The Dorean criminal trial has begun...

Discussion of various forms of Advance Fee Fraud, including application fees for loans that never materialize, self-liquidating loan scams, as well as mortgage elimination scams and related debt elimination scams [Nigerian-type scams should go in the Nigerian 4-1-9 forum]
neodemes

Postby neodemes » Thu Oct 18, 2007 12:06 am

Demosthenes wrote:Oh boy. Do I have some fun stories for you guys...


Do tell.

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Demosthenes
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Postby Demosthenes » Thu Oct 18, 2007 12:15 am

I have a really crappy and unstable internet connection. Patience will be rewarded shortly.
Demo.

Pauligirl

Postby Pauligirl » Thu Oct 18, 2007 1:07 am

For some reason, the boys just can't get the hang of this court thing.




SCOTT N. SCHOOLS (SCSBN 9990)
United States Attorney
BRIAN J. STRETCH (CSBN 163973)
Chief, Criminal Division
BRIGID S. MARTIN (CSBN 231705)
C. DAVID HALL (CSBN 66081)
Assistant United States Attorneys
450 Golden Gate Avenue, Box 36055
San Francisco, California 94102
Telephone: (415) 436-7168
FAX: (415) 436-7234
Attorneys for the Plaintiff
UNITED STATES DISTRICT COURT
NORTHERN DISTRICT OF CALIFORNIA
UNITED STATES OF AMERICA, ) No. CR 005-00611 WHA
)
Plaintiff, ))
GOVERNMENT'S MEMORANDUM
v. ) REGARDING DEFENDANT'S
) MOTION TO COMPEL
DALE SCOTT HEINEMAN, )
and KURT F. JOHNSON )
)
Defendant. )
)
On scheduled first day of trial, October 15, 2007, the defendants attempted to have the Court hold
a Motion to Compel twenty financial institutions. This hearing was not scheduled with the
authorization of Court, nor was the government noticed of this hearing. On October 15, 2007, only
one financial institution responded, Greenpoint Mortgage. The government believes that only
Greenpoint responded because it's offices are in the North Bay and they were probably the only the
only institution that actually received the defendant's mailing prior to October 15. Since that date
the government has been contacted by more of the institutions, saying they had just received the
Motion to Compel, and seeking guidance as to what to do now.
The government requests that the Court dismiss the Motion to Compel because there is no further
information the institutions have for the defendants. The 20 institutions are those involved in the

transactions charged in the conspiracy and mail fraud counts of the indictment. The government has
gathered all the relevant information and documents these institutions have regarding the charged
transactions. The government has discovered all this information, many thousands of page in length,
to the defendants. Further, the government will introduce all these relevant documents and
information in it's case-in-chief through witnesses from the institutions. These exhibits have been
provided to the defendants in a ten binder set for trial.
The government does not know whether the 26 requests contained in the Motion to Compel were
contained in the subpoenas sent to the institutions, but a review of them shows that the request are
either a continuation of the argumentative and incomprehensible questions the defendants used in
presentment packets as part of the scheme itself (i.e. Request 1-Any documents showing there was
no loan . . . ) or irrelevant to the issues of this case (i.e. Request 2-The servicing agreement between
the promissory note owner and the one collecting the loan payments). Further, the defendants have
made no showing that the institutions have withheld any information.
The government asks the Court to Dismiss the Motion to Compel as unnecessary and vexatious
to the institutions.
DATED: October 16, 2007 Respectfully submitted,
SCOTT N. SCHOOLS
United States Attorney
/s/
C. DAVID HALL
Assistant United States Attorney

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Postby Judge Roy Bean » Thu Oct 18, 2007 2:48 am

Pauligirl wrote:For some reason, the boys just can't get the hang of this court thing...
"The government asks the Court to Dismiss the Motion to Compel as unnecessary and vexatious to the institutions.
DATED: October 16, 2007 Respectfully submitted,
SCOTT N. SCHOOLS
United States Attorney
/s/
C. DAVID HALL
Assistant United States Attorney


Ah, finally. Someone raised the spectre of the "vexatious" party with these fools.

Two years behind bars while having fun in his through-the-looking-glass fantasy world (at taxpayer's expense) ought to have been enough already.

One has to wonder when the USA's office will issue indictments for the dim duo's on-going BOE nonsense now that Buhtz has been convicted.

'Round here, an incarcerated accused party still can't run around breaking the law from his or her cell, particularly using jail resources in the process. At this point, I'm sorry I have to say I'm no longer sure how that works the Northern District of California.

It seems the silliest part of all of this is that unless Alsup specifically slaps them down, there are going to be some number of like-mindless (or devious) types who sieze on Johnson's nonsense to mount even more frivolous and costly assaults on reality while in custody.

If the utter nonsense "argument" poses like fictions vs. real persons, BOE's, UCC filings, bonds against the treasury, all-caps name vs. names with punctuation, etc., etc., that these idiots have generated while in their fantasy state aren't hit with seriously punitive actions, the nutball crowd will take them even further to heart.

And as I see it from over here on this side of the Pecos, one more desperate victim of the lending industry machine who falls for the scam-artists like Johnson is one too many.

It's hard enough getting a servicer to admit there was an error and avoid litigation by at least correcting the mistake. When a scam like Dorean is somehow connected, they dig in their heels even when they know they're in the wrong.

Alsup has an opportunity to save thousands of homes by making an example of the debt-elimination nonsense once and for all, no matter how goofy the defense circus gets.
The Honorable Judge Roy Bean
The world is a car and you're a crash-test dummy.
The Devil Makes Three

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Postby Judge Roy Bean » Thu Oct 18, 2007 2:49 am

Demosthenes wrote:I have a really crappy and unstable internet connection. Patience will be rewarded shortly.


One word: Starbucks. :wink:
The Honorable Judge Roy Bean
The world is a car and you're a crash-test dummy.
The Devil Makes Three

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Postby Demosthenes » Thu Oct 18, 2007 2:52 am

Disclaimer: Sound in the courtroom is crappy so I may be a little off on a couple of the names.

Day 1, Continued

First two witnesses were Peggy and Tim McKay, Dorean clients in their 50s from Corvalis, Montana. Peggy and Tim run a carpet cleaning and repair company out of the garage in their home. Their niece is Sara J. Magoon, a co-defendant in this case who is currently a fugitive. A few years ago, Sara had been in a car accident and had given birth three months early. The medical bills wiped her out and her home was about to go into foreclosure. She hired the Dorean Group and their scam delayed the foreclosure long enough for Sara to 1) become a broker, 2) recruit her aunt and uncle into the plan, and 3) post her story online, where Farrel LeCompte read about her “victory” against her mortgage lender and became a client himself.

Peggy and Tim McKay had no debt but were facing a dilemma with their business -- they had outgrown their garage. They got a bid to build a new building on their 10 acre lot to house the business and needed $125,000. When Sara told them of her success with Dorean, they embarked on a risky program. They started with a loan on their existing property in the amount of $258,000. Half went to Dorean, half paid for the new building. Once the new business building was completed, they had the property reappraised, qualified for a much larger loan ($420,000) used $258,000 to repay the first loan, and split the rest equally with Dorean. The mortgage elimination scam didn’t work after all (surprise) and this couple of stuck with a $420,000 loan even though $200,000 of the proceeds were paid to Dorean. Kind of costly considering they only needed $125,000 to grow the business.

Their testimony was emotional, Kurt had pulled the Christian card on them, and their own niece had sold them the deal. They’re in pretty dire straights now because they could only qualify for a mortgage where the rate was fixed for five years, and when the rate adjusts they’re pretty much doomed. In the meantime, the bank has foreclosed on the niece’s home.

The third witness was Farrel LeCompte (aka Flea).
Demo.

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Demosthenes
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Postby Demosthenes » Thu Oct 18, 2007 2:57 am

Judge Roy Bean wrote:
Demosthenes wrote:I have a really crappy and unstable internet connection. Patience will be rewarded shortly.


One word: Starbucks. :wink:


I was in a Starbucks earlier. Some homeless asshole who smelled like a urinal was hitting on me. (The courthouse is not in the choicest area of SF...)
Demo.

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Postby Demosthenes » Thu Oct 18, 2007 3:09 am

Day 1 (Continued)

Ahh. Flea. 40ish, not bad looking, short, professional appearance in a dark business suit, white shirt, red tie, thick New Orleans accent, weasely. He has a wife and three year old child. He was an accountant for a chemical company, became a Dorean client out of greed, and then became a broker out of more greed. Even after he realized that Dorean’s scheme didn’t work (his own home was foreclosed on in 2004) he continued to sell sell sell. He is currently working as a currency trader, and is awaiting sentencing after pleading guilty on conspiracy charges.

Bragged about his MBA but it turned out he got it via correspondence school (an unaccredited college in Moraga, CA called Frederick Taylor University).

http://en.wikipedia.org/wiki/Frederick_ ... University

The prosecution walked Flea through his broker agreement with Dorean. Nothing particularly exciting.
Demo.

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Postby Demosthenes » Thu Oct 18, 2007 3:20 am

Miscellany

Kurt’s dad was in the audience the first day of the trial. He’s a 70+ redneck type, heavy set, wearing jeans, relies on a walker, and has a long gray beard. The judge caught him trying to take photos in courtroom using his cellphone which a bailiff took away. He didn’t show up today (day two).

When the jury is present, the judge is friendly, affable, professional, and helpful. When they’re gone, he is pissed as hell at the defendants, and none too keen on the job being done by the prosecutors. I like the judge.

There were the Dorean followers in the audience on the second day (Wednesday). Three men, all black, in their 40s and 50s. One of them told me that the movie Money Masters is “really deep” and he recommended that I watch a movie which shows that men have never landed on the moon. The Marshals and bailiffs are ever present.
Demo.

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Postby Demosthenes » Thu Oct 18, 2007 3:45 am

Day 2

The trial starts at 7:45 am each morning. The judge is not perfect…

Flea’s testimony continued and was nothing spectacular. No smoking guns, no insider dirt. He talked briefly about his one day of training, and that he charged clients $3,000 to eliminate a first mortgage, and $1,500 for subsequent mortgages. Of this amount, he kept 2/3 and the rest went to Dorean. In the third quarter of 2004 alone (which is after his own mortgage went into foreclosure) he sent in $129,000 to Dorean. When the Dorean offices were raided by the FBI, he had to quit sending cashier’s checks and instead was wiring moneys to their account in Latvia.

He testified that he pled guilty because he continued to sell the scheme even after he realized that it was a scam that didn’t work. He claimed to be a product of his own greed.

Cross was way more interesting that direct. Flea’s demeanor changed when Johnson spoke to him. He became compliant and respectful, and directly contradicted his earlier testimony about the scheme being a scam. Kurt’s charisma had a tangible effect on Flea. Johnson used the opportunity to show the jury photos of the nice building that housed the business, the law library in the business, the customer service center, the computer server that housed the website and so on, implying but never saying that the trappings are what make a business legitimate. It was fascinating to watch.

Johnson has made the point several times through each witness that the only reason why the mortgage elimination plan started failing was because the business was interrupted by the FBI raid. Even after the raid and Heineman’s arrest, Flea continued to give seminars. One was attended by 250 potential clients and Johnson participated by telephone. Johnson seemed proud that he disclosed to the potential clients that he was the target of an FBI raid and investigation.

Flea had previously tried a debt elimination scheme in 2001 but it didn’t work. He became aware of Dorean by a post made online by Sara Magoon and his only due diligence was to ask Kurt questions.

Johnson’s final question to Fea: Do you believe that we are willing to go to jail or die for our cause?

The judge sustained the objection that the question called for speculation.
Demo.

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Postby Demosthenes » Thu Oct 18, 2007 4:19 am

Day 2 (Continued)

The next witness was a Flea client named Steve Geyman (the microphone sucks and I can barely hear the witness, so I’m unsure of his name). He’s a 46 year old computer programmer in Boise Idaho. When he became a Dorean client, he was out of work in North Carolina with a growing family (six children, one on the way). He moved his family to Seattle to take a new job, and bought a new house with very little down. Financial difficulties hit when the home in North Carolina didn’t sell quickly.

He saw either spam or a pop up ad for mortgage elimination and went searching online for a solution to his problems. He paid $4,500 to Flea to eliminate his first and second mortgages. When it came time to do the refinance part of the Dorean deal, his conscience kicked in. Claiming that a mortgage lender was defrauding you and getting out of repaying the loan was one thing. Entering into a new loan knowing that the lender was going to defraud you so you could out of repaying was another.

While the client was trying to decide what to do, Wells Fargo started foreclosing on the home. He had tried to write “under protest” on his checks but WF had rejected them. When reality finally hit, he contacted the bank and negation a plan to get back on track with the loan.

Cross examination was more of the same. Johnson tried to blame the failure of his program on the FBI raid.
Demo.

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Postby Demosthenes » Thu Oct 18, 2007 4:37 am

Day 2 (Continued)
The last witness of the day is an OCC fraud examiner named Matthew Johnson. He was qualified as an expert witness, but I have no idea what the point of his testimony was. Apparently, neither did the judge.

The questions he was asked were vague and meandering about UCC and fractional reserve banking and quit claiming automobiles and god knows what else. To make matter worse, his answers were unclear and occasionally flippant. Juries don’t do flippant. At the end of the day, the government said the dreaded phrase, “No further questions.”

Once the jury was gone, the judge started to chew out the prosecutors but stopped when he realized that he’d just be giving Johnson and Heineman ammunition when cross starts tomorrow.
Demo.

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Postby Demosthenes » Thu Oct 18, 2007 4:57 am

Day 2 Miscellany

OCC guy stated that he had researched the Swiss Bank that the Dorean Group was using in relation to their phony bond scheme and there was no such business at that address in Switzerland. There was only a flower shop. When the judge asked what research he’d done to prove that, OCC said he’d looked it up on the internet. The judge was not happy.

The courtroom flag has fringe on it.

Walker Todd will testify next week as a fact witness, not an expert witness. Apparently the dim duo had approached him to do something in the past and he will be testifying about that.

The courthouse had a fire drill today. It’s the 18th anniversary of the Loma Prieta earthquake.

San Francisco is a fricken’ gorgeous city, not withstanding randy urine soaked homeless guys at Starbucks, and I miss it dreadfully.
Demo.

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Postby notorial dissent » Thu Oct 18, 2007 6:21 am

JRB, sorry, wasn't talking about the voir dire, I was referring to the opening, I am concerned that they will try and present too technical a case and lose the jury as happened in LV earlier. Of course ponty tail and the blob providing comic relief will probably go a long way towards blunting and prosecutorial induced boredom and certainly won't win them any points.

I would think that the sheer nonsense of their theories and presentations would be glaringly off in any but the most brain dead of jurors.

Begins to sound like my fears were not groundless, unfortunately.

And the circus rolls on...........
Last edited by notorial dissent on Thu Oct 18, 2007 2:56 pm, edited 1 time in total.

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Demosthenes
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Postby Demosthenes » Thu Oct 18, 2007 6:28 am

The good news is, it isn't a brain dead jury. I'd say far from it. They've been paying close attention.
Demo.

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Postby Prof » Thu Oct 18, 2007 1:55 pm

Thank you, thank you. Sitting here, I wonder how I (a reasonably experienced trial person) would try to tell this story to the jury.

I'm glad the government did get itself a thoughtful jury. And why didn't the FBI just make a call to the folks in Geneva and ask for a report on the location of the "Swiss Bank?" Easily admissible, and absolutely irrefutable. THE GOVERNMENT HAS ONLY HAD TWO YEARS.

(As to your tourist "blog for the BAY," I have got to take advantage of my son's enrollment at San Jose State and get back there, soon.)
"My Health is Better in November."

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Postby buck09 » Thu Oct 18, 2007 4:58 pm

Demosthenes wrote:not withstanding randy urine soaked homeless guys at Starbucks


What's sad is that all these deadbeats who, after all the civil trials and frivolous penalties are assessed, still have a roof over their heads and enough cash to buy Moon Pies and Bud Light.

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Postby Judge Roy Bean » Thu Oct 18, 2007 9:33 pm

buck09 wrote:...What's sad is that all these deadbeats who, after all the civil trials and frivolous penalties are assessed, still have a roof over their heads and enough cash to buy Moon Pies and Bud Light.


Bud Light? In Federal prison? :shock:

I can't fathom a self-respecting warden who would allow Bud Light anywhere near the property.

Note to Demo: You can see by the wandering posts your audience is growing restless.
The Honorable Judge Roy Bean
The world is a car and you're a crash-test dummy.
The Devil Makes Three

neodemes

Postby neodemes » Thu Oct 18, 2007 10:37 pm

:!: ...Update....Update....Update....Update....Update....Update.... :!:

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Demosthenes
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Postby Demosthenes » Thu Oct 18, 2007 10:39 pm

Let's see... where to begin...
Demo.


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