[RAWfiles: I'll make this paragraph the "kicker" for the article:
"Sometime in the last few years, Johnson and Heineman began reading
about mortgage elimination programs on the Internet. Such schemes
aren't just a way to make money; they're a longtime staple for
conspiracy theorists who claim the American monetary system is based on
a massive fraud perpetrated by a cabal of bankers. The godfather of
this movement is G. Edward Griffin, the founder of American Media, a
Southern California company that distributes books and videos about
conspiracies ranging from the banking system, to the September 11
attacks, to the secret society Skull & Bones. In the early 1990s,
Griffin published The Creature from Jekyll Island, the movement's
bible, in which he claimed that ever since the United States replaced
the gold standard with paper money, the country has been plagued by
inflation, while banking elites print money out of thin air to secretly
enrich themselves."]
http://www.eastbayexpress.com/Issues/2006-04-05/news/feature_print.html
>From eastbayexpress.com
Originally published by East Bay Express 2006-04-05
Dirty Deeds
The Dorean Group promised hundreds of homeowners that their mortgages
would go away. Guess what? They didn’t.
By Chris Thompson
When Kurt Johnson and Dale Scott Heineman set up the Dorean Group in
late 2003, they promised homeowners that just by filing a few simple
documents with the county they could completely wipe out hundreds of
thousands of dollars in debt. Their theory was a gumbo of paranoid
conspiracies and self-help gibberish based on an idea known as "vapor
money."
According to this fantasy, which has a cult following, all
electronically transferred money is inherently fraudulent, the Federal
Reserve Bank is controlled by a secret bankers’ cabal, and gold and
silver are the only legal tender recognized by the Constitution. In
spite of the delusional quality of this argument, hundreds of
homeowners paid the two men millions of dollars to help eliminate their
mortgage debt.
Johnson and Heineman allegedly amassed a fraudulent fortune from
homeowners and lending institutions, depositing some of the funds in
offshore accounts, according to documents assembled by the Federal
Bureau of Investigation. On the blog where he has railed for months
about his fight with the feds, Johnson himself estimated that he and
Heineman made close to $5 million through their Union City operation.
Even while he was a fugitive from the law, Johnson published rambling,
almost-daily manifestos defending his scheme and declaring himself a
servant of the Lord working to thwart the agents of darkness.
Federal law enforcement officials, some of the agents of darkness
Johnson had in mind, say the two men presided over one of the most
ambitious national real-estate frauds in years. The officials claim
that the Dorean Group concocted an arcane, almost delusional racket to
fraudulently erase the mortgages of up to 574 homes around the country,
defrauding lenders of more than $94 million. Johnson and Heineman have
been charged with 68 counts of conspiracy, bank fraud, mail fraud, and
contempt of court. After six months in custody, the men are finally
approaching their day in court. And if a recent preliminary hearing is
any indication, it should be a colorful affair.
On February 17, in the Oakland courtroom of U.S. District Judge Lowell
Jensen, Johnson and Heineman were dressed in blue jumpsuits with
"Alameda County Jail" stenciled on the backs. Heineman, a skinny young
man who looked to be in his thirties, wore his hair in long, curly
brown locks; Johnson was fortyish, stocky, and bald. The men had
decided to represent themselves, and the judge was about to schedule a
hearing to make sure they understood how complicated that would be.
That’s when Heineman declared that his and Johnson’s purpose in court
was to expose the sinister secrets of American justice.
As Johnson stood quietly to the side, Heineman claimed that Jensen’s
court was a "supercilious, Machiavellian" star chamber that carried out
the orders of a mysterious, extralegal cabal. Judge Jensen, however,
still had a chance to reclaim his honor if he would open his heart to
"Christ Jesus."
Jensen briefly humored Heineman. "I think it’s a matter of individual
choice," he said. "We’re here on a matter of civil law, under civil
authority."
"The agency exists for you to administer justice under righteousness,"
Heineman retorted.
As Jensen soldiered onward, and outlined the next step in the trial,
Heineman had another point to make. "You also mentioned that we’re
human beings, and I wanted to verify that," he said. The government, he
explained, had declared its intent to prosecute the fictitious entity
known as the Dorean Group, as well as Heineman and Johnson. Yet
Heineman and Johnson weren’t fictitious entities, but human beings.
Heineman suggested the government, in some kind of grand existential
blunder, had indicted two abstractions. "I don’t believe the flesh and
blood human beings standing here are being tried or indicted," he
concluded.
In court, Heineman and Johnson seemed like colorful fanatics, but as
mortgage-elimination gurus, countless otherwise normal American
families went along with them anyway. They convinced hundreds of
homeowners that they could wipe out their mortgages with just a few
signatures on some fancy legal paperwork. Such is the superheated
housing market that hundreds of formerly law-abiding citizens were
offered an allegedly illegal scam to defraud their banks and said yes,
even though some will certainly lose their homes as a result.
Thanks to the surreal housing market, and an explosion of new forms of
credit, real-estate fraud has become a quiet epidemic. The FBI recorded
more than 21,000 cases of fraud last year – 600 percent more than in
1999 – but since two-thirds of the nation’s mortgage lenders didn’t
report the cases they discovered, the real number may be as high as
60,000. At least $1 billion was stolen from borrowers and lenders in
2005, and just this month the Mortgage Bankers Association urged
Congress to commit millions of dollars to a new effort to prosecute
mortgage fraud.
But there’s more to the story than greedy crooks and unsophisticated
borrowers. As the housing market reaches unprecedented levels, members
of the middle-class "ownership society" so celebrated by a certain
president are choosing to become crooks. When homes were worth
$100,000, there wasn’t as much incentive to welch on the mortgage. Now
that East Bay homes are worth about five times that amount, more
homeowners are tempted to imperil their futures on even the most
transparent cons.
"We’re seeing more real-estate fraud because we’re seeing more
real-estate activity," says Rachel Dollar, a Marin County attorney and
specialist in mortgage-fraud litigation. "More and more borrowers are
experiencing payment stress, and that’s when it happens."
Hundreds of Americans did business with the Dorean Group. No one knows
how many lost their homes or ruined their credit as a result. No one
knows how many marriages were destroyed by the stress. But the Dorean
Group isn’t the country’s only "mortgage elimination" business. A
Google search can find countless other groups promising that electronic
debt is illegal, and that they will help you erase it for a fee. If the
housing market cools, and interest rates rise, thousands of homeowners
who gambled on risky interest-only loans may feel pressured to fall
prey to such schemes.
Very little is known publicly about Kurt Johnson. He tried to call this
newspaper once from his Utah jail cell, but did not respond to further
requests for comment forwarded through his father, a South Bay
physician.
Kurt Johnson was born roughly 43 years ago in Trenton, New Jersey, but
his father declines to disclose anything else about his son’s
background. Johnson freely admits that in the early 1990s, he was
sentenced to almost six years in prison for securities fraud. He was
paroled after two years, according to the Sacramento Bee.
Sometime in the last few years, Johnson and Heineman began reading
about mortgage elimination programs on the Internet. Such schemes
aren’t just a way to make money; they’re a longtime staple for
conspiracy theorists who claim the American monetary system is based on
a massive fraud perpetrated by a cabal of bankers. The godfather of
this movement is G. Edward Griffin, the founder of American Media, a
Southern California company that distributes books and videos about
conspiracies ranging from the banking system, to the September 11
attacks, to the secret society Skull & Bones. In the early 1990s,
Griffin published The Creature from Jekyll Island, the movement’s
bible, in which he claimed that ever since the United States replaced
the gold standard with paper money, the country has been plagued by
inflation, while banking elites print money out of thin air to secretly
enrich themselves.
"I don’t think anybody in the movement is doing it because they’re
trying to get something for nothing," says Scot Runyon, spokesman for
the mortgage elimination business Li-Bo Enterprises. "They just know
they’re in a system that’s not working for anybody except those who
know you can turn money out of thin air. … You ever see the movie The
Matrix? Go back and look at it a couple times. That movie is a lot
deeper than most people think."
Like many other such businesses, Johnson and Heineman created the
Dorean Group to invalidate hundreds of mortgages based on this theory.
Homeowners gave the two men a fee ranging from $1,500-$4,500 and signed
their property over to them. Dorean representatives then sent the
lending institution a document, according to the federal indictment,
demanding that the lender prove "to the unilateral satisfaction of the
Dorean Group" that the loan was not based on fraud. Failure to respond
within ten days, the document added, constituted tacit assent that the
loan was fraudulent and
…







