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Second jury finds fault with controversial foreclosure rescue deals

In 2005, Thomas Cook told 68-year-old Yolanda Rodriguez that the St. Petersburg company he worked for could help save her home from foreclosure.

Instead, Garco Inc. got the deed to the house, and Rodriguez, who was evicted, lost as much as $200,000 in equity. But on Thursday, a Sarasota County jury found that the transaction that cost Rodriguez her home was invalid because Cook, acting as a broker on the deal, did not have a Florida real estate license.

The verdict paves the way for Rodriguez to get back her 2,300-square-foot Englewood pool home. It could also provide legal ammunition for others who have lost their houses to "foreclosure rescue" companies like Garco and its owner, Gideon Rechnitz, whose real estate license was revoked for alleged fraud in 1990.

"A licensed real estate agent would not have been allowed to do anything Thomas Cook did," says Elizabeth Boyle, a Gulfcoast Legal Services attorney who represented Rodriguez.

"He did not disclose who the purchasers were, he lied to Miss Rodriguez, and he didn't put her interests first as a real estate agent would. The jury had an opportunity to make sure the law was enforced, and they did their job."

Defense attorney Sam Heller said the jurors found no evidence that Rechnitz improperly evicted Rodriguez, now 72, and her deaf brother.

"The only charge not resolved in favor (of Rechnitz and Cook) is a licensing issue, which we feel the jury got wrong and will be reversed on appeal," Heller said.

Rodriguez's case is thought to be the first in which a jury verdict hinged on whether someone involved in property transactions for a foreclosure rescue company is subject to the Florida Real Estate License Act.

But it is not the first case against Rechnitz and Cook to go to trial. In October, another Sarasota jury awarded $93,467 to Wanda Costa, who claimed the men scammed her out of her Port Charlotte home in violation of Florida's Deceptive and Unfair Trade Practices Act. That verdict is under appeal.

Both Rodriguez and Costa had substantial equity in their homes, but were behind on their mortgage payments. Cook, who made the initial contact on Rechnitz's behalf, told the women they could sell their houses to investors who would let them stay on as renters until they were able to buy back the property.

In fact, the actual buyer was Rechnitz, and the women were still liable for their mortgages even though he held the deeds.

In the most recent case, Rodriguez said she stopped paying rent because Rechnitz failed to make promised repairs. He evicted her and her brother in 2006 and had all of their possessions, including family photos, loaded into portable storage units.

Rodriguez said she was unable to retrieve the items because they were stored in Rechnitz's name. Everything was sold at public auction, and brother and sister spent weeks in a Salvation Army shelter and cheap hotels before landing in a small apartment with donated furniture.

At trial, Rodriguez's attorneys failed to convince jurors that she had been evicted improperly or that she had suffered any damages because of the eviction or the loss of her personal property.

That part of the verdict shows "that Mr. Rechnitz and Mr. Cook have been completely vindicated by the court and the jury on all charges alleging that he was unfair, deceptive or in any way took advantage of or misled Ms. Rodriguez," according Heller, the men's attorney.

However, the jury ruled in Rodriguez's favor on a key issue, finding that Cook acted as a broker although he is not licensed as such. Florida law defines a broker as someone paid for acting on behalf of another person in real estate transactions.

In a sworn deposition before trial, Cook called himself "a broker" and acknowledged he had been paid $1,975 for his dealings with Rodriguez.

By finding for Rodriguez on the licensing issue, the verdict voided the entire transaction and set the stage for a March hearing in which Circuit Judge Lee Haworth could return the deed to her.

The hearing will determine whether Rodriguez owes Rechnitz for any improvements he made to the house, or whether some of that would be offset by money Rechnitz has received from renting to a series of tenants.

Last year, the Florida Division of Real Estate determined that 11 individuals had engaged in unlicensed real estate activity, a felony subject to fines of up to $5,000 and criminal charges. The division does not track how many people are actually prosecuted.

Boyle, who estimates that her nonprofit agency has spent more than $200,000 litigating against Cook and Rechnitz, says she is frustrated that government regulators are not more aggressive.

"We've seen several examples in the last couple of years of people like Bernie Madoff, who for decades got away with breaking the law and victimizing people. Why did this happen? Because people whose job it was to enforce laws turned a blind eye to what was going on. But this jury understood how important the law is."

Susan Taylor Martin can be contacted at susan@sptimes.com.

Second jury finds fault with controversial foreclosure rescue deals 02/12/10 [Last modified: Saturday, February 13, 2010 10:19am]
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