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Theft victims get no redress for their pain; Insurers reject claims for repayments in crime linked to foreclosure counselor

There weren't as many gifts under the tree for Josette Saia and her two daughters this holiday season.

No, she and her girls are going without, and one of the reasons why is the former housing counselor who promised to help save their home from foreclosure.

Instead of helping the Hamburg family, Lori J. Macakanja did just the opposite. She stole from them.

"That was all the savings I had," Saia said of the $4,700 she gave Macakanja in an effort to avoid losing her home. "It's not going to be like Christmases of the past."

Even more frustrating for Saia and the other 130 or so victims is the ongoing and so far unsuccessful effort to get their money back.

HomeFront, the Buffalo housing group they went to for help, filed claims with its insurance companies, only to be turned down.

"I don't know who I'm more angry with," said Saia. "We're suffering from what HomeFront should be fixing."

HomeFront stopped short of accepting responsibility for the thefts but sued its insurance carriers in state court after its initial claims were denied by the companies.

"We're asking the court to interpret our contracts," said James P. Harrington, a lawyer for HomeFront.

So far, the insurance companies are balking, leaving the victims to wonder if they'll ever get their money back.

"My husband works six or seven days a week, and I'm working two jobs," said Gina Hernandez, who lost $5,600. "We need that money."

And they're not alone.

Macakanja, who pleaded guilty to felony mail fraud in October, stole from dozens of people over an 18-month period in 2009 and 2010.

She also admitted spending the money she stole -- an estimated $300,000 -- while gambling at local casinos.

"So you lost $300,000?" U.S. District Judge Richard J. Arcara asked her at the time of her sentencing.

"Plus everything I won," she said.

As part of her plea deal, Macakanja is required to pay restitution, but the victims wonder if she will ever have the means to do it.

"Who knew she was a crook?" said Hernandez. "We really, really trusted her. To this day, I still can't believe she did this to us."

Hernandez said she went to HomeFront because of its solid reputation for helping homeowners facing foreclosure.

Now, more than two years later, she and others are wondering why HomeFront isn't taking responsibility for what happened to them.

"How does this go on right under their noses?" said Laurie Graham of Lackawanna, a single mother who lost $5,000. "They hired her, and she worked for them."

Saia, a divorced mother of two, said she went to HomeFront because she was worried she might lose her home because of health problems that caused her to miss work. Her home is outfitted for her daughter, who has spina bifida and uses a wheelchair.

What Saia didn't know at the time is that Macakanja had devised a series of schemes for stealing money from the very people she was supposed to help.

Sometimes, prosecutors said, she would ask her clients for money so she could make a payment on their mortgage but then put the money in her personal account.

Other times, she would send the money to the bank but have it applied to her mortgage, not the victim's mortgage, they said.

When it became apparent Macakanja was stealing from her, Saia said, she immediately went to HomeFront for an explanation.

"I asked, 'Am I going to get my money back?' " she said, "and I was told, 'Yes, we have employee theft insurance, and we can make a claim.' "

Harrington said HomeFront made those claims and, when they were denied, sued the insurance carriers -- Hartford Fire Insurance Co., Philadelphia Indemnity Insurance Co. and Erie Insurance.

Representatives of Hartford and Erie declined to comment on the suit, and Philadelphia Indemnity could not be reached to comment.

In court papers, Hartford argued that HomeFront's "claims are barred because employee theft as defined by the policy did not occur."

Erie and Philadelphia Indemnity have yet to respond to HomeFront's suit, although Philadelphia Indemnity has agreed to help pay for HomeFront's legal costs in several separate but related suits.

The organization is being sued by 14 homeowners.Prosecutors have said they found no evidence that HomeFront, as an organization, was intentionally involved in Macakanja's thefts, but her victims don't buy that.

"To this day, I'm perplexed," Graham said of the housing group. "They're just not cooperating."

Saia, meanwhile, is left with the difficult task of explaining to her two daughters why money is so tight this holiday season.

"I'm not just talking about Christmas gifts," she said. "They're always asking me, " 'Why can't we do this, why can't we do that?' "

News Staff Reporter Patrick Lakamp contributed to this story.