Tag Archives: foreclosure

Mychajliw’s Ambition & Fraas’ Foreclosure

29 Oct

It’s a shame when politicians go negative – especially ones who have cultivated an image for being always bright, shiny, and positive. 

Comptroller Stefan Mychajliw is on the air with negative ads hitting challenger Kevin Gaughan for a personal income tax issue that he had. One’s personal ability to pay a tax bill, which could very well have been brought about simply through bad guessing and not having enough cash to cover an unexpectedly large tax bill, doesn’t necessarily reflect on one’s ability to conduct audits and ensure that government personnel and processes are running as smoothly and efficiently as possible. 

Gaughan’s and the Democrats’ response has been even more pitiful, attempting to hit Mychajliw for being fired from two TV stations for rule-breaking, and for still being listed as a principal at a private PR firm while on the people’s dime. These are all little side issues. It’s become so petty that we now have failed county Democratic chair and current Cheektowaga Democratic Chair Frank Max’s patronage hires throwing Gaughan under the bus because he didn’t pay for her Coke at a downsizing meeting. (Max’s people are backing Mychajliw for a variety of reasons, not the least of which is “to embarrass Jeremy Zellner”.) 

One thing Gaughan has pointedly promised is to not seek higher office while Comptroller. Voters like to see people fulfill their elected roles. Mychajliw, who holds no legal or financial background or degree, and who has no experience whatsoever with accounting or auditing, is uniquely unqualified to be Comptroller. But don’t come between him and a microphone, because he’s building a brand. 

The website he was planning called “Rightlean.com” never went anywhere, and he used “eriecountyworks.com” for his transition website. But this one hasn’t yet been used: 

So, “stefanforcongress.com” has been aiming high even since March 2012. This would have set Mychajliw up for a possible run against Louise Slaughter or Brian Higgins. Slaughter has since been redistricted out of the Buffalo metro. 

But more to the point, we have someone running for taxpayer watchdog whose only personal tax nut is the sales tax; public documents reveal that Mychajliw hasn’t owned any property in Erie County since his 2007 divorce. The 70 Griswold address he gives to register his websites and to reimburse himself from campaign funds belonged until September 18th to his sister, Charlene Morales. Sources say Mychajliw now lives with his father. 

But Mychajliw was acutely mindful of the fact that he was unqualified for the job. The last two Republicans to challenge Mark Poloncarz for the comptroller job hit him for being a lawyer, and not a CPA. So, naturally, the next time the Republicans win the seat, they pick a guy with a broadcast journalism degree. So, Mychajliw pledged to surround himself with the “best and brightest“, the shiniest of whom was Teresa Fraas, a CPA who had only ever worked in the private sector.

Fraas, as it turns out, had let her CPA license lapse in New York. Mychajliw made headlines by urgently media-alerting a supposed scandal of DSS records being available out in the open to anyone, but as it turns out, Fraas had tricked a custodian to let her into a locked room where the records were kept. Surveillance video proved it. 

Mychajliw ran ads pledging that the first “audit” he would conduct would look into the “friends and family” hiring practices in county government. That’s fantastic, but it wasn’t an “audit”, and is completely outside of the job description of a Comptroller. Hiring “friends and family” through patronage or nepotism may be something we don’t like because it is, or seems, unfair, but it doesn’t affect county finances unless you’re creating a new job for the person. Presumably, the underlying position and its related costs would already be accounted-for in the budget, and the decision on hiring is not reviewable or subject somehow to audit. 

Auditing is about money – not politics. 

Pledging to audit hiring practices is silly, and he has no power to “end” anything. He doesn’t have legislative powers, or even executive power with respect to changing that. And if a “friend” or “family” is qualified for the job, what objective harm is being done to the county coffers? 

Real CPAs will tell you Mychajliw’s office hasn’t conducted a proper audit pursuant to generally accepted auditing rules as of this date. 

Back to Teresa Fraas.

We are told that Kevin Gaughan is not qualified to be Comptroller because he fell behind on his taxes. We also know that his opponent, Stefan Mychajliw, is making much of this, and that he had pledged to surround himself with the “best and brightest” to protect the taxpayer. Teresa Fraas, who recently resigned, was at the forefront of that effort, trumpeted as the first CPA to be Deputy Comptroller in charge of Audits since 2006. 

But Ms. Fraas got caught falling behind on the mortgage for a home she owned in Arizona. 

On December 10, 2012, this public notice appeared in the Case Grande Dispatch. Fraas’ Arizona home at 42950 W. Martie Lynn in Maricopa, AZ was to be sold at foreclosure auction for her failure to pay her mortgage and/or property taxes. The auction sale deed reveals that Fraas’ default exceeded $175,000. 

This dwarfs Gaughan’s tax issues in both scope and severity. In fact, Gaughan’s failure is only 16% of Fraas’, since we’re doing math. 

Fraas Trustee’s Deed upon Sale

Whom has Mychajliw retained to replace Fraas, and who are the financial and accounting professionals minding the store for the unqualified incumbent? 

Baum: You’ve Been Served

22 Nov

I actually interviewed at the Steven Baum foreclosure mill last year. I knew they did foreclosure and collections work, but didn’t know the full nature of what they did. I answered an ad for a litigation attorney, dressed up for it, and met with two women who were dressed in sweatshirts and jeans.

They asked what I liked about being a lawyer. I replied that I enjoy representing and helping a diverse roster of clients through a difficult time.  I like using my mind, my research and writing skills, and the fact that every day is different – some days you’re in court, some you’re in depositions, and on other days you’re just pushing papers around. As far as trying cases, it’s simply a fun thing to do, to direct your half of that production for a jury.

The women explained that they don’t try cases there, “litigation attorney” ad notwithstanding. Every day consisted of a lawyer drafting identical boilerplate documents and managing a huge roster of foreclosure actions, mostly from the comfort of their own office. You don’t meet your clients – you just deal with banks and roll the cases through the system, one by one.

Having indirectly expressed the fact that I hated that sort of daily sameness, I didn’t expect a call back, nor did I receive one.

With the news yesterday that the now-embattled Baum firm is closing in the wake of scandals involving not only a tasteless and hateful Halloween party, but an allegedly predatory way of doing business, the awkward failure of that job interview was retrospectively awesome.  The Baum firm appeared to be a bad actor, and its way of doing business was coming back to haunt it. A lawyer friend of mine sent this to me:

Several years ago, I had my first case with the Baum firm. The residents in a three or four unit apartment complex had found a notice of petition and petition for a post-foreclosure eviction on the foyer stairs in their building.  None of them were served with the pleadings, nor did they receive the 10-day notice of the pending action. All of the papers were made out as against the pre-foreclosure owner/landlord, naming him as a resident of the property, along with his wife, a neighbor and any number of “John Doe” respondents.

When I called the Baum firm, the lawyer I spoke with (I forget the name) was adamant that service was proper and wanted to focus solely on how we could get my people out with a minimum of fuss. They had affidavits of service showing someone served the property owner (who had moved to South Carolina about three years ago), his wife (ditto) and the woman who lived at a next door address for (I believe) at least a decade, all as residents of the subject property.

I objected to this purported service, in our conversation, stating that none of my people had received papers and none of the named people resided in the property. The attorney I spoke with stated, basically, that he had affidavits of service so the action was going forward.

It wasn’t, per se, improper. He did have the proof of his case and it was on me to make the objection. If we had gone to court, I would have, and I wonder how it might have worked out. Instead, all of my people ended up leaving for new housing as the landlord was letting utility service lapse prior to the scheduled court date.

As a lawyer, though, I feel that I can’t just plow ahead. My clients sometimes lie and sometimes they don’t know the truth. If someone brings up a major issue in the case I’m working on, I feel it’s my professional and ethical duty to react appropriately. That might include being noncommittal to opposing counsel but researching behind the scenes. But it shouldn’t mean disregarding what I’m told and turning a blind eye to alleged abuse of process service or improperly commenced proceedings. The willingness of this Baum attorney to base a case on clearly fraudulent affidavits of service gave me an initial impression of this firm that I feel is only proven by all the news stories I keep seeing about their ongoing conduct.

If you take a look at the images that accompany the linked-to stories about the now-infamous Halloween party, you’ll note that the Baum employees were specifically mocking foreclosure defendants who claimed not to have received service of process – a key issue in any such case.

However, I’m torn on this one. I’d rather have seen Baum enter into a deal with Attorney General Schneiderman to pay a fine and reform the way it does business – to work to modify notes to keep people in their homes, with the understanding that abandoned homes, bank-owned foreclosures, and homelessness are to be avoided if possible. Because ninety people are losing reasonably well-paying white-collar jobs here in western New York, I’m not cheering the demise of this firm – yes, there’s a poetic justice with respect to the heartless and unfunny people who mocked the homeless and the victims of the foreclosure crisis, but that wasn’t representative of all the Baum employees who work there now.

I guess I wish those individuals the best, and hope they learned something from the experience.

City to Sue to Fund Demolitions

28 Feb

David Torke over at Fix Buffalo has the scoop. Evidently, the City of Buffalo is suing 36 lenders for the cost of demolishing homes that never make it all the way through the foreclosure process and end up vacant and derelict.

A copy of the City’s pleadings is here. Over 3,000 foreclosures took place within city limits in the last two years, as alleged in the Complaint. There are 10,000 vacant homes that need to be demolished at a cost of between $16,000 and $40,000 each.

This particular lawsuit, however, deals with 57 specific properties which the city alleges are nuisances it is dutybound to abate, and the Complaint is 90-something pages long, so each affected property is tied to each defendant lender.

Good for the city for holding someone responsible for the cost of demolition. But the raw statistics are sobering and put the lie to any talk of a renaissance.

Buffalo isn’t coming back until all of Buffalo is coming back.

And absolutely nothing has happened in the last 4 years to help Buffalo stop the bleeding.