Friday, February 06, 2009


Trend of the Day: Squatting on foreclosed homes

Experts say instances of people renting out homes over which they have no legal right are increasingly common.

Squatters have been found living in foreclosed homes nationwide, and homeless advocates in many cities are arguing for their right to do so.

—Sam Stanton reporting in "Bizarre signs come out as mystery pair move into upscale Sacramento neighborhood"

I found the case as well as Stanton's reporting quite interesting—

Sacramento police were in one of the city's most affluent neighborhoods Tuesday investigating a scheme with a twist: claims that the house involved is under the protection of a sovereign republic and that trespass could be met with "self defense" and "justifiable homicide."

The bizarre case unfolded Tuesday in a gated West Natomas neighborhood that boasts million-dollar homes and some of the city's most prominent residents – think members of the Maloof family.1

At issue is a 3,361-square-foot home on Clubside Lane that sold in 2006 for $865,000, assessor's records show. Neighbors say the home has been on the market seven times since then and that the last owner moved out more than a year ago.

What on earth does this mean? Has the home been bought or repossessed seven times since 2006?

It's been vacant ever since.

It needed a rest.

That all changed over the weekend, when lights suddenly came on and a middle-aged couple started moving stuff in.

About the same time, two printed signs appeared on the front window, one of them warning against trespassing and claiming the home was the "Private Property of sovereign Woman of republic of California" and that federal and state employees could not access the property.

The sign mentioned "freeman," an apparent reference to the radical anti-government group that gained fame in 1996 during an 81-day standoff with federal authorities in Montana.

It also referred to the occupants' right to "Self-Preservation – Right To Repel Force By Force – Self Defense – Justifiable Homicide."

What we have here may be a case of a right-wing haunting, which would explain all the comings and goings.

It's just not something you'd expect to find on a block where your neighbors include the owners of the Sacramento Kings; former Kings star Mike Bibby; California State University, Sacramento President Alexander Gonzalez; and Sacramento Assistant City Manager Gus Vina.

No, it's really just not the thing. Something should be done. Something was—

Police were called, and Tuesday morning, real estate fraud detective Mike Wood showed up to talk to the tenants.They produced a contract allowing them to rent the four-bedroom, 3.5-bathroom home with a pool and fireplace for $1,500 a month, police said.

What a deal!

That contract carried the name of Sacramento real estate broker Phillis Powers, police said, the same person listed in one of the window signs as the contact for information on the home.

As the investigation continued, Wood learned that the home had been purchased at auction last Thursday by Aurora Loan Services Inc. of Littleton, Colo., and that Aurora did not know who Phillis Powers was or why someone was living in the home.

"They said the place should be empty," said police spokesman Norm Leong.

A bank spokeswoman referred calls to Aurora's parent company, Lehman Brothers Bank. (Aurora's Web site states that it is not part of the bankruptcy filing of Lehman Brothers Holding Inc.). A spokeswoman at Lehman Brothers Bank did not return a call.

Now I'm confused. Are there two banks involved? And will Lehman Brothers speak to the reporter or won't they?

Powers did not respond to three messages left on her phonemail Tuesday. The tenants told police they did not want to speak to the media and did not respond to knocks at the door.

A call to the cell phone number listed for one of the renters – Carver Barney, 57 – was answered by a man who insisted he was not Barney and that he had been reached through a wrong number. A second call to the same phone produced a man who said he was Barney's brother-in-law and that Barney was unavailable.

Will no one besides the police and the neighbors talk to this poor reporter? Don't they realize he has a deadline to meet?

Police say they do not know whether the tenants were victims or participants in an alleged scheme. But Wood, the fraud detective, said he dealt with Powers in a past case involving an Elk Grove home.

"On the one instance I had before, the house was for sale and the Realtor who was representing the bank came over and found someone living in it," Wood said.

Nothing came of that case. The tenants moved out before Wood could question them, he said.

More likely they heard that reporter Stanton was on the way.

Wood said he has arrested people for advertising rental homes on the Internet illegally, and former U.S. Attorney McGregor Scott said the types of foreclosure scams being discovered continue to grow.

"I wish I could tell you there's something novel about it, but there isn't," said Scott, now a partner in the Sacramento law firm Orrick, Herrington & Sutcliff. "You have vacant homes that were foreclosed on and real estate agents renting the home out to tenants...."

There's nothing novel about this? I really must get out more. On second thought maybe I shouldn't.

In the Natomas case, police said they were concerned about the language on the signs in the windows and confiscated them as evidence.

Evidence of what?

A nationally known expert on groups such as the Freemen said real estate frauds involving its followers pop up regularly.

"The Freemen are an offshoot of the Posse Comitatus movement, which maintains there is no legitimate government beyond the county level," said Brian Levin, director of the Center for the Study of Hate & Extremism at California State University, San Bernardino.

"They really don't believe that any of these laws apply to them, so from time to time you'll see this type of thing bubble up, from squatting on property that isn't their own or buying something with a fraudulent cashier's check."

Finally I understand what our politicians have been up to—they've joined the Freemen. And all this time I was thinking they were just corrupt!

Sacramento police said their probe continues into possible charges of fraud, burglary and trespassing but that it is not clear whether charges will be filed or the tenants evicted.

When I consider the financial condition of Lehman Brothers, I suggest they continue to collect the rent.

Meanwhile, neighbors say they aren't sure what to think.

"I understand people are in desperate situations," said 71-year-old Jim May, who lives next door. "This just seems odd."

As the Depression deepens, the novelty will quickly pass.



1I tried to think of members of the Maloof family and could not think of even one. A little googling revealed the name Joe Maloof, owner of the Sacramento Kings basketball team. [back]

Thursday, February 05, 2009


Factlet of the Day: Proposition 8 donations

Proposition 8 drew more donations in California this year than any other ballot initiative — and about as much money as President-elect Barack Obama collected in the state.Sacramento Bee

Proposition 8, you may recall, amended California's State Constitution to forbid same-sex marriages.

If you follow the link you can find two lists of individual donors—supporters and opponents. Unfortunately the groups have been merged in the list of organizational donors, leaving us to wonder if Cal Fruit International was a supporter or an opponent.


Monday, February 02, 2009


Scariest Headline of the Day

Chinese Cautious on Treasury Notes —headline in the NY Times

The story from Reuters appeared in the Time's World Business section. Here's the complete story—

China’s willingness to continue buying United States Treasury securities in large numbers will depend on its need to protect the value of its foreign investments, the Chinese premier, Wen Jiabao, said Saturday. He also said that a stable yuan is in everyone’s interests.

Whether we will buy more U.S. Treasury bonds, and if so by how much — we should take that decision in accordance with China’s own need and also our aim to keep the security of our foreign reserves and the value of them,” Mr. Wen said.

His enigmatic remarks, made near the end of a visit to Europe, could raise new concerns about China’s commitment to continue purchasing United States government debt.

Why the Reuters reporter found Wen's remarks "enigmatic"—besides that Wen is Chinese and therefore "inscrutable" to Westerners—I cannot say. There is nothing enigmatic about his remarks at all, as you will see.

In early January Keith Bradsher reported

The overall pace of foreign reserve accumulation in China seems to have slowed so much that even if all the remaining purchases were Treasuries, the Chinese government’s overall purchases of dollar-denominated assets will have fallen, economists said.

China’s leadership is likely to avoid any complete halt to purchases of Treasuries for fear of appearing to be torpedoing American chances for an economic recovery at a vulnerable time, said Paul Tang, the chief economist at the Bank of East Asia here.

This is a political decision,” he said. “This is not purely an investment decision.

The Chinese signaled that they were willing to play nice and continue to buy dollars, which is to say, American debt, thus keeping the interest rate low on that debt—not to mention keeping down the price of Chinese exports.

Then Tim Geithner had to testify in a Senate confirmation hearing and upset the apple cart by appeasing certain Senators—

... a row intensified over Beijing's exchange rate policy after new U.S. Treasury Secretary Timothy Geithner branded China a currency manipulator last week, using a term the previous administration avoided for years.

A Chinese diplomat said Washington had enough evidence to know China does not manipulate its exchange rate.

"I don't think it's fair all of a sudden to change the position of the U.S. government," the diplomat said....

In fact, Geithner's remarks went beyond Geithner's beliefs and implicated Obama. As Jackie Calmes reported over a week ago—

Timothy F. Geithner ... told senators that President Obama believed China was “manipulating” its currency, suggesting a more confrontational stance toward that country than under the Bush administration.

An administration official said that Mr. Geithner was only repeating what Mr. Obama had said during the campaign, and pointed out that his statement also emphasized that the president intended to use “all the diplomatic avenues available to him” to address the currency question.

It remained unclear whether Mr. Geithner was signaling that Mr. Obama would officially declare later this spring that China was engaging in currency manipulation, when the administration is required by a 20-year-old trade law to report to Congress on exchange rate issues. Such a finding would begin a legal process that starts with diplomacy and could end with the imposition of trade barriers like tariffs.

So this weekend the Chinese head of government (Wen) signaled to the American head of government (Obama) that he'd better watch out—China will not be toyed with. Put more diplomatically, Obama has just had his face slapped.

A former chief economist at the IMF summed up the risk—

I have to say this is really a bit of an issue for Mr. Obama’s internationalist sort of theme for his foreign policy because this is going to be at least a spat with China, and if we don’t back down it’s then a row, and you know how that goes.

Only an economist could be so glib. Actually, none of us knows how that goes, which is what makes it so scary.

Last summer amidst calls for Bush to boycott the opening of the Peking Olympics and before the banks had officially begun to collapse, Bush said that such a boycott "would be an affront to the Chinese people." Bush didn't care any more about the Chinese people than he did about the American people, but his handlers knew enough to tell him that he'd better get his butt on a plane heading for Peking.

China seems to be the hole in Obama's foreign policy and is certainly a threat to his economic policy. If sustaining the current financial system is Obama's intention—as it appears to be—don't be surprised to hear someday soon that he has boarded Airforce One for a summit in Peking. If he carries along a hat, it will be in his hand.

2/03/08 — 7:02: Rereading this I realize I'm showing my age. Instead of writing "Peking" I should have written the more modern "Beiching." But who ever ate Beiching duck?

Related post
China shakes the dollar market (11/09/07)


Sunday, February 01, 2009


Crime of the Day: Library delinquency

Thirty-nine-year-old Shelly Koontz was arrested Thursday night on a fifth-degree theft charge. She is accused of keeping "The Freedom Writers Diary," which she checked out from the public library in nearby Jesup in April. —story from the AP

And what was this criminal's defense? According to Orlan Love and Jeff Raasch,

“It was my fault, and I should have had it back, but I was busy,” Koontz, 39, a third-shift worker at Deere & Company in Waterloo, said. Koontz is a single mother of two teenage daughters and is helping raise a grandson. She said she was engaged in moving her family from Jesup to Independence in October, when the library turned the matter over to police.

Clearly she had no time for books. This is a classic case of greed.

But American justice is impartial. Whether you "steal" a library book or $50 billion, as in the case of Bernie Madoff, you are taken to the police station, booked, then allowed to go home.

In this instance, though, it might have been cheaper and more sensible to send her a bill for the book, then cut off her library privileges until it was paid. On the other hand there is something to be said for keeping the police occupied.


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