Convictions Upheld For East Bay Mortgage Scam Artists

In 2007 Dale Scott Heineman of Union City and Kurt Johnson of Sunnyvale were convicted on one count each of conspiracy and 34 counts each of mail fraud stemming from their fraudulent business practices while operating the Dorean Group in Union City and Newark from 2003 to 2005. The pair pocketed millions of dollars by claiming they could help people eliminate mortgage debts.

In early 2008 Kurt Johnson was sentenced to 25 years in federal prison, while his partner Dale Scott Heineman got 21 years and 8 months.

Prosecutors said Johnson and Heineman victimized at least 20 lenders and as many as 3,500 homeowners across 35 states with their idea that borrowers could ditch their mortgage debts through a legal and bureaucratic process. Homeowners first transferred their interest in their properties to a trust, naming Johnson and Heineman as trustees. The pair would then send demand notices to the lenders questioning the validity of their lending practices.

When banks failed to respond or “prove” their lending practices were valid, the pair recorded bogus documents with county clerks’ offices supposedly establishing that the homes were no longer under a mortgage. The homeowners then refinanced with different banks using their supposedly unencumbered homes as collateral.

Heineman and Johnson took upfront fees as well as a cut of the homeowners’ new equity loans; they admitted making more than $3 million, and were later ordered to pay almost $513,000 in restitution.

FULL ARTICLE

On Tuesday July 6th 2010 a federal appeals court issued the decision to uphold the convictions.

In the ruling, Judge Barry Silverman of the 9th U.S. Circuit Court of Appeals wrote:

“[Heineman and Johnson] were adamant in their desire to represent themselves and assert an absurd legal theory wrapped up in Uniform Commercial Code gibberish…Both defendants were examined by a psychiatrist and found to have no diagnosable mental disorder.”

…“The record clearly shows that the defendants are fools, but that is not the same as being incompetent,” Silverman wrote for himself and two other circuit judges. “(T)hey had the right to represent themselves and go down in flames if they wished, a right the district court was required to respect. There was no legal or medical basis to foist a lawyer on them against their will.”

So basically these two scam artists are idiots and deserve to be right where they are – behind bars.

convictions upheld for east bay mortgage scam artists

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