California AG Shuts Down Foreclosure Scam, With a Twist

With the fourth installment of the much-admired Indiana Jones movie franchise ringing up box-office gold this past holiday weekend, California Attorney General Edmund Brown busted his own group of villians that had been using their knowledge of U.S. history to rip off troubled homeowners facing foreclosure. A team of scam artists allegedly acquired deeds to hundreds of homes in foreclosure by convincing desperate consumers to place their property in a “land grant,” a phony and worthless real estate document. Federal Land Grant Company — a San Diego-based business run by Bill Hutchings, his wife Xiaoke Li and former wife Shawna Landis — tricked desperate homeowners into believing that they could protect their homes from foreclosure by deeding their property to “federal land grants.” Land grant transfers, used hundreds of years ago when the United States was still acquiring land from other countries, are no longer recognized by any court or county assessor. “There hasn’t been a legitimate use of the land grant since the conclusion of the Mexican-American war,” Brown said in a press statement last week. “If some fast talking scam artist offers a quick escape from foreclosure using archaic documents, be extremely suspicious.” The scammers required homeowners to pay up to $10,000 to put their property in a so-called land grant, which the company claimed would prevent foreclosure. Federal Land Grant also tricked homeowners into signing over the deed to their home and paying the company rent. To make the meaningless grants appear legitimate, the company attached a land survey from when property was transferred to the United States by a foreign entity hundreds of years ago. In San Diego, for example, the company attached a survey from the Spanish Land Grant of 1872 and said that the deed reinstated the land grant and would protect homes from foreclosure. State investigators confirmed from realty specialists in the Bureau of Land Management that a “federal land grant” transfer is meaningless, and there is no mechanism in California for establishing a land grant on privately held land. Homeowners who are conned by the land grant scam are typically evicted from their property at the completion of foreclosure proceedings, and retain no legally recognizable title to their property. At least two Riverside County Superior Court judges, when faced with foreclosure sales involving so-called land grants, did not give any consideration to the deeds and issued eviction orders sought by the lender. Federal Land Grant often perpetrated their scam by inviting homeowners to attend weekly seminars on the fraudulent land grant program. During these seminars, which had up to 50 participants, the company convinced homeowners to enter a lease back scheme in which the homeowners transfer their property to Federal Land Grant and then make monthly payments, purportedly for rent. Investigators in the California Attorney General’s Office said they have discovered more than 280 properties in San Diego and Riverside counties that have been transferred to Federal Land Grant or one of its affiliated companies. An additional 65 properties have been transferred in counties including Los Angeles, Orange and San Bernardino. At least 60 homeowners have had their homes sold through foreclosures already, the state AG’s office said. “The defendants preyed on mostly non-English speaking, Hispanic homeowners who were in foreclosure, claiming to offer assistance in preventing the victims from losing their home,” San Diego District Attorney Dumanis said. “These transactions were illegal and left the victims even worse off than they were before. Some of the victims have been evicted from their own homes when this scheme failed.”

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