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Mar
23
Written by:
Chuck Gallagher
3/23/2008 5:42 PM
The target - people drowning in debt, their nose barely above water, needing help. The solution (so they thought) was the Dorean Group. The outcome - a big fat scam. There is no such thing as a free ride.
Kurt F. Johnson, age 45, and Dale Scott Heineman, age 48, were sentenced last week for their roles in creating this national debt elimination scheme. Johnson will spend 25 years in federal prison (that's 55% of his life thus far) - exiting prison after his 65th birthday. Heineman was sentenced to 21 years - likewise, exiting after his 65th birthday.
Can you imagine being in the prime of your life and finding yourself facing, what could be the most productive years of your life, in federal prison? Sad.
According to the US Attorney's news release:
From 2003 to 2005, Mr. Johnson and Mr. Heineman operated as the Dorean Group from offices in Union City and Newark, California. Together they orchestrated a mortgage elimination scheme whereby fraudulent documents were recorded as part of their clients’ titles to make it appear as though mortgage lenders’ secured interests in the properties were canceled when, in fact, the corresponding mortgage and home equity loans had not been fully repaid. At the direction of the Dorean Group, some of its clients used these fraudulently-generated “free and clear” titles to obtain hundreds of thousands of dollars in new home equity loans from lenders who were led to believe that the properties were unencumbered by loans. Clients who obtained new loans paid 50-75% of the funds to the Dorean Group. At least 20 lenders and as many as 3,500 homeowners throughout 35 states were victimized by Mr. Johnson, Mr. Heineman, and the Dorean Group.
A Dorean Group “broker” charged with participating in the conspiracy was also sentenced along with Mr. Heineman and Mr. Johnson. In August 2007, William Julian, 44, of Cayce, South Carolina, pleaded guilty to conspiracy to commit mail fraud, wire fraud, and bank fraud. Mr. Julian was sentenced to 5 years imprisonment.
Information related to the scheme was reported on scamfraudalert.com in 2005. An excerpt is shown here:
Dorean Group, headquartered in suburban Oakland, California, uses independent agents to promote its program. One such representative, Capital Creation Resource, describes the program on its website (www.ccrsolution.com). After paying a $3,000 fee, the homeowner agrees to place the title to their home in a family trust, then present the lender a document that contains 40-50 “legal” challenges to the loan. Dubbed the “CPA Report”, this document outlines 40-50 claimed “violations” of federal laws committed by the lender. The lender must respond with proof of the validity of the loan. When the lender fails to respond, a power of attorney is filed which gives the trustees authority to act on behalf of the lender. Using the power of attorney, a “Discharge of Mortgage” is filed certifying that the loan has been fully paid.
The next step is to apply for refinancing on the home. Once obtained, the homeowner, their Dorean Group Agent and Dorean Group divide the funds. This new loan is then “eliminated” using the same technique.
The BBB’s investigation led it to the Cuyahoga County Recorder’s office where evidence was found of several properties involved in this activity. All had a quitclaim deed filed giving ownership of the home to the trust. Two Dorean officials appear as trustees on these quitclaims, D. Scott Heineman and Kurt F. Johnson. These same individuals appear on power of attorney and discharge of mortgage paperwork.
Obviously the Better Business Bureau was on to something in early January of 2005 as both were indicted by a grand jury on September 22, 2005.
VICTIM OR NOT? It has been reported that as many as 3500 homeowners have been victimized. What may be controversial is whether these folks were "victims"? I have no doubt that they have suffered losses and extreme trouble as a result of Johnson and Heineman's scam. But, are they victims? That question tends to evoke emotion. But in order to be a victim there need to be several parts that come together at essentially the same time: (1) No knowledge; (2) no personal gain; and (3) direct suffering as a result.
I submit that the 3500 homeowners did not know they were being scammed - true - but were seeking a way out of debt that clearly was legally manipulative in hopes that they could get more money and eliminate debt. The "victims" had a vested interest in the process and outcome - and had it worked, would have been unjustly enriched. The fact that it didn't doesn't mean they were "victims." What is does mean is they were gullible, duped and at the core was the desire to gain something for nothing.
Now let me be clear - you don't have to commit the crime in order to have played a part in the overall drama. And, if, in any way, you played a part, then you can’t be a VICTIM. If you played a role in a scheme to get legitimate debt eliminated, you are not victimized as the motivation was to victimize the debt holder. While I know that statement will be unpopular, it is nonetheless right.
As a speaker on white collar crime and business ethics, I often say: "Every choice has a consequence!" Again, with substantial prison sentences issued once again the fact that you reap what you sow has come true. Remember, only positive choices can yield positive results.
Feel free to comment - especially if you were duped by this group. Your comments may help others!
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I attended Middle and High School with "Bill" Julian. Then he came to work with me in the wireless industry. He was shady then.
This news does not surprise me at all...
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