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Jury finds Rechnitz defrauded widow of her home in a foreclosure scam

Wanda Costa, seen here with fiance Joseph Lukowiak, was awarded $93,467 after selling her Port Charlotte home to Gideon Rechnitz for nothing in a foreclosure rescue scam.

Gulfcoast Legal Services

Wanda Costa, seen here with fiance Joseph Lukowiak, was awarded $93,467 after selling her Port Charlotte home to Gideon Rechnitz for nothing in a foreclosure rescue scam.

In a "groundbreaking'' case that could be the first of its kind in the nation, a jury this week found that the owner of a St. Petersburg foreclosure rescue company scammed a 60-year-old Port Charlotte woman out of her home.

The Sarasota County jury awarded $93,467 to Wanda Costa, who unwittingly sold the house to Gideon Rechnitz for nothing in 2006 even though she had substantial equity at the time.

Under the guise of helping her, Costa's lawyers said, Rechnitz and associate Thomas Cook duped her into signing over the deed without making it clear she would still be responsible for the mortgage and thousands of dollars in "commissions.''

"What the jury did in this case was say 'No' to that kind of behavior,'' said attorney Elizabeth Boyle of Gulfcoast Legal Services, which represented Costa for free. "I hope other people will come forward because they may get some relief, too.''

Neither Rechnitz nor Cook responded to requests for comment. They "are disappointed in the jury's verdict and intend to pursue their remedies through appropriate legal means," their lawyer, Sam Heller, said.

Rechnitz still holds the deed to Costa's home, which is vacant and in foreclosure.

Costa, now living in Tennessee, plans to sell the house if she gets the deed back and collects enough from Rechnitz to pay off the mortgage.

"I was so excited about everything,'' she said Friday, a day after the verdict. "I hope they never do this to anybody else.''

Rechnitz, the subject of several St. Petersburg Times articles, is among scores of individuals and foreclosure prevention companies under investigation by Florida Attorney General Bill McCollum. He has called foreclosure rescue fraud "one of the worst manifestations of the current economic situation.''

As fraud proliferates, there has been a growing number of cases nationwide in which judges ruled in favor of homeowners who claimed they were cheated out of their property.

Boyle said her research indicated that Costa's case may the first in which a verdict was rendered by a jury.

The nonprofit National Consumer Law Center said it did not know if there have been jury verdicts elsewhere.

"You could say this sends a message to people looking to get into this business,'' said Bob Hobbs, the deputy director, "but in fact they are people who dodge the bullet and are able to move around. It is often very hard to collect in these cases.''

In what they called a "ground-breaking use'' of Florida's Deceptive and Unfair Trade Practices Act, Costa's lawyers said Rechnitz and Cook violated a new section of the law banning those in the foreclosure rescue business from duping, swindling or cheating homeowners who are in foreclosure proceedings.

"They sent out fliers that said they did not want to buy Ms. Costa's home, but that was a complete lie,'' her lawyers said. "In fact, they did not want to help her, they wanted to get her title and her equity.''

A disabled widow raising two grandchildren, Costa had fallen behind on her mortgage. She was trying to sell the house through a real estate company when Cook, who worked for Rechnitz, left a flier offering to "reinstate your mortgage in full'' with "no up-front fees.''

In August 2006, Costa deeded her home to Rechnitz as "trustee of the Costa Family Trust.'' In doing so, Costa thought she was protecting her equity in the house, which was mortgaged for $69,000 but had a market value then of about $146,000.

Only later did Costa realize she had sold the house to Rechnitz for nothing though the mortgage remained in her name. She also paid more than $9,000 in commissions to Rechnitz and Cook.

"The transaction was so deceptive that it would have confused and misled someone in full command of their faculties,'' her attorneys said. "To Ms. Costa, who was disabled, desperate and financially illiterate, it was overwhelming.''

Costa stayed in the house and was supposed to pay rent equal to the mortgage payments. But in deeding the house to Rechnitz, she had lost her homestead exemption, which caused her taxes to go up.

"After I found out what he did,'' she said Friday, "I wasn't going to pay him nothing because he scammed me out of my house.''

With property values plunging, Rechnitz let the house stay in default. But instead of deeding the property back to her, he filed an eviction notice in April 2007. Costa sued him last year.

Through her lawyers, she alleged that Rechnitz and Cook also violated state law by acting as real estate agents in the sale of her home even though they weren't licensed. Rechnitz lost his license in the '90s after being sued by the Federal Trade Commission over a time-share marketing scheme — a fact he had to admit on the witness stand in this week's trial.

"I think that was a cinching moment for the jury,'' Boyle said.

As the Times has reported, Rechnitz acquired dozens of houses in the greater Tampa Bay area through methods similar to those used in Costa's case. He faces trial in December in a lawsuit filed by another Sarasota County woman who claims he cheated her out of her home.

With his foreclosure rescue business under investigation, Rechnitz and daughter Fallon recently started a new company that purportedly helps distressed homeowners obtain loan modifications. St. Petersburg code investigators have cited Fallon repeatedly for putting the company's "Stop Foreclosure — Save Your Home'' signs on public property.

Rechnitz's wife and daughter were in the courtroom as jurors returned the verdict against him, Cook and two Rechnitz companies, Garco and Profitmax.

"They looked pretty stunned,'' Boyle said.

Times researcher Carolyn Edds contributed to this report. Susan Taylor Martin can be contacted at susan@sptimes.com.

Jury finds Rechnitz defrauded widow of her home in a foreclosure scam 10/02/09 [Last modified: Saturday, October 3, 2009 3:06am]
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