Real Estate Fraud
Court Slams Foreclosure Scamsters

Contract law voided by fraud

When Douglas County prosecutors refused to go after Foreclosure Bailout Scamsters who stole 13 victims homes, the victims were forced to go to civil court to undo the crime against them. Years of being displaced and without their homes as the predators had the funds to keep fighting the victims, wearing them out emotionally and financially.

WOWT, Channel 6 News
Omaha, NB, NBC Affliate
Posted: 08-12-05

The Nebraska Supreme Court ruled against two people accused of defrauding people out of their homes in a foreclosure bailout operation.

Alayna Hollingshead and Scott Bloemer, former officers of Mid America Financial Investment Corp., were sued by 13 individuals or couples in the Omaha area who said the pair convinced them to sign home equity papers to prevent foreclosure on their homes.

In 2003, Douglas County District Judge Peter Bataillon ruled that instead of refinancing the homes, Hollingshead and Bloemer actually took title away.

He said that the victims were told they were signing loan documents and did not realize that they were actually being presented with purchase agreements.

Hollingshead and Bloemer argued that the written contracts were binding, based upon the rule that "one who signs an instrument without reading it, when he can read and has the opportunity to do so, cannot avoid the effect of his signature merely because he was not informed of the contents of the instrument."

The high court rebuked that argument.

"The rule that one who signs a contract is bound by its terms does not apply where the ... execution of the instrument was induced by fraud," wrote Judge Kenneth Stephan. "Because the district court specifically found that each of the plaintiffs was fraudulently induced to sign what were misrepresented as loan documents, the general rule binding a party to a signed contract does not apply."

Hollingshead and Bloemer were ordered to restore title of the homes tot their perspective owners, or, reimburse the victims.

Mark Laughlin, one of the lawyers representing the victims, hailed the decision.

"These people were honest and hardworking people and they got taken advantage of and defrauded," he said. "This is the right and just result."

The court also upheld a ruling ordering Hollingshead and Bloemer to pay $378,000 in fees to the victims' lawyers.