by Brian Mahany
American ingenuity – it can be used for good purposes or evil. Frederic Gladle of Austin, Texas is behind bars tonight because he chose the latter. The story of his crime is quite fascinating.
Everyone knows someone who has lost their home to a foreclosure or is dangerously close to one. The number of Americans who are underwater on their homes is staggering – its in the tens of millions. The foreclosure crisis has created a booming cottage industry – foreclosure rescue. Unfortunately many of the industry’s players are fraudsters. They represent the worst of humanity – criminals praying on desperate people. Frederic Gladle is today’s poster child.
Federal prosecutors charged him with bankruptcy fraud and identity theft. Earlier this year he pleaded guilty and is awaiting sentencing in March.
According to published reports, Gladle marketed to homeowners in imminent danger of losing their home. For a “fee” of $750 per month, he would help delay the foreclosure and homeowners stay in their homes. His method at first blush seems ingenious but obviously it landed him in the “Gray Bar Hotel.” It didn’t work for his clients either.
Gladle had homeowners sign a deed creating a fractional interest in the home. He would then put those deeds in the names of people who had filed a bankruptcy. Under federal law, a bankruptcy filing creates an automatic stay in which creditors can’t pursue any collection action without further order of the court. By randomly finding people who had filed for bankruptcy and placing a portion of the home in their name, lenders were “stayed” by the bankruptcy court.
The result he advertised was an extra 6 months for the homeowners. It appears many of the homeowners didn’t understand what exactly he was doing. Prosecutors say that in some cases he forged their names on deeds.
Lest you think that no one would sign up for this scam, prosecutors say that Gladle collected approximately $1.5 million. Desperate families will take drastic measures to stay in their homes. Whatever he promised them, the scam didn’t work. Most of the families are out on the street and $4,500 poorer (assuming he was charging for 6 months of his service.)
Although not yet sentenced, Gladle is being held without bail. U.S. Magistrate Judge Andrew Austin had this to say about Gladle’s bail request, “The defendant has pled guilty to a scheme that involved, among other things, his aggressive attempt to hide his identity. He was found in possession of at least two false driver’s licenses, and there is ample evidence of the defendant’s knowledge and use of electronic and other means to hide his location and identity. On top of this, the scheme resulted in gross receipts of at least $1.4 million, and the government has recovered only a fraction of this amount of money. It is unknown where the vast majority of this money went, whether it has already been spent, and whether any substantial amount remains available to the defendant. Finally, given his past actions, the defendant lacks the credibility to make any statements that the Court can rely on regarding his intentions were he to be released.”
There are alternatives to bankruptcy but homeowners should be vary wary of companies that promise to renegotiate their loan or keep them in their house. We recommend looking for non-profit entities or lawyers that have been in business for several years. While there is nothing to say that many of the newcomers to the foreclosure rescue industry aren’t providing a good service – there are just too many phony mortgage rescue “consultants” and start-ups out there today.
The fraud lawyers at Mahany & Ertl represent homeowners, mortgage lender employees, net branch managers and whistleblowers in large class actions and federal false claims act (Lincoln law) cases. Generally we do not represent individual homeowners unless local to one of our offices. We are interested in all cases, however, where the lender or loan servicing company has acted illegally or unethically.
For more information contact attorney Brian Mahany at (414) 704-6731 (direct) or by email at Calls and emails are kept confidential. Comments on this or other blog posts are welcome, however, confidential information should not be posted as a comment on our blog!
Mahany & Ertl – America’s Fraud Lawyers. Offices in Milwaukee, Wisconsin; Detroit, Michigan; Portland, Maine & Minneapolis, Minnesota. Services available in many other jurisdictions.