Feds nab California man for $7 million foreclosure scam

by Ryan Smith21 Jun 2017
Federal agents have arrested a California man alleged to have masterminded a foreclosure-avoidance scam that bilked victims of more than $7 million.

Michael Henschel, 68, has been indicted on 11 counts related to orchestrating a bankruptcy fraud scheme that targeted distressed homeowners. According to prosecutors, Henschel owned a company that operated under several names. Through that company, he and his co-conspirators marketed illegal foreclosure- and eviction-delay services to homeowners who were in default and renters facing eviction. As part of the scam, Henschel allegedly convinced homeowners to sign phony grant deeds showing that the homeowners had conveyed an interest in their properties to fictional third parties, according to the US Attorney’s Office.

Henschel and his co-conspirators also allegedly filed bankruptcies in the names of fictional people and entities in order to trigger the “automatic stay” provision of the bankruptcy code, which stalled foreclosures. He delayed evictions using similar tactics. He allegedly charged exorbitant fees for the illegal services. All told, Henschel and his co-conspirators collected more than $7 million, according to prosecutors.

Henschel has been charged with one count of conspiracy, eight counts of bankruptcy fraud and two counts of wire fraud. If convicted, he could face up to five years in prison for each of the conspiracy bankruptcy fraud counts and up to 20 years for each of the wire fraud counts.

Related stories:
Feds sue city of Los Angeles for defrauding HUD
Wisconsin DOJ sues property management firm over “misleading and deceiving” practices


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