Former Lawyer Sentenced to 15 Years in Mortgage Bailout Frauds

Former Chicago Lawyer Sentenced to 15 Years in Prison for Mortgage Fraud Involving at Least 102 Fraudulent Bailouts
U.S. Attorney’s Office  -  January 20, 2012  -  Northern District of Illinois  -  (312) 353-5300

CHICAGO, IL —A former Chicago lawyer was sentenced to 15 years in federal prison for engaging in mortgage and bankruptcy fraud schemes involving a so-called “mortgage bailout” program that purported to “rescue” financially distressed homeowners but instead tricked victims into relinquishing title to their homes and declaring bankruptcy. The defendant, Norton Helton, participated in at least 102 fraudulent mortgage bailout transactions and more than a dozen fraudulent bankruptcies in 2004 and 2005. He was ordered to pay more than $3.2 million in mandatory restitution to various lenders and financial institutions that were not repaid by the borrowers or fully recovered through subsequent foreclosure sales, federal law enforcement officials announced today.  Helton, 50, of Atlanta and formerly of Chicago, was sentenced Wednesday by U.S. District Judge Samuel Der-Yeghiayan in federal court in Chicago. He was ordered to begin serving his sentence in June.  Helton and two co-defendants, Charles White and Felicia Ford, were convicted of multiple fraud counts following a five-week trial in June and July 2010. White, 43, of Chicago, was sentenced late last year to more than 22 years in prison, while Ford, 39, of Chicago, is awaiting sentencing next month.  White owned and operated Eyes Have Not Seen (EHNS), which purported to offer insolvent homeowners mortgage bailout services that would prevent them from losing their homes in foreclosure by selling their property to third-party investors for whom the defendants fraudulently obtained mortgage financing. The victim-clients were assured they could continue living in their homes rent and mortgage-free for a year while they attempted to eliminate their debt and repair their credit. EHNS misled clients concerning the operation of the purported program. In particular, victim-clients were not told that their homes were, in fact, being sold to third parties and that ENHS would strip their homes of any available equity at the time of sale, which EHNS did. Instead, ENHS clients were told that they were only temporarily transferring their homes and would preserve their ownership rights.  Helton was recruited by White to represent ENHS participants at the real estate transactions it orchestrated. The victim-clients typically met Helton for the first time at the closings at which they sold their homes. Helton worked to placate individuals who questioned the program and to dissuade them from retaining independent legal advice. He received above-market legal fees for appearing at closings at which he did little more than guide victim-clients through the paperwork that sold their homes with EHNS receiving all of the profits from the sale. Helton further used the ENHS real estate closings to recruit prospective bankruptcy clients, informing them that bankruptcy would serve as a component of the bailout program. Helton subsequently filed more than a dozen bankruptcy petitions for victim-clients that omitted any reference to their recent EHNS property sales.  In addition to participating in ENHS’s bailout program, Helton attempted to implement his own mortgage bailout program through Diamond Management of Chicago, Inc., a foreclosure avoidance company comparable to EHNS. Helton marketed Diamond’s bailout program and his bankruptcy services as part of a “credit repair” system.  Patrick J. Fitzgerald, United States Attorney for the Northern District of Illinois, announced the sentence today with Robert D. Grant, Special Agent in Charge of the Chicago Office of the Federal Bureau of Investigation; Barry McLaughlin, Special Agent in Charge of the U.S. Housing and Urban Development Office of Inspector General in Chicago; and Thomas P. Brady, Inspector in Charge of the U.S. Postal Inspection Service in Chicago. The U.S. Trustee Program, a Justice Department component that oversees administration of bankruptcy cases and private trustees, also assisted in the investigation.  The government is being represented by Assistant U.S. Attorneys Joel Hammerman and Mark E. Schneider.  The case is part of a continuing effort to investigate and prosecute mortgage fraud in northern Illinois and nationwide under the umbrella of the interagency Financial Fraud Enforcement Task Force, which was established to lead an aggressive, coordinated, and proactive effort to investigate and prosecute financial crimes. For more information on the task force, visit: www.StopFraud.gov.

Related Background Story:

Lawyer convicted of mortgage-rescue fraud
The Chicago Tribune by Ameet Sachdev - July 13, 2012

Norton Helton, a former Chicago attorney who once offered personal-finance advice on the radio, was found guilty Friday of bilking distressed homeowners through a fraudulent foreclosure rescue program.  His conviction offers a cautionary tale for delinquent borrowers who are the most vulnerable to the myriad of mortgage fraud swindles. Helton was involved in a scheme when the housing market was on the way up. But suspect foreclosure assistance programs have become more rampant during the housing downturn, according to federal law enforcement.  Helton was the subject of a 2006 Tribune investigation into mortgage fraud. In its investigation the Tribune found that in 2005 Helton helped persuade a 91-year-old woman to sign over her sole asset, a brick home on Chicago's West Side co-owned with her nephew.  Nine months after the story was published, federal prosecutors charged Helton with bankruptcy fraud for allegedly concealing home sales from U.S. Bankruptcy Court. The nephew, Kelvin Martin, was one of at least nine alleged victims.  After a monthlong trial, the jury convicted Helton of all the charges against him — nine counts of bankruptcy fraud and three counts of wire fraud related to mortgage loans. Each count of wire fraud carries a maximum penalty of 20 years in prison, and he faces a maximum five years in prison for each bankruptcy charge. Helton is free on bond pending his sentencing, scheduled for the end of September.  Helton could not be reached for comment Monday, and his attorney did not return phone calls.  Two other defendants, Charles White and Felicia Ford, were later added to Helton's case. They also were found guilty of wire fraud.  Gregg Szilagyi, a bankruptcy trustee who testified at trial, described the crime as "despicable."  "They were taking advantage of people at their lowest point, facing foreclosure," Szilagyi said. "They wound up stealing their property."  The government presented a paper trail of thousands of documents, according to interviews with the prosecutor, defense attorneys and court records.  Evidence showed that Helton worked with White, who owned a real estate company that offered troubled homeowners a "mortgage bailout" program. Under the scheme, homeowners were persuaded to sell their property to "investors" with the expectation they would be allowed to remain in their homes while they paid down debt and repaired their credit through bankruptcy.  After a year, clients would have the right to repurchase their homes, if financially able to do so.  At the time of sale, White stripped the homeowners of their equity. He also obtained more than $1.6 million in mortgage financing for the investors by preparing fraudulent loan applications with fake employment and income information. He did so with the help of Ford, a closing agent who worked for a title company that shared offices with White's company.  White advertised his company on gospel radio shows. Even the name of his company, Eyes Have Not Seen Inc., is taken from a biblical passage.  Helton appeared at the closings of White's real-estate transactions. He promoted the bailout program on his weekly radio show "All Things Are Possible Now," which aired on WVON. He also operated his own foreclosure rescue program through Diamond Management of Chicago Inc.  "The people who went through bankruptcy did so as part of a bailout program," said Assistant U.S. Attorney Joel Hammerman. "The individuals were told they could improve their credit by going through Chapter 7.''  Prosecutors charged that Helton hid the home transfers from the bankruptcy petition so he could keep $400,000 in his clients' assets under wraps.  White's attorney, Steven Greenberg, said his client is disappointed in the verdict and plans to appeal. Ford's attorney, Nishay Sanan, said there was insufficient evidence to convict his client and also plans to appeal.  asachdev@tribune.com