Heartbreak Hotel: Georgia Judges and the National Mortgage Fraud Epidemic

By Maynard Eaton, published June 16 @ opednews.com; reposted with permission.

ATLANTA (GA) — Is it me or have all Georgia judges gone completely wild?

The Wall Street Journal recently reported on the rash of judicial misconduct and criminal conduct in the Georgia Courts. In “Georgia Judges Gone Wild” (August 23, 2010) which cited Georgia’s “Rash of Judges Stepping Down” (August 22, 2010) In which the Atlanta Journal-Constitution reported that  more than 16 Georgia Judges have had to resign for violations of ethics, and criminality — should Judge Wendy Shoob be next?

Yesterday, Fulton County Superior Court Judge Wendy Shoob was chastised for abuse of discretion in the Fulton County Report; “Justices Criticize Judges Use of Power” (June 14, 2011)

While, this may be the first time she has received such a public reprimand, it is far from the first time she has exhibited such an abuse of power. One notable case involves the Historic Winecoff Hotel in a case of commercial Mortgage Fraud on a National Landmark. On June 26, 1998, Courtney Dillard became the first African-American developer to acquire the Historic Winecoff Hotel with an innovative financial plan to redevelop it into a boutique hotel on Peachtree Street, and an early victim of both the mortgage fraud epidemic and judicial misconduct allegations.

Judge Wendy Shoob failed to disclose the fact that her husband represented the alleged purchasers in Dillard-Winecoff vs. InterBank Funding, et al and she therefore possessed an indirect financial interest in the outcome of the case before her. She improperly dismissed the case without discovery and entered summary judgment benefiting her husband’s clients. Fortunately, Judge Shoob was overturned on appeal.

On November 25, 2002 the Georgia Supreme Court entered a decision in InterBank Funding et al. vs. Dillard-Winecoff, 275 Ga 765 (2002), affirming the Georgia Court of Appeals Whole Court Decision, and remanded the case for trial on the merits.  The next day, November 26, 2002 the United States District Court for the Southern District of New York granted the U.S. Securities and Exchange Commission’s application for partial summary judgment in SEC v. Inter Bank Funding, et al., Case No. 02-CV-5713 (S.D.N.Y.) against Simon Hershon and InterBank Funding Companies for securities fraud in connection with the offer and sale of $189 million in debt securities between 1997 and 2002, and for operating unlawfully in violation of the Investment Company Act of 1940.  InterBank Funding Companies declared Bankruptcy in New York and filed notice of its Bankruptcy Stay on February 12, 2003.

And nearly ten years later, Dillard-Winecoff still has never received discovery, an evidentiary hearing or a jury trial on the merits as ordered by the Georgia Supreme Court. On February 11, 2003 Judge Shoob finally disclosed her clear conflict of interest when she recused herself on remand after the “straw purchasers” voluntarily intervened in the case. However, Judge Shoob still exhibited undue influence over various other Superior Court Judges due to her fundraising and personal/family relationships. The daughter of Marvin Shoob, a highly revered federal judge, Wendy Shoob is a second generation Georgia Judge who fundraises for judicial elections. Thus Wendy Shoob is not merely a judge; she is a “judge maker” and she wields significant personal and familial influence.

Judge Shoob implored Judge Roland Barnes to dispose of the case in favor of her husband’s client. Consequently, less than 72 hours after intervention in a purely procedural hearing limited to lifting a lis pendes, Judge Barnes spontaneously declared the intervener defendants were “bona fide” purchasers without evidence or an evidentiary hearing and despite the existence of TWO federal Bankruptcy Stays over the proceedings. However, Judge Barns went so far as to insert his order in the court docket THE DAY BEFORE the procedural hearing actually took place, in order to avoid the separate bankruptcy stay filed by Dillard-Winecoff.

The only evidentiary hearing ever scheduled in Dillard-Winecoff case was canceled when Brian Nicholos went on a murderous rampage through the Fulton County Courthouse on March 11, 2005. However, her undue influence continued even after Judge Barnes unfortunate demise.  The subsequent judge, Thelma Moore simply sat on the case for four years without rescheduling the evidentiary hearing or ruling on any of literally dozens of motions. When Georgia law requires that Judges rule on all motions within thirty days (not years) — justice delayed is justice denied.

However, as a result of premature public funding/outlays by the City of Atlanta and the InterBank Bankruptcy Stay; the Dillard-Winecoff case laid dormant in Fulton County Superior Court for nearly a decade. Meanwhile the City of Atlanta issued building permits and millions of dollars of public funds and tax credits to develop the property into the new Ellis Hotel — while actual ownership was still being disputed. Ironically, the City of Atlanta has a sorted history of improper use of federal grant dollars and aid, from the decertification of the Atlanta Empowerment Zone in the 1990s to the incarceration of former Mayor Bill Campbell. Atlanta has a history of misuse and abuse of public funds and grant dollars in development projects.

Exasperated, the Dillard-Winecoff voluntarily dismissed and then re-filed the case o n January 8, 2007 in an attempt to move it forward. Dillard-Winecoff  vs. InterBank Funding Companies, et al Civil Action File No. 2007-CV-128105. Unfortunately, Judge Ural Glanville took the case but declared it moot despite the prior Georgia Supreme Court decision and prevented the clerk of the court from forwarding the case to the Court of Appeals — ignoring the timely appeals that were filed.

However, the InterBank Bankruptcy Case was closed on June 10, 2011 and thus the New York Bankruptcy Stay has finally been lifted/eliminated. Thus, the Dillard-Winecoff is now free to pursue its cause of action against InterBank Funding Companies –if only– the Fulton County Superior Court Judges would actually follow the Georgia Supreme Court Decision.

–If it could happen to us” it could happen to you–

In closing, the Winecoff Hotel is a National Historic Landmark but other than that why should the nation care about a mortgage fraud case in Georgia? First, the culprits InterBank Funding Companies ran a $189 Million mortgage-backed ponzie scheme from Washington, DC the Nation’s Capital. Second, the subject property is a National Landmark with $20–$30 Million in taxpayer funds, including grants and tax credits.

Finally, if this level of commercial Mortgage Fraud could occur without the police or FBI bothering to get involved (despite a Georgia Supreme Court Decision); then it just proves that ordinary cases of residential Mortgage Fraud will not be investigated either. Said another way, if a case of unprosecuted Mortgage Fraud could occur to a National Historic site on Peachtree Street in Atlanta, Georgia; then it can happen to anyone… no one is safe, whether in Washington, DC — Los Angeles, CA or New York City.