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  1. #1
    sojustask's Avatar
    sojustask is offline The Late, Great Lady Mod - Retired User Rank
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    4 new defendents in Dorean Group case

    http://www.mortgagefraud.squarespace.com/

    Supercedijng indictment and 4 new defendents in Dorean Group case

    In the following press release United States Attorney Kevin V. Ryan (Oakland, California) announced that a federal grand jury in Oakland indicted Dale Scott Heineman, 45, Kurt F. Johnson, 42, the Dorean Group, and four Dorean Group "brokers" in a 68-count superseding indictment charging mail fraud, bank fraud, conspiracy to commit mail fraud, wire fraud and bank fraud, and contempt of court. The superseding indictment, returned late yesterday, has added charges of mail fraud, bank fraud, and conspiracy to commit mail fraud, wire fraud and bank fraud against the following four Dorean Group "brokers":

    William Julian, 42, Cayce, South Carolina,

    Farrel J. LeCompte, Jr., 35, Kingwood, Texas,

    Sara J. Magoon, 29, Hamilton, Montana, and

    Charles Dewey Tobias, 58, of Longwood, Florida.

    These charges are the result of an investigation by the FBI.

    The principals of the Dorean Group are Dale Scott Heineman of Union City, California, and Kurt F. Johnson, of Sunnyvale, California. They, along with the Dorean Group and four of its brokers, are charged with operating a debt elimination scheme whereby fraudulent documents are recorded as part of their clients’ titles to allegedly transfer lenders’ secured interests in the properties when the corresponding mortgage and home equity loans had not been paid. With this fraudulently-generated free and clear title, some clients, at the direction of the Dorean Group, obtained hundreds of thousands of dollars in home equity loans from independent lenders.

    Heineman and Johnson also face contempt of court charges for violating a restraining order and preliminary injunction which prohibited the Dorean Group from engaging in any activities related to its mortgage elimination scheme. The charges in the superseding indictment relate to 24 properties in California, Colorado, Florida, Idaho, Montana, Nevada, North Carolina, South Carolina, Texas, Utah and Washington with a value of over $6 million. The FBI continues to investigate more than

    550 properties throughout 35 states with a potential value of greater than $88 million in loans that may have been affected by this alleged scheme. The FBI is also investigating properties in 19 California counties affected by this alleged scheme.

    U.S. Attorney Kevin V. Ryan stated, "Homeowners should be cautious of offers that sound too good to be true. This alleged scheme violates mortgage agreements between the lender and borrower and taints property titles by recording false documents on the title of a home. Manipulating property titles and interfering with mortgage loans with the intent to defraud is illegal and will result in prosecution."

    Joseph Ford, Special Agent in Charge of the FBI in San Francisco, stated, "Mr. Heineman and Mr. Johnson are accused of being con artists in a sophisticated telemarketing scheme. They are alleged to have incorporated the internet to further their criminal enterprise, which is nationwide in scope and has significant impact on the housing market in the U.S. Because cyberspace has no borders, the FBI is working with its law enforcement partners from around the world to address these growing crimes."

    According to the indictment, the Dorean Group is an unlicensed and unincorporated entity that has been operating a purported debt elimination program since at least January 2004. The Dorean Group uses brokers to promote its program. On various websites, the Dorean Group and its brokers publically advertise that they have a "PROVEN, legal and moral way of eliminating your mortgage while adding $32K to your pocket (*based on a $200,000 mortgage)."

    According to the superseding indictment, the Dorean Group’s scheme to defraud operated as follows:

    (1) Fee: The client pays an up-front fee of approximately $1,000 to $3,000 per loan to be eliminated and promises to make a "free-will offering of 50% of the REDEEMED mortgage." The redeemed mortgage (dubbed a refinance loan in websites promoting this scheme) refers to a subsequent equity loan obtained from a separate lender based upon the Dorean Group’s fraudulent recordation representing that the initial mortgage loan secured by the property had been fully satisfied.

    (2) Transfer of Title: Once the initial fee is paid, the Dorean Group forms a trust with its client, the trustees of which are Heineman and Johnson. The client records a quitclaim deed with the local county recorder’s office, which allegedly transfers the borrower’s title interests to this trust. However, typical mortgage agreements between a borrower and a lender require the lender’s consent before the borrower may transfer his/her title interests. According to the superseding indictment, no lender granted Heineman, Johnson, or the Dorean Group permission to act on behalf of the borrower under the applicable mortgage agreements.

    (3) Self-Executing Presentment Packet: The Dorean Group subsequently mails a "self- executing presentment packet" to the lender of its client’s loan. In this packet, the Dorean Group claims to act on behalf of the borrower, demanding proof of the validity of the lender’s loan "to the unilateral satisfaction of the Dorean Group" within 10 days. If this burden is not met, documents in the packet allege that, due to the lender’s "tacit assent" and "default," Heineman and/or Johnson of the Dorean Group will act as the lender’s agent and attorney-in-fact as to the loan and the secured property. In addition, if the lender elects to attempt to prove the validity of its loan, but fails to do so "to the unilateral satisfaction of the Dorean Group," the lender, according to the packet, is liable to the Dorean Group for damages twenty times the amount of the loan.

    (4) Substitution of Trustee: After 10 days has elapsed, Heineman, Johnson and the Dorean Group prepare a "Substitution of Trustee," or, depending on jurisdiction, a "Specific Power of Attorney" or "Power of Attorney," that is recorded as part of the title to its client’s property. This recordation claims that Heineman and/or Johnson is acting as agent and attorney-in-fact on behalf of the lender. According to the indictment, no lender has authorized Heineman, Johnson, or the Dorean Group to act either as its agent or attorney-in-fact.

    (5) Full Reconveyance: Under this false representation, Heineman, Johnson and the Dorean Group prepare a "Full Reconveyance" or, depending on jurisdiction, "Discharge of Mortgage" or "Satisfaction of Mortgage," that is recorded as part of the title to its client’s property. In this document, Heineman and/or Johnson of the Dorean Group – allegedly acting on behalf of the lender – represents that the loan secured by the property has been fully satisfied, when the loan had not been repaid. In this recordation, Heineman and/or Johnson purportedly transfers the lender’s secured interests in the client’s property to the client’s trust established by the Dorean Group, causing the property title to falsely appear unencumbered.

    (6) Subsequent Home Equity Loan: With what appears to be free and clear title, and pursuant to its standard client service agreement, the Dorean Group directs its clients to seek a subsequent "refinance loan,"or home equity loan, from a separate lender with the apparently-unencumbered property serving as the security for the loan. When the loan disbursement is obtained, the Dorean Group receives 50% of its proceeds, the Dorean Group broker (who solicited the client) receives 10-25% of the funds, and the client keeps the remaining 25-40% of the loan. The refinance loan is subject to the Dorean Group’s debt elimination program and is not repaid.

    cont...

  2. #2
    sojustask's Avatar
    sojustask is offline The Late, Great Lady Mod - Retired User Rank
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    Re: 4 new defendents in Dorean Group case

    Mr. Heineman and Mr. Johnson are also each charged in the superseding indictment with contempt of court. On July 6, 2005, the Civil Division of the United States Attorney’s Office filed a complaint for injunctive relief, and a motion for a temporary restraining order directing that Messrs. Heineman and Johnson, doing business as the Dorean Group, to cease engaging in their mortgage elimination scheme. On July 6, 2005, Judge William H. Alsup granted the government’s motion for a temporary restraining order. On August 1, 2005, Judge Alsup converted the temporary restraining order to a preliminary injunction, prohibiting the Dorean Group from engaging in any activities related to its mortgage elimination scheme, pending final judgment in the civil action. According to the superseding indictment, after they were served with the temporary restraining order and the preliminary injunction, respectively, Heineman and Johnson executed an "appointment of successor trustee" to allegedly transfer their interests as trustees of the Dorean Group’s clients’ trusts to a Dorean Group employee.

    Mr. Heineman and Mr. Johnson were previously arraigned on the initial indictment before Judge Wayne D. Brazil in Oakland on February 13, 2006. Mr. Heineman and Mr. Johnson appeared before Magistrate Judge Brazil for arraignment on the superseding indictment on February 17, 2006, at 10:00 a.m. They are also set to make an initial appearance before Judge D. Lowell Jensen in Oakland on February 17, 2006, at 11:00 a.m. No bail arrest warrants were issued for Mr. Julian, Mr. LeCompte, Ms. Magoon, and Mr. Tobias.

    The maximum statutory penalty for each count of mail fraud in violation of 18 U.S.C. § 1341 and affecting a financial institution is 30 years imprisonment and a fine of $1,000,000, plus restitution. The maximum statutory penalty for each count of bank fraud in violation of 18 U.S.C. § 1344 is 30 years imprisonment and a fine of $1,000,000, plus restitution. The maximum statutory penalty for each count of conspiracy to commit mail fraud, wire fraud and bank fraud in violation of 18 U.S.C. § 1349 is 30 years imprisonment and a fine of $1,000,000, plus restitution. However, any sentence following conviction would be imposed by the court after consideration of the U.S. Sentencing Guidelines and the federal statute governing the imposition of a sentence, 18 U.S.C. § 3553.

    An indictment contains only allegations against an individual and, as with all defendants, Mr. Heineman, Mr. Johnson, Mr. Julian, Mr. LeCompte, Ms. Magoon, Mr. Tobias, and the Dorean Group must be presumed innocent unless and until proven guilty.

    James Keller is the Assistant U.S. Attorney who is prosecuting the case. The prosecution is the result of a fourteen-month investigation by the Federal Bureau of Investigation. Several law enforcement entities, including the Alameda County District Attorney’s Office, the California Attorney General’s Office among many others, provided valuable assistance and information about this alleged scheme to the United States Attorney’s Office.

    Posted on Friday, February 17, 2006

  3. #3
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    Re: 4 new defendents in Dorean Group case

    And: the cases have been joined and assigned to Federal judge Alsup. this guy is the judge who ordered the feds to investigate Dorean in the first place.




    Quote Originally Posted by sojustask
    Mr. Heineman and Mr. Johnson are also each charged in the superseding indictment with contempt of court. On July 6, 2005, the Civil Division of the United States Attorney’s Office filed a complaint for injunctive relief, and a motion for a temporary restraining order directing that Messrs. Heineman and Johnson, doing business as the Dorean Group, to cease engaging in their mortgage elimination scheme. On July 6, 2005, Judge William H. Alsup granted the government’s motion for a temporary restraining order. On August 1, 2005, Judge Alsup converted the temporary restraining order to a preliminary injunction, prohibiting the Dorean Group from engaging in any activities related to its mortgage elimination scheme, pending final judgment in the civil action. According to the superseding indictment, after they were served with the temporary restraining order and the preliminary injunction, respectively, Heineman and Johnson executed an "appointment of successor trustee" to allegedly transfer their interests as trustees of the Dorean Group’s clients’ trusts to a Dorean Group employee.

    Mr. Heineman and Mr. Johnson were previously arraigned on the initial indictment before Judge Wayne D. Brazil in Oakland on February 13, 2006. Mr. Heineman and Mr. Johnson appeared before Magistrate Judge Brazil for arraignment on the superseding indictment on February 17, 2006, at 10:00 a.m. They are also set to make an initial appearance before Judge D. Lowell Jensen in Oakland on February 17, 2006, at 11:00 a.m. No bail arrest warrants were issued for Mr. Julian, Mr. LeCompte, Ms. Magoon, and Mr. Tobias.

    The maximum statutory penalty for each count of mail fraud in violation of 18 U.S.C. § 1341 and affecting a financial institution is 30 years imprisonment and a fine of $1,000,000, plus restitution. The maximum statutory penalty for each count of bank fraud in violation of 18 U.S.C. § 1344 is 30 years imprisonment and a fine of $1,000,000, plus restitution. The maximum statutory penalty for each count of conspiracy to commit mail fraud, wire fraud and bank fraud in violation of 18 U.S.C. § 1349 is 30 years imprisonment and a fine of $1,000,000, plus restitution. However, any sentence following conviction would be imposed by the court after consideration of the U.S. Sentencing Guidelines and the federal statute governing the imposition of a sentence, 18 U.S.C. § 3553.

    An indictment contains only allegations against an individual and, as with all defendants, Mr. Heineman, Mr. Johnson, Mr. Julian, Mr. LeCompte, Ms. Magoon, Mr. Tobias, and the Dorean Group must be presumed innocent unless and until proven guilty.

    James Keller is the Assistant U.S. Attorney who is prosecuting the case. The prosecution is the result of a fourteen-month investigation by the Federal Bureau of Investigation. Several law enforcement entities, including the Alameda County District Attorney’s Office, the California Attorney General’s Office among many others, provided valuable assistance and information about this alleged scheme to the United States Attorney’s Office.

    Posted on Friday, February 17, 2006

  4. #4
    Join Date
    Feb 2006
    Posts
    219

    Re: 4 new defendents in Dorean Group case

    I heard the US attoney says Magoon(too bad nice gal, just seriously misguided got in too deep) has fled to Canada, Julian is a fugitive and Tobias is already doing 2 years. Flea posted a $25,000 on a $250K bond. Somebody is bound to flip



    Quote Originally Posted by sojustask
    http://www.mortgagefraud.squarespace.com/

    Supercedijng indictment and 4 new defendents in Dorean Group case

    In the following press release United States Attorney Kevin V. Ryan (Oakland, California) announced that a federal grand jury in Oakland indicted Dale Scott Heineman, 45, Kurt F. Johnson, 42, the Dorean Group, and four Dorean Group "brokers" in a 68-count superseding indictment charging mail fraud, bank fraud, conspiracy to commit mail fraud, wire fraud and bank fraud, and contempt of court. The superseding indictment, returned late yesterday, has added charges of mail fraud, bank fraud, and conspiracy to commit mail fraud, wire fraud and bank fraud against the following four Dorean Group "brokers":

    William Julian, 42, Cayce, South Carolina,

    Farrel J. LeCompte, Jr., 35, Kingwood, Texas,

    Sara J. Magoon, 29, Hamilton, Montana, and

    Charles Dewey Tobias, 58, of Longwood, Florida.

    These charges are the result of an investigation by the FBI.

    The principals of the Dorean Group are Dale Scott Heineman of Union City, California, and Kurt F. Johnson, of Sunnyvale, California. They, along with the Dorean Group and four of its brokers, are charged with operating a debt elimination scheme whereby fraudulent documents are recorded as part of their clients’ titles to allegedly transfer lenders’ secured interests in the properties when the corresponding mortgage and home equity loans had not been paid. With this fraudulently-generated free and clear title, some clients, at the direction of the Dorean Group, obtained hundreds of thousands of dollars in home equity loans from independent lenders.

    Heineman and Johnson also face contempt of court charges for violating a restraining order and preliminary injunction which prohibited the Dorean Group from engaging in any activities related to its mortgage elimination scheme. The charges in the superseding indictment relate to 24 properties in California, Colorado, Florida, Idaho, Montana, Nevada, North Carolina, South Carolina, Texas, Utah and Washington with a value of over $6 million. The FBI continues to investigate more than

    550 properties throughout 35 states with a potential value of greater than $88 million in loans that may have been affected by this alleged scheme. The FBI is also investigating properties in 19 California counties affected by this alleged scheme.

    U.S. Attorney Kevin V. Ryan stated, "Homeowners should be cautious of offers that sound too good to be true. This alleged scheme violates mortgage agreements between the lender and borrower and taints property titles by recording false documents on the title of a home. Manipulating property titles and interfering with mortgage loans with the intent to defraud is illegal and will result in prosecution."

    Joseph Ford, Special Agent in Charge of the FBI in San Francisco, stated, "Mr. Heineman and Mr. Johnson are accused of being con artists in a sophisticated telemarketing scheme. They are alleged to have incorporated the internet to further their criminal enterprise, which is nationwide in scope and has significant impact on the housing market in the U.S. Because cyberspace has no borders, the FBI is working with its law enforcement partners from around the world to address these growing crimes."

    According to the indictment, the Dorean Group is an unlicensed and unincorporated entity that has been operating a purported debt elimination program since at least January 2004. The Dorean Group uses brokers to promote its program. On various websites, the Dorean Group and its brokers publically advertise that they have a "PROVEN, legal and moral way of eliminating your mortgage while adding $32K to your pocket (*based on a $200,000 mortgage)."

    According to the superseding indictment, the Dorean Group’s scheme to defraud operated as follows:

    (1) Fee: The client pays an up-front fee of approximately $1,000 to $3,000 per loan to be eliminated and promises to make a "free-will offering of 50% of the REDEEMED mortgage." The redeemed mortgage (dubbed a refinance loan in websites promoting this scheme) refers to a subsequent equity loan obtained from a separate lender based upon the Dorean Group’s fraudulent recordation representing that the initial mortgage loan secured by the property had been fully satisfied.

    (2) Transfer of Title: Once the initial fee is paid, the Dorean Group forms a trust with its client, the trustees of which are Heineman and Johnson. The client records a quitclaim deed with the local county recorder’s office, which allegedly transfers the borrower’s title interests to this trust. However, typical mortgage agreements between a borrower and a lender require the lender’s consent before the borrower may transfer his/her title interests. According to the superseding indictment, no lender granted Heineman, Johnson, or the Dorean Group permission to act on behalf of the borrower under the applicable mortgage agreements.

    (3) Self-Executing Presentment Packet: The Dorean Group subsequently mails a "self- executing presentment packet" to the lender of its client’s loan. In this packet, the Dorean Group claims to act on behalf of the borrower, demanding proof of the validity of the lender’s loan "to the unilateral satisfaction of the Dorean Group" within 10 days. If this burden is not met, documents in the packet allege that, due to the lender’s "tacit assent" and "default," Heineman and/or Johnson of the Dorean Group will act as the lender’s agent and attorney-in-fact as to the loan and the secured property. In addition, if the lender elects to attempt to prove the validity of its loan, but fails to do so "to the unilateral satisfaction of the Dorean Group," the lender, according to the packet, is liable to the Dorean Group for damages twenty times the amount of the loan.

    (4) Substitution of Trustee: After 10 days has elapsed, Heineman, Johnson and the Dorean Group prepare a "Substitution of Trustee," or, depending on jurisdiction, a "Specific Power of Attorney" or "Power of Attorney," that is recorded as part of the title to its client’s property. This recordation claims that Heineman and/or Johnson is acting as agent and attorney-in-fact on behalf of the lender. According to the indictment, no lender has authorized Heineman, Johnson, or the Dorean Group to act either as its agent or attorney-in-fact.

    (5) Full Reconveyance: Under this false representation, Heineman, Johnson and the Dorean Group prepare a "Full Reconveyance" or, depending on jurisdiction, "Discharge of Mortgage" or "Satisfaction of Mortgage," that is recorded as part of the title to its client’s property. In this document, Heineman and/or Johnson of the Dorean Group – allegedly acting on behalf of the lender – represents that the loan secured by the property has been fully satisfied, when the loan had not been repaid. In this recordation, Heineman and/or Johnson purportedly transfers the lender’s secured interests in the client’s property to the client’s trust established by the Dorean Group, causing the property title to falsely appear unencumbered.

    (6) Subsequent Home Equity Loan: With what appears to be free and clear title, and pursuant to its standard client service agreement, the Dorean Group directs its clients to seek a subsequent "refinance loan,"or home equity loan, from a separate lender with the apparently-unencumbered property serving as the security for the loan. When the loan disbursement is obtained, the Dorean Group receives 50% of its proceeds, the Dorean Group broker (who solicited the client) receives 10-25% of the funds, and the client keeps the remaining 25-40% of the loan. The refinance loan is subject to the Dorean Group’s debt elimination program and is not repaid.

    cont...

  5. #5

    Re: 4 new defendents in Dorean Group case

    So what is the latest on this situation? anyone know?

  6. #6
    Join Date
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    West of the Pecos
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    Re: 4 new defendents in Dorean Group case

    As a civil matter, it was over and done with months ago. The Dorean "process" is legally meaningless and participants are exposed to whatever steps the lenders take to restore their interest in the property if they want to.

    Criminally, the case drags on in the Northern District of California with the next hearing in early September but it won't have any affect on the mortgage elimination program one way or the other.

    Two of the indicted, Johnson and Heineman, have been throwing up a barrage of old, legally bogus arguments and mythological conspiracy theory and quasi-religious nonsense but it hasn't done anything but create some amusement.

    The other parties are represented by counsel, and have to be either laughing or wondering how to keep themselves from being aligned with the nonsense.

    Apparently, Heineman and Johnson are content to play the martyr role without regard for what happens to anyone else.

    Participant "victims" may still be able to get themselves out without prosecution if their attorney contacts the magistrate the court has set up to nullify the bogus trusts.
    Last edited by Judge Roy Bean; 08-29-2006 at 06:17 AM.

  7. #7
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    Re: Update on 4 new defendants in Dorean Group case

    Brother Tobias formally plead guilty on 9-26 and will be sentenced on 12-19 according to the current docket. Appears he is getting probation or the like for testimony / co-operation.

    Brother Feral LeCompte court records are sealed. This probably indicates he too is trying to work out a plea with the US attorney in exchange for his freedom

    Rumor has it that brother Bill Julian has been arrested down in Panama and will shortly be joining the other brothers at Club Fed


    BARRY J. PORTMAN
    Federal Public Defender
    JOSH COHEN
    Assistant Federal Public Defender
    19th Floor Federal Building
    450 Golden Gate Avenue
    San Francisco, CA 94102
    (415) 436-7700
    Counsel for Defendant TOBIAS
    IN THE UNITED STATES DISTRICT COURT
    FOR THE NORTHERN DISTRICT OF CALIFORNIA
    UNITED STATES OF AMERICA,
    Plaintiff,
    v.
    CHARLES DEWEY TOBIAS,
    Defendant.
    _____________________________________
    ))))))))))
    No. CR-05-0611 WHA
    STIPULATION AND [PROPOSED]
    ORDER CONTINUING CHANGE-OFPLEA
    HEARING
    On September 5, 2006, the parties in this matter appeared before the Court for a status
    conference. The parties informed that Court that they were in the process of negotiating a
    resolution of the case with respect to defendant Charles Tobias, and asked to return for change of
    plea on September 19, 2006.
    The parties have since met and conferred several times. While the parties are very close
    to settlement, there remains a good-faith disagreement concerning the proper application of the
    Sentencing Guidelines to the facts of this case. Both parties have undertaken their own
    independent research and have agreed to meet and confer once again early this week.
    Accordingly, the parties jointly seek one additional week to bring these negotiations to
    closure. The parties thus agree and stipulate that the hearing presently scheduled for September
    19, 2006 should be continued to September 26, 2006, provided that the Court is available on that
    date. The parties further agree and stipulate that time should be excluded under the Speedy Trial
    Act in the interests of justice and to enable both sides to prepare effectively by conducting the
    necessary research.
    IT IS SO STIPULATED.
    Dated: 9/18/06 /s/___________________________
    BARRY J. PORTMAN
    Federal Public Defender
    JOSH COHEN
    Assistant Federal Public Defender
    Dated: 9/18/06 /s/____________________________
    KEVIN V. RYAN
    United States Attorney
    JAMES KELLER
    Assistant United States Attorney
    ORDER
    Accordingly, and for good cause shown, the Court orders that the hearing in this matter
    presently scheduled for September 19, 2006 shall be vacated, and directs the parties to appear for
    change of plea on September 26, 2006 at 2:00 PM.
    The Court further orders that the time from September 19, 2006 through September 26,
    2006 shall be excluded under the Speedy Trial Act. The Court finds that the ends of justice
    served by granting the requested continuance outweigh the best interest of the public and the
    defendant in a speedy trial. This finding is based on the Court's determination that the failure to
    grant the continuance would deny counsel for both parties the reasonable time necessary for
    effective preparation, taking into account the exercise of due diligence. See 18 U.S.C. §
    3161(h)(Cool(A) & (B)(iv).
    IT IS SO ORDERED.
    Dated: __________________________________

    signed by Judge Alsup September 18, 2006





    Quote Originally Posted by sojustask
    Mr. Heineman and Mr. Johnson are also each charged in the superseding indictment with contempt of court. On July 6, 2005, the Civil Division of the United States Attorney’s Office filed a complaint for injunctive relief, and a motion for a temporary restraining order directing that Messrs. Heineman and Johnson, doing business as the Dorean Group, to cease engaging in their mortgage elimination scheme. On July 6, 2005, Judge William H. Alsup granted the government’s motion for a temporary restraining order. On August 1, 2005, Judge Alsup converted the temporary restraining order to a preliminary injunction, prohibiting the Dorean Group from engaging in any activities related to its mortgage elimination scheme, pending final judgment in the civil action. According to the superseding indictment, after they were served with the temporary restraining order and the preliminary injunction, respectively, Heineman and Johnson executed an "appointment of successor trustee" to allegedly transfer their interests as trustees of the Dorean Group’s clients’ trusts to a Dorean Group employee.

    Mr. Heineman and Mr. Johnson were previously arraigned on the initial indictment before Judge Wayne D. Brazil in Oakland on February 13, 2006. Mr. Heineman and Mr. Johnson appeared before Magistrate Judge Brazil for arraignment on the superseding indictment on February 17, 2006, at 10:00 a.m. They are also set to make an initial appearance before Judge D. Lowell Jensen in Oakland on February 17, 2006, at 11:00 a.m. No bail arrest warrants were issued for Mr. Julian, Mr. LeCompte, Ms. Magoon, and Mr. Tobias.

    The maximum statutory penalty for each count of mail fraud in violation of 18 U.S.C. § 1341 and affecting a financial institution is 30 years imprisonment and a fine of $1,000,000, plus restitution. The maximum statutory penalty for each count of bank fraud in violation of 18 U.S.C. § 1344 is 30 years imprisonment and a fine of $1,000,000, plus restitution. The maximum statutory penalty for each count of conspiracy to commit mail fraud, wire fraud and bank fraud in violation of 18 U.S.C. § 1349 is 30 years imprisonment and a fine of $1,000,000, plus restitution. However, any sentence following conviction would be imposed by the court after consideration of the U.S. Sentencing Guidelines and the federal statute governing the imposition of a sentence, 18 U.S.C. § 3553.

    An indictment contains only allegations against an individual and, as with all defendants, Mr. Heineman, Mr. Johnson, Mr. Julian, Mr. LeCompte, Ms. Magoon, Mr. Tobias, and the Dorean Group must be presumed innocent unless and until proven guilty.

    James Keller is the Assistant U.S. Attorney who is prosecuting the case. The prosecution is the result of a fourteen-month investigation by the Federal Bureau of Investigation. Several law enforcement entities, including the Alameda County District Attorney’s Office, the California Attorney General’s Office among many others, provided valuable assistance and information about this alleged scheme to the United States Attorney’s Office.

    Posted on Friday, February 17, 2006

  8. #8
    Join Date
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    219

    Re: 4 new defendents in Dorean Group case

    On 10/14/04 , brother Tobias was convicted on one each of 1) conspiracy to defraud the US, 2) influence/injuring an officer/juror/witness, and 3) intimidation or force against a witness.

    On 2/15/05, he was sentenced to 24 months in federal prison.

    On 3/14/05, he went to prison. His projected release date is 12/08/06.

    It seems cooperating and testifying in the Dorean matter was better than the alternative of receiving serious time if convicted

  9. #9
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    Feb 2006
    Posts
    219

    Re: 4 new defendents in Dorean Group case

    Filed 11/06/2006
    http://paulag.home.coastalnet.com/KUBITZNOV7.pdf
    http://paulag.home.coastalnet.com/KUBITZNOV72.pdf
    http://paulag.home.coastalnet.com/KUBITZNOV73.pdf

    There are several more exhibits, but you'll get the idea

    and then there's this:
    Filed 11/07/2006

    Case continued to 12/11/06 at 2:00pm for Status
    ORDERED AFTER HEARING:
    Valerie Stewart present. Government's request to have one of the defendants moved to a different facility is granted. US Marshal Service shall move defendant Kurt Johnson to another
    facility today.
    Government provided the status of two other co-defendants: 1) William Julian was arrested in Panama and is awaiting extradition; and 2) Sara Magoon is in Canada, and is arranging to appear here voluntarily.
    Court VACATED the trial and pretrial conference.


    Filed 11/08/2006

    Based on the government's showing and in the interests of justice, it is hereby ORDERED that defendant Johnson be housed at a facility other than FCI Dublin. Defendant Heineman shall continue to be housed at FCI Dublin. The Court will entertain motions by the
    defendants to: (1) meet as needed to prepare their defense, and (2) use the computer that has the electronic discovery. Good cause for these requests must be shown. (The Court notes that defendants Heineman and Johnson have not used the electronic-discovery computer since
    August 26.)
    The government has informed the Court that defendant William Julian has been apprehended in Panama. The government expects that he will be extradited to the United States
    by mid-December. Accordingly, the trial date currently scheduled for JANUARY 8, 2007 is hereby VACATED. The pretrial conference currently scheduled for DECEMBER 18, 2006 is also VACATED. A status conference will be held on DECEMBER 11, 2006 AT 2:00 P.M.
    Under the Speedy Trial Act, time is excluded until December 11, 2006, for the reasons previously stated and because at least one at-large defendant is now in the process of extradition
    back to stand trial.
    IT IS SO ORDERED.
    Dated: November 8, 2006


    Filed 11/09/2006

    ORDER REFERRING HEINEMAN
    AND JOHNSON TO
    MAGISTRATE JUDGE SPERO
    FOR FURTHER CONFERENCE

    At the last hearing on November 7, defendants Heineman and Johnson stated that they had signed the proposed plea agreements provided by the government and given them to prison officials to return to the government. The prison officials and the government knew nothing
    about this and were ordered to investigate. Meanwhile, to eliminate any question whether defendants have accepted unqualifiedly a plea offer, they are referred again to Magistrate Judge Spero for a further conference where he, if he deems it appropriate, may present written plea
    offers from the government. If one or both are to be signed by defendant(s), it should be done in the presence of Judge Spero and AUSA Keller without qualification and the original should be kept by AUSA Keller to bring to any plea change hearing.
    IT IS SO ORDERED.

  10. #10
    Join Date
    Feb 2006
    Posts
    219

    Re: 4 new defendents in Dorean Group case

    Rodney Austin, Tega Cay, South Carolina was given a 10-year suspended sentence and placed on two years probation after pleading guilty to obtaining a signature or property with a value of more than $5,000 under false pretenses. Charges against his wife, Deborah Austin, Tega Cay, South Carolina, were dropped. Austin was charged in connection with his role as a broker for the Dorean Group. According to an article in the Fort Mill Times, the Austins allegedly set up trusts linked to Dorean on three different properties in Tega Cay, South Carolina but were only charged in connection with one of the properties. Both defendants also reportedly agreed to testify against Dale Scott Heineman and Kurt Johnson.
    http://www.mortgagefraudblog.com/ind...outh_carolina/



    Scam artist avoids prison
    http://www.fortmilltimes.com/local/s...-5375515c.html

    By Jonathan Allen Fort Mill Times
    (Published October 4‚ 2006)

    It sounded too good to be true; Pay off your mortgage and pocket $60,000 to boot.
    Unfortunately, some Tega Cay residents had to find out the hard way that in most cases, what sounds too good to be true usually is. One couple even faced jail time for their in-volvement in the alleged sch-eme. Rodney and Deborah Austin, of 8041 Windjammer Drive, were charged with being involved with a "much larger scheme," according to Assistant Solicitor Kevin Brackett.
    After agreeing to testify against the accused ringleaders of a nationwide mortgage debt elimination scheme, the Austins may not see any jail time.
    The charge against Deborah Austin, obtaining a signature or property with a value of more than $5,000 under false pretense, was dropped in return for her and her husband's cooperation.
    Rodney Austin, who Brackett described as the "brains" of the couple's operation, was given a 10-year suspended sentence and placed on probation for two years after pleading guilty to the same charge his wife faced.
    "In the fraud food chain these guys were bottom feeders," Brackett said. "We like to catch the little guys but we want to make sure the big fish get hammered too."
    According to Brackett, the Austins were involved with an organization called the Dorean Group based in California. Dorean was run by two men, D. Scott Heineman and Kurt F. Johnson.
    According to a federal indictment against Heineman and Johnson, the scam worked like this: an agent for the Dorean Group, like the Austins, lured a potential client with the promise of eliminating his or her mortgage and making $60,000 or more in the process.
    The Dorean Group charged a fee that ranged from $1,000 to $3,000 per debt to be eliminated and the clients would promise to give the Dorean Group half of the redeemed mortgage. After the initial fee the Dorean Group and its client would form a trust naming Heineman and Johnson as trustees. The client would then file a quitclaim deed supposedly transferring the client's title interests to the trust.
    Next, the Dorean Group mailed a "self-executing presentment packet" to its client's creditor demanding the creditor prove the validity of its loan to the sole satisfaction of the Dorean Group within 10 days. If the creditor didn't answer in time documents in the packet claim that due to the creditor's "tacit assent" and "default" Heineman and/or Johnson, "act as the lender's agent and attorney-in-fact as to the loan and the secured property."
    Also, if the creditor chose to prove the validity of its loan but did not meet the Dorean Group's satisfaction, documents in the packet claim the creditor was liable to the Dorean Group for damages 20 times the amount of the loan, according to the indictment.
    After the 10-day period elapsed the Dorean Group filed a "Substitution of Trustee," "Specific Power of Attorney" or a "Power of Attorney," depending on the jurisdiction, claiming Heineman and/or Johnson were acting as the agent or attorney-in-fact for the creditor.
    Allegedly acting as the creditor's agent, Heineman and/or Johnson would prepare a "Full Reconveyance," a "Discharge of Mortgage" or a "Satisfaction of Mortgage," depending on the jurisdiction. That document would state the mortgage had been paid when in fact it had not, "causing title of the property to falsely appear free and clear of any encumbrances," according to the indictment.
    Finally, came the payoff in which the client was directed by the Dorean Group to use the newly cleared title to obtain another home equity loan from another lender. Once the funds are disbursed the Dorean Group got 50 percent of the loan, the Dorean Group agent that brought in the client would get a 10-25 percent cut and the client would keep what was left.
    The new loan would then be subject to the same scam and never be repaid.
    According to records obtained by the Fort Mill Times, including legal advertisements placed in another local newspaper, the Austins set up trusts linked to Dorean on three different properties in Tega Cay. However, they were only criminally charged in reference to one of the properties, Brackett said. Only one of the victims still lives in South Carolina and pressed charges.
    Heineman and Johnson were already in prison awaiting trials when the Austins were arrested last October. Shortly after their arrests federal holds were placed on the Austins. According to Brackett, a U.S. Attorney and an FBI agent talked to the Austins before they agreed to testify against Dorean.
    "Their contention was they were suckered by Dorean too," Brackett said.

  11. #11
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    Feb 2006
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    219

    Re: 4 new defendents in Dorean Group case

    Consider the judgment against Dorean group client Greg Poppin, of California, who paid to get got a trust set up in Johnson & Heineman's swindle for a property in Grass Valley.
    After ordering the bogus Dorean documents cancelled, rendered void and expunged from the county records, the judge left it up to the Plaintiff (lender) as to whether they could go ahead and foreclose, or in addition, collect damages jointly and severally against Heineman, Johnson and Poppin in the amount of nearly $390,000 (plus interest) and over $16,000 in attorney's fees and costs. All of which stands there and collects interest until paid. With the perpetrators incarcerated and facing long sentences, Poppin (the client) was left to face the music.




    Quote Originally Posted by sojustask
    http://www.mortgagefraud.squarespace.com/

    Supercedijng indictment and 4 new defendents in Dorean Group case

    In the following press release United States Attorney Kevin V. Ryan (Oakland, California) announced that a federal grand jury in Oakland indicted Dale Scott Heineman, 45, Kurt F. Johnson, 42, the Dorean Group, and four Dorean Group "brokers" in a 68-count superseding indictment charging mail fraud, bank fraud, conspiracy to commit mail fraud, wire fraud and bank fraud, and contempt of court. The superseding indictment, returned late yesterday, has added charges of mail fraud, bank fraud, and conspiracy to commit mail fraud, wire fraud and bank fraud against the following four Dorean Group "brokers":

    William Julian, 42, Cayce, South Carolina,

    Farrel J. LeCompte, Jr., 35, Kingwood, Texas,

    Sara J. Magoon, 29, Hamilton, Montana, and

    Charles Dewey Tobias, 58, of Longwood, Florida.

    These charges are the result of an investigation by the FBI.

    The principals of the Dorean Group are Dale Scott Heineman of Union City, California, and Kurt F. Johnson, of Sunnyvale, California. They, along with the Dorean Group and four of its brokers, are charged with operating a debt elimination scheme whereby fraudulent documents are recorded as part of their clients’ titles to allegedly transfer lenders’ secured interests in the properties when the corresponding mortgage and home equity loans had not been paid. With this fraudulently-generated free and clear title, some clients, at the direction of the Dorean Group, obtained hundreds of thousands of dollars in home equity loans from independent lenders.

    Heineman and Johnson also face contempt of court charges for violating a restraining order and preliminary injunction which prohibited the Dorean Group from engaging in any activities related to its mortgage elimination scheme. The charges in the superseding indictment relate to 24 properties in California, Colorado, Florida, Idaho, Montana, Nevada, North Carolina, South Carolina, Texas, Utah and Washington with a value of over $6 million. The FBI continues to investigate more than

    550 properties throughout 35 states with a potential value of greater than $88 million in loans that may have been affected by this alleged scheme. The FBI is also investigating properties in 19 California counties affected by this alleged scheme.

    U.S. Attorney Kevin V. Ryan stated, "Homeowners should be cautious of offers that sound too good to be true. This alleged scheme violates mortgage agreements between the lender and borrower and taints property titles by recording false documents on the title of a home. Manipulating property titles and interfering with mortgage loans with the intent to defraud is illegal and will result in prosecution."

    Joseph Ford, Special Agent in Charge of the FBI in San Francisco, stated, "Mr. Heineman and Mr. Johnson are accused of being con artists in a sophisticated telemarketing scheme. They are alleged to have incorporated the internet to further their criminal enterprise, which is nationwide in scope and has significant impact on the housing market in the U.S. Because cyberspace has no borders, the FBI is working with its law enforcement partners from around the world to address these growing crimes."

    According to the indictment, the Dorean Group is an unlicensed and unincorporated entity that has been operating a purported debt elimination program since at least January 2004. The Dorean Group uses brokers to promote its program. On various websites, the Dorean Group and its brokers publically advertise that they have a "PROVEN, legal and moral way of eliminating your mortgage while adding $32K to your pocket (*based on a $200,000 mortgage)."

    According to the superseding indictment, the Dorean Group’s scheme to defraud operated as follows:

    (1) Fee: The client pays an up-front fee of approximately $1,000 to $3,000 per loan to be eliminated and promises to make a "free-will offering of 50% of the REDEEMED mortgage." The redeemed mortgage (dubbed a refinance loan in websites promoting this scheme) refers to a subsequent equity loan obtained from a separate lender based upon the Dorean Group’s fraudulent recordation representing that the initial mortgage loan secured by the property had been fully satisfied.

    (2) Transfer of Title: Once the initial fee is paid, the Dorean Group forms a trust with its client, the trustees of which are Heineman and Johnson. The client records a quitclaim deed with the local county recorder’s office, which allegedly transfers the borrower’s title interests to this trust. However, typical mortgage agreements between a borrower and a lender require the lender’s consent before the borrower may transfer his/her title interests. According to the superseding indictment, no lender granted Heineman, Johnson, or the Dorean Group permission to act on behalf of the borrower under the applicable mortgage agreements.

    (3) Self-Executing Presentment Packet: The Dorean Group subsequently mails a "self- executing presentment packet" to the lender of its client’s loan. In this packet, the Dorean Group claims to act on behalf of the borrower, demanding proof of the validity of the lender’s loan "to the unilateral satisfaction of the Dorean Group" within 10 days. If this burden is not met, documents in the packet allege that, due to the lender’s "tacit assent" and "default," Heineman and/or Johnson of the Dorean Group will act as the lender’s agent and attorney-in-fact as to the loan and the secured property. In addition, if the lender elects to attempt to prove the validity of its loan, but fails to do so "to the unilateral satisfaction of the Dorean Group," the lender, according to the packet, is liable to the Dorean Group for damages twenty times the amount of the loan.

    (4) Substitution of Trustee: After 10 days has elapsed, Heineman, Johnson and the Dorean Group prepare a "Substitution of Trustee," or, depending on jurisdiction, a "Specific Power of Attorney" or "Power of Attorney," that is recorded as part of the title to its client’s property. This recordation claims that Heineman and/or Johnson is acting as agent and attorney-in-fact on behalf of the lender. According to the indictment, no lender has authorized Heineman, Johnson, or the Dorean Group to act either as its agent or attorney-in-fact.

    (5) Full Reconveyance: Under this false representation, Heineman, Johnson and the Dorean Group prepare a "Full Reconveyance" or, depending on jurisdiction, "Discharge of Mortgage" or "Satisfaction of Mortgage," that is recorded as part of the title to its client’s property. In this document, Heineman and/or Johnson of the Dorean Group – allegedly acting on behalf of the lender – represents that the loan secured by the property has been fully satisfied, when the loan had not been repaid. In this recordation, Heineman and/or Johnson purportedly transfers the lender’s secured interests in the client’s property to the client’s trust established by the Dorean Group, causing the property title to falsely appear unencumbered.

    (6) Subsequent Home Equity Loan: With what appears to be free and clear title, and pursuant to its standard client service agreement, the Dorean Group directs its clients to seek a subsequent "refinance loan,"or home equity loan, from a separate lender with the apparently-unencumbered property serving as the security for the loan. When the loan disbursement is obtained, the Dorean Group receives 50% of its proceeds, the Dorean Group broker (who solicited the client) receives 10-25% of the funds, and the client keeps the remaining 25-40% of the loan. The refinance loan is subject to the Dorean Group’s debt elimination program and is not repaid.

    cont...

  12. #12
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    Feb 2006
    Posts
    219

    Re: 4 new defendents in Dorean Group case

    Quote Originally Posted by kingwood queen
    So what is the latest on this situation? anyone know?

    Gov has offered them 20 years at Club Fed.

    Saturday, December 16, 2006 (from the Dorean Group Blog)

    The 11th is our next date and it is unique among all our dates because I have no goal, no direction from the Lord except to say it is finished. As my faith matures to comprehend the great accomplishments of the Lord it ironically or paradoxically becomes more childlike. I truly am helpless yet the love of my caretaker is steadfast and trustworthy. There is an enhancement to the truth of Christ’s diligent intellect over my affairs when I’m confronted with the body of Christ. Many of you have been used in a special way as the confirming voice of God. It takes childlike faith to trust the power of Christ in you. Winnie, Karen S., Steve H., Becky B, Dee, Bob, Lynette, A. Corrazzo, Mark G., Swami, Doug Cav. And Doug Cam. All of you and others not mentioned here have strengthened my faith by your obedience to our Lord. Trust this that your eternal reward will be enhanced with blessings here on earth. Many others betrayed me and rewarded my love with their cowardice. This was a constant sorrow which made your sweet offering of obedience all the more soothing. As I submit this heartfelt thank you let me boldly say that we shall now see the power of our mighty Lord that justifies our boast among those who are perishing. Our God reigns and you are the proof of it. I’m proud of all of you in the spirit.
    posted by whistleblower at 4:05 AM 3 comments

    On 11-21 we went before Judge Spero for another settlement conference. This is a face to face sit down with the alledged Judge to sign a plea agreement. Their offer of 20 years can’t be taken serious because nobody signed it. They said if I signed it they surely would. That is them making me an offer to make them an offer. That is a jurisdictional trick I won’t fall for. Spero had a copy of our original plea agreement with our proper commercial endorsements upon them but not the originals apparently retained by our counsel Mr. Kubitz. This created another problem in that counsel has indicated by his behavior we are not to enter an agreement. Spero went into how you cannot sign a rule 11 plea agreement without recourse. Here’s where the Acting classes and poker bluffing start to take shape. If we were at law the intent of agreement would suffice and words would not hinder the result. If though we truly are at commerce my endorsement quashes their goal. This was obvious when Spero became an emotional rant on how they were getting mad at my games and they were surely going to give me life. I said “Wow! Doesn’t anyone ever win a trial” just to break it up a little. I have to tell you I am amazed how grown men can find a sense of honor in a childish racket. Well no deal I guess, pleading guilty is harder than you can imagine. We left with our next date 12-11 to find out if the other defendants are coming and a whole lot more I won’t discuss at this time. Many of you hear of this independently from our God. I’m happy about it also!
    posted by whistleblower at 6:50 PM 20 comments

  13. #13

    Re: 4 new defendents in Dorean Group case

    Any news on Sara-Jane?

  14. #14
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    Feb 2006
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    219

    Re: 4 new defendents in Dorean Group case

    Quote Originally Posted by DupedByDorean
    Any news on Sara-Jane?

    Sara Jane I heard fled to Canada when the Dorean indictments came down but a few months ago I heard she turned herself in, about the time they arrested and extradited another Dorean broker Bill Julian from Panama leaving another Dorean broker Guy Santermo who having, at last sighting, also "relocated" to the the republic of Panama; and being the good Chritian soul that he is , was marketing a get rich quick, no work and no risk traveling product(see other posts), written up no less in the Wall Street Journal according to Guy , till they shut his link/site down for spamming. It's always refreshing for me to see people who have humbled themselves and changed their ways

  15. #15
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    Feb 2006
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    219

    Re: 4 new defendents in Dorean Group case

    When all was said and done a couple of thousand people were scammed. out of that some lost their homes . But from what I hear , even if you filed the Dorean "paperwork" so long as you kept up on your payments the banks left you alone ; save for the people who managed to sell their homes from under the banks after filing the Dorean paperwork . The mtg companies and banks have gone after those people in court. The 2 dorean owners have been in prison for a few years and will most likely be there for some time. Most of the Dorean brokers have been charged and arrested. As with all these "elimination" deals just a lot of smoke and mirrors

  16. #16
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    Feb 2006
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    219

    Re: 4 new defendents in Dorean Group case

    Quote Originally Posted by DupedByDorean
    Any news on Sara-Jane?

    Latest court doc from the case.
    It mentions Sara Jane has been charged.

    SCOTT N. SCHOOLS (SC 9990)
    United States Attorney
    MARK L. KROTOSKI (CASBN 138549)
    Chief, Criminal Division
    JAMES E. KELLER (NYSBN 2893881)
    Assistant United States Attorney
    MARY K. DIMKE (WASBN 33865)
    DOJ Trial Attorney
    450 Golden Gate Avenue, Box 36055
    San Francisco, California 94102
    Telephone: (415) 436-6840
    Facsimile: (415) 436-7234
    E-Mail: James.Keller@usdoj.gov
    Mary.Dimke@usdjoj.gov
    Attorneys for United States of America
    UNITED STATES DISTRICT COURT
    NORTHERN DISTRICT OF CALIFORNIA
    SAN FRANCISCO DIVISION
    UNITED STATES OF AMERICA,
    Plaintiff,
    v.
    DALE SCOTT HEINEMAN, et al.,
    Defendants.
    ))))))))))

    MOTION FOR PRETRIAL DETERMINATION OF ADMISSIBILITY OF STATEMENTS
    CR 05-0611 WHA 2
    BACKGROUND
    Defendants Dale Scott Heineman and Kurt Johnson formed the Dorean Group no later than
    January 1, 2004. At the initial stage of the mortgage elimination scheme, defendants Heineman
    and Johnson personally recruited clients, who were individuals that had previously purchased a
    home subject to a mortgage agreement, to submit their property to the scheme. Subsequently,
    Heineman and Johnson hired certain clients to act as brokers and the brokers assumed the
    responsibility of recruiting clients. Heineman and Johnson executed broker agreements with
    these individuals, including charged defendants Magoon and Julian.
    The broker agreements
    permitted the brokers to hire agents to assist in soliciting clients for the mortgage elimination
    scheme. Some brokers did in fact hire agents to assist in recruiting clients.
    It is expected that witnesses will testify that the Dorean Group's broker system permitted
    Heineman and Johnson to avoid having direct contact with the actual clients of the scheme. As a
    result, Heineman and Johnson operated the mortgage elimination program in a mass-marketing,
    pyramid fashion, with layers of individuals that insulated the defendants from communicating
    with the clients.
    As a result, many of the clients of the Dorean Group's scheme spoke primarily
    with agents and brokers.The brokers and agents made representations to the clients regarding the success and the
    legality of the scheme. For example, the clients were told that the "program" was tested and
    proven.
    The clients were also informed that if they encountered legal obstacles to the "program,"
    the Dorean Group would provide legal assistance to them. These representations were false.
    Furthermore, the brokers hired assistants who managed the day-to-day operations of the
    scheme, such as communicating with clients and managing the paperwork required to submit
    their properties to the "program." The brokers made representations to the assistants regarding
    the "program" to encourage them to participate, told the assistants what to tell the clients, and
    discussed the operation and success of the program with the assistants.
    The government intends to offer testimony from the clients regarding the statements made to
    them by the brokers and agents, and testimony from the assistants regarding statements made by
    the brokers to prove the existence and operation of the scheme and as co-conspirator statements.
    Case 3:05-cr-00611-WHA Document 309 Filed 03/05/2007 Page 2 of 6

    MOTION FOR PRETRIAL DETERMINATION OF ADMISSIBILITY OF STATEMENTS
    CR 05-0611 WHA 3
    ANALYSIS
    The government contends that the brokers or the agents statements to clients and others are
    admissible because (1) the statements are not for the truth or the matter asserted, but to show the
    existence and operation of the scheme, and (2) the statements were made in furtherance of the
    conspiracy under 801(d)(2)(E).
    (1) The statements are offered not for the truth of the matter asserted, but to show the
    existence and operation of the scheme.
    Fed. R. Evid. 801(c) defines hearsay as: "(A) a statement, other than one made by the
    declarant while testifying at the trial or hearing, offered in evidence to prove the truth of the
    matter asserted." The Ninth Circuit has a well-established rule regarding admissibility of
    statements which have probative value but are not intended to demonstrate "the truth of the
    matter." A victim's testimony regarding the representations made to induce them to participate
    in a program or to otherwise part with their funds is not offered for its truthfulness, but rather to
    establish that the statement was made and to prove the existence of a scheme to defraud. See
    United States v. Gibson, 690 F.2d 697, 700 (9th Cir. 1982). In Gibson, the Ninth Circuit
    affirmed admission of victim-investor testimony regarding statements made by salesmen for the
    defendant's corporation. Id. The Court found that:
    The investor's testimony was offered to prove the existence of a scheme; the
    statements were not offered for their truthfulness. The purpose of the testimony
    was solely to establish the fact that the salesmen and employees had made the
    statements. The fact was relevant to support the government allegations that a
    scheme existed.
    No. CR 05-00611 WHA
    GOVERNMENT'S MOTION IN LIMINE
    TO PRECLUDE DEFENDANTS FROM
    MAKING IMPROPER LEGAL
    ARGUMENTS
    Pre-trial Conference Date: March 9, 2007
    INTRODUCTION
    The United States of America, through Scott N. Schools, United States Attorney for the
    Northern District of California, Assistant United States Attorney James E. Keller, and Mary K.
    Dimke, Trial Attorney, United States Department of Justice, Criminal Division, Fraud Section,
    hereby moves the Court to prevent the defendants from testifying or eliciting testimony in the
    form of legal opinions. The government anticipates that the defendants will argue inaccurate and
    misleading legal interpretations to the jury. Such arguments invade the province of the Court to
    instruct the jury on the law, are irrelevant to the case, create unnecessary delay, and serve only to
    Case 3:05-cr-00611-WHA Document 305 Filed 03/05/2007 Page 1 of 7

    1 It is firmly established that district courts have subject matter jurisdiction over
    prosecutions for violations of criminal statutes. "Under 18 U.S.C. § 3231, federal district courts
    have exclusive original jurisdiction over ‘all offenses against the laws of the United States.'"
    See U.S. v. Hanson, 2 F.3d 942, 945 (9th Cir. 1993).
    2 The defendants have been charged with violations of the following criminal statutes: 18
    U.S.C. § 1349, 1341, 1344, 401. The Uniform Commercial Code and contract common law are
    wholly inapplicable to federal criminal statutes.
    3 The defendants' "‘vapor money' theory has no basis in law. It has been squarely
    addressed and rejected by various courts through the country for over twenty years." The
    Frances Kenney Family Trust v. World Savings Bank, 2005 WL 106792, *5 (N.D. Cal. 2005)
    (collecting cases).
    MOTION IN LIMINE
    CR 05-0611 WHA 2
    confuse the jury on the appropriate issues before them. Consequently, the Court should prevent
    the jury from exposure to such arguments and evidence to the extent possible and should give
    curative instructions if the defendants offer such argument or evidence in violation of the Court's
    orders.
    FACTUAL BACKGROUND
    Defendants Johnson and Heineman have already filed numerous pleadings making frivolous
    and groundless statements of the law. Based on these pleadings and other documents submitted
    by the defendants, the government anticipates the defendants will attempt to make a number of
    frivolous and groundless legal arguments using documentary evidence, testimony, their opening
    statements, and voir dire. Those arguments include, but are not limited to, the following:
    (1) The District Court does not have jurisdiction over this matter.1
    (2) The Uniform Commercial Code governs this criminal action.
    (3) Contract Law governs this criminal action.2
    (4) That no enforceable debt accrues from a lender that funds a loan through wire
    transfers rather than hard cash (the "vapor money" theory).3
    All of these legal arguments are incorrect statements of law, irrelevant, would confuse the
    jury, and would invade the Court's province in instructing the jury on the law.
    ANALYSIS
    The primary issue in this case will be the defendants' intent: whether they possessed the
    requisite intent to defraud. The admissibility of most evidence in this case will depend on
    Case 3:05-cr-00611-WHA Document 305 Filed 03/05/2007 Page 2 of 7

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