled to manage the affects of a collapsing real estate market and increasing costs associated with what Koerber describes as "a malicious, and politically motivated" effort by a few private citizens working in concert with State of Utah regulators in the Department of Commerce. Recently, the abusive practices of the Utah Department of Commerce against other businesses in the state have begun comming to light.

Boss's exit doesn't quell claims securities division is amok by Steven Oberbeck (Salt Lake Tribute) 2/12/2008

Utah's Security Chief is resigning Under Cloud by Jason Lee (Deseret News) 2/6/2008

The company currently maintains a substantially interest in real estate holdings despite the market downturn and over the course of the last several years the State regulators have not made any official allegations, filed any administrative actions, or made any civil or other charges against Koerber, company, or the company itself.

"This is not the kind of business environment that makes it worth FranklinSquire's efforts to continue to grow its business or to continue New Castle Holdings, LLC and Hill Erickson, LLC. It is easier for us to downsize, and re-focus the efforts of our core people on other projects" Koerber explained. "I would rather wind up the affairs of FranklinSquires, New Castle and Hill Erickson, pay all our creditors - and refocus my energy and the energy of those who are interested in working with me on something where we can make a more powerful difference in the world. I'm sure there's a chance the name FranklinSquires might someday again re-enter the business community, but for the time being its time to wind thing down, clean up the loose ends, make everyone whole, and focus our energies elsewhere."

In the estimation of its officers, the company has sufficient assets to ensure that where it has legitimate interests, part of winding down its affairs will be to ensure that no stone is left unturned including seeking compensation for damage done to the business by the efforts of others.

FranklinSquires has employed more than 230 Utah citizens since its founding in 2004.

For Financial Issues contact the office of:
Rick Koerber: 801-722-9295

For Legal Issues, contact the company's attorneys:
Mackey Price Thompson and Ostler at 801-575-5000
57 West 200 South
Salt Lake City, UT 84101

02/14/2008 10:21 AM by More BS

Utah's securities chief is resigning under cloud, Posted by Robert Paisola

The head of the state Division of Securities is resigning, following allegations of mismanagement and misuse of authority and a continuing state audit.
Division director Wayne Klein said Monday that he has submitted his resignation to his state Commerce Department chief Francine Giani. He plans to step down at the end of this month.

Klein's decision come amid controversy surrounding a case his agency investigated involving four employees with First Western Advisors Inc., a stock brokerage and investment firm.

Rep. Jim Bird, R-West Jordan, was concerned about the handling of the First Western case and requested the audit late last year. The Legislative Auditor General's Office began the audit in early November and plans to complete its work by the end of the legislative session.

"The division does important work," Giani said Tuesday. "Unfortunately, sometimes they do investigate people that are known by people that can call for audits."

Klein said Tuesday that his resignation would take pressure off the division so that its important work can go forward without him being a lightning rod for criticism. The controversy traces back to last March, when the Utah Division of Securities alleged that First Western Advisors, along with two current and two former brokers, were part of securities fraud involving nine Utahns who invested more than $20.6 million.

The division had filed a petition to revoke and bar licenses and impose fines against First Western and brokers Gary W. Teran, Carl A. Page, David A. Russon and Brian G. Kasteler. Teran is the company's president, and Russon and Kasteler are former First Western brokers.

Specifically, the division said the agents invested in Class B shares, which have higher costs and higher commissions for the agents than Class A shares of the same fund. However, some clients thought they owned Class A shares based upon Morningstar "Snapshot" reports that the agents sent, reflecting mutual fund performance for Class A shares, the division said.

The division also said that the nine investors testified to the U.S. Securities and Exchange Commission, but the agents tried to contradict their statements by having them sign "mutual-fund disclosure statements" and "declarations" suggesting the investors were always aware of the brokers' actions.

The filing also charged First Western with failing to maintain accurate books and records and failing to supervise the activities of the four brokers. The division accused the firm of violating the Utah Securities Act, saying First Western failed to disclose material facts to clients, recommended unsuitable investments, gave false account information to clients and attempted to change client testimony to the SEC.

The division later dismissed the fraud claims after the men signed settlement agreements with orders to comply with state requirements of the Utah Uniform Securities Act. The division also issued news releases expressing regret for any potential harm their allegations may have caused to First Western's business.

Giani and Klein said the division never claimed First Western bilked clients out of money, but the division did raise questions about the firm's practices and fee structures, which were eventually addressed and resolved between the division and the company in the settlement agreements.

In the consent order, the company also agreed to change its policies in exchange for the agency dismissing fraud charges.

Klein said the division issued the apology because of the potential damage to the company's reputation caused by media reports stating First Western had de-frauded clients, which he said the division never claimed.

Klein also came under fire for a 2005 case involving broker Richard Mack. The division filed a petition against Mack that accused him of failing to adequately supervise a broker who was selling unregistered securities. A judge ruled the case should be dismissed, but the division is appealing that ruling to the Utah Supreme Court.

The criticism regarding Klein came to the forefront during a hearing last week before the House Business and Labor Committee, when four people testified about his perceived failings or the unfair practices within the agency, he said. During the committee meeting, Bird introduced HB83, which would give the state Securities Advisory Board, which oversees the division, the ability to decide which cases to pursue.

The board is made up of independent advisers and now only provides recommendations on what fines the division should levy.

Bird has been a strong critic of Klein's agency and, according to Giani, was a former business associate of Mack.

Klein said the controversy, combined with the legislative audit, has made him feel it would be better for the division if he leaves, to avoid further conflict.

"It just seemed best to for me to step aside before the audit comes out and they make recommendations," he said. "Then someone can come in with a clean slate and implement the recommendations without the baggage that I bring."

Commerce director Giani hired Klein in October 2005. A lawyer with two decades of experience in securities law, he had served in the Utah Attorney General's Office since 1996.

Giani said she considers Klein to be one of the most knowledgeable, competent, and highly regarded people in the field of securities law, and she is sad to see him step down from his post. She attributed much of the controversy to "mischaracterization over what has occurred." But she said she will abide by any and all of the recommendations that come from the auditor's office.

Giani also said she is cautiously optimistic Klein's work and reputation will be vindicated by the audit. "That's my hope," she said.



Saturday, February 9, 2008

The State of Idaho Attorney General Files Suit.. Posted by Robert Paisola

The State of Idaho Attorney General Files Suit.. Posted by Robert Paisola

C. Rick Koerber,the robert paisola foundation, robert paisola, Streamline Financial,Idaho Unifonn Securities Act ,Gavin M. Gee, idaho court filing,Attorneys’ Investigative Services, franklin squires lawsuit,

Moderators Note:

Attorneys’ Investigative Services, Inc. (Not A Western Capital Company) is pleased to announce that we are accepting additional clients who are or may have been victims of Rick Koerber/Franklin Squires et al. Findings from our open
investigation indicate that we may be able to assist many additional
victims of “Equity Milling”. If you would like a free initial
consultation about your specific circumstances, we would be happy to
meet with you at your convenience.

Please contact Steve @:
Attorneys’ Investigative Services, Inc
P.O. Box 65953
Salt Lake City, Utah 84165
Cell (801) 898-2353 or

Attorneys’ Investigative Services, Inc., is a private investigative firm
specializing in investigating matters of civil litigation. Examples of
current areas of investigation include mortgage fraud, real estate
title, odometer fraud, water rights, illegal debt collection,
governmental regulatory compliance, and unauthorized telephone charges.
We also provide expert witness in a variety of fields."






Case No. _C_V_OC_O_7_2_1_97 2 i

VERIFIED COMPLAINT Fee category: Exempt I I

COMES NOW the State of Idaho, Department of Finance, Gavin M. Gee, Director, by and through its counsel, Alan Conilogue, Deputy Attorney General, and upon information and belief, complains and alleges as follows:

1. This action is brought pursuant to the Idaho Unifonn Securities Act (2004), Idaho Code § 30-14-101 et seq. (the Act), and in particular Idaho Code § 30-14-<>03, wherein the Department is authorized to bring actions seeking injunctive and other relief against persons who have either violated or are about to violate provisions ofthe Act or any rule promulgated thereunder.

2. The acts and practices herein comprising violations of law by the above-named defendants occurred in Ada County and elsewhere in the state of Idaho.

Plaintiff alleges that Defendant Michael J. Breinholt, individually and dba as one or more LLCs, and other defendants, have issued securities in the form of promissory notes and investment contracts in an aggregate amount greater than three million dollars ($3,000,000). In ongoing transactions, these defendants take investor money and send it to a Utah company
named Annuit Coeptis, which in turn sends it to another Utah company named Founders Capital.

3.Annuit Coeptis pays Defendants 3% monthly, or 36% annual, interest on the money. Defendants in tum pay the investors typically 1.5% or 2% monthly interest (18% or 24% annually, respectively), keeping the difference for themselves. Defendants failed to register these securities as required by law. Defendants also defrauded investors by misrep~esenting the investment, and by failing to provide required material information.

4. Defendants also participated in a course of business that operated as a fraud or deceit upon investors, in order to increase the amount invested with Defendants, using a model developed by a person sanctioned by the state of Wyoming for violating its securities laws. To help the investors obtain money to invest, Defendants engaged in two types of real estate transactions. Defendants would help an investor get, in effect, a home equity loan. A key component is that Defendants work with certain appraisers and mortgage loan originators who cooperate in obtaining high appraisals and loans at inflated values, in order to maximize the available equity. Money from the home equity loan is then invested with Defendants, who forward it to Annuit Coeptis.

5. These defendants also identify properties that are allegedly undervalued. They will assist the investor in buying the property at the low price, then Will swiftly have it reappraised at a much higher value. The investor will then refinance the property. The difference between the lower purchase price and the subsequent higher appraisal represents equity that the investor can borrow against to provide the proceeds to Defendants.


6. Defendant Home Sweet Home, LLC (HSH) is or was a limited liability company in the State ofIdaho. Due to irregularities with its company records, HSH's current status is not clear.

a. HSH was organized under the laws of Idaho on February 22, 2005, with Michael
J. Breinholt (Breinholt) and Elijah Rich as its managers.

On January 24, 2006 HSH changed its name to Streamline Financial, LLC, and deleted Elijah Rich as a manager, leaving Breinholt as the sole manager and member.

On January 24, 2006, HSH executed several documents in an apparent effort to clean up organizational loose ends and conform company paperwork to records filed with the Idaho Secretary of State. Several documents were back-dated to February 22, 2005, but were actually executed later. HSH executed an operating agreement with an effective date of February 22, 2005, signed by Breinholt and by Becca Breinholt as members. HSH also executed on January 24, 2006 a Unanimous Consent to Action to form and fund the company, back•dated to February 22, 2005, and signed 'by Michael and Becca Breinholt as members. HSH also executed on January 24, 2006 a Joint Consent to Action, signed by both Breinholts, which appointed Michael Breinholt as the sole manager.

d. HSH is and was a mere alter ego for Breinholt, used to effectuate the unlawful sale of securities and fraud as described in this Verified Complaint.

7. Defendant Streamline Financial, LLC (Streamline) is or was a limited liability company in the State of Idaho. Due to irregularities with its company records, Streamline's current status is not clear.

a. Streamline first appears on January 24, 2006, when HSH changed its name to Streamline Financial, LLC and named Breinholt as the sole manager and member.

b. As with HSH, Streamline executed several documents in an apparent effort to
clean up organizational loose ends and conform company paperwork to records filed with the Idaho Secretary of State. Streamline executed an Amended & Restated Operating Agreement with an effective date of February 22, 2005, signed by Breinholt and by Becca Breinholt as members.

I naming Michael and Becca Breinholt as managers.

c. Streamline was administratively dissolved by the Idaho Secretary of State for failure to file the required annual report form on time, but was reinstated on May 17, 2006.

d. Streamline executed a Joint Consent to Action, signed by both Breinholts, that appointed Michael Breinholt as the sole manager. This document was dated August 2, 2006

e. Streamline executed another Joint Consent to Action, signed February 7, 2007,

f. Streamline is and was a mere alter ego for Breinholt, used to effectuate the unlawful sale of securities and fraud as described in this Verified Complaint.

8. John Doe Companies 1,2 and 3 are entities whose exact structure, status and true name are currently unknown. Plaintiff alleges that these companies are and were mere alter egos for Breinholt or other individual Defendants, used to effectuate the fraudulent and unlawful offer or sale of securities as described in this Verified Complaint. This Verified Complaint will be amended pursuant to Idaho Rule of Civil Procedure IO(b)(4) when the true name(s) is(are) discovered.

9. Defendant Breinholt has been a resident of Boise and Meridian in Ada County, Idaho and has conducted business in Idaho during all times relevant herein.

10. John Doe Individuals A, B and C are persons whose true names are currently unknown. Plaintiff alleges that these persons unlawfully and fraudulently offered or sold securities in the same or a similar fashion as Breinholt as described in this Verified Complaint, and made the same misrepresentations and failures to disclose as Breinholt. This Verified Complaint will be amended pursuant to Idaho Rule of Civil Procedure IO(b)(4) when the true name(s) is(are) discovered.

11. John Doe Individuals D, E and F are persons whose true names are currently unknown. Plaintiff alleges that these persons have received and have possession of funds as a result of the violations of law and fraudulent conduct described in this complaint. This Verified Complaint will be amended pursuant to Idaho Rule of Civil Procedure IO(b)(4) when the true name(s) is(are) discovered. These defendants will at all times herein be referred to as the Nominal Defendants.


12. Beginning at least as early as March, 2006, defendants other than the Nominal Defendants began offering and issuing securities in the form of promissory notes and investment contracts. These defendants accepted money in exchange for a promissory note that offered a monthly interest rate of 1.5%, 2%, or 3%. Investors who participated in this common enterprise expected profits from it based solely on the efforts of others.

13. Defendants follow an investment philosophy taught by The FranklinSquires Company, LLC, a company formed by C. Rick Koerber. Koerber professes he coined the phrase "equity milling," which appears to be how returns were generated. Investors refinance their homes and borrow against the accumulated equity, then invest the money with Defendants, thus "milling the equity." A homeowner might pay 6% interest on the equity loan, but will supposedly make 18% to 24% on the invested money.

14. Defendants also offered to find properties for investors to purchase for equity milling. Defendants asserted that they could find undervalued property, help the investor purchase it, and then quickly refinance the property at a higher value. The investor/purchaser could either rent the home or commercial property, or, in the right circumstances, could leave it empty. These transactions occurred during a real estate market characterized by rapidly rising prices. Mortgage lenders believed that loans bore little risk because even if the purchaser defaulted, the property would have risen in value. Since they perceived little risk, lenders loaned money without traditional risk mitigation aspects. Borrowers could obtain loans that required only the interest to be paid for two years or so, and at low interest rates. The carrying costs on the loans were low enough that the 18% to 24% return on the investment would easily make the payments, even without renting the property.

15. Defendants, at all times material herein, were not registered with the State of Idaho or the National Association of Securities Dealers (NASD) (now known as the Financial Industry Regulatory Authority, or FINRA) as broker/dealers, or as broker/dealer agents.

16. The securities issued by Defendants were not registered with the State of Idaho or the NASDIFINRA.


17. In order to induce investors to invest, Defendants, other than the Nominal Defendants, made the following representations, among others:
The investment was guaranteed.
The investment was risk free.
The investment was backed by real estate and precious gems and metals.

d. The returns were generated by "hard money lending." Hard money lending, as used by Defendants, appears to simply mean loaning money. Defendants used the phrase as a ten of art to imply some greater importance to their activities.
e. Defendants, other than the Nominal Defendants, were engaged in "hard money lending."

f. The returns were also generated by purchasing undervalued real estate which was
then somehow made to yield a high return.

18. The statements in the preceding paragraph are false and misleading for these reasons.

a. The investments are not guaranteed. Rather, it appears that payments from Annuit Coeptis to Defendants have stopped and that Defendants do not have sufficient assets to repay investors. Thus, if payments to Defendants from Annuit Coeptis have stopped and yet investors continue to receive payments, such payments can only be coming from ongoing unlawful fundraising by Defendants.

b. The investments are not risk free.
Most if not all of the money placed with Defendants was sent to a Utah company, Annuit Coeptis, which then forwarded it to another Utah company, Founders Capital. Defendants did not invest it in real estate or precious gems and metals.

The returns were not generated by "hard money lending." Defendants did little or no lending. They borrowed money, issued securities in the form of promissory notes and investment contracts, and sent the money to Annuit Coeptis. Annuit Coeptis forwarded the money to Founders Capital.

e. Defendants were not engaged in "hard money lending." If Defendants loaned money, it was not in amounts as to be a significant source of returns for the investments.

f. The investments were not used by Defendants to purchase real estate. Most, if not
all, of the investment monies were placed with Annuit Coeptis and other companies.
Material Omissions

19. Defendants did not tell potential investors certain information that would be necessary to make other statements not misleading, and that an investor would likely consider as material to a decision to invest with Defendants. Defendants failed to disclose the following material information:

a. That the author of the equity milling capital accumulation plan, C. Rick Koerber, was the subject of an administrative action by the State of Wyoming. The action resulted in a Stipulated Order that forbid future violations of Wyoming Securities law;

b. Information on about Defendants' financial condition or operating history;

c. That some investors, including those related to Defendants, received higher rates of return than other investors;

d. The amount and type of compensation paid to Defendants;

e. That most if not all of the investment money was forwarded to other entities for investment with yet another entity;

f. That the other entities paid higher rates of return than was offered to Defendants

g. That investor money would eventually be forwarded to an entity or entities controlled by Koerber; .!

That Defendants were not registered as agents to sell the securities, as required by the Idaho Uniform Securities Act (2004);

That the securities issued by Defendants were not registered as required by the Idaho Unifonn Securities Act (2004).

20. Beginning at least as early as March, 2006 and continuing at least through July 2007, Defendants other than the Nominal Defendants issued at least 33 unregistered securities to at least 25 investors. The aggregate face amounts of the securities issued is three million one hundred thirty nine thousand four hundred dollars ($3,139,400). Plaintiff believes that Defendants have been and are continuing to issue such securities, and the actual face amount issued in violation of Idaho law is much higher.

(Fraud -False and Misleading Statements)
21. The allegations of paragraphs 1 through 20 above are real1eged and incorporated herein
as if set forth verbatim.
22. Idaho Code § 30-14-501(2) provides that it is unlawful for any person, directly or indirectly, in connection with the offer, sale or purchase of a security, to make an untrue statement of material fact or omit to state a material fact necessary in order to make the statements made, in the light ofthe circumstances under which they were made, not misleading.

23. Defendants' misrepresentations to prospective investors as set forth in paragraphs 17 and 18 were made in connection with the offer, sale or purchase of securities. Defendants' misrepresentations, as specifically set forth in paragraphs 17 a through f above, were false and misleading, constituting violations of Idaho Code § 30-501(2) as to each misrepresentation to each investor.

24. Defendants' omissions of material facts and failures to disclose to prospective investors as set forth in paragraph 19 were made in connection with the offer, sale or purchase of securities. Defendants' omissions of material facts and failures to disclose, as specifically set forth in paragraphs 19 a through i above, constitute violations of Idaho Code § 30-501(2) as to each omission and failure to disclose to each investor.

(Fraudulent Conduct)

25. The allegations of paragraphs 1 through 20 above are realleged and incorporated herein as if set forth verbatim.

26. Idaho Code § 30-14-501(3) provides that it is unlawful for any person, directly or indirectly, in connection with the offer, sale or purchase of a security, to engage in an act, practice, or course of business which operates or would operate as a fraud or deceit upon any person.

27. Defendants' acts as set forth in paragraphs 1 through 20 were made in connection with the offer, sale or purchase of securities. Their conduct as described in paragraphs 1 through 20 constitutes engaging in transactions, acts, practices, or courses of business which operate or would operate as a fraud or deceit upon investors or prospective investors, in violation of Idaho Code § 30-14-501(3) as to each victim.

COUNT THREE (Unregistered Securities)

28. The allegations of paragraphs 1 through 20 above are realleged and incorporated herein as if set forth verbatim.

29. Defendants issued, sold or offered for sale in Idaho securities in the form of promissory notes and investment contracts. Such securities were not registered with the Department as

required by Idaho Code § 30-14-301.

30. The Defendants' failure to register such securities with the Department constitutes a violation of Idaho Code § 30-14-301.

COUNT FOUR (Failure to Register)

31. The allegations of paragraphs 1 through 20 above are realleged and incorporated herein as if set forth verbatim.
32. Defendants, other than the Nominal Defendants, transacted business in Idaho as broker dealers. No Defendant was registered as a broker-dealer with the Department as required by Idaho Code § 30-14-401(a).

33. Defendants' failure to register as broker-dealers with the Department constitutes a violation of Idaho Code § 30-14-301.

34. Defendants, other than the Nominal Defendants, transacted business in Idaho as agents of broker-dealers or of issuers. No Defendant was registered as an agent with the Department as required by Idaho Code § 30-14-402(a).

35. Defendants' failure to register as agents with the Department constitutes a violation of Idaho Code § 30-14-402(a).

COUNT FIVE (Constructive Trust)

36. The allegations of paragraphs 1 through 20 above are realleged and incorporated herein as if set forth verbatim.

37. Plaintiff alleges that Defendants other than the Nominal Defendants transferred funds obtained through the unlawful and fraudulent transactions described in this complaint to the Nominal Defendants, also known as John Doe Individuals D, E and F. Such funds were obtained by Defendants other than the Nominal Defendants under circumstances rendering it unconscionable for the Nominal Defendants to use or retain the funds or proceeds from them. The Nominal Defendants have no legal or equitable right, claim or interest in such funds, and would be unjustly enriched if allowed to retain the funds and/or proceeds of them. Therefore, equity requires that a constructive trust or equitable lien be imposed on the funds and proceeds, and that the funds and proceeds be conveyed to the Plaintiff forthwith as restitution for the investors. The amount of the funds and proceeds will be proven at trial.


WHEREFORE, the Department prays for judgment in favor of the Department and against Defendants as follows:

1. That Defendants, other than the Nominal Defendants, be adjudged to have violated the Idaho Uniform Securities Act (2004), Idaho Code § 30-14-101 et seq., rules promulgated thereunder, and other applicable federal laws and regulations as proven at trial, as to Counts One through Four alleged above, as well as any additional counts proven at trial.

2. That Defendants be permanently enjoined from engaging in any act or practice violating any provision of the Idaho Uniform Securities Act (2004) or any rule promulgated thereunder, pursuant to Idaho Code § 30-14-603(b)(1), and in particular, that they be permanently enjoined from:

Selling or offering for sale nonexempt securities in any form in the state of Idaho without first registering them with the Department in accordance with Title 30, Chapter 14, Idaho Code;
Selling or offering for sale nonexempt securities in any form in the state of Idaho without first becoming registered as a broker/dealer and/or broker/dealer agent with the Department in accordance with Title 30, Chapter 14, Idaho Code;

c. In connection with the offer, sale or purchase of any security, directly or

material fact necessary in order to me the statements made, in light of the circumstances under which they are made, not misleading;

iii. Engaging in any act, practice or course of business that operates or would operate as a fraud or deceit upon another person.

3. That Defendants be ordered to pay a civil penalty of up to $10,000 for each violation of the Act as the Court deems appropriate, pursuant to Idaho Code § 30-14~ 603(b)(2)(C), for total penalties of at least $500,000, and that the court award a money judgment in favor of Plaintiff in such amount.

4. That Defendants be ordered to disgorge all money rightfully belonging to the investors, in amounts to be proven at trial, pursuant to Idaho Code § 30-14-603(b)(2)(C).

5. That Defendants be ordered to make restitution to investors, pursuant to Idaho Code § 30-14~603(b)(2)(C).

6. That the Court impose a constructive trust or equitable lien on all funds and proceeds fraudulently obtained from investors and transferred to the possession or control of the Nominal Defendants, aka John Doe Individuals D, E and F, in an amount to be proven at trial, so that such funds may be conveyed by the Plaintiff as restitution to the investors.

7. That the court unwind any transfers by Defendants of investor funds and
transferred to the Nominal Defendants, pursuant to the "Unlawful Transfers" provision of Chapter 9, Title 55, Idaho Code, and in particular, Idaho Code § 55-903

8. That Plaintiff be awarded attorney fees and costs incurred in the preparation and prosecution of this action, pursuant to Idaho Code § 12-121, and that the court award a money judgment in favor of Plaintiff in such amount. Should judgment be taken by default herein, Plaintiff asserts that $5,000 is a reasonable sum for the same.

9. For such further relief as this Court may deem just and equitable under the circumstances.

From the Idaho State Attorney General

Thursday, February 7, 2008

Utah Mortgage Fraud, Jennifer Swaney, Posted by Robert Paisola


How Mortgage Fraud Works: From CNN- Posted by Robert Paisola

This video is from the show Open House on CNN. This video briefly explains how a flipping scam works and what to look out for so you are not another victim!

Live from CNN: Foreclosure Nightmare, Posted by Robert Paisola

This video is from the show Open House on CNN. Homeowners in trouble facing short sale or foreclosure should be careful when answering to unsolicited mail, phone calls or emails. A HUD representative and a legal services representatives explain what homeowners should watch out for and what to do..

Live from CNN: Countrywide Forecloses on Couple, Posted by Robert Paisola

This video is from the show Open House on CNN. Homeowners in trouble facing short sale or foreclosure should be careful when answering to unsolicited mail, phone calls or emails. A HUD representative and a legal services representatives explain what homeowners should watch out for and what to do

1 in 700 Homes in Foreclosure from Fraud, Posted by Robert Paisola

Consumer advocates and legal experts are advising homeowners to watch out for scams as foreclosure rates shoot through the roof. One popular scam is the offer to help a troubled homeowner get a new mortgage, and at a closing, trick the homeowner into sign away the deed to the property.

Families Facing Foreclosure from Fraud, Posted by Robert Paisola

Wednesday, February 6, 2008

Live from Las Vegas- Another Mortgage Scam, Posted by Robert Paisola

House Hearing on Mortgage Foreclosures: Posted by Robert Paisola

Mortgage Fraud 101 in Spanish, Posted by Roberto Paisola

Val E. Southwick Prosecution : Posted by Robert Paisola

Val E. Southwick, a smooth-talking businessman who sometimes used his LDS faith to persuade potential investors to part with their money, was charged Wednesday with nine felonies in what federal and state authorities describe as a massive Ponzi scheme that bilked about 800 investors out of as much as $180 million.

Criminal charges filed in state court and a federal civil complaint say the Ogden businessman used a spider web of 150 or so interconnected companies to raise $445 million over 17 years of operation from banks and professional and unsophisticated investors. The latter included at least several elderly investors who, on promises of high returns and that their money was safe, invested their entire life savings with Southwick at a time when his companies were broke.

"Mr. Southwick had such enormous personal appeal that they all believed him," said Wayne Klein, the director of the state Division of Securities.

The massive fraud may be the largest in Utah history. Among creditors are several hundred Utahns and investors from 29 other states and three foreign countries.

The criminal charges and a civil complaint filed in federal court by the U.S. Securities and Exchange Commission were filed after negotiations, said Max Wheeler, Southwick's attorney. Southwick has agreed to plead guilty in the state case and reach an agreement with the SEC over the civil
complaint, though details are still pending, Wheeler said.

"Val is prepared to acknowledge mistakes were made and has agreed to cooperate with both the state and federal governments to try to get to the bottom of what happened and to make an attempt to minimize the negative impact on investors," said Wheeler. The attorney added that Southwick had been advised not to speak publicly.

Several investors said Wednesday they were happy to see the charges but were critical that it had taken state and federal regulators so long to prosecute Southwick.

"Here's one of the biggest criminals that has ever been in the history of Utah and they're treating him like he's a VIP or something," said Jonathan Horne, who invested $2.1 million after meeting personally with Southwick in January 2005.

Said Brad Hatch, of Spanish Fork, who invested $125,000 in 2002 after getting a sales pitch from Southwick: "There's a bunch of us who feel like if they hadn't been dragging their feet we wouldn't be out of our life savings."

Klein said the state has been investigating Southwick since October 2006 but has been hampered by the complexity of the case, the lack of financial records and audits of the companies, and by investors who did not cooperate. Of 817 letters sent to investors seeking information, only about a quarter responded. The majority apparently believed Southwick's promises to repay them and heeded his warning that cooperation with regulators might slow the return of their money.

Southwick lured investors with promises of high returns, competent management and promises that their money was safe, according to an investigative summary released by the Division of Securities. He also relied on his membership in the LDS Church, according to investigators and several investors.

"Southwick emphasized his membership and ecclesiastical roles in The Church of Jesus Christ of Latter-day Saints during solicitation meetings with investors," the investigative summary says. "Southwick showed his LDS Temple Recommend, or mentioned its existence, to several investors, and his office contains LDS 'memorabilia,' all of which appeared designed to breed a sense of trust between Southwick and investors."

Instead of Southwick secure investments paying as much as 24 percent a year, he "operated a massive Ponzi scheme, paying existing noteholders with funds from new investors," the SEC complaint says. The millions of dollars, much of which is not accounted for, often was used to repay earlier investors and cover living expenses for Southwick and his family.

Southwick, 62, faces up to 15 years in prison on each state felony count. The SEC is seeking unspecified fines, a return of monies obtained through fraud and to enjoin Southwick and associates from engaging in future fraudulent behavior.

Southwick filed for bankruptcy in federal court in Utah through one of his companies, VesCor Capital Inc., in May 2007, about a year after he stopped paying investors promised interest. Other related companies are in bankruptcy court in Nevada.

The state investigation is continuing and could lead to criminal, civil and administrative actions against people who sold millions of dollars worth of securities on behalf of Southwick, said Klein, who recently said he would resign his position after questions arose about the operation of the Division of State Securities and his management style.

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