Too-good-to-be-true ‘mortgage cancelation’ scam proves too bad for real estate agents involved

RALEIGH — The real estate agents got bamboozled by the elaborate “mortgage-cancelation” scam that sounded — and was — too good to be true.

But they’re also the ones the N.C. Real Estate Commission disciplined, for “not knowing better” as state-licensed real estate agents, according to an investigative attorney for the state commission.

The grifters are still at-large — as far as is known, a spokeswoman for the N.C. Attorney General’s office said — and presumably still operating their debt-reduction swindle.

Gwen and John Chubirko of Kannapolis-based Genesis & Associates of N.C. Inc. real estate firm were two of four Charlotte-area real estate agents disciplined in three recent actions made public last week.

“The commission is supposed to be there to protect the public being hurt,” Gwen Chubirko said this week. “But we’re the public who got hurt this case.”

Janet Thoren, director of regulatory affairs for the state real estate commission, agreed that the couple was conned.

But, Thoren added, as trained and licensed real estate agents, the Chubirkos were legally obligated to be aware of the illegality of the debt-dodge and were held accountable by the state regulatory agency for their participation in it.

“The Chubirkos were victims, but they voluntarily signed fraudulent documents they shouldn’t have,” Thoren said. “They should have known better. Shouldn’t we all?”

Gwen Chubirko, who received additional real estate training as a member of the Charlotte Regional Realtor Association, declined to discuss the intricacies of the mortgage boondoggle or to name the individuals who pulled it off, because, she said, “We feel somewhat threatened by the people who did us in.”

The Notification of Disciplinary Action released by the state real estate commission says Gwen Chubirko “signed certain documents that were filed in the local register of deeds office that related to her own properties and were designed to circumvent the collection of valid debt.”

“But it doesn’t, of course, help, because the bank eventually comes knocking on the door,” Thoren said. “It causes the banks some problems because they have to do legal things to prove the mortgage is valid.”

The real estate commission has no jurisdiction, Thoren said, to go after the hoaxers. The state attorney general’s office does, but N.C. Justice Department spokeswoman Noelle Talley said no similar mortgage con games have been reported or investigated in the past eight years.

Charlotte Regional Realtor Association spokeswoman Kim Walker said her organization offers classes, seminars and publications to help its members operate safely and within the law.

“We rely on our members to report scams to us and, once alerted, we will typically encourage them to contact the authorities, and then we will post a general warning message in our member communications,” said Anne Marie Howard, CRRA executive. “If our members report scams or if we are aware of them, we are not going to discuss them with the media.”

In the most recent instance of mortgage-canceling in N.C., state Attorney General Roy Cooper in 2005 banned the double-dealing Dorean Group from doing business in the state. The California-based company bilked at least 25 N.C. homeowners out of $3,000 each, Cooper said, with a purported “proven legal and moral way of eliminating your mortgage while adding $32K to your pocket” through a “mortgage elimation” hustle “based on the faulty premise that the United States banking system is fraudulent and illegitimate and that borrowers are not legally responsible for repaying their mortgage loans.”

Dorean’s principals, Dale Scott Heineman and Kurt F. Johnson, were convicted in 2008 on federal mail fraud charges of suckering 20 lenders and 3,500 homeowners in 35 states. According to a California newspaper account, Johnson estimated Dorean made close to $5 million perpetrating the rip-off; and even during his days as a fugitive, he published online “rambling, almost-daily manifestos defending his scheme and declaring himself a servant of the Lord working to thwart the agents of darkness.”

U.S. District Court Judge William Alsup in San Francisco handed Johnson 25 years and Heineman 21 years and eight months in a federal penitentiary.

For their part, the Chubirkos got off relatively lightly. John Chubirko agreed to surrender his real estate license in exchange for his wife being able to continue to operate as a real estate agent on the condition that a state bar-licensed attorney review all legal documents she signs. <tweak> The Chubirkos were turned in, Thoren said, by an attorney who noticed the filed papers while doing a records search.

But real estate agents — and everyone else dealing with debt secured by real estate — should continue to beware of similar shady deals.

In other recent actions, the N.C. Real Estate Commission suspended the real estate license of Iqraa Taalib Din Madyun for nine months. The suspension will be stayed if Madyun takes a series of classes and does not act as a broker-in-charge for two years.

Madyun could not be located for comment.

Warren, who still has her license, said Madyun left the firm in 2011 and she has not had contact with him since.

Asked about the commission’s charges, Warren said: “I don’t want to throw Iqraa under the bus. There was a set of circumstances that caused it to happen.”

In the third case involving Charlotte-area real estate agents, Moody said Gary Phelps, owner of Phelco Properties of Mooresville, sold a chunk of his business to several unlicensed individuals who renamed it Lake Norman Vacation Station LLC, also of Mooresville, and that Phelps failed to act as its broker-in-charge as required. Moody also said Phelps admitted having a $16,000 to $18,000 shortfall in his trust account when he sold the company the unlicensed LLC.

Phelps, however, said there was “no shortage in the account; there was some deception on the part of” the owners of Vacation Station LLC, identified by the commission as Douglas and Terry Foland.

“I really can’t go into it pending a lawsuit,” Phelps said. “Let’s just say they’re not exactly on the up-and-up.”

Calls to Lake Norman Vacation Station seeking comment from the Folands went unreturned.