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Lawyer, Liar, Liar, Pants on Fire

By Frederick Corrigan

Some very good friends of mine were using part of the equity in their home to make real estate investments.

They started in 1998 and over the next 8 years, they bought 12 different homes, remodeled them and either rented or flipped them. They had built up close to 1 million, in retail value, in the houses that they had physically refurbished with their own sweat and toil.

Financing was easy, and all of the mortgage brokers were pushing ‘No Income Verification’ loans. This worked great for my hard working friends, who were senior citizens on fixed incomes.

Then the real estate market collapsed and home values dropped below outstanding loans. My friends couldn’t sell their home, except as a “Short Sale”.

They then had to file bankruptcy and wreck a life time of good credit.

All of the closings on each of the investment properties required a lawyer. These same lawyers had done closings, for years, with standard bank loans. They had to know that the mortgage companies were pushing the limits on ‘no down payment’ and ‘no income verification’ loans. They also had to know that the appraisers were working in favor of the mortgage companies to show the right property value to loan value.

Well ,my friends lost their home and over $125.000.00 that they had invested in refurbishing the home.

Now the kicker!

My friends had been buying limited edition art pieces, some reprints, some signed litho’s, some signed sports collectables and some original art. They were running a small art studio, from their home, as well as refurbishing houses.

When they had to file bankruptcy, they hired a lawyer at a $3,000.00 fee. The bankruptcy court took their art and hired an auction house to dispose of it to pay creditors. Now this art had a written appraised value of $85,000.00 and a hard cost of $35,000.00.

The art items went to auction. The gross return was approximately $7000.00. The cost of the auction was $700.00 for the auctioneer, transportation and storage $650.00, insurance while in storage $300.00 and advertising $250.00. That didn’t leave much for the creditors.

When my friends got the list of pieces that were sold, they found that out of 100 pieces in the sale, only 65 had been sold. When I say sold, I mean given away! Example: A signed, appraised piece, 48”X42” in a 6” wide gilded frame that had a retail value of $5200.00, with a hard cost of $1200.00 was sold for $5.00. Yes, FIVE DOLLARS! They shot Jesse James for stealing less!

Now my friends asked their bankruptcy lawyer to ask the bankruptcy court judge to return the art pieces that hadn’t been sold. The attorney said he didn’t want to, because that might upset the judge and he had to work with him on a regular basis. Now if you think about it, the auction house had a great deal with the judge and the lawyers. They have merchandise, without a cost, that they can sell at a nice profit.

Wouldn’t you think that the bankruptcy judge (former lawyer) and the bankruptcy lawyer would question the sale of a $1200.00 art piece for $5.00? Did the auction company have their buyer in the audience, who would buy (steal) pieces that the auction company would put in future sales and make a great profit?

If you have any type of estate auction coming up, be there to see who buys the merchandise.

BEWARE---Lawyer, liar, liar pants on fire!

Contributor's Note

A man who represents himself in a court of law, has a fool for a attorney.
A man who hires an attorney had better keep them on a short leash.
You choose!

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As always, an excellent piece from Frederick. A very sad situation for his friends, but an all too common one.Some years ago, I opened a small auction house and asked a well-respected former auctioneer for some advice and 'tricks of the trade'. What he told be about taking bids'off the wall' (non-existent bids) and ways off knocking desirable items down cheap to friend and colleagues planted in the audience completely amazed me. I did not last long in that business.

Thank you for taking the time to share your experiences with me and for your kind words.
I don't often call professional people liars, but I think that this intel speaks for itself.
Thanks again.
Frederick

It sounds a lot like a pack of vultures swooping in to take advantage of someone lost in the desert. In Japan a bankrupt business is often dismembered by a type of criminal known as seiriya who specialize in disposing the assets and profiting immensely. What transpires is surprisingly similar to what you describe.

Thank you for your comments. It's always interesting to learn about events in other countries.
Thanks for sharing.
Frederick

It is painful to declare bankruptcy and even more painful to have to let go of artwork lovingly acquired. I hope your friends managed to recover the unsold artwork in the end.

I appreciate your heart felt concerns. Sorry to say, my friends didn't get the art back. I wasn't preve to the name of the lawyers involved.
Thanks again.
Frederick

it is amazing how legally people in difficult times and by reasons out of their control the "system" allows for this type of damaging activity to happen to people already suffering - Frederic what should people do in this situation ?

Thank you for your comments of concern. One could fight an injustice up through the court system, However, this takes time and money which they probably don't have.
Hopefully, they will get their reward at some point.
Frederick

Oh no! I feel for your friends, but there are two things here that make this even worse than what you wrote about.

One, using the equity in their home to do this was a very bad idea. Never tie up your home in a business deal.

Second, the "auction". Did they have any control over the auction company used? I read an article (on Qondio no less) about auctions. Research is necessary before choosing an auction to sell your valuables. Not all auctions are created equal apparently. Not all are reputable, and not all know what they're doing. Also, some types of auctions are inappropriate for certain types of items -- you have to match the item with the auction. If this was just a "court auction" then, well...guess the rest.

All of that being said, the lawyer wasn't much of a bargain either. He could and should have been a much better help to your friends. This is what he gets paid for.

Hi James,
My friends are starting to get on their feet. The bankruptcy court picked the auction company.
Thank you once again for your support.
Frederick

As someone wrote, it is so common these days for businesses to collapse,and for people to lose most of what they had accrued. Finance houses here in New Zealand started collapsing like a deck of cards last year; investers lost most of their savings that they had invested, while CEO's drove round in expensive cars and showed little empathy or remorse for their actions.

It is very interesting to hear what is going on in other parts of the world.
Thank you for your informative comments.
Frederick

I had a situation not long ago where my uncle in Kent, UK died being partially intestate. In other words after his death, I was sent a letter saying that I should register an interest in the estate, because there was some doubt over the legality of the Will, because the original had been lost and only a copy had lodged with the lawyer (solicitor).
I wrote to the solicitor to get an explanation of the siuation. This local solicitor wrote back telling me that the probate court had already ruled that the will was good and there was no point me contesting the will any more.

I had visited my uncle regularly for conversation regularly and we had a great rapport. I had known him since I was a boy of 5, and helped him through the death of his Mum and Dad.
He had an insatiable thirst for knowledge and we had great debates. He had Agrophobia and had not ventured outside the Dairy Farm that he ran with his brother.

He showed me many memoribilia, including black and white pictures of me and my brother back in 1947. Also newspapers of my father fighting famous fires in London. To crown it all he promised me all the items plus a Royal Navy album of my Grandfather's life aboard HMS HighFlyer pictured in the 1890's.

Nothing, apart from the farm itself was of any big monetary value.
But the pictures and album have never been sent to me. The whole estate was left to my cousins son and his father.
The whole episode left a sour taste in my mouth, and I have vowed not to visit my surviving uncle, he had promised to send me the memoribilia.

This all started with a lawyers letter which sewed the seed's of my current situation. This cost me no money(maybe) but a lot of heartache and soul-searching.

I'm sorry for your heartache. As we get older, we realize that when we are promised items from a relative, we should know and contact the lawyer handling their will. Hopefully, you will end up with the items concerning your father.
Best of luck.
Frederick

It's instances like this that have earned lawyer's their nasty reputation. I have been very lucky and had few dealings with them thus far in my life. My sister handled my father's estate.

Thank you for your comments and support. It's always handy to have family members who can assist with the details.
Have a nice day,
Frederick

How sad! Seems there are vultures hanging around every corner. Exactly the thing that has put the economy into the state it's in. Reading the astrology predictions, these liars, and rip off artists won't be doing so well in the near future.

Thank you for visiting and for your thoughtful comments, Carol.
I certainly hope that the astrology predictions are correct, as these Business Suit Leaders are stuffing too much into their pockets.
Best to you.
Frederick

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