Two convicted of filing fraudulent bankruptcy petitions in Kansas to stop foreclosures

A federal jury in Topeka has convicted two Los Angeles area men of filing fraudulent bankruptcy petitions in Kansas to stop home foreclosures.

The jury Friday found Isaac Yass, 42, and Robert Andrew Blechman, 39, guilty of six counts of mail fraud and six counts of aggravated identity theft.

“The defendants used the bankruptcy system to operate an illegal foreclosure rescue scheme, causing harm to financially distressed homeowners and threatening the integrity of the bankruptcy system,” Richard Wieland, U.S. trustee for Kansas, Oklahoma and New Mexico, said in a written statement.

The scam took advantage of the automatic stay that goes into effect when a bankruptcy petition is filed. The stay halts actions by creditors, including foreclosure proceedings.

Yass and Blechman operated a service called Stopco, which told homeowners going through foreclosure that it could help them keep their houses for a monthly fee. Stopco then filed bankruptcy petitions in Kansas City, Kan., Topeka and Wichita in the names of nonexistent businesses that claimed to be partial owners of the properties in foreclosure.

The bankruptcy petitions allegedly contained false names and Social Security numbers, as well as creditor addresses that turned out to be mailboxes or UPS stores in Lenexa, Overland Park, Olathe and Wichita.

After their indictment last March, Wieland’s office estimated that since 2006, Stopco had stopped foreclosures on properties valued at more than $50 million in Kansas, California, Maryland and Tennessee

Yass and Blechman each face a maximum sentence of 30 years in prison, fines of up to $1 million on each of the mail fraud counts and fines of up to $250,000 on each of the identity theft counts. Sentencing has been set for May 11.

The U.S. attorney’s office, the FBI, the U.S. Postal Inspection Service and the Social Security Administration’s Office of the Inspector General jointly worked on the investigation.

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