Thursday, September 10, 2009

Fraude imobiliare in America: invinuiti, arestati sau pedepsiti

September 16, 2009
Last of Hedge Fund Advisors Pleads Guilty in $194 Million Hedge Fund Collapse
Jeffrey H. Sloman, Acting United States Attorney for the Southern District of Florida, John V. Gillies, Special Agent in Charge, Federal Bureau of Investigation (FBI), Miami Division, and J. Thomas Cardwell, Commissioner, State of Florida, Office of Financial Regulation, announced that defendant Won Sok Lee, 39, an attorney, formerly of Riviera Beach (Singer Island), Florida, and Irvine, California, pled guilty this afternoon to two felony counts in connection with the operation of a hedge fund formerly run by the KL Group LLC in Florida and California, Case No. 06-80197-Cr-Ryskamp.
Sentencing has been scheduled for December 11, 2009 at 1:30 p.m. before U.S. District Court Judge Kenneth L. Ryskamp in West Palm Beach federal court. Lee faces a statutory maximum term of imprisonment of twenty-five years, a fine of $500,000, and restitution to the victims of the massive fraud. Lee pled guilty to one count of conspiracy to commit mail fraud and wire fraud, in violation of Title 18, U.S.C.§ 371 (Count 1, which carris a five-year maximum penalty) and one count of wire fraud, in violation of Title 18, U.S.C. §1343 (Count 2, which carries a 20-year maximum penalty).
In December 2006, defendants Won Lee, John Kim, and his brother, Yung Bae Kim were charged in a 35-count Indictment for their participation in a massive investment fraud in the operation of various hedge funds under the umbrella of the KL Group, LLC, initially in California and later in Palm Beach County. According to the Indictment, documents filed with the court, and statements made during the plea hearings, the defendants used quarterly mailings and website postings to misrepresent to investors that the KL Financial Group was a hugely successful family of hedge funds. In fact, however, the KL funds lost millions of dollars, and, in Ponzi scheme fashion, used new investors’ monies to make payments owed to previous investors. From 2000 through 2005, KL received approximately $194 million in investor funds.
Also charged in the Indictment were three hedge fund advisor companies that were owned and controlled by the individual defendants: KL Group, LLC, KL Triangulum Management, LLC, and Shoreland Trading, LLC. The companies pled guilty in July 2007 to participating in the investment fraud conspiracy. They were sentenced and were ordered to pay restitution in the amount of $78,525,567.34. As well, defendants John Kim and Yung Kim pled guilty to their involvement in the fraud, and were sentenced on July 17, 2008 to 220 months in prison and 75 months in prison, respectively.
Defendant Won Lee remained a fugitive from December 2007 until early 2009. In 2009, federal authorities located Won Lee in South Korea. He was extradited to South Florida in April 2009 to face the federal charges pending against him. In pleading guilty today, Won Lee signed a detailed factual proffer, which was filed with the court, in which he admitted lying to investors to induce them to invest in the hedge funds and to keep their monies invested or to reinvest in different hedge funds. The misrepresentations included false statements about the soundness and performance of particular funds. For example, victims were told that the funds were profitable, when in fact, none were. Lee also admitted his complicity in creating counterfeit clearing firm statements that were used to perpetrate and conceal the scheme.
In addition, Lee admitted lying to a clearing house about the origin of monies used to buy and sell stocks cleared through Penson, a Texas-based clearing firm. Lee also admitted to creating fictitious stock trading sheets, which were used to show a one-day profit of $22 million in a stock known as RIMM, the company that manufactures the popular “Blackberry” device. The RIMM trade, however, never took place, and the fictitious stock trading sheets were used to fool investors concerning the profitable trades being conducted by the KL hedge funds.
Acting U.S. Attorney Jeffrey H. Sloman remarked, “This plea is one of the final steps in a multi-year journey to bring to justice financial professionals who breached the trust placed in them by investors. The U.S. Attorney’s Office will continue to work with the State of Florida and its law enforcement partners to help restore the integrity of our private financial markets.”
Mr. Sloman commended the Federal Bureau of Investigation and the State of Florida’s Office of Financial Regulation for their tireless efforts on this matter. The case is being handled by Assistant U.S. Attorneys Stephen Carlton and Edward Nucci


September 15, 2009
Former Highgate Manor Operator Pleads Guilty in $11 Million Multi-State Mortgage Fraud Scheme
The Office of the United States Attorney for the District of Vermont stated that Benjamin Osmanson, 30, of California and Sarita, Texas, pleaded guilty yesterday to three counts of conspiracy, wire fraud, and money laundering related to his scheme to defraud mortgage lenders by submitting false loan applications in the names of “investors.” Osmanson was arrested in October 2008 in Texas. His codefendant Jillian Protzman pled guilty on August 17, 2009, to two counts of conspiracy and money laundering. Two mortgage brokers involved in the scheme, Mike Otis and Chris Whitfield pled guilty earlier this year in the Western District of Kentucky at Louisville, Kentucky. Additionally, Florida realtor Margaret Giresi pled guilty yesterday in Vermont to an information charging her with conspiracy for her role in the scheme.
Osmanson was charged in an eleven-count indictment alleging that from at least as early as January 2006 through at least April 2007, he and Protzman orchestrated the purchase of at least 50 properties in California, Florida, Kentucky, and Vermont in the names of at least 10 investors, obtaining more than $26,000,000.00 in loans to support the purchases. According to the indictment, Osmanson recruited friends, family members, and acquaintances to “invest” in real estate. Osmanson and Protzman then submitted fraudulent loan applications in the names of the investors to obtain fully-financed mortgage loans. The indictment states that Osmanson, Protzman, and others sought loans from multiple lenders, and closed the loans for each investor within a short period of time, in order to preserve the appearance of the investor’s good credit until the transactions were complete. The indictment further alleges that Osmanson and Protzman enriched themselves with “rebates,” “fees,” and commissions connected to the fraudulent property purchases, and continued to recruit investors and submit applications for new loans even after the loans to the initial investors began to fail. During the plea hearing, Osmanson admitted his scheme caused over $11 million in losses to the mortgage lenders as the properties purchased during the scheme went into foreclosure.
Sentencing is preliminarily scheduled for January 2010. Osmanson faces maximum possible terms of imprisonment of up to five years on the conspiracy count, 30 years on the wire fraud count, and 10 years on the money laundering count; however, the actual sentence in the event of a conviction will be determined by the Court after consulting the federal sentencing guidelines. The Court will also order Osmanson to pay restitution in an amount determined after consultation with the U.S. Probation Office.
September 14, 2009
Mortgage Lender Sentenced to 63 Months in Custody in Connection with Real Estate Investment Scheme
SAN FRANCISCO—
Cheryl Hernandez Camus was sentenced today to 63 months in prison and ordered to pay $1,457,255 in restitution for mail and wire fraud in connection with a real estate investment scheme, United States Attorney Joseph P. Russoniello announced.
Ms. Camus pleaded guilty on December 12, 2008 to five counts of wire fraud and two counts of mail fraud. In pleading guilty, Camus admitted to devising a short-term money lending investment scheme in which she promised fixed returns and the return of the principle investment within a fixed period of time. Ms. Camus admitted making a number of false representations in conjunction with the investment scheme, including:
The investors’ money would be used to help finance real estate transactions, such as payment of closing costs or down payment;
The investors’ money would be used to pay medical costs;
The investor would receive a fixed monthly interest payment on the investment;
The investor would receive the return of the principle investment amount within a fixed period of time;
The loans would involve “really no risk.”
Camus screened the borrowers to ensure that money was only lent to borrowers who had the ability to repay;
Camus had been conducting similar transactions for three years and the returns had been “awesome.”
Camus would personally guarantee the investment; and
The investment would be secured by a legitimate deed of trust.
Camus used the money she obtained from investors for personal expenses and to pay back earlier investors.
Ms. Camus, 37, of Concord, California, was indicted by a federal grand jury on April 8, 2008. She was charged with five counts of wire fraud and two counts of mail fraud.
The sentence was handed down by U.S. District Court Judge Marilyn Hall Patel following a guilty plea on five counts in violation of 18 U.S.C. § 1343 and two counts in violation of 18 U.S.C. § 1341. Judge Patel calculated the restitution amount of $1,457,255, by finding that the principal loss amount was $1,924,796, and that Ms. Camus had paid back $467,541 to the victims. Judge Patel also sentenced the defendant to a three year period of supervised release. The defendant will begin serving the sentence on October 30, 2009.
September 14, 2009
Columbus Man Pleads Guilty to Money Laundering in Connection with Mortgage Fraud Scheme
COLUMBUS, OH
—Charles E. Townsend, 39, of Columbus pleaded guilty in United States District Court here to one count of money laundering in connection with his involvement in a mortgage fraud scheme that exaggerated property values to out of state investors in order to secure funding for the purchase of properties in primarily low income neighborhoods in Columbus.
William E. Hunt, Acting United States Attorney for the Southern District of Ohio, Jose A. Gonzalez, Special Agent in Charge, Internal Revenue Service Criminal Investigation, and Keith L. Bennett, Special Agent in Charge, Federal Bureau of Investigation, announced the plea entered late Friday before United States District Judge Algenon L. Marbley.
According to statements of facts presented in court, Townsend helped two co-conspirators, Aryeh Schottenstein and Jeffery Lieberman, fraudulently secure funding from Stillwater Investments Group of New York for real estate transactions involving propertiesin Columbus. Townsend exaggerated the value of properties in order to induce Stillwater to fund real estate transactions in amounts well in excess of the true value of the properties involved. Townsend also promised to use certain funds provided by Stillwater to renovate houses involved in those real estate transactions, which renovations were not undertaken. In some of these transactions Townsend also retained funds as purported “consulting fees” when no commercially valuable consulting services were performed.
The statement of facts cites an instance in which Stillwater wired $227,500 from New York to Ohio to purchase and renovate property actually worth no more than $50,000. At closing on the following day, May 11, 2004, Townsend received a check in the amount of $43,815 as a “consulting fee,” which he deposited in his personal bank account. That transaction constitutes the laundering of funds procured through the wire fraud scheme.
Schottenstein pleaded guilty in May, 2008 to one count each of conspiracy and money laundering and was sentenced in February, 2009 to 42 months' imprisonment, followed by three years of supervised release, 416 hours of community service, and ordered to pay $3,740,173 in restitution to the victim financial institutions, jointly and severally. Lieberman pleaded guilty in April, 2008 to one count each of conspiracy and money laundering. He was sentenced in February, 2009 to 16 months' imprisonment, followed by three years of supervised release, 416 hours of community service, and ordered to pay $400,000 in restitution to Stillwater Capital Partners.
Money laundering is punishable by up to ten years' imprisonment, a fine of up to $250,000 and restitution. Judge Marbley will set a date for sentencing.

September 11, 2009
Former Madison County Real Estate Investor Charged in Mortgage Fraud Scheme
JACKSON, MS
—United States Attorney Stan Harris, Federal Bureau of Investigation Acting Special Agent in Charge Stephen F. Gomez, Federal Deposit Insurance Corporation - Office of Inspector General Special Agent in Charge Thomas C. McDade, and Madison/Rankin County District Attorney Michael Guest announced today that a federal grand jury has returned a six count indictment against Earline Y. Rawls in connection with a fraudulent mortgage loan scheme. The indictment charges Rawls with one count of conspiracy to commit bank fraud and six counts of bank fraud.
According to the indictment, Rawls devised a scheme which began in August of 2006, and continued through March 29, 2007, and involved the purchase of four residential properties in Madison and Hinds County. The indictment alleges that the primary objective of the conspiracy was to induce approval, funding and distribution of over $1,000,000.00 in loan proceeds through the deceptive submission of fraudulent representations to Merchants and Farmers Bank, Community Bank of Mississippi and BancorpSouth. The indictment further alleges that Rawls, doing business as Heavenly Homes, manufactured fraudulent documents indicating business revenues of $1,301,689 and a profit of $271,530.00 from January 1, 2006 through November 20, 2006. Rawls allegedly submitted this information in furtherance of her scheme with unindicted co-conspirators.
This mortgage fraud investigation is a joint effort led by the Federal Bureau of Investigation, and the Federal Deposit Insurance Corporation, and was assisted by other agencies in the Jackson Financial Crimes Task Force, including the Internal Revenue Service, the United States Postal Inspection Service, Housing and Urban Development - Office of Inspector General, Mississippi Department of Banking and Consumer Finance, Mississippi Real Estate Commission and Appraisal Board, the Madison Police Department, and the Madison-Rankin County District Attorney’s Office.
Stephen F. Gomez, Acting Special Agent in Charge of the FBI in Mississippi applauded the work of the Jackson Financial Crimes Task Force, stating, "By combining the assets and resources of our respective agencies, the Task Force is extremely well equipped to address this threat to the financial well-being of the citizens and financial institutions in our community."
Michael Guest, the Madison/Rankin County District Attorney, said, “Our office is pleased to have the opportunity of working with the United States Attorney’s Office and other state and federal authorities in bringing perpetrators of mortgage fraud in Madison County to justice. The fraudulent representations made to lenders in many instances may be viewed as significantly contributing to the high rate of foreclosures and economic uncertainty in Mississippi. We will continue efforts to prosecute these cases whenever and wherever wrongdoers are discovered. ”
U.S. Attorney Stan Harris commended the federal, state, and local agencies who are participating in the Jackson Financial Crimes Task Force. Harris said, “This is a good example, on the anniversary of September 11th, of the excellent work that law enforcement agencies can accomplish when they partner together.”

September 10, 2009
Cedar Funding Businessmen Indicted for Real Estate Investment Fraud
SAN FRANCISCO
—A federal grand jury indicted David Arthur Nilsen and Manoel Antonio Errico, of Monterey, Calif., with conspiracy to commit mail and wire fraud, mail fraud, wire fraud, and securities fraud, United States Attorney Joseph P. Russoniello and Monterey County District Attorney Dean D. Flippo announced.
The indictment, which was issued Tuesday, remained under seal until Nilsen was arrested after surrendering to authorities in San Jose, Calif., earlier today.
The indictment accuses Nilsen and Errico of defrauding investors in Cedar Funding, a Monterey-based “hard money” lender, in connection with investments in loans purportedly secured by deeds of trust and in a fund that invested in those same loans. According to the court document, Cedar Funding had more than 1,000 investors and the loss to those investors could exceed $100 million.
The indictment further alleges that Nilsen, 58, and Errico, 55, defrauded investors in fractional interests in loans secured by deeds of trusts, and in Cedar Funding Mortgage Fund, LLC, by making materially false statements, failing to disclose material facts, and creating a materially deceptive and misleading scheme, plan and artifice to defraud. The indictment alleges in part that, through, among other things, documents provided to investors, advertisements, interest payments and verbal communications, Nilsen and Errico created the false and misleading appearance that the investors’ funds were invested in sound, secured real estate loans, which offered high returns and safety of principal. In truth, by in or about 2004 and increasingly thereafter, most of the loans were not performing, and the investors’ funds were not secure. As borrowers increasingly failed to pay off loans, Nilsen and Errico, without the investors’ prior knowledge or consent, extended the loan maturity dates and advanced more investor funds, which caused the loan balances to balloon beyond the initial loan amounts, diluted the investors’ fractional interests in the loans and increased the likelihood that they would lose some or all of their principal.
The indictment also alleges that, unknown to investors, the source of a substantial part of the interest that Nilsen and Errico caused Cedar Funding to pay to existing investors came from new investors’ funds rather than from performing borrowers.
Nilsen made his initial appearance in federal court in San Jose today, and has been released after executing a co-signed bond of$1 million. The defendant's next scheduled appearance is at 9:30 a.m. on Sept. 28 for identification of council and bail review before Magistrate Judge Howard R. Lloyd.
Errico is a fugitive.
Nilsen and Errico are named in each of the 31 counts alleged in the indictment. The maximum statutory penalties for each count in the indictment are:
Count 1, 18 U.S.C. § 1349 (Conspiracy): 20 years' imprisonment, a fine of $250,000 or twice the amount of gain or loss, whichever is greater, three years supervised release, and a special assessment of $100
Counts 2 through 12, 18 U.S.C. § 1341 (Mail Fraud), and Counts 13 through 20, 18 U.S.C. § 1343 (Wire Fraud): each count carries the same maximum penalties as Count 1
Counts 21 through 31, 15 U.S.C. §§ 78j(b) and 78ff, 17 C.F.R. §§ 240.10b-5 and 240.10b5-2 (Securities Fraud), 18 U.S.C. § 2 (Aiding and Abetting): each count carries the same penalties as Counts 1 through 20, except that the maximum fine is $5,000,000.
The court may also order that the defendants to pay restitution, if appropriate. However, any sentence following conviction would be imposed by the court after consideration of the U.S. Sentencing Guidelines and the federal statute governing the imposition of a sentence, 18 U.S.C. § 3553.
September 9, 2009
United States Attorney's OfficeDistrict of Arizona Contact: (602) 514-7500
Real Estate Investor Convicted on 19 Counts for His Involvement in a Mortgage Fraud Conspiracy
PHOENIX—
Mario Bernadel, 51, of Phoenix, was convicted yesterday on 19 counts of Conspiracy to Commit Mail, Wire, and Bank Fraud; Mail Fraud; Wire Fraud; Bank Fraud, and Transactional Money Laundering as a result of his involvement in a cash back mortgage fraud scheme. Sentencing is set before U.S. District Judge Stephen M. McNamee on November 30, 2009.
Bernadel played a leadership role in the underlying conspiracy which involved at least 32 residential properties in the greater Phoenix area. The objective of the conspiracy was to recruit unqualified borrowers as straw buyers, submit fraudulent loan applications on their behalf, obtain mortgage loans in excess of the selling price of the property and then take the excess amount of the loans out through escrow in what is know as a “cash back” scheme. The defendant recruited and/or trained mortgage brokers, straw buyers and an escrow officer in the scheme to defraud and then benefitted from their involvement in the scheme.
Following the funding of the loans, Bernadel received cash back that he used to live a lavish lifestyle and further perpetuate the scheme. All of the homes purchased through the conspiracy have been foreclosed or sold at a loss to the lending institutions. Seven other co-conspirators were also charged and have pleaded guilty for their involvement in the conspiracy. They will be all sentenced over the next few months. The conspiracy resulted in approximately $20,000,000 in loans obtained by fraud and a loss to lending institutions of more than $2,000,000.
A conviction for Conspiracy to Commit Wire, Bank, and Mail Fraud carries a maximum penalty of 30 years in federal prison, a $1,000,000 fine or both. In determining an actual sentence, Judge McNamee will consult the U.S. Sentencing Guidelines, which provide appropriate sentencing ranges. The judge, however, is not bound by those guidelines in determining a sentence.
Bernadel’s conviction is part of initiative called “Operation Cash Back,” in which 40 defendants were indicted and arrested, including many real estate professionals in June 2008. Bernadel is the 20th defendant to date who has been convicted through “Operation Cash Back.”
These investigation in this case was conducted by the Federal Bureau of Investigation. The prosecution was handled by Kevin M. Rapp and Charles W. Galbraith, Assistant U.S. Attorneys, District of Arizona, Phoenix.

September 8, 2009
William “Boots” Del Biaggio Sentenced to 97 Months’ Imprisonment for Securities FraudSilicon Valley Businessman Receives Stiff Sentence for Defrauding Lender in Connection with More Than $100 Million in Loans
SAN FRANCISCO
—William J. “Boots” Del Biaggio was sentenced today to 97 months in prison and ordered to pay approximately $67.5 million in restitution for his role in a $100 million fraud scheme, United States Attorney Joseph P. Russoniello announced.
“I would hope this sentence and those imposed by the courts in other recently publicized investment fraud cases will make it clear that the federal government will prosecute to the fullest extent permitted by law those who defraud their investors, in particular, and perpetrate a fraud on the market, in general,” Russoniello said. “Mr. Del Biaggio caused substantial harm to his victims, in some cases jeopardizing their future financial sustainability. The sentence imposed should be a warning to others that the prospect of easy profits is not worth the risk of loss and shame that detection and prosecution is certain to bring.”
Del Biaggio, 42, of San Jose, Calif., was charged by Information of one count of securities fraud on Dec. 4, 2008. He pleaded guilty on Feb. 4, 2009. According to the plea agreement, Del Biaggio admitted to using doctored brokerage statements to defraud banks and other lenders to obtain or renew approximately $100 million in loans. He also admitted to his role in the misappropriation of investors’ funds in three investment funds at which he was a principal: Sand Hill Capital Partners III; BDB Management, LLC; and BDB Management III. For his conduct related to these investment firms Del Biaggio agreed to pay approximately $19.9 million in restitution.
According to court documents, Del Biaggio’s actions related to the charged, fraudulent scheme ultimately caused $47 million in losses. His conduct related to the investment funds affected more than 75 investors—some lost their savings. Several of the victims spoke of their loss at the sentencing.
The sentence was handed down by U.S. District Court Judge Charles R. Breyer. Judge Breyer also sentenced the defendant to a three year period of supervised release, and ordered him to pay a $100 special assessment. Del Biaggio who is out on bond is scheduled to self surrender on Jan. 8, 2010.
Del Biaggio’s co-defendant, Scott Cacchione, is scheduled to be sentenced on Sept. 29.
Jonathan Schmidt is the Assistant U.S. Attorney who is prosecuting the case with the assistance of Rayneisha Booth. The prosecution is the result of a lengthy investigation by the FBI.
September 8, 2009
CEO Surrenders to FBI for $11 Million Mortgage Fraud Scheme
NEWARK, NJ—
David Findel is best known for his purchase of exclusive seats at a local football stadium. Now, he will be known for another reason. Today, Special Agent In Charge Weysan Dun announced the surrender of Findel, the 44-year-old President and CEO of Worldwide Financial Resources, on a single charge of wire fraud.
A criminal complaint filed today in Newark charges Findel, of Colts Neck, New Jersey, with submitting false documents to financial institutions in a mortgage reselling scheme. Findel’s actions caused those institutions to wire money to Findel’s company, Worldwide Financial Resources (herein referred to as “WFR”) located at 50 Route 9 North, Morganville, New Jersey. Originally started as a financial planning company, WFR had been expanded by Findel to include a variety of home mortgage services, to include mortgage origination and banking. This allowed WFR to both initiate and fund mortgages for its clients by borrowing money from a “warehouse lender.” To repay the lender, WFR would resell each home mortgage it originated in the secondary mortgage market at a profit.
Because of the housing crisis, WFR experienced a liquidity crisis in January 2008. That is when Findel perpetrated a scheme to defraud mortgage banks by reselling the same mortgages to multiple financial institutions, according to the criminal complaint. It is important to note that once WFR sold a mortgage, it relinquished any and all financial interest in that mortgage. But Findel would then create a second set of fraudulent mortgage documents (loan applications, promissory notes, closing sheets, settlement forms, etc.) and resell—for a second time—the same mortgage to a different secondary lender. Funds from the secondary lender’s account were wired through an escrow company to the account of WFR. Findel allegedly used those funds to pay corporate and personal expenses. The complaint alleges that Findel obtained more than $11 million from secondary lenders through his fraudulent mortgage transactions.
“This is a man who had it all,” said Weysan Dun. “Mr. Findel made this company what it was. He had the skill and savvy for this business. But what I find most remarkable is that despite his wealth and success, it simply wasn’t enough. Mr. Findel let greed beat him.”
Findel had an initial appearance this afternoon before Honorable Mark Falk, United States Magistrate Judge. Falk released Findel on $1 million secured bond. If convicted, Findel faces a maximum prison sentence of 20 years and $250,000 in fines. A criminal complaint is merely an accusation. Despite this accusation, every defendant is presumed innocent unless and until proven guilty beyond a reasonable doubt.
September 8, 2009
Three Indicted for Mortgage Fraud Scam
James Wiese, 38, of Birmingham, Ilir Dokaj, 33, and Tom Gjokaj, 52, both of Sterling Heights, were indicted today by a federal grand jury in Detroit for scheming to obtain $7,557,100 from federally insured banks through fraudulent mortgages on twelve Birmingham homes, United States Attorney Terrence Berg announced today. Berg was joined in the announcement by Andrew C. Arena, FBI Special Agent in Charge.
The 2-count indictment charges that James Wiese, through his company Great Lakes Custom Builder, LLC, purchased twelve residential properties in Birmingham, Michigan in 2004 and 2005. Many of these property sites originally had smaller homes located on them, which had been demolished. Wiese built new houses on the twelve sites, expecting to make a profit when the new houses were sold.
James Wiese, Ilir Dokaj and Tom Gjokaj devised a scheme in which Gjokaj would be the straw buyer and purchase all twelve of the newly constructed Birmingham properties in three months: the first fraudulent loan closed on May 11, 2007, and the twelfth and final loan closed on August 13, 2007. Gjokaj paid Wiese's asking price for all twelve properties, for a total purchase price of $8,313,000.
To cause the lending institutions to believe that Gjokaj qualified to purchase the houses, the conspirators engaged in a variety of fraudulent conduct, including:
Wiese supplied $815,815.86 toward the sales of his properties himself. He provided $346,700 to be used as the earnest money deposits for the sales, and an additional $469,115.86 to be used as the down payments and to cover closing costs. To prevent the lenders from knowing that the funds came from him and not from Tom Gjokaj, Wiese deposited the money and down payments into bank accounts controlled by Gjokaj, and also transferred other funds to bank accounts controlled by Ilir Dokaj; Dokaj then moved most of those funds into bank accounts controlled by Gjokaj.
After funds from Wiese and Dokaj were in accounts he controlled, Gjokaj drafted official checks or wrote personal checks from those accounts, and used the checks as earnest money deposits and down payments.
On the mortgage loan applications (1003s) for each of the properties, Gjokaj failed to disclose that Wiese, the builder and seller, was ultimately providing the funds for the earnest money and down payments. Instead, Gjokaj fraudulently represented that the earnest money and down payments were his own funds. Gjokaj also inflated his monthly earnings, failed to disclose all of his liabilities (including those related to the properties he had already purchased), and made other material misrepresentations.
At the closings on the sales of the properties, both James Wiese and Tom Gjokaj signed the HUD-1 Settlement Statements certifying that all payments associated with the transaction were included on the Settlement Statements; however, the Settlement Statements did not list the transfers of funds by Wiese to Gjokaj to cover the earnest money deposits and down payments. All of the mortgages went into immediate default.
United States Attorney Berg said, “The charges in this case demonstrate the dangers when the builder/property owner colludes with the purchaser in order to grease the skids of the financing process by furnishing the down-payment that purchaser should legitimately make and hide that fact from the lender. We will continue to target mortgage fraud because it harms both our financial institutions as well as the integrity of the market.”
An indictment is only a charge and is not evidence of guilt. A defendant is entitled to a fair trial in which it will be the government's burden to prove guilt beyond a reasonable doubt.
The case was investigated by special agents of the FBI. The case is being prosecuted by Assistant U.S. Attorney Cynthia Oberg.

September 4, 2009
United States Attorney's OfficeSouthern District of Texas Contact: (713) 567-9000
Owner of Brownstone Construction Indicted for Mortgage Fraud
HOUSTON
—A 16-count sealed indictment charging Melvin Lendall Brown, the owner of Brownstone Construction, with wire fraud arising from an alleged multi-million dollar mortgage fraud scheme has been unsealed, United States Attorney Tim Johnson and FBI Special Agent in Charge Richard C. Powers announced today.
Brown, 49, of Houston, was charged with 16 counts of wire fraud arising from a scheme to defraud residential mortgage lenders of approximately $5 million in loans in connection with home purchases in the Houston area. Brown surrendered to the FBI on Thursday morning and appeared before Magistrate Judge Calvin Botley yesterday afternoon. Brown has been ordered released upon posting 10 percent of a $100,000 bond into the registry of the court. Arraignment has been set for Sept. 11, 2009.
According to the allegations in the indictment returned last week, over a one-year period beginning in June 2004, Brown recruited individuals with good credit to act as borrowers in applications for residential mortgage loans to purchase one or more homes in the Houston area, knowing the borrowers had no intention of making payments on the mortgage loans. Brown generally told each borrower he would buy the home in the borrower’s name, make any monthly mortgage payments, find others to live in the home and pay monthly rent, take the home out of the borrower’s name after a period of time and compensate the borrower. He then completed and caused to be completed Uniform Residential Loan Applications in the names of the borrowers that overstated their employment income and other assets, understated or omitted their debts and other liabilities, falsely represented that the borrowers leased the homes they resided in and received income from the rent and falsely claimed that the borrowers intended to occupy the newly purchased homes, all of which were material to the lenders’ decisions to approve the applications and fund the loans. In support of those fraudulent loan applications, Brown submitted and caused to be submitted false and fraudulent documentation, including sham lease agreements and bogus employment information.
At or near the closings for those home purchases, the indictment alleges Brown caused title companies to disburse the fraudulently-induced loan proceeds to various individuals and entities, including Brownstone Construction. Brown represented to the title companies that Brownstone Construction had been hired for projects to improve those properties when, in fact, Brown did not perform or arrange for others to complete the projects. Brown allegedly received more than $500,000 of the fraudulently-induced loan proceeds, which he used for expenditures unrelated to those properties.
The maximum penalty, upon conviction, for each wire fraud count is 20 years in prison and a fine up to $250,000.
The investigation leading to the charges was conducted by the FBI and the Department of Housing and Urban Development Office of Inspector General. Assistant United States Attorney Stephen L. Corso will be prosecuting the case.
An indictment is a formal accusation of criminal conduct, not evidence.
A defendant is presumed innocent unless convicted through due process of law.

September 4, 2009
United States Attorney's OfficeSouthern District of Florida Contact: (305) 961-9000
Phoenix Diversified Commodities Trader Pleads Guilty to Tax, Mortgage, and Fraud Charges in $37 Million “Ponzi” Scheme
Jeffrey H. Sloman, Acting United States Attorney for the Southern District of Florida, Michael J. Folmar, Acting Special Agent in Charge, Federal Bureau of Investigation, Miami Field Office, Daniel W. Auer, Special Agent in Charge, Internal Revenue Service, Criminal Investigation Division, Miami Field Office, and J. Thomas Cardwell, Commissioner, State of Florida’s Office of Financial Regulation, announced that defendant Michael A. Meisner, 52, of Boca Raton, Florida, pled guilty today before the Honorable U.S. Magistrate Judge James M. Hopkins to a three-count Information filed on September 2, 2009, which charged mail fraud, in violation of 18 U.S.C.§ 1341, loan application fraud, in violation of 18 U.S.C. § 1014, and tax evasion, in violation of 26 U.S.C. § 7201. Bond was set at a $500,000 corporate surety bond, and a $500,000 personal surety bond. Sentencing was set for November 20, 2009, at 9:30 a.m., before the Honorable U.S. District Judge Kenneth A. Marra. Meisner faces a maximum of 55 years imprisonment.
As set forth in the Information and the written proffer filed with his plea agreement, in approximately October, 2001, Meisner, a registered commodity trading advisor, incorporated a company called Phoenix Diversified Investment Corporation (PDIC). Meisner, through PDIC, accepted in excess of $37 million from over 260 investors through and until approximately May, 2008, when PDIC was placed into receivership and bankruptcy.
In order to solicit investors, Meisner made materially false and fraudulent statements about his background and about PDIC’s performance, and omitted material facts. He lied to prospective investors, telling them that he was a highly successful commodities trader who had developed a commodities index software trading program that consistently resulted in profitable commodity futures trades. He provided falsified historical performance return sheets which showed high monthly returns on trades, and told prospective investors that their investments were safe and secure, and that their principal investment was guaranteed and not at risk.
Meisner failed to tell prospective investors that only approximately $13 million of the approximate $37 million in PDIC investor funds were deposited into commodities trading accounts. Though he represented profit to the investors, in reality, trades on these funds showed a net trading loss in excess of $6 million. Meisner also failed to tell potential investors that approximately $22 million of PDIC investor monies were not invested but, instead, were used to make fraudulent ponzi-type “interest payments” to prior investors.
In addition, Meisner failed tell potential investors that approximately $6.8 million in PDIC investor monies were used to support his and his family’s luxurious lifestyle. PDIC investor monies were used to pay for, among other things: the purchase or lease of at least 15 luxury cars, including a $217,800 2005 Bentley GT and a $152,000 2005 Aston Martin; the purchase or lease of eight luxury Palm Beach county residences, including high-end single-family homes in gated communities and oceanfront condominiums; luxury vacations, private education expenses, country club fees, multiple large-screen televisions and other high-end electronics, luxury clothing and housewares, and a lavish wedding for his daughter held at Mar-A-Lago on Palm Beach.
Meisner also admitted that on or about April 20, 2006, he filed a false application in order to obtain a $1,000,000 mortgage loan on certain property located on NW 49th Lane, Boca Raton, Florida.
He further admitted that from on or about October 21, 2006, up to and including the present, he evaded the payment of a large part of the $444,581 in federal income tax he reported he owed for 2005 by, among other things, using corporate PDIC business funds to pay for personal living expenses related to his lavish lifestyle. Mr. Sloman commended the investigative efforts of the Federal Bureau of Investigation, the Internal Revenue Service, Criminal Investigation Division, and the State of Florida’s Office of Financial Regulation. The case is being handled by Assistant U.S. Attorney Carolyn Bell.

September 3, 2009
Denver Real Estate Agent and Mortgage Broker Indicted in Mortgage Fraud Scheme
DENVER—
Cedric Lipsey, age 35, and Philip A. Martinez, age 34, both from Denver, Colorado, were indicted by a federal grand jury last week on charges of wire fraud as part of a mortgage fraud scheme, U.S. Attorney David Gaouette, FBI Special Agent in Charge James Davis, and IRS Criminal Investigation Special Agent in Charge Christopher M. Sigerson announced. Lipsey was arrested by federal agents without incident. He appeared in U.S. District Court in Denver on August 31st, 2009 for an initial appearance, where he was advised of the charges pending against him. He appeared in court again today, where U.S. District Court Magistrate Judge Kristen L. Mix authorized his release on a $50,000 property bond.
According to the indictment, beginning in April 2004, and continuing thereafter until about March 2006, in the District of Colorado and elsewhere, Cedric Lipsey, aided and abetted by defendant Philip A. Martinez, did knowingly devise and intend to devise a scheme to defraud lending companies that funded residential mortgage loans and to obtain money from them by means of materially false and fraudulent pretenses, representations, and promises.
Cedric Lipsey, a licensed real estate agent, held himself out as a successful real estate agent and investor. Philip A. Martinez was a loan officer and mortgage broker.
Lipsey orchestrated the purchase and resale or refinancing of numerous residential properties, including the sale of one of his own homes, by paying individuals to participate as “investors” in what he referred to as an investment “opportunity.” Lipsey and Martinez arranged for these so-called “investors” to use their good credit to obtain mortgage loans to purchase the properties. Shortly after the first set of loans that helped these individuals purchase properties, Lipsey caused them to sell the properties to a second set of buyers at substantially higher prices, with Lipsey and Martinez taking a combination of commissions, fees, and proceeds from the first and second transactions.
Lipsey falsely represented that the first buyers would be purchasing and had purchased the properties for less than their actual market value. The first sales were not “distressed”, as the defendants sometimes represented to facilitate their fraud. In fact, the first buyers purchased the properties at or near their market value, and there was no legitimate reason for the substantial increase in price when the same properties were resold shortly thereafter.
Lipsey and Martinez arranged to have a variety of fraudulent documents submitted to the lenders in support of the loan applications. These consisted primarily of documents purporting to show proof of the borrowers’ employment, proof of the borrowers’ assets, and sources of the borrowers’ asset, and incomes. The defendants also used forged signatures where necessary to facilitate the scheme. Furthermore, Lipsey enabled certain appraisers to create false reports which reflected that the subject properties were “comparable” to the higher quality or otherwise more valuable properties, when they were not.
“Mortgage fraud weakens our economy, threatens the recovery of the housing market, and makes it more difficult for law-abiding folks to purchase a home,” said United States Attorney David Gaouette.“Mortgage fraud hurts borrowers, financial institutions, and legitimate homeowners,” said FBI Denver Division Special Agent in Charge James Davis. “The FBI, in conjunction with our law enforcement, regulatory, and industry partners, will continue to diligently pursue perpetrators of mortgage fraud schemes.
“Mortgage fraud creates a significant loss of tax revenue, drives buyers into foreclosure, leave lenders burdened with bad loans and neighborhoods with abandoned and deteriorating properties,” said Christopher M. Sigerson, Special Agent in Charge, IRS Criminal Investigation, Denver Field Office.
If convicted of wire fraud, which are counts one through 27, the penalty is not more than 20 years in federal prison, and up to a $250,000 fine, per count. If convicted of count 28, monetary transaction in property derived from unlawful activity, the defendant faces not more than 10 years in federal prison, and up to a $250,000 fine
September 3, 2009
Mortgage Fraud Ring Faces Years in Prison, $1.2 Million in Restitution
Myron L. Hooker, Jr., 43, of Detroit, Peter Garland, 40, formerly of Southfield, Nicole Jackson, 38, formerly of Detroit and Antwan Mcrea, 35 of Detroit, were sentenced yesterday for obtaining fraudulent mortgage loans on numerous properties and splitting illegal proceeds in varying proportions among themselves announced United States Attorney Terrence Berg.
Berg was joined in the announcement by Andrew G. Arena, Special Agent in Charge of the Detroit Field Office of the Federal Bureau of Investigation. United States Attorney Terrence Berg said, “We’re catching up with a lot of these mortgage fraudsters, and now they are starting to see the price to be paid for turning mortgage lending into a criminal enterprise. Mortgage fraud poses a significant threat to our economy. In prosecuting mortgage fraud we demonstrate the United States Attorney’s office and the FBI’s commitment and determination in holding perpetrators accountable for these crimes.”
Myron Hooker, the lead defendant in the case, was sentenced by the Honorable Julian Abele Cook, United States District Judge, to serve 63 months in federal prison on wire fraud charges, and 40 months for conspiracy to commit wire and mail fraud, the terms to be served concurrently.
The remaining defendants were convicted of conspiracy to commit wire and mail fraud and received the following sentences:
Peter Garland, was sentenced to serve 27 months in federal prison;
Antwan Mcrea, was sentenced to serve 24 months in federal prison;
Nicole Jackson, was sentenced to serve one day in federal prison, to be followed by three years supervised release and five months home confinement
In addition to their custodial sentences, Hooker, Garland, Jackson and Mcrea were ordered to pay, in various amounts, more than $1.2 million in restitution, $100 in special assessments per count of conviction and must serve two or three years of supervised release upon the completion of their custodial terms.
Information presented to the Court at the time of their pleas showed that Hooker conspired and agreed with the other defendants, to defraud and obtain money and funds from lending institutions, banks and individuals by obtaining fraudulent mortgage loans. Hooker orchestrated the fraud by coordinating and directing the activities of loan officers, straw buyers, collusive sellers, real estate appraisers, and closing agents, some of whom are also charged in the indictment. For instance, Hooker obtained falsely inflated appraisals on real estate and paid straw buyers to act as purchasers of the property. To bolster the straw buyer’s credit-worthiness, false income and asset documentation was provided by Hooker. Relying on the falsely inflated appraisals and fraudulent documentation, lending institutions approved and disbursed loans. These loans often subsequently went into default leaving the lending institutions with insufficient collateral and substantial losses, well in excess of $1,000,000.
U.S. Attorney Berg thanked the FBI for the successful investigation of the case.

September 3, 2009
Former Dallas Cowboys Football Player Eugene Lockhart and Eight Others Charged in Mortgage Fraud SchemeFederal Indictment Charges Conspiracy, Bank Fraud, and Wire Fraud
DALLAS
—A federal grand jury has indicted Eugene Lockhart, Jr., 48, a former player with the Dallas Cowboys, and eight others on various charges related to a mortgage fraud scheme he and the others allegedly ran in the Dallas area from 2001 through 2005, announced U.S. Attorney James T. Jacks of the Northern District of Texas. Lockhart, of Carrollton, Texas, and co-defendant Lendell Beacham, 50, of DeSoto, Texas, were arrested this morning by FBI agents, and will appear this afternoon at 1:00 p.m. before U.S. Magistrate Judge Jeff Kaplan for their initial appearance.
All nine defendants are charged in the indictment, returned by a federal grand jury earlier this week and unsealed this morning, with various offenses related to the scheme, including conspiracy, bank fraud, and wire fraud. In addition to Lockhart and Beacham, the following defendants are named in the indictment: William Randolph Tisdale, Jr., 45, formerly of Dallas, but currently serving a federal sentence on unrelated charges; Hubert Jones, III, 39, of Garland, Texas; Patricia Ortega Suarez, 55, of Dallas; Suzette Switzer Hinds, 45, of Dallas; Michael Anthony Caldwell, 49, of Arlington, Texas; Donna Lois Kneeland, 45, of Grand Prairie, Texas; and Bryan J. Moorman, 67, of Mesquite, Texas. These defendants, with the exception of Tisdale, are expected to surrender to the FBI tomorrow morning, September 4, 2009.
All nine defendants are charged with one count of conspiracy to commit bank fraud and wire fraud. In addition, Lockhart, Beacham and Moorman are each charged with one count of wire fraud; Tisdale is also charged with two counts of bank fraud; Jones is also charged with two counts of bank fraud and one count of wire fraud; Suarez is also charged with one count each of bank fraud and wire fraud; and Hinds is also charged with one count of bank fraud.
According to the indictment, Lockhart was involved with several real estate entities, including America’s Team Mortgage; America’s Team Realty; America’s Team Funding Group; Ace Mortgage; Cowboys Realty; Cowboys Mortgage and KLT Properties. Tisdale was involved with Pinnacle Development and Realty Corporation; Atilla Capital Corporation; and KLT Properties. Jones was the President of Pinnacle Development and Realty Corporation and Director of Atilla Capital Corporation. Beacham was the owner of Cowboys Mortgage and was involved with Ace Mortgage. Defendants Suarez, Hinds and Kneeland were escrow officers at various title companies. Caldwell was the general manager at New Land National Title and Moorman was an appraiser.
The indictment alleges that the defendants ran a scheme in which they located single-family residences for sale in the Dallas area, including distressed and pre-foreclosure properties, and negotiated a sales price with the seller. They created surplus loan proceeds by inflating the sales price to an arbitrary amount substantially more than the fair market value of the residence.
They recruited individuals to act as nominee or “straw purchasers” or “straw borrowers,” promising to pay them a bonus or commission of between $10,000 and $20,000 for their participation in a particular real estate transaction. The conspirators caused the loan applications for each straw borrower to include false financial information, often including inflated false income figures to conceal the borrower’s true financial condition so that the lender would more likely approve the loan. The conspirators concealed from the lenders the true status, financial condition and intentions of the named borrowers, knowing that loans would not likely be approved if the lender knew the true role, credit worthiness, and risk of each straw borrower. The conspirators falsely represented in loan documents that the straw purchaser intended to use the property as their primary residence, intentionally concealing from lender that each straw borrower, viewed himself as an “investor,” who never intended to occupy the home.
The indictment also alleges that the conspirators caused bogus and fraudulent “marketing fees” to be listed on loan closing documents to provide a means for the conspirators to receive surplus/excess loan proceeds.
The scope of the conspiracy involved approximately 54 fraudulent residential property loan closings resulting in the funding of approximately $20.5 million in fraudulent loans.
An indictment is an accusation by a federal grand jury and a defendant is entitled to the presumption of innocence unless proven guilty. If convicted however, the conspiracy and each bank fraud counts carries a maximum statutory sentence of 30 years in prison, a $1 million fine and restitution. Each of the wire fraud counts, upon conviction, carries a maximum statutory sentence of 20 years in prison, a $250,000 fine and restitution. In addition, the indictment includes a forfeiture allegation which would require the defendants, upon conviction, to forfeit various sums of money, totaling up to $20.4 million.
August 28, 2009
Mortgage Fraud Defendants Convicted on All Counts
GRAND RAPIDS, MI—Defendants Patricia L. VanderZwaag, 37, and Daniel Lee VanderZwaag, 36, of Holland, Michigan, were found guilty by a federal jury in Kalamazoo of one count each of mail fraud and wire fraud, U.S. Attorney Donald A. Davis announced today. Patricia L. VanderZwaag was also convicted on one count of financial institution fraud and one count of money laundering.
The defendants are the owners of Mad Jac Corporation, also known as B & J Towing. They provided false documentation and information to mortgage companies to obtain loan proceeds. Defendant Patricia VanderZwaag also used false information and documentation, including the Social Security Number of another person, to obtain a mortgage loan from National City Bank. She then transferred $16,000 of one of the mortgage company loans to another bank to launder the funds.
Patricia VanderZwaag faces a maximum penalty of 30 years’ imprisonment and a fine of $1,000,000. Daniel Lee VanderZwaag faces a maximum penalty of 20 years’ imprisonment and a fine of $1,000,000. Immediately after the return of the guilty verdicts, the Hon. Paul L. Maloney, Chief U.S. District Court Judge, remanded both VanderZwaags to the custody of the U.S. Marshal until sentencing. A date for the sentencing hearing has not yet been set.
U.S. Attorney Davis commended the Federal Bureau of Investigation for its work in the case. This case was prosecuted by Assistant U.S. Attorney Timothy P. VerHey.
August, 24, 2009
Nine Sentenced in Alaska’s Largest Mortgage Fraud Investigation
ANCHORAGE, AK
—United States Attorney Karen L. Loeffler announced that on August 21, 2009, lead defendant Lance Lockard was sentenced to 70 months in prison for his leadership of a large-scale mortgage fraud scheme.
Lockard was the ninth and last defendant to be sentenced for his role in the largest mortgage fraud investigation in Alaska’s history. In total, nine individuals and one corporate defendant were convicted and sentenced for their roles in a widespread, three-year long scheme to defraud some 13 mortgage lenders and banks in 57 different loan transactions netting over $1,700,000 in profits and over $2.5 million in losses to the financial institutions. United States District Court Judge Ralph Beistline, who presided over the case, sentenced the nine defendants to a total of 14 and ½ years of imprisonment, and imposed fines of over $90,000 and restitution of over $2.5 million dollars.
The defendants convicted as a result of the scheme are: Lance Lockard, of Anchorage, age 34, Gary Paterna, of Anchorage, age 62, Charles Carlson, of Anchorage, age 74, Holli Stroud, of Chugiak, age 30, Jonathan Ruf, of Anchorage, age 33, Keith Facer, of Anchorage, age 41, Don Murray, of Anchorage, age 35, Cerise Sanders, of Anchorage, age 31, and Alaska State Mortgage Company, Inc., of Anchorage.
Lockard, a licensed real estate investor and the lead defendant pled to 64 counts and was sentenced to 70 months and ordered to pay 2.5 million in restitution. Lockard also admitted the forfeiture allegation in an additional count, forfeiting his interest in $116,000 held in an investment account under his name. Charles Carlson, a licensed real estate appraiser, was sentenced on July 11, 2009, to 24 months and to pay restitution of $2,360,185. Holli Stroud, a title company loan closer, was sentenced on June 25, 2009, to 18 months and to pay restitution of $403,733.60. Keith Facer, a licensed real estate agent, was sentenced on May 29, 2009, to 16 months and to pay restitution of $221,065.24. Don Murray, a licensed real estate agent, was sentenced on May 19, 2009, to 21 months and pay restitution of $493,868.77. Cerise Sanders, a loan originator, was sentenced on May 19, 2009, to 12 months and one day. Jonathan Ruf, was sentenced on May 28, 2009, to 12 months and one day and to pay restitution of $1,066.390. Gary Paterna. Mr. Lockard’s father-in-law, was sentenced on May 18, 2009, to three days in jail and pay restitution of $1,162,884.86. Alaska State Mortgage, a local mortgage company, was sentenced on May 13, 2009, to a fine of $91,478.53. The defendants pled to a total of 64 counts charging conspiracy, wire fraud, bank fraud, and false statements to a financial institution.
The pleas and sentencing bring to a close the largest mortgage fraud scheme ever prosecuted in the District of Alaska. The fraud was perpetrated by professionals in all areas of the real estate industry. Between on or about December 23, 2003, and May 31, 2006, Lockard and his co-defendants arranged to purchase and sell real estate in Alaska, and to obtain mortgage loans for the purchase and sale of that real estate, through a series of fraudlent schemes that relied upon false and fraudulent statements, inflated appraisals, falsified down payments, nominee borrowers and purchasers, hidden cash-back payments and other improper practices that concealed the true details of the financial transactions from the mortgage lenders involved. The effect and result of this conduct was to transfer the investment risk from Lockard and the other co-conspirators to the mortgage lenders and to provide inflated profit and fraudulently obtained loan funds to Lockard and the other co-conspirators. The charges in the indictment to which the defendants pled guilty outlined a total of five separate schemes, involving properties in numerous Anchorage subdivisions, and two large undeveloped properties in the Talkeetna area.
According to the indictment, in the first scheme, Lockard, Paterna, his father-in-law, Carlson, the appraiser and Stroud, the loan closer, arranged for fraudulent loan documentation on the purchase of 10 properties. The indictment alleges that Lockard arranged for the simultaneous purchase and sale of the properties using Paterna as a nominee purchaser and that Carlson inflated the appraisals of the properties with Stroud falsifying the closing documents to conceal the fact that no down payments had been made.
The second scheme in the indictment charges that Lockard and Ruf with the aid of Carlson, Stroud and Cerise Sanders, and Alaska State Mortgage Company as loan originators arranged for Ruf, acting as a nominee for Lockard, to purchase13 separate properties on the same day, with all purchases fraudulently listed as purchases of his primary residence by Sanders and McCready acting for Alaska State Mortgage. According to the indictment, Carlson and Stroud, as in scheme one, inflated the appraisals and falsified loan closing paperwork. The indictment further alleges that the defendants, acting on behalf of Lockard sold the properties obtained through the fraudulent loans listed in schemes one and two to third-party buyers using further inflated appraisals provided by Carlson and illegal cash-back payments to the buyers aided by real estate agents Keith Facer and Don Murray to induce them to purchase the overpriced properties.
The indictment further alleges that Lockard, Stroud, Carlson, Ruf and Paterna engaged in similar fraud involving two other property purchases. It charges that Stroud and Lockard with the aid of an inflated appraisal provided by Carlson, arranged for Stroud to purchase a property with a falsified down payment. It further charges that Lockard, Paterna, Carlson, Stroud and Ruf again used nominees and falsified loan paperwork in a purchase financed by FNBA. Finally, the indictment alleges that Lockard engaged in a “bust out” scheme by purchasing properties with the aid of Paterna, Ruf and Carlson, at inflated prices with the purpose of taking the loan proceeds and defaulting immediately on the loans.
At Friday’s sentencing hearing, Judge Beistline concluded that Lockard was an organizer and leader of the criminal activity, that he had fraudeulently obtained more than $1 million in gross proceeds from the First National Bank of Alaska, and that his crimes caused total losses of approximately $2.5 million dollars. Judge Beistline commented that Mr. Lockard’s crimes were motivated by greed and had an impact on our community. In addition to the financial institutions that were defrauded, one of the individual victims testified at setencing about his personal financial losses, and his struggles to pay the mortgages on three duplexes he had unwittingly purchased for grossly inflated prices. Judge Besitline admonished that there was “no excuse for lying and deception, and no excuse for breaking the law,” and that Mr. Lockard was going to have to “face the consequences of the very poor choices he made.”
United States Attorney Karen L. Loeffler noted that these convictions and sentences point out the vast harm that can be done to an industry and the public when a handful of dishonest individuals are willing to falsify the documents and information on which the mortgage market relies.
Ms. Loeffler also commended the diligent and extensive investigation by special agents of the Federal Bureau of Investigation for their investigation that lead to this result.
20 August, 2009
California Man Pleads Guilty to Mortgage Fraud Conspiracy, Money Laundering$12.6 Million Scheme Involved New, Upscale Homes in Lee’s Summit, Raymore
KANSAS CITY, MO—Matt J. Whitworth, Acting United States Attorney for the Western District of Missouri, announced that an Anaheim, Calif., man pleaded guilty in federal court today to his role in a $12.6 million mortgage fraud conspiracy that involved 25 upscale residential properties in Lee’s Summit, Mo., and Raymore, Mo.
Jerome Shade Howard, 40, of Anaheim, pleaded guilty before U.S. Chief District Judge Fernando J. Gaitan this morning to the charges contained in an Oct. 29, 2008, federal indictment. Howard admitted that he received more than $900,000 in illegal kickbacks as part of nearly $8.5 million in fraudulent mortgage loans.
Howard is among 12 defendants who have pleaded guilty to the scheme to buy and sell new homes – all of which were built by Jerry R. Emerick, 39, of Raymore – in the Raintree and Belmont Farms subdivisions in Lee’s Summit and the Eagle Glen subdivision in Raymore. Buyers purchased the homes at inflated prices, obtaining mortgage loans for more than the actual sale price by providing false information to mortgage! lenders, then kept the extra proceeds. Buyers created shell companies for the purpose of receiving those kickbacks from Emerick, with kickbacks of up to $125,000 on each house.
Emerick owned and operated Ty Construction and Residential Contracting, LLC, which was engaged in the business of residential construction, primarily in Lee’s Summit and Raymore. He pleaded guilty on April 9, 2009, to conspiracy to commit mortgage fraud and wire fraud and to transfer funds obtained by fraud across state lines.
In total during the course of the conspiracy from June 2005 to May 2007, mortgage lenders approved loans for 25 homes totaling more than $12.6 million. From that total, buyers received approximately $2.3 million without the lenders’ knowledge.
Howard admitted that he obtained false Social Security numbers for two buyers to use in obtaining loans for the purchase of properties; solicited and obtained five buyers who fraudulently purchased properties; prepared and submitted false information and documents in connection with mortgage loans; dealt with co-conspirators; personally purchased two properties during and as part of the conspiracy; and obtained funds from the mortgages on his own purchases as well as on the purchases of others.
Howard was involved in fraudulent mortgage loans that totaled $8,499,790, from which he received a total of $900,731. By pleading guilty today, Howard also agreed to forfeit to the government $900,731, representing the amount of proceeds he obtained during the scheme.
Under federal statutes, Howard is subject to a sentence of up to 15 years in federal prison without parole, plus a fine up to $500,000 and an order of restitution. A sentencing hearing will be scheduled after the completion of a presentence investigation by the United States Probation Office.
This case is being prosecuted by Assistant U.S. Attorney Linda Parker Marshall. It was investigated by the Federal Bureau of Investigation and IRS-Criminal Investigation.

August 19, 2009
United States Attorney's OfficeDistrict of Arizona Contact: (602) 514-7500
Mortgage Officer Pleads Guilty to His Role in Cash-Back Mortgage Fraud Scheme
PHOENIX—
Jake David Abegg Whitman, 33, of Mesa, Ariz., pleaded guilty on August 18, 2009, to one count of Conspiracy to Commit Bank Fraud and seven counts of Bank Fraud.
Whitman played a leadership role in the underlying conspiracy, which involved 19 unimproved residential properties in the greater Phoenix area. The objective of the conspiracy was to obtain mortgage loans that were substantially larger than the actual value of the properties—often by hundreds of thousands of dollars. Whitman owned 10 of the properties and served as branch manager of the mortgage broker, Academy Mortgage, that processed the loans.
As part of the conspiracy, Whitman worked with a hand-picked appraiser to obtain inflated appraisals for the properties. He also recruited buyers to purchase the properties at those inflated prices. The buyers typically lacked the income and assets to provide the down-payment or to make the mortgage payments. To overcome this, Whitman secretly supplied the down-payment to the buyers (without disclosing this arrangement) and also provided “cash back” to the buyers at closing. The properties eventually went into foreclosure and cost lending institutions nearly $1,000,000 in losses. Whitman is cooperating with authorities in the prosecution of others.
Sentencing is set before U.S. District Judge G. Murray Snow on October 26, 2009. Each conviction for Conspiracy to Commit Bank Fraud and Bank Fraud carries a maximum penalty of 30 years in federal prison, a $1,000,000 fine, or both. In determining an actual sentence, Judge Snow will consult the U.S. Sentencing Guidelines, which provide advisory sentencing ranges. The judge, however, is not bound by those guidelines in determining a sentence.
Whitman’s plea is part of an initiative called “Operation Cash Back” in which 40 defendants were indicted and arrested, including many real estate professionals, in June 2008. To date, 18 have entered guilty pleas.
The investigation in this case was conducted by the Federal Bureau of Investigation. The prosecution is being handled by Kevin M. Rapp and Dominic Lanza, Assistant U.S. Attorneys, District of Arizona, Phoenix.

August 17, 2009
Robert Penn and Keven Lafavers Indicted for Mortgage Fraud Crimes Involving Over $12.5 Million in Fraudulent Loans
INDIANAPOLIS
—Robert Andrew Penn, age 44, formerly of Indianapolis and currently a resident of Naples, Florida, and Keven M. Lafavers, age 45, formerly of Indianapolis and currently a resident of Lagrange, Kentucky, were indicted by a federal grand jury for mortgage fraud, announced Timothy M. Morrison, United States Attorney for the Southern District of Indiana. The Indictment, unsealed today, charges both men with conspiracy to commit wire fraud and wire fraud, relating to mortgage fraud activities in which they allegedly participated between 2003 and 2005. Penn is also charged with conspiracy to commit money laundering. The indictment follows an investigation by Special Agents of the Internal Revenue Service - Criminal Investigation Division and the United States Attorney’s Office, with assistance from the Federal Bureau of Investigation.
According to the Indictment, between November 2003 and August 2005, at least 112 fraudulent loans, totaling $12,621,500.00, were allegedly obtained by Penn and his numerous business entities, assisted by Lafavers and others. The loans were obtained from Argent Mortgage Company, The MoneyStation, and People’s Choice Mortgage/Countrywide Home Loans.
Seven other individuals were charged in April of this year with participating with Penn and Lafavers in their mortgage fraud crimes. The investigation is continuing as to other individuals and other loans obtained by Penn and his businesses.
According to the Indictment, which was unsealed today, Penn owned and operated numerous business entities which were created and used to illegally obtain loans on residential real estate properties in the Indianapolis area. The Indictment charges that Penn was essentially in charge of the fraud schemes and controlled and directed the activities of all of the other people involved in the illegal activities. Lafavers was employed by Penn to locate properties for sale, negotiate the purchases of those properties, and enter into option agreements and land contracts with the sellers on behalf of Penn and his businesses.
The mortgage fraud schemes charged in the Indictment were accomplished as follows. Participants in the schemes (generally Lafavers) located properties and arranged to purchase them at a fair market value generally by means of an option agreement or unrecorded land contract. Penn, with the assistance of his relatives in Virginia, located straw purchasers who invested their good credit, but no money, to be the purchasers of these properties at a much higher price than that negotiated with the seller. Most of these straw purchasers were unwitting participants in the scheme; the majority were located in Virginia and were friends and relatives of Penn and his family. The straw purchasers generally never saw the properties they were purchasing. They were told, by Penn and others, that they were joining an investment club, that they would not have to make any payments on the properties, and that the properties would be managed for them by scheme participants (including renting the properties and paying all bills). These straw purchasers received money for participating in the investment club, generally $3,000.00 - 4,000.00 for each property purchased in their name. Mortgage brokers participating in the schemes prepared fraudulent loan applications, containing false statements, including: that the straw purchasers owned bank accounts, stock (in Penn’s companies) and other assets which they did not own; that the straw purchasers had income which they did not actually have; and that the straw purchasers were making the down payments on the properties from their own funds. In reality, other participants in the schemes actually provided the down payments for the properties, and were paid a fee of $1,000.00 - $3,000.00 for doing so. Appraisers were employed by Penn and his co-conspirators to prepare appraisals which vastly overstated the values of the properties, in order to support the sales price which was ultimately shown on the closing documents. The false loan applications, appraisals, and other fraudulent documents were then submitted to the lenders. The lenders, relying upon the false statements in the loan packages, issued the loans. The loans were funded via wire transfers of money from the lenders to a title company, which the scheme participants used to assist them in preparing false closing documents and issuing title company checks. At the time the loans closed, the properties sold for the fraudulently inflated sales price, and the fraudulently obtained loan proceeds were shared by scheme participants. The sellers were paid the amount they had negotiated to receive, and the co-conspirators shared the excess proceeds. Lafavers, who had located the properties and negotiated their purchase, generally received $1,000.00 per property located. The loan processors were generally paid $500.00 for assisting in obtaining the loan. The scheme participant funding the down payment was paid $1,000.00 - $3,000.00 for each down payment they loaned. The co-conspirators (relatives of Penn) who recruited the investors and assisted them in signing the loans papers was paid $1,000.00 per loan. The remaining amounts were split between Penn and his other coconspirators, and also used to pay existing mortgages on earlier purchased properties to keep the scheme from being detected by the lenders.
Of the fraudulent loans charged, fifteen (15) loans related to the purchase of properties from individual sellers, generally individuals who either did not have their homes listed to sell, or had them listed as “for sale by owner.” These loans totaled over $3,000,000.00 and were all issued by Argent Mortgage Company.
The remaining ninety-seven (97) fraudulent loan transactions charged all relate to the sale of duplexes in the Windsor Village neighborhood, located near Arlington Avenue and 21st Street, on the east side of Indianapolis. These properties were all owned by one person, thru various land trusts. Penn negotiated with this individual to purchase all of the duplexes at a price of $50,000.00 each (the last group of these properties actually sold for $60,000.00). Straw purchasers were recruited to purchase each of these duplexes for $120,000.00 each. Inflated appraisals were obtained showing that the properties were worth $120,000.00 each. Immediately prior to the closing of the sale, the original owner transferred the properties via quitclaim deeds to Land Economics LLC, one of Penn’s companies. Land Economics LLC was then shown as the seller of the properties on the closing documents and straw purchasers recruited by Penn and his relatives were shown as the buyers. Fraudulent loan packages had been prepared and submitted to the lenders. Co-conspirators (including Penn) funded the down payments. Lenders funded a loan in the amount of $96,000.00 on each of the ninety-seven (97) properties (a total of $9,312,000.00 in loan proceeds). After the properties closed, the original owner was paid his negotiated price (less any appropriate closing costs) and Penn’s companies received the remaining proceeds (generally in excess of $70,000.00 for each property). Eight of the Windsor Village loans were funded by Argent Mortgage Company and three of the loans were funded by The MoneyStation. The remaining eighty-six (86) loans were all originally funded by People’s Choice Mortgage, a warehouse lender in Kentucky who had a correspondent lending agreement with Countrywide Home Loans in California. Countrywide Home Loans purchased all of these loans shortly after they were funded. All of the Windsor Village properties went into early payment default, that is, no payments were made on the mortgages and the lenders suffered a loss for the entire amount of the loans.
All of the loans involved in the schemes went into default, and the lenders either foreclosed on the homes or took other action, including granting deeds in lieu of foreclosure or allowing short sales of the properties. Many of the duplexes in Windsor Village later re-sold in 2007 and 2008, generally for amounts between $3,500.00 and $15,000.00.
According to Assistant United States Attorney Susan Heckard Dowd, who is prosecuting the cases for the government, Penn faces a maximum possible prison sentence of thirty-five (35) years and a maximum possible fine of $750,000.00. Lafavers faces a maximum possible prison sentence of twenty-five (25) years and a maximum possible fine of $500,000.00.
Penn was arrested on the charges in Naples, Florida on August 7 and is being transported to Indiana by the United States Marshals. He will have an initial appearance before a United States Magistrate Judge when he arrives in Indianapolis. Lafavers was arrested on the charges in Lagrange, Kentucky on August 12 and had an initial appearance before United States Magistrate Judge Kennard P. Foster in Indianapolis. A detention hearing is scheduled for Wednesday. Lafavers is currently in the Marion County Jail. Trial is currently set for both defendants before United States District Court Judge David F. Hamilton on September 21, 2009.
August 14, 2009
United States Attorney's OfficeSouthern District of Texas Contact: (713) 567-9000
Former Houston Resident Pleads Guilty in Montgomery County Mortgage Fraud Scheme
HOUSTON—
Grant William Gondrezick, 45, has pleaded guilty to conspiring to commit wire fraud, United States Attorney Tim Johnson announced today. Gondrezick pleaded guilty this morning before U.S. District Judge Melinda Harmon. Sentencing is set for Dec. 4, 2009, when he faces up to five years in prison, a fine of up to $250,000 and up to $1.9 million in restitution. Gondrezick will remain on bond pending his sentencing. Gondrezick is a current resident of Benton Harbor, Mich., and formerly of Houston.
According to the factual basis in Gondrezick’s plea agreement, Gondrezick engaged in a mortgage fraud scheme between November 2004 and May 2005 that involved the sale of 24 homes, most of which were in Montgomery County. Gondrezick recruited straw buyers who entered sales contracts for homes which stated that substantial amounts (typically between $80,000 and $100,000) were going to be taken out of the seller’s proceeds at closing and sent to one of Gondrezick’s contracting companies for home improvements. These amounts were added to the asking price of the homes though neither the seller nor the nominee buyer asked for the improvements or hired Gondrezick’s company. Gondrezick submitted invoices to the title companies in these amounts to justify the third-party disbursements, claiming that custom renovations or home theater work had been performed. In fact, no such work was performed. Because the nominee buyers never planned to live in the homes, the buyer never complained about the lack of renovations which had been paid out of the closing. Gondrezick received approximately $1.9 million in these disbursements out of the loan proceeds which totaled approximately $10 million.
Gondrezick further admitted that the straw buyers were paid to participate in this scheme and that the loan applications contained false information relating to the buyers income, employment, assets and intent to occupy the homes.
Co-defendants Tiffany Brooks, who worked as a loan processor, Dirk Minnifield, a realtor, and Marc Jason Williams, who worked with Brooks as a loan processor, are also charged for their alleged involvement in this scheme and are scheduled for a Feb. 1, 2010, trial. They are presumed innocent unless convicted through due process of law.
The case was investigated by the FBI and the Department of Housing and Urban Development Office of Inspector General. The case is being prosecuted by Assistant United States Attorney Gregg Costa.
August 12, 2009
Escrow Officer Pleads Guilty to His Role in Cash Back Mortgage Fraud Schemes
PHOENIX—
Christopher S. Bartlemus, 31, of Phoenix, pleaded guilty to conspiracy counts in two separate indictments on August 10 and August 12, 2009. In one case, Bartlemus pleaded guilty to Conspiracy to Commit Wire, Bank and Mail Fraud and in a separate case, to Conspiracy to Commit Bank Fraud. Sentencing is set before Judge McNamee on November 2, 2009 and Judge Campbell on November 16, 2009.
Bartlemus’ role in the conspiracy stemmed from his position as an escrow officer with Security Title Agency. During the charged conspiracies he facilitated “cash back” at closing to third parties who were unrelated to the transactions. He failed to disclose the assignment of these funds to the lenders. All of the homes where he facilitated a third party assignment, in violation of lender’s instructions, have gone into foreclosure. Bartlemus is cooperating with authorities in the prosecution of others.
A conviction for Conspiracy to Commit Wire, Bank and Mail Fraud carries a maximum penalty of 30 years, a $1,000,000 fine or both. In determining an actual sentence, Judges McNamee and Campbell will consult the U.S. Sentencing Guidelines, which provide appropriate sentencing ranges. The judge, however, is not bound by those guidelines in determining a sentence.
Bartlemus’s plea is part of initiative called “Operation Cash Back” where 40 defendants were indicted and arrested, including many real estate professionals in June 2008. To date, 16 of those defendants have entered guilty pleas.
These investigations in these cases were conducted by Federal Bureau of Investigation. The prosecution is being handled by Kevin M. Rapp, Charles Galbraith and Leta Hollon, Assistant U.S. Attorneys, District of Arizona, Phoenix.
12, August , 2009
Title Agent Indicted in Mortgage Fraud Scheme
BALTIMORE, MD—A federal grand jury has indicted Jay Leonard, age 43, of Alexandria, Virginia, today for mail and wire fraud in connection with scheme involving the fraudulent purchase of 25 properties in Maryland, the District of Columbia and Virginia and a scheme to solicit investors for a resort property that did not exist, announced United States Attorney for the District of Maryland Rod J. Rosenstein. The indictment was returned on August 11, 2009 and Leonard is scheduled to have his initial appearance in U.S. District Court in Baltimore today at 3:00 p.m.
According to the nine count indictment, February 2006 through September 2008, Leonard, a title agent, working with co-conspirator Osman Al-Bari and others, solicited funds from victims in Maryland for a $10 million spa resort in Spotsylvania County, Virginia, that Leonard, Al-Bari and others claimed they were developing. According to the indictment, Leonard used his position as title agent and falsely claimed that he was doing a closing for the spa resort. Based on those allegedly false representations, the Maryland victims transferred $478,000 to Leonard's bank accoung.
The indictment further alleges that, working with Osman Al-Bari, Timothy Reed, Terrence White and others, Leonard served as the title agent for several straw purchasers who bought at least 20 properties in Maryland, Virginia and Washington, D.C. For example, the indictment alleges that co-conspirator Sabrina Weinberg purchased four properties for Al-Bari and others and was paid approximately $40,000 for the purchases. Weinberg and other straw purchasers used fraudulent loan applications and closing documents to qualify for the mortgages and to disguise the true buyer of the property. According to the indictment Jay Leonard had Weinberg sign false affidavits claiming that each property was her primary residence. Further, the indictment alleges that Leonard kicked back a portion of the settlement funds from the straw buyer properties, disguising the wire transfers on the closing documents as reimbursement for alleged "renovations" performed on the properties prior to closing by Brotherly Investment Group, a company owned by Al-Bari, Reed and White. The indictment alleges that for the Weinberg properties alone, Leonard sent wire transfers totaling $515,820 to Al-Bari, Reed and White.
According to the indictment, almost all of the properties Leonard was involved with went into foreclosure, causing actual losses of over $7 million.
Leonard faces a maximum sentence of 30 years in prison for each of four counts of mail fraud and five counts of wire fraud.
10, august, 2009
Two Real Estate Professionals Convicted in Massive Mortgage Fraud Scheme That Led to $40 Million in Losses
A federal jury this afternoon convicted a prominent Beverly Hills real estate agent and a licensed real estate appraiser on federal charges for their roles in a massive mortgage fraud scheme that caused more than $40 million in losses to federally insured banks.
After a five-week trial, the jury convicted Kyle Grasso, 38, formerly of Santa Monica, and Lila Rizk, 42, of Trabuco Canyon, of conspiracy, bank fraud and numerous loan fraud charges for their roles in the mortgage fraud scheme. Additionally, Grasso was convicted of three counts of money laundering.
The evidence presented at trial showed that Grasso and Rizk were part of a scheme that obtained inflated mortgage loans on homes in some of California's most expensive neighborhoods.
Eight other real estate professionals who were part of the scheme previously pleaded guilty to federal felony charges for their roles. The defendants who previously pleaded guilty are:
scheme leader Charles Elliott Fitzgerald, 48, formerly of Newbury Park and Beverly Hills;
Mark Alan Abrams, 47, of Los Angeles, who along with Fitzgerald orchestrated the scheme;
Nicole LaViolette, 38, of Palm Springs;
Jamieson Matykowski, 35, of Laguna Niguel;
Timothy Holland, 37, of Santa Ana;
Richard Maize, 54, of Beverly Hills;
Thomas R. Schiff, 47, of Brentwood; and
L. Scott Robinson, 46, of Dana Point.
Fitzgerald was previously sentenced to 14 years in federal prison for his participation in the scheme. The remaining defendants are awaiting sentencing.
The wide-ranging and sophisticated scheme defrauded mortgage lenders by obtaining inflated mortgage loans on expensive homes in some of California's most exclusive neighborhoods, including Beverly Hills, Bel Air, Holmby Hills, Malibu, Carmel, Mill Valley, Pebble Beach and La Jolla. Members of the conspiracy sent false documentation, including bogus purchase contracts and appraisals, to the victim banks to deceive them into unwittingly funding mortgage loans that were hundreds of thousands of dollars higher than the homes actually cost. Lehman Brothers Bank alone was deceived into funding more than 80 such inflated loans from 2000 into 2003, resulting in tens of millions of dollars in losses.
Lehman Brothers Bank and RBC Mortgage Company sued Fitzgerald, Abrams and others in federal court in Los Angeles in 2003 and obtained a receivership, temporary restraining orders and preliminary injunctions against them. Judge Pregerson appointed David J. Pasternak as receiver to recover assets acquired with proceeds of the fraud. The receiver, as well as attorneys and forensic accountants employed by him, have cooperated extensively with the government's ongoing criminal investigation.
The evidence presented at trial included proof that Grasso profited by collecting hundreds of thousands of dollars in commissions and concealed payments. The prosecution further presented evidence that Rizk profited by collecting hundreds of thousands of dollars in fees for providing inflated appraisals in the scheme.
Judge Pregerson is scheduled to sentence Grasso and Rizk on January 29, 2010.
A third defendant who went to trial, Joseph Babajian, 56, another Westside real estate agent, was acquitted on 13 criminal counts, and the jury was unable to reach a verdict on eight additional counts. United States District Judge Dean D. Pregerson declared a mistrial as to the eight counts

August 6, 2009
United States Attorney's OfficeMiddle District of Florida Contact: (813) 274-6000
Former Judge Pleads Guilty to Mortgage Fraud
TAMPA, FL
—United States Attorney A. Brian Albritton announces that Thomas E. Stringer (Tampa, Florida) today pleaded guilty to one count of bank fraud before Magistrate Judge Mark A. Pizzo. Stringer faces a maximum penalty of thirty years in federal prison. However, because it appears that no one sustained a loss from the commission of the crime, the relevant sentencing guidelines contemplate the imposition of a non-custodial sentence. United States intends to seek forfeiture of $222,362.00, the amount of the proceeds from the fraud. A sentencing date has not been set.
According to court documents, Stringer engaged in a scheme to defraud a bank that loaned him money to purchase a residence in Hawaii. Stringer falsified his mortgage application for the residence by claiming that he had borrowed none of the money he was using for the down payment, when in fact he had borrowed funds from a third party.
This case was investigated by the Federal Bureau of Investigation, Tampa Division. It is being prosecuted by Assistant United States Attorneys Robert E. O'Neill and Anthony Porcelli.
August, 5th, 2009
“Home Savers” and Misbehaviors! FBI Arrests Two in Foreclosure Scheme
NEWARK, NJ—It’s the type of story that is becoming increasingly more common: FBI Special Agent In Charge Weysan Dun announced today the arrests of GARTH CELESTINE, age 44, of 535 Dean Street, Apartment 515, Brooklyn, New York; and PHIL A. SIMON, age, 34, of Brooklyn – both better known collectively as “Home Savers Consulting Corporation”. Both were arrested this morning at their residences without incident and charged with attempt and conspiracy to commit wire fraud in connection with a home foreclosure scheme.
Celestine and Simon owned and operated Home Savers, which held itself out as a foreclosure rescue company, at 946 Fulton Street, Brooklyn, New York and 350 North Main Street, Freeport, New York. The company conducted business in both New York and New Jersey. According to the complaint, Celestine and Simon allegedly conspired with each other to defraud both homeowners facing foreclosure and mortgage lenders by making materially false representations and promises and causing wire transfers to perpetuate the scheme. A key aspect of the scheme was the targeted victims: homeowners with substantial equity in their homes who were facing foreclosure because of an inability to make the monthly payments. The criminal complaint specifically alleges five incidents of fraudulent mortgage loan applications generated by the defendants in August and September of 2005 for properties located in Bergenfield, Paterson and Elizabeth, New Jersey. The defendants are suspected of additional incidents in New York, but have not been charged in those matters.
Based on the complaint, there were three separate groups of victims. First, there were the defrauded homeowners. Celestine and Simon would promise to help the homeowners keep their homes by avoiding foreclosure and repairing their damaged credit. The homeowners would be required to allow the title of the homes to be put in the names of “straw buyers” (third party purchasers) for one year –all with the promise of obtaining more favorable mortgages on those homes and having the title returned to them at the end of the one year period. Furthermore, Celestine and Simon allegedly told the homeowners that any equity withdrawn from their homes would be kept in escrow and used to pay the mortgages and expenses on those homes, as well as to repair the original owners’ credit.
The second victim-group consisted of the straw-buyers. Celestine and Simon allegedly recruited individuals with good credit scores to act as “buyers” of the homes facing foreclosure. This was accomplished by misrepresenting to the straw-buyers that they were helping the true owners to “save” their homes. The straw-buyers were also paid a fee up to $10,000 per property in exchange for their participation in the transactions.
The third group of victims were the mortgage lenders. Based on the criminal complaint, Celestine and Simon submitted and caused to be submitted fraudulent loan applications to lenders in the straw-buyers’ names. The applications contained false personal and financial information about the straw-buyers, most importantly their income, assets, and debt. The combination of the high equity properties, the good credit ratings of the straw-buyers, the false information in the loan applications, and the promise that the straw-buyers intended to live in the homes in question all unfairly influenced the mortgage lenders into granting the mortgages. Celestine and Simon also allegedly applied to different lenders for multiple mortgages on the same properties at the same time to extract the maximum available equity from each property.
According to the complaint, Celestine and Simon attended each loan closing and controlled the payout of the loan proceeds. Once all the homeowner’s debts and other fees were paid off, the remainder of the loan proceeds was deposited in one or more of three different company accounts owned and controlled by Celestine and Simon. However, Celestine and Simon kept every penny for themselves. Furthermore, the complaint charges that Celestine and Simon eventually failed to make the mortgage payments in nearly every case and caused the loans to default. In the end, Celestine and Simon caused lenders to fund more than $10 million worth of fraudulent loans and stole $1.5 million worth of equity from the properties.
After reading the details of this scheme, one might assume Celestine and Simon were experts in the mortgage business. In fact, Simon currently cuts hair at his salon, “House of Hair” located at 615 Washington Avenue in Brooklyn, New York. This is an example as to why the public should research the credentials of anyone with whom they intend to do business in the mortgage and real estate industry.
“Let me make this crystal clear: anyone engaged in any type of mortgage fraud scheme will most definitely be investigated, caught, and prosecuted to the fullest extent of the law,” said FBI Special Agent In Charge Weysan Dun. “It is well known that the collapse of our housing market was a significant contributor to the dire economic circumstances our nation is facing.” Dun credits the mortgage fraud task force with bringing this matter to its investigative closure. Dun also thanks the FBI’s New York Field Office for their assistance.
Celestine and Simon are scheduled for an initial appearance today before the Honorable Esther Salas, United States Magistrate. If convicted, the defendants could face a maximum sentence of up to thirty years in prison, a $1,000,000 fine, or both. A criminal complaint is merely an accusation. Despite this accusation, every defendant is presumed innocent unless and until proven guilty beyond a reasonable doubt.
This case is being prosecuted by Assistant United States Attorney Donna Gallucio in the District of New Jersey in Newark.

August 14, 2009
United States Attorney's OfficeSouthern District of Texas Contact: (713) 567-9000
Former Houston Resident Pleads Guilty in Montgomery County Mortgage Fraud Scheme
HOUSTON—
Grant William Gondrezick, 45, has pleaded guilty to conspiring to commit wire fraud, United States Attorney Tim Johnson announced today. Gondrezick pleaded guilty this morning before U.S. District Judge Melinda Harmon. Sentencing is set for Dec. 4, 2009, when he faces up to five years in prison, a fine of up to $250,000 and up to $1.9 million in restitution. Gondrezick will remain on bond pending his sentencing. Gondrezick is a current resident of Benton Harbor, Mich., and formerly of Houston.
According to the factual basis in Gondrezick’s plea agreement, Gondrezick engaged in a mortgage fraud scheme between November 2004 and May 2005 that involved the sale of 24 homes, most of which were in Montgomery County. Gondrezick recruited straw buyers who entered sales contracts for homes which stated that substantial amounts (typically between $80,000 and $100,000) were going to be taken out of the seller’s proceeds at closing and sent to one of Gondrezick’s contracting companies for home improvements. These amounts were added to the asking price of the homes though neither the seller nor the nominee buyer asked for the improvements or hired Gondrezick’s company. Gondrezick submitted invoices to the title companies in these amounts to justify the third-party disbursements, claiming that custom renovations or home theater work had been performed. In fact, no such work was performed. Because the nominee buyers never planned to live in the homes, the buyer never complained about the lack of renovations which had been paid out of the closing. Gondrezick received approximately $1.9 million in these disbursements out of the loan proceeds which totaled approximately $10 million.
Gondrezick further admitted that the straw buyers were paid to participate in this scheme and that the loan applications contained false information relating to the buyers income, employment, assets and intent to occupy the homes.
Co-defendants Tiffany Brooks, who worked as a loan processor, Dirk Minnifield, a realtor, and Marc Jason Williams, who worked with Brooks as a loan processor, are also charged for their alleged involvement in this scheme and are scheduled for a Feb. 1, 2010, trial. They are presumed innocent unless convicted through due process of law.
The case was investigated by the FBI and the Department of Housing and Urban Development Office of Inspector General. The case is being prosecuted by Assistant United States Attorney Gregg Costa.
August 10, 2009
United States Attorney's OfficeCentral District of California Contact: (213) 894-2434
Two Real Estate Professionals Convicted in Massive Mortgage Fraud Scheme That Led to $40 Million in Losses
A federal jury this afternoon convicted a prominent Beverly Hills real estate agent and a licensed real estate appraiser on federal charges for their roles in a massive mortgage fraud scheme that caused more than $40 million in losses to federally insured banks.
After a five-week trial, the jury convicted Kyle Grasso, 38, formerly of Santa Monica, and Lila Rizk, 42, of Trabuco Canyon, of conspiracy, bank fraud and numerous loan fraud charges for their roles in the mortgage fraud scheme. Additionally, Grasso was convicted of three counts of money laundering.
The evidence presented at trial showed that Grasso and Rizk were part of a scheme that obtained inflated mortgage loans on homes in some of California's most expensive neighborhoods.
Eight other real estate professionals who were part of the scheme previously pleaded guilty to federal felony charges for their roles. The defendants who previously pleaded guilty are:
scheme leader Charles Elliott Fitzgerald, 48, formerly of Newbury Park and Beverly Hills;
Mark Alan Abrams, 47, of Los Angeles, who along with Fitzgerald orchestrated the scheme;
Nicole LaViolette, 38, of Palm Springs;
Jamieson Matykowski, 35, of Laguna Niguel;
Timothy Holland, 37, of Santa Ana;
Richard Maize, 54, of Beverly Hills;
Thomas R. Schiff, 47, of Brentwood; and
L. Scott Robinson, 46, of Dana Point.
Fitzgerald was previously sentenced to 14 years in federal prison for his participation in the scheme. The remaining defendants are awaiting sentencing.
The wide-ranging and sophisticated scheme defrauded mortgage lenders by obtaining inflated mortgage loans on expensive homes in some of California's most exclusive neighborhoods, including Beverly Hills, Bel Air, Holmby Hills, Malibu, Carmel, Mill Valley, Pebble Beach and La Jolla. Members of the conspiracy sent false documentation, including bogus purchase contracts and appraisals, to the victim banks to deceive them into unwittingly funding mortgage loans that were hundreds of thousands of dollars higher than the homes actually cost. Lehman Brothers Bank alone was deceived into funding more than 80 such inflated loans from 2000 into 2003, resulting in tens of millions of dollars in losses.
Lehman Brothers Bank and RBC Mortgage Company sued Fitzgerald, Abrams and others in federal court in Los Angeles in 2003 and obtained a receivership, temporary restraining orders and preliminary injunctions against them. Judge Pregerson appointed David J. Pasternak as receiver to recover assets acquired with proceeds of the fraud. The receiver, as well as attorneys and forensic accountants employed by him, have cooperated extensively with the government's ongoing criminal investigation.
The evidence presented at trial included proof that Grasso profited by collecting hundreds of thousands of dollars in commissions and concealed payments. The prosecution further presented evidence that Rizk profited by collecting hundreds of thousands of dollars in fees for providing inflated appraisals in the scheme.
Judge Pregerson is scheduled to sentence Grasso and Rizk on January 29, 2010.
A third defendant who went to trial, Joseph Babajian, 56, another Westside real estate agent, was acquitted on 13 criminal counts, and the jury was unable to reach a verdict on eight additional counts. United States District Judge Dean D. Pregerson declared a mistrial as to the eight counts.
This case is the result of an investigation by the Federal Bureau of Investigation and IRS-Criminal Investigation.

August 4, 2009
Business Owner Sentenced to 100 Years for His Role in Scheme to Defraud Clients of Funds Allegedly Held in Trust
Edward H. Okun, the former owner of The 1031 Tax Group LLP (1031TG), was sentenced today to 100 years in prison for his leading role in a scheme to defraud and obtain approximately $126 million in client funds held by 1031TG.
Okun was also ordered to forfeit $40 million by U.S. District Judge Robert E. Payne.
After a three-week trial in federal court in Richmond, Va., a jury found Okun, 58, of Miami, guilty on March 19, 2009, of conspiracy to commit mail and wire fraud, wire fraud, conspiracy to commit money laundering, money laundering, bulk cash smuggling, and perjury.
"Edward Okun’s investors trusted that he would keep their funds safe," said Assistant Attorney General Lanny A. Breuer. "But evidence introduced at trial showed that Mr. Okun instead used those investor dollars to finance a lavish lifestyle and to grow his own business holdings. Today's sentencing provides a measure of justice for those who lost so much to Okun’s deceit."
"Because of Edward Okun’s crimes, many victims in this case experienced near financial collapse and personal pain," said U.S. Attorney Dana J. Boente. "Today’s sentence is proper punishment for such an egregious breach of trust by a financial advisor."
According to the evidence presented at trial, from August 2005 through April 2007, Okun and others used 1031TG and its subsidiaries, all owned by Okun, in a scheme to defraud clients of millions of dollars through false pretenses. Section 1031 of the Internal Revenue Code allows investment property owners to defer the capital gains tax that would otherwise be due on properties sold, if the proceeds are used to purchase new property in a specified time frame. To facilitate this exchange, investment property owners deposit the proceeds of property sales with qualified intermediaries and sign exchange agreements that include various promises by the qualified intermediaries to clients regarding the safekeeping and use of exchange funds.
Specifically, the evidence presented at trial established that 1031TG obtained funds by promising clients that their money would be used solely to effect 1031 exchanges as outlined in the exchange agreements. After making such promises, evidence showed that Okun and others misappropriated approximately $126 million in client funds to support his lavish lifestyle, pay operating expenses for his various companies, invest in commercial real estate, and purchase additional qualified intermediary companies to obtain access to additional client funds. In the negotiations to purchase additional qualified intermediary companies, evidence showed that Okun and others misled owners of those companies to induce them to sell their companies to Okun, who then took control of and misappropriated the client funds.
The evidence also showed that Okun instructed his employees in Richmond to withdraw $15,000 in cash from Investment Properties of America’s (IPofA) bank account, a company owned by Okun, and smuggle the cash to his personal yacht on Paradise Island in the Bahamas to avoid federal currency reporting requirements.
The jury also found that Okun made material false statements under oath before the U.S. District Court for the Eastern District of Virginia in a fraudulent attempt to assert a personal attorney-client relationship with a former chief legal officer of IPofA.
In related cases, Lara Coleman, the former chief operating officer of IPofA, pleaded guilty on Jan. 6, 2009, to conspiring to commit mail and wire fraud and to making a material false statement to federal investigators and agreed, under the terms of the plea, to a sentence of 10 years in prison. Robert D. Field II and Richard E. Simring have also pleaded guilty to participating in the conspiracy to defraud 1031TG customers. Field was the chief financial officer and Simring was the chief legal officer of a holding company that was set up, in part, to oversee both IPofA and 1031TG, though neither company was ever officially made a subsidiary of the holding company. Field pleaded guilty on July 3, 2008, and Simring pleaded guilty on July 24, 2008. Field and Simring each face a maximum of five years in prison at sentencing. Coleman, Field and Simring are scheduled to be sentenced on August 13, 2009. All three defendants who pleaded guilty in this case agreed to forfeiture.

08/06/09
Woodbridge Man Convicted of Mortgage Fraud

July 29, 2009
United States Attorney's OfficeSouthern District of Ohio Contact: (937) 225-2910
Sixth and Final Conspirator Enters Guilty Plea in Mortgage Fraud Scheme
CINCINNATI, OH—Jessica A. Zbacnik, 42, of Monroe, pleaded guilty in United States District Court here for her role in an extensive mortgage fraud scheme that affected 210 residential properties, including 205 in Montgomery County.
Gregory G. Lockhart, United States Attorney for the Southern District of Ohio, Keith L. Bennett, Special Agent in Charge, Federal Bureau of Investigation; Jose Gonzalez, Special Agent in Charge, Internal Revenue Service Criminal Investigation, and other members of the Greater Dayton Mortgage Fraud Task Force announced the plea entered today before U.S. District Judge Michael A. Barrett.
Zbacnik pleaded guilty to one count of conspiracy to commit money laundering and one count of conspiracy to commit mail fraud, wire fraud and money laundering. She is the sixth and final defendant to have pled guilty to various mortgage fraud charges following a June, 2008 indictment which was handed down in Dayton federal court.
In court, Zbacnik admitted that she was part of the conspiracy that took place between March 2002 and June 2008 and operated and controlled various real estate mortgage and title insurance related businesses and corporations with the object of entering into a fraudulent scheme designed to obtain monies, profits, real property, and other things of value.
According to the statement of facts filed in court, Zbacnik admitted that she had helped arrange, facilitate, and manipulate documents associated with real estate sales and closings in order to fraudulently obtain excess mortgage loan proceeds generated from the sale of residential properties for the personal benefit of the defendant and her co-conspirators.
Zbacnik’s five other co-conspirators were:
Edward McGee, 74, of Dayton, who pleaded guilty on May 12, 2009 to conspiracy to commit money laundering
Kenneth O. McGee, 49, of Dayton (son of Edward McGee), who pleaded guilty May 12, 2009 to conspiracy to commit mail fraud, wire fraud, and money laundering and conspiracy to commit money laundering
Julian M. Hickman, 31, formerly of Centerville and now living in East Cleveland, who pleaded guilty to conspiracy and tax crimes on December 15, 2008
Robert Mitchell, 42, of Vandalia, who pleaded guilty to conspiracy to commit mail fraud, wire fraud, and money laundering and conspiracy to commit money laundering on March 11, 2009
Kamal J. Gregory, 34, of Centerville, who pleaded guilty to conspiracy to commit mail fraud, wire fraud, and money laundering and conspiracy to commit money laundering on April 14, 2009
Zbacnik faces up to 30 years' imprisonment on the charge of conspiracy to commit mail fraud, wire fraud, and money laundering, a $1 million fine, and five years of supervised release. She faces additional penalties of up to 20 years' imprisonment, a fine the greater of either $500 thousand or twice the value of the property involved in the subject transaction, and three years of supervised release on the conspiracy to commit money laundering charge. All six co-conspirators are awaiting sentencing.
Lockhart commended the cooperative efforts of all agencies participating in the Greater Dayton Mortgage Fraud Task Force, which includes the FBI, IRS, Ohio Department of Commerce Division of Financial Institutions, Ohio Attorney General’s Office, the U.S. Postal Inspection Service, the U.S. Department of Housing and Urban Development Office of Inspector General, and the Perry Township Police Department, along with Assistant U.S. Attorney Dwight Keller, who is prosecuting the case.

July 28, 2009
Mortgage Executive Turns Herself in on Mortgage and Wire Fraud Charges
RICHMOND, VA
— Stacy Lynn Chamberlain, age 42, of Unionville, Virginia, was arrested today on charges mortgage fraud on a federally insured bank and wire fraud on several mortgage companies and investors therein. Dana J. Boente, United States Attorney for the Eastern District of Virginia; Jennifer Love, Special Agent in Charge of the Federal Bureau of Investigation; and Colonel W. Stephen Flaherty of the Virginia State Police announced today’s arrest and the unsealing of the indictment, which had been returned on March 3, 2009.
The Indictment charges Chamberlain with one count of Bank Fraud, upon Fremont Savings and Loan, based in Anaheim California, eighteen counts of Wire Fraud, and one count of Interstate Transfer of Money Taken by Fraud. The alleged victims of the eighteen fraud counts were various mortgage companies and investors. The defendant is facing a maximum exposure of 360 years in prison and $5,250,000 in fines.
The Bank Fraud Count charges that in early 2004, Chamberlain a branch manager for the Richmond Branch of Gateway Funding Diversified Mortgage Services of Horsham, Pennsylvania, planned to purchase a $489,900 house in Jarrettsville, Maryland, without putting any money down, which required her to obtain a first mortgage loan for $440,910 and a second mortgage loan for $48,990. The indictment alleges that because her credit was bad and she could not qualify for such a loan, Chamberlain decided to purchase the house in the name of RLS, a nominee straw purchaser. However, because RLS had her own financial difficulties and could also not qualify for such a loan, it is further alleged Chamberlain created fraudulent income and employment information for RLS that would elevate her creditworthiness to A+ level so that Fremont would not verify the information as closely.
In reliance on the allegedly false statements, Fremont approved both loans and then sold the $440,910 first mortgage loan to Deutsche Bank and the $48,990 second mortgage loan to Citifinancial. Within a short time after the loans were made to Chamberlain, the indictment charges she stopped making the monthly payments and both loans went into foreclosure.
The Wire and Transfer Fraud counts charge Chamberlain with defrauding five mortgage companies and various investors out of money and their intangible rights to the honest services of their employees, by means of materially false and fraudulent pretenses, representations, and promises. The total approximate loss to these victims was $1.4 million.
The indictment alleges that in order to obtain employment and partnership relationships in the mortgage field, Chamberlain misrepresented her academic credentials and previous loan production and performance levels. In reliance on these misrepresentations, the employers entered into contractual relationships with the defendant and provided her with substantial funds. After Chamberlain established those relationships and obtained money and property from the victims it is alleged, she then further misappropriated and attempted to misappropriate funds and assets, and took steps to cover up her misappropriations.
The case is being investigated by the Federal Bureau of Investigation, Charlottesville Division and the Virginia State Police. Assistant United States Attorney David T. Maguire is prosecuting the case for the United States.

July 29, 2009
Two Men Charged in Hartford-Area Mortgage Fraud Conspiracy
Nora R. Dannehy, Acting United States Attorney for the District of Connecticut, today announced that a federal grand jury sitting in Hartford has returned a nine-count Indictment charging GEORGE HAJATI, also known as Gjergji Hajati, 30, of Westerly Terrace, Rocky Hill, and JUSTIN WILLIAMS, 31, of Newington, with conspiracy and wire fraud offenses stemming from an alleged Hartford-area mortgage fraud scheme.
The Indictment was returned on February 11, 2009. Following his recent extradition from Albania, HAJATI appeared today before United States Magistrate Judge William I. Garfinkel in Bridgeport and entered a plea of not guilty to the charges against him.
The Indictment alleges that, between September 2003 and November 2007, HAJATI, using his company Connecticut Partners Mortgage (“CPM”), conspired with WILLIAMS, a CPM employee, and Douglas Sheehan, 38, an attorney, and others to deceive mortgage lending financial institutions into providing falsely inflated mortgage loans to real estate buyers for the purchase of property that was worth less than the amount of the loans. The Indictment alleges that CPM provided fraudulent financial statements to the lending institutions that inflated the sales prices of the properties, the down payments made by purchasers and the amount due to sellers, as well as other fraudulent information, in order to induce the institutions to provide the funds.
Acting U.S. Attorney Dannehy stated that the investigation is ongoing and, at this time, it is believed that the various lenders have suffered a loss of more than $1 million due to this alleged mortgage scheme.
According to documents filed with the Court and statements made in court, on November 14, 2007, Federal Bureau of Investigation agents conducted a court-authorized search of Connecticut Partners Mortgage on Weston Street in Hartford. On November 21, 2007, HAJATI fled the United States to Albania. In January 2008, HAJATI met WILLIAMS in Australia. In May 2008, the co-defendants traveled to Albania, where HAJATI lived until he was 17 years old, has relatives, and is fluent in the language.
On March 17, 2009, approximately one month after HAJATI and WILLIAMS were indicted by a grand jury in Hartford, HAJATI was arrested by Albanian authorities after he attempted to cross the border of Albania and Montenegro. He was extradited to the United States on July 24.
HAJATI and WILLIAMS are charged with one count of conspiracy to commit wire fraud and eight counts of wire fraud. Each charge carries a maximum term of imprisonment of 30 years and a fine of up to $1 million.
Following his arraignment today, HAJATI was released under electronic monitoring after posting a bond in the amount of $250,000, cosigned by family members and partially secured by property.
WILLIAMS was arraigned on March 31 following his voluntary return from Albania. He is released on a non-surety bond in the amount of $25,000.
On November 20, 2008, Sheehan waived his right to indictment and pleaded guilty before United States District Judge Mark R. Kravitz in New Haven to one count of conspiracy to commit wire fraud and four counts of wire fraud. He awaits sentencing.

July 28, 2009
Former Head of Groton Mortgage Company Charged with Defrauding Lenders
Nora R. Dannehy, Acting United States Attorney for the District of Connecticut, today announced that a federal grand jury in New Haven has returned an Indictment charging GARY T. JOHNSON, 59, of Groton, with four counts of wire fraud and two counts of engaging in illegal monetary transactions while operating his former mortgage lending business. The Indictment was returned on July 22 and ordered unsealed today by United States Magistrate Judge Thomas P. Smith in Hartford during JOHNSON’s arraignment.
According to the Indictment, JOHNSON operated a family-run business known as Matrix Investment Corp. (“Matrix”), which was based in Groton. Matrix provided mortgage loans to interested borrowers either as a broker for other lenders or as a loan originator itself. JOHNSON was the Chairman of Matrix and oversaw lending activity at the Company.
The Indictment alleges that, during 2004 and 2005, Matrix and JOHNSON began to use monies disbursed for the benefit of borrowers for purposes other than the payoffs set forth in the relevant HUD settlement statements, including to pay Matrix’s ongoing operating expenses or to make payoffs to other lenders on unrelated refinancings.
The Indictment further alleges that, in the summer of 2004, JOHNSON informed some of his employees that he was seeking to refinance certain of his personal properties to put money into the business to fund Matrix. As part of that process, a Matrix employee began to explore refinancing options for JOHNSON from various lenders, including Greenpoint Mortgage Funding Inc., for approximately $640,000 and a line of credit for $80,000, both to be secured by JOHNSON’s personal residence. Several months later, JOHNSON sought refinancing for $563,500 with Flagstar Bank, to be secured by another house he purportedly owned in New London.
The Indictment alleges that JOHNSON caused fraudulent personal loan applications to be submitted to Greenpoint, Flagstar Bank, and other lenders. JOHNSON had input on the content of the applications, and he reviewed and signed preliminary applications and final applications, on or about the date of closing, and prior to any receipt of funds. The Indictment further alleges that, on the applications, JOHNSON misrepresented his ownership interest in his primary residence, misrepresented the occupancy status of the second residence, overstated his monthly income, and falsely represented that the monies would be used, in part, to repay preexisting debts, including existing liens on the relevant properties. The debts were not ultimately repaid.
Both the $640,000 and the $80,000 loans with Greenpoint closed on August 9, 2004. The Flagstar loan for $563,500 closed on October 9, 2004. The Indictment alleges that in the fall of 2005, JOHNSON ceased making payments on both the Greenpoint and Flagstar loans. The loans went into default, and the lenders have suffered substantial loss.
If convicted, JOHNSON faces a maximum term of imprisonment of 20 years on each of the first two wire fraud counts, a maximum term of imprisonment of 30 years on each of the next two counts of wire fraud, and a maximum term of imprisonment of 10 years on each of the two counts of engaging in an illegal monetary transaction.
Acting U.S. Attorney Dannehy stressed that an indictment is only a charge and is not evidence of guilt. The defendant is entitled to a fair trial at which it is the government’s burden to prove guilt beyond a reasonable doubt.
July 27, 2009
Six Mortgage Industry Insiders Charged by FBI and IRS
NEWARK, NJ—
FBI Special Agent In Charge Weysan Dun announced today the arrest of Daniel Verdia, Don Apolito, Jaye Miller, and Chrystal Paling (all on Tuesday, July 21), as well as the surrender of Robert Gorman and Philip Blanch (on Friday, July 24)—all in connection with a mortgage fraud scam operated out of an office in Hasbrouck Heights, New Jersey. All of the arrests occurred without incident. The six defendants are each charged with one count of wire fraud, in a joint investigation between the FBI and IRS titled “Operation Follow The Money.”
The investigation centered around activities occurring between February and September of 2005. According to the criminal complaint, the defendants obtained five mortgage loans by fraud between February and September of 2005 and deceptively converted the proceeds of those loans to their own use. This was done by first misrepresenting to the buyers and sellers the terms of the mortgage financing the purchase, the disbursements of the mortgage proceeds, and the source of the proceeds to pay off the mortgages, among other details. The second phase of the fraud involved falsifying information on the mortgage loan applications—namely the income and assets of the purchasers on the loans, the source of the down payments on new purchases, and the disbursements of cash related to the mortgage proceeds. The defendants allegedly accomplished their misdeeds through numerous interstate wire transfers. In the end, the only people who made a profit were Verdia, Miller, Apolito, Gorman, Blanch, and Palings.
Background
According to the complaint, Verdia, age 51, has owned and operated mortgage brokerage companies since 2001, beginning with Challenge Mortgage Services, LLC which was located at 377 Route 17, Hasbrouck Heights, New Jersey. Challenge later became Monarch Mortgage Services, LLC, which eventually moved to 1 International Boulevard, Mahwah, New Jersey in 2007. In February of that year, Verdia and his associates closed Monarch and opened The Mortgage Exchange at the same address. While he operated Monarch at the Hasbrouck Heights location, Verdia also owned Capital Investment Strategies (CIS), LLC which operated out of the same office and purportedly was the source of funds for Verdia’s real estate ventures. According to the complaint, CIS is a shell company used by Verdia and his associates to fraudulently conceal money.
Defendant Jaye Miller, age 50, has actively worked with Verdia since 2000 and has functioned as a loan officer and loan processor within Verdia’s companies. Miller was also a 50% owner of CIS and endorsed checks made out to that entity—monies that were allegedly proceeds of fraudulent activity. Robert Gorman, age 60, has also worked in many of Verdia’s businesses. Gorman obtained information from the mortgage applicants and processed the applications. This involved knowingly signing and submitting applications with false information, according to the allegations. Don Apolito, age 37, has done business with Verdia since 2002 and operated a number of companies that supplied warehouse lines of credit that funded Verdia’s alleged fraudulent transactions. All three of the companies operated by Apolito—Nina Funding, Matrix Funding, and the Mortgage Exchange—were operated out of Verdia’s Hasbrouck Heights office. Additionally, the complaint alleges that Apolito also served the same function as Gorman: knowingly signing and submitting loan applications with false information. Attorney Philip Blanch, age 69, closed all of loans in question. It was his responsibility to ensure the legality of the transactions and to verify the accuracy of the information in the closing documents and disbursement of funds. Blanch did this by signing the federal Uniform Settlement Statements (HUD-1) forms involved in the transactions. However, the complaint alleges Blanch was well aware that information he “verified” on the HUD-1 statements was false. Crystal Paling, age 49, worked for Blanch. The complaint alleges that Palings recruited individuals to purchase and sell the properties that were the subjects of fraud in this case. The complaint also alleges that Palings authored many of the documents associated with these transactions and facilitated the wire transfers to and from Blanch’s trust account.
The Scheme
The following outline is based on allegations made in the criminal complaint. In the simplest terms, a victim home owner (two of which in this case were suffering financial hardship due to medical expenses) was convinced by one of the defendants named above to either sell or refinance his or her home through Monarch Mortgage Services, LLC as part of a foreclosure bailout scheme. The defendants then recruited a straw buyer who was promised a sum of $5,000 for his or her participation. The defendants explained to the straw buyer that the original owner would repurchase the home after a short period of time when the owner had recovered from financial difficulties. The defendants also told the straw buyers that the mortgage payments for the newly purchased properties would be paid by Monarch. The defendants then falsified the financial information in the paperwork associated with the transaction. In one of the transactions, the falsified application was submitted to one of the companies under Apolito’s control, Matrix Funding, for loan approval and then later sold to an outside mortgage company. But in all other cases, the fraudulent applications were submitted directly to outside mortgage lenders. Once the loans were approved, the mortgage lenders wired funds to Blanch’s attorney trust account. At Blanch’s direction, Palings, would then wire all or most of the proceeds to CIS as a fee or payment. In the end, three of the victim homeowners received no compensation whatsoever for the sale of their homes. Furthermore, one of those three victims suffering financial hardship was lead to believe he was refinancing his home when in reality, he sold it for a 100% loss. The other two victims received a fraction of the money they were legitimately owed. The defendants, however, all received financial compensation for each of the five transactions. None of the resulting mortgages from these five transactions were ever paid and all of them went into default. The total fraud in these five transactions is estimated at $1 million.
“Those who are engaged in foreclosure bailout schemes are opportunistic thieves,” said Weysan Dun. “The defendants in this matter are charged with preying on the financially weak and desperate, our lending industry, and ultimately the taxpayers.To swindle people out of the roofs over their heads is just deplorable. But we will continue working with our partners in uncovering these schemes, bringing the fraudsters to justice, and educating the public.”
Acting SAC Julio La Rosa, IRS-Criminal Investigations stated, “We will continue to work closely with our law enforcement counterparts at the FBI to investigate allegations of mortgage fraud. These types of financial crimes add to the underground economy, erode the integrity of our tax system, and threaten the financial health of our communities.”
Dun compliments and thanks the IRS who has worked side by side with the FBI in this investigation from the beginning.
The arrested defendants appeared before Honorable Mark Falk, United States Magistrate Judge, for their initial appearance in Newark on Tuesday, July 21 and the two defendants who surrendered appeared on Friday, July 24. All the defendants were released on bond. Additional charges may be filed at a later date. A criminal complaint is merely an accusation. Despite this accusation, every defendant is presumed innocent unless and until proven guilty beyond a reasonable doubt

July 20, 2009
Former Real Estate Loan Closing Agents Are Charged with $9 Million Mortgage Loan Fraud
JACKSON, MS
— Acting United States Attorney Stan Harris announced today that a federal grand jury has returned a 38 count indictment charging J. Larry Kennedy and Keith M. Kennedy with conspiracy to commit mail and wire fraud, conspiracy to launder money, multiple counts of wire fraud, and multiple counts of money laundering in relation to their roles in a mortgage fraud conspiracy and scheme with Mark J. Calhoun, April Calhoun and Willie Jones to obtain fraudulent loans totaling in excess of $9 million. This indictment supercedes an earlier indictment returned by the federal grand jury in January, 2009, charging Mark J. Calhoun, April Calhoun, and Willie Jones for their roles in the mortgage fraud conspiracy and scheme.
In addition to the charges against the Kennedys, this new indictment includes additional money laundering charges against Mark J. Calhoun, April Calhoun, and Willie Jones for engaging in monetary transactions with criminally derived property. All defendants are scheduled to appear for arraignment on Tuesday, July 21, 2009, at 2:30 p.m. before Magistrate Judge James Sumner. The offenses charged in the indictment carry the following maximum statutory penalties:
conspiracy to commit mail and/or wire fraud carries up to 20 years imprisonment and/or fines up to $200,000.00;
each wire fraud offense carries a maximum statutory penalty of 20 years imprisonment and/or fines up to $250,000.00;
each money laundering conspiracy and each promotion money laundering offense carries a maximum statutory penalty of 20 years imprisonment and/or fines up to $500,000.00 or twice the value of the property involved in the transaction, whichever is greater;
each charge for engaging in a monetary transaction over $10,000.00 with criminally derived property carries a maximum statutory penalty of 10 years imprisonment and/or a fine of $250,000.00 or twice the value of the property involved in the transaction, whichever is greater.
The superceding indictment alleges that between September 2004, and at least through September 2006, while operating in the Jackson-metro area as Loan Closing & Title Services, Inc., the Kennedys were the closing agents involved with the fraudulent mortgage loans charged in the indictment. The indictment alleges that during the conspiracy and scheme, the Kennedys and their co-conspirators provided fraudulent loan documents to various lenders; thereafter, the Kennedys disbursed proceeds from the fraudulent loans to Mark J. Calhoun, April Calhoun, Willie Jones, and their respective companies as fictitious creditors.
According to the indictment, as part of the conspiracy and scheme, on some of the fraudulent loans the Kennedys falsely notarized loan documents during the loan closing process that were relied upon by the lenders to demonstrate that the specific borrower personally appeared at the loan closing and signed the closing documents in the presence of the loan closing agent in order to retrieve the mortgage loan proceeds.
Acting U.S. Attorney Stan Harris praised the federal, state and local cooperative efforts of the Jackson Financial Crimes Task Force. “This is a good example of the kind of quality case that can be put together when multi-jurisdictional resources are combined. While financial crime can be complex, potential perpetrators should take warning that the citizens of Mississippi are protected by an interagency team with the specific expertise to root out, investigate and vigorously prosecute financial fraud,” said Harris.
Florida - June 29, 2009
Forty-One Defendants Charged in Separate Schemes that Resulted in Approximately $40 Million in Fraudulent MortgagesDefendants include Bankers, Appraisers, Mortgage Brokers, Title Agents, Real Estate Agents, and Straw Buyers
Jeffrey H. Sloman, Acting United States Attorney for the Southern District of Florida, Michael K. Fithen, Special Agent in Charge, U.S. Secret Service, Antonio J. Gomez, Acting Inspector in Charge, U.S. Postal Inspection Service, Miami Division, Michael J. Folmar, Acting Special Agent in Charge, Federal Bureau of Investigation (FBI), Jon T. Rymer, Inspector General, Federal Deposit Insurance Corporation-Office of Inspector General (FDIC-OIG), Kenneth M. Donohue, Inspector General, U.S. Department of Housing and Urban Development-Office of Inspector General (HUD-OIG), Miami Field Office, Linda Charity, Acting Commissioner, State of Florida Office of Financial Regulation, and Robert Parker, Director, Miami-Dade Police Department, announced charges against 41 defendants in six separate cases, resulting in more than $40 million in fraudulent loans. Today’s cases reaffirm the joint federal and local commitment to crack-down on mortgage fraud perpetrators, first announced in September 2007.
On September 27, 2007, the U.S. Attorney’s Office announced a joint Federal-State Mortgage Fraud Initiative, designed to combat the growing mortgage fraud epidemic in South Florida. The Mortgage Fraud Initiative brought together federal and state law enforcement to investigate and prosecute federally a myriad of mortgage fraud offenders, from straw purchasers, to mortgage brokers, to complicit bank employees, title agents, and attorneys. Thereafter, in June 2008, building upon the success of the Mortgage Fraud Initiative, the U.S. Attorney’s Office and its federal, state and local law enforcement partners, created a Mortgage Fraud Strike Force, comprised of experienced prosecutors, agents, and officers, dedicated exclusively to investigating and prosecuting mortgage fraud cases.
The Mortgage Fraud Strike Force has yielded substantial results. Since September 2007, 218 individuals have been charged for their involvement in mortgage fraud schemes that have resulted or were intended to result in nearly $300 million in mortgage loans.
Today, Acting U.S. Attorney Sloman, joined by members of the Federal-State Mortgage Fraud Initiative and Strike Force, announced the following additional mortgage fraud prosecutions:
1. United States v. Mayra Rodriguez, et al., Case No. 09-20628-CR-Graham.
On July 23, 2009, nineteen (19) defendants were charged in a 20-count Indictment for their participation in a mortgage fraud scheme that resulted in approximately $21 million in fraudulent loans. Charged in the Indictment were defendants Mayra Rodriguez, 31; Lucia Peluffo, 29; Nelson Bermudez, 36; Yamile Segurola, 24, all of Miami; Carlos Rodriguez, 29, of Homestead; Mayelin Salas, 36, of Miami Springs; Nelida Rodriguez, 48,of Opa Locka; Sonya Balmaseda, 35, of Hialeah; Jorge Egeraige, 38, of Hialeah; Jaime Rojas, 39, of North Miami Beach; Alejandro Rabelo,49, of Miami Beach; Pedro Huezo, 58, of Opa Locka; Jose Arriete, 53; Gerard Wenzel, 50; Elias Fleites, 55; Marcelo Fernandez, 41; Lucy Segurola, 51; Ricardo Segurola, 51; and Jorge Lugo, 46, all of Miami.
According to the Indictment, defendants Mayra Rodriguez, Mayelin Salas, Nelida Rodriguez, Yamile Segurola, and Lucia Peluffo were employed at companies owned by Magile Cruz (Cruz previously pled guilty and was sentenced in January 2009 to 120 months’ imprisonment for her participation in this scheme). Cruz’s companies included Star Lending Mortgage, State Mortgage Lending, Sherley Title Services, Doral Title Services, and Professional Title Express, all in Miami-Dade County. Star Lending Mortgage was a mortgage brokerage firm and State Mortgage Lending was a mortgage lender, both licensed in the State of Florida. Sherley Title Services, Doral Title Services and Professional Title Express were title agencies, but were not licensed by the State of Florida.
More specifically, the Indictment alleges that from 2005 through 2007, Cruz, through her companies, would identify residential properties that were for sale. Thereafter, Cruz, and defendants Mayra Rodriguez, Yamile Segurola and Lucia Peluffo would prepare mortgage loan applications on behalf of complicit straw borrowers. These applications included false employment verifications, pay stubs, income and funds on deposit, and IRS Forms W-2. Defendant Nelson Bermudez, an employee of Wachovia Bank during the fraud, assisted the fraud by creating false verifications of deposit for the purported Wachovia accounts of straw borrowers. Defendants Carlos Rodriguez, Mayelin Salas, and others recruited and paid individuals to pose as buyers and borrowers in the transactions. Defendants Sonya Balmaseda, Jorge Egeraige, Ricardo Segurola, Lucy Segurola, Marcelo Fernandez, Pedro Huezo, Jose Arriete, Gerard Wenzel, Alejandro Rabelo, Elias Fleites, Jorge Lugo, and Jaime Rojas, all acted as straw borrowers.
The Indictment describes three methods used by the defendants to execute their scheme. First, the defendants created and submitted to the lending institutions false duplicate HUD-Settlement Statement Forms, which grossly inflated the true purchase price of the properties. At other times, the defendants adopted a shotgun approach to mortgage fraud, through which they obtained near-simultaneous loans for the same piece of property from multiple lenders. Finally, the defendants concocted entirely false real estate sales by stealing the identities of unwitting home owners, forging the sales documents in their names, and using complicit straw purchasers to obtain mortgages, all without the real property owners’ knowledge or consent.
Once the mortgage applications were approved, the lenders wired the loan proceeds to the defendant’s title companies for closing. At closing, Cruz, Mayra Rodriguez and Yamile Segurola would keep the difference between the inflated mortgage loan proceeds and the actual selling price of the property. Moreover, to perpetuate the scheme and avoid detection, the defendants often filed change of address forms with the Postal Service to prevent unwitting home owners from discovering that their property had been sold without their knowledge or consent. The defendants would re-direct the mail to post office boxes opened and controlled by Cruz and Nelida Rodriguez. In addition, to keep the fraud afloat and undetected, the defendants would make payment on the loans until the properties could be resold, often to another straw borrower, repeating the cycle of fraud. When Cruz failed to make payment on the loans, some properties went into foreclosure, resulting in substantial losses to the lending institutions.
The Indictment charges the defendants with conspiracy to commit mail fraud and wire fraud, and substantive mail fraud and wire fraud. Mr. Sloman commended the investigative efforts of the Federal-State Mortgage Fraud Strike Force, with special commendation to the U.S. Postal Inspection Service, U.S. Secret Service, and the State of Florida Office of Financial Regulation. The case is being prosecuted by Assistant U.S. Attorney Lois Foster-Steers.
2. United States v. Bryan A. Guarch, et al., Case No. 09-20627-CR-Moreno.On July 23, 2009, thirteen (13) defendants were charged in a 15-count Indictment for their participation in a mortgage fraud scheme that resulted in approximately $4 million in fraudulent loans. Charged in the Indictment were defendants Bryan A. Guarch, 29, Richard Pi, 27, Edwin Garcia, 30, Carlos Martinez, 29, Wayne Bermudez, 29, Oscar Quintero, 28, Sunsy Garcia, 29, Ryan Barouh, 27, Jason Cuza, 30, Anthony Silverio, 26, all of Miami, Rafael Jaramillo, 32, of Hialeah Gardens, Mario Estrada Mora, 25, of Miami Beach, and Vanessa Negron, 27, of Boiling Springs, South Carolina.
According to the Indictment, defendants Guarch and Pi organized the scheme and identified eight properties to be used to defraud mortgage lenders. Guarch and Pi used defendants Edwin Garcia, Rafael Jaramillo, Carlos Martinez, and Wayne Bermudez, to recruit straw buyers to submit fraudulent loan applications to mortgage lenders. Among the straw buyers recruited in this way were co-conspirators Oscar Quintero, Mario Estrada Mora, Sunsy Garcia, and Vanessa Negron.
After submitting fraudulent loan applications to the lenders, Pi and Guarch paid-off loan officers, defendants Ryan Barouh and Jason Cuza, to facilitate the approval of the loans. Guarch and Pi caused the title company closer, defendant Anthony Silverio, to approve and submit to the lender a fraudulent HUD-1 Settlement Statement with an inflated purchase price. In an effort to conceal the fraud, Silverio provided a second HUD-1 Settlement Statement to the sellers reflecting the actual, much lower purchase price of the property. At closing, Guarch and Pi kept more than $1 million in loan proceeds, representing the difference between the inflated purchase price and the price actually paid to the seller for the property. After closing, Guarch and Pi used those loan proceeds to pay off their co-conspirators and to fund their lavish life styles. After each of the closings, the straw buyers defaulted on the loans, causing each of the properties to go into foreclosure and resulting in possible losses to the lenders of more than $2.6 million.
The Indictment includes charges of conspiracy to commit wire fraud and substantive wire fraud. Mr. Sloman commended the investigative efforts of the Federal-State Mortgage Fraud Strike Force, with special commendation to the U.S. Secret Service, U.S. Postal Inspection Service, the Miami-Dade Police Department, and the State of Florida Office of Financial Regulation. The case is being prosecuted by Assistant U.S. Attorney Peter A. Forand.
3. United States v. Sixto Figueroa, Susy Figueroa, Rolando Herrera, Manuel Garcia, and Yolanda Garcia-Montes, Case No. 09-20610-CR-Lenard.On July 21, 2008, five (5) defendants were charged in an eight-count Indictment for their participation in a mortgage fraud scheme that resulted in the issuance of more than $830,000 in mortgage loans. According to the Indictment, defendants Sixto Figueroa, 57, and his wife Susy Figueroa, 44, both of Miami, fraudulently sold residential lots in Port LaBelle, FL. To effectuate their scheme, the Figueroas recruited individuals to pose as buyers of the properties. Among the straw buyers recruited and paid by the Figueroas were co-conspirators Rolando Herrera, 63, and Manuel Garcia, 40, both of Miami.
As part of the scheme, the Figueroas submitted fraudulent loan applications to Wachovia Bank. The applications contained false information regarding the straw buyers’ financial condition, including fraudulent tax returns and fabricated bank statements, which falsely suggested that the straw buyers had greater income and assets than they actually did. Additionally, the HUD-1 Settlement Statements provided to Wachovia falsely stated that the straw buyers would use their own money to pay closing obligations. In fact, however, the Figueroas paid all of the straw buyers’ closing obligations.
After the loans were approved, the bank wired the loan proceeds to defendant Yolanda Garcia-Montes’s title company for closing. For three purported property sales, Garcia-Montes improperly released these funds to the Figueroas, who, in turn, used the money to pay the straw buyers’ cash to close obligations for those deals. After the closing, each of the Wachovia mortgage loans eventually went into default after the non-qualifying straw buyers failed to make the required mortgage payments, resulting in substantial losses to Wachovia.
The defendants were charged with conspiracy to commit bank fraud and bank fraud. Mr. Sloman commended the investigative efforts of the Federal State Mortgage Fraud Strike Force with special commendation to the United States Secret Service and Miami-Dade Police Department. The case is being prosecuted by Assistant U.S. Attorney Joseph B. Shumofsky.
4. United States v. Fielding Dameron, Case No. 09-20637-CR-Jordan.On July 27, 2009, defendant Fielding Dameron, 60, of Miami, was charged in an Information for his role in a mortgage fraud conspiracy that resulted in the issuance of more than $9.8 million in mortgage loans from 2005 through 2007.
According to the Information, Dameron, working with other uncharged co-conspirators, participated in numerous fraudulent real estate transactions in Miami-Dade and Broward Counties. Dameron recruited individuals to serve as straw purchasers or otherwise obtained stolen identities for use in transactions. Using a fraudulent loan borrower, a mortgage broker working with Dameron submitted applications to various lending institutions. Once a lender would approve an application, often for an amount higher than what was negotiated with the seller, it would wire the loan proceeds to a title company in advance of the closing. The complicit title company would direct the funds in advance of the closing to Dameron, who would wire back the funds to the title company in the form of cashier’s checks to be used as the buyer’s contribution to the transaction. Following a transaction’s closing, the title company would wire Dameron money as his share of the profit.
The defendant was charged with conspiracy to commit mortgage fraud. Mr. Sloman commended the investigative efforts of the Federal-State Mortgage Fraud Strike Force, with special commendation to the U.S. Secret Service, Miami-Dade Police Department, and the FBI. The case is being prosecuted by Assistant U.S. Attorney Jeffrey E. Tsai.
5. United States v. Stephen LaLonde, Case No. 09-60181-CR-Cohn.On July 13, 2009, defendant Stephen LaLonde, 42, of Fort Lauderdale, was charged in a two-count Information for his role in a mortgage fraud closing scheme that resulted in the theft of more than $1 million in loan proceeds.
According to the Information, LaLonde stole more than $1 million at real estate closings as part of a scheme to defraud legitimate borrowers, lenders, and a title insurance company in connection with six real estate closings, held at Spectrum Title Inc., in Oakland Park, FL. The legitimate borrowers in these transactions sought to re-finance and payoff existing mortgages. Unbeknownst to the borrowers, however, LaLonde, kept the loan proceeds for himself and did not use the funds to pay off the borrowers’ pre-exiting loans.
The defendant was charged with mail fraud and making false statements. Mr. Sloman commended the investigative efforts of the Federal-State Mortgage Fraud Strike Force, with special commendation U.S. Postal Inspection Service, the Florida Department of Law Enforcement, and the State of Florida Office of Financial Regulation. The case is being prosecuted by Assistant U.S. Attorneys Jeffrey Kay and Laurie Rucoba.
6. United States v. Milennys Foira and Richard Diaz, Case No. 09-20638-CR-Jordan.On July 28, 2009, two defendants were charged in a three-count Indictment for their participation in a mortgage fraud scheme that resulted in the issuance of $450,000 in mortgage loans.
According to the Indictment, Milennys Foira, 35, of Doral, FL, a real estate agent, and Richard Diaz, 26, of Miami, FL, recruited Jean Claude Cahen, who was previously charged and convicted, to use his identity and credit to buy a selected property in Miami, Florida. Cahen agreed to be paid $10,000 for the use of his identity and credit. The applications, prepared by Foira, contained materially false information regarding Cahen’s purported employment, income, and rent payment history. As a result of the fraudulent mortgage applications, the lending company wire-transferred the loan proceeds to the closing agent. Without the lender’s knowledge, Diaz received a wire in the amount of $24,525 after the closing. Those proceeds were shared by Foira, Diaz and Cahen. After the closing, the parties failed to make the payments on the mortgage and the property fell into foreclosure.
The defendants were charged with conspiracy to commit wire fraud and two counts of substantive wire fraud. Mr. Sloman commended the investigative efforts of the Federal State Mortgage Fraud Strike Force, with special commendation to the U.S. Secret Service and Miami-Dade Police Department. The case is being prosecuted by Assistant U.S. Attorney Cristina Perez Soto.
In all cases, the defendants face the following possible maximum terms of imprisonment if convicted: conspiracy to commit wire fraud and substantive wire fraud: 20 years’ imprisonment; mail fraud: 20 years’ imprisonment; bank fraud: 30 years’ imprisonment; false loan application: 30 years’ imprisonment; and making a false statement to a government agency: five years’ imprisonment.
Acting U.S. Attorney Sloman stated, "The success of the Federal-State Mortgage Fraud Strike Force and our mortgage fraud crack-down is evident in the staggering number of prosecutions we have brought to date. Still, the battle against mortgage fraud is far from over. Mortgage fraud investigations and prosecutions will continue to be one of our top priorities.”
Michael Fithen, Special Agent in Charge of the U.S. Secret Service, noted, "To date, efforts dedicated to this particular anti-fraud initiative have yielded great success. Still, we recognize that mortgage fraud is a cancer that will continue to plague South Florida. The Secret Service will continue to stand shoulder to shoulder with our law enforcement partners to investigate these crimes, and help bring these criminals to justice.”
“The U.S. Postal Inspection Service will continue to work diligently with our partners in law enforcement and the banking industry to assure our Postal customers that the mail is not used as a conduit for these types of schemes. As the number of mortgage fraud cases continues to rise in South Florida, we will renew our efforts to revitalize public trust in the Postal Service,” said Antonio J. Gomez, Acting Inspector in Charge, U.S. Postal Inspection Service, Miami Division.
Michael J. Folmar, Acting Special Agent in Charge of the FBI's Miami Office, stated, “With many homeowners fighting to stay afloat in a down economy, it is increasingly important for the mortgage industry to operate free of fraud. The Federal-State Mortgage Fraud Strike Force is part of that effort, combining law enforcement resources to combat fraud.”
Jon T. Rymer, Inspector General for the FDIC-OIG, said, “The FDIC-Office of Inspector General is committed to its partnerships with the law enforcement community to address mortgage fraud cases throughout the country. The American people need to know that we are working together to ensure integrity in the financial services and housing industries and that those involved in criminal activities that undermine that integrity will be held accountable.”
Acting Commissioner Linda Charity, from the State of Florida’s Office of Financial Regulation, said “I commend the efforts of the Office of the U.S. Attorney and the Mortgage Fraud Strike Force investigators in this huge mortgage fraud investigation.”
Miami-Dade Police Director Robert Parker added, “It is unfortunate that a criminal element has infiltrated the real estate and mortgage industry and negatively affected those who have worked hard to attain the American dream of owning a home. The Miami-Dade Police Department will continue to work diligently with our law enforcement partners to assist with the prosecution of those responsible for the grave economic harm inflicted upon our community.”
Mr. Sloman commended the investigative efforts of all the federal, state and local agencies participating in the Federal-State Mortgage Fraud Strike Force, including the Federal Bureau of Investigation, the U.S. Postal Inspection Service, the U.S. Secret Service, the Federal Deposit Insurance Corporation-Office of Inspector General, the U.S. Department of Housing and Urban Development - Office of Inspector General, the Internal Revenue Service, the State of Florida Department of Financial Regulation, the Miami-Dade Police Department, and the Broward County Sheriff’s Office.
June,23, 2009 Ohio
Ohio Man Charged in Mortgage Fraud Scheme
William J. Edwards,
United States Attorney for the Northern District of Ohio, announced today that an information has been filed against Paul R. Tomko charging him with one count of mail fraud in connection with mortgage loans that were obtained fraudulently. According to court records, Tomko, age 36, resides in Middleburg Heights, Ohio.
The information alleges that from August 2003 through January 2005, Tomko and others who were not named executed a scheme to defraud Homecoming Financial Network and People’s Choice Home Loans in connection with twelve mortgage loans. The information further alleges that Tomko and others caused fraudulent loan applications to be processed through mortgage brokers, including CMS Home Loans in Elyria, Ohio, and Allstate Financial Group in Beachwood, Ohio. The information charges that Tomko utilized straw buyers to purchase properties and to obtain financing in their names. The information further charges that Tomko caused fraudulent appraisals to be prepared which falsely and artificially inflated the true values of the properties that were acquired and financed.
The information also alleges that the loan application packages that were submitted to the lenders included some or all of the following false and fraudulent documentation and information: inflated appraisals, source of down payment, rental income, lease agreements, and forged signatures. The information charges that Tomko and others fraudulently obtained twelve mortgage loans totaling nearly $1.2 million on properties located in the Cleveland, Ohio, area. It is further alleged that Homecomings Financial Network and People’s Choice Home Loans sustained significant losses as these mortgage loans went into default and the properties were sold through foreclosure.
If convicted, the defendant’s sentence will be determined by the Court after review of factors unique to this case, including the defendant’s prior criminal record, if any, the defendant’s role in the offense and the characteristics of the violation. In all cases the sentence will not exceed the statutory maximum and in most cases it will be less than the maximum.

05/19/09
Leader of Multimillion-Dollar Mortgage and Insurance Fraud Scheme Sentenced to 51 Months in Prison
July 16, 2009
United States Attorney's OfficeMiddle District of Florida Contact: (813) 274-6000
Orlando Man Pleads Guilty to Arranging Fraudulent Mortgages
ORLANDO, FL—United States Attorney A. Brian Albritton announces that Garry S. Martin (age 36, of Orlando) has pleaded guilty to conspiring to commit money laundering in connection with various mortgage fraud schemes. Martin faces a maximum penalty of 20 years in federal prison.
According to the plea agreement, Martin was convicted in the United States District Court for the Eastern District of New York in 2006 for engaging in mortgage fraud. Martin had made several applications to secure mortgages from Citimortgage, Inc., a subsidiary of CitiBank. Those applications contained several false statements, including inflated values for the borrower’s income and assets.
The terms of Martin’s supervised release for his 2006 conviction prohibited him from offering various real estate services. After Martin had been placed on supervised release in the Middle District of Florida, however, he maintained his real estate sales agent license and obtained his real estate brokers license. He also formed various companies, including Antigua Housing and Management, Inc. (“Antigua H&M”), Antigua Real Estate, Antigua Abstract LLC (“Antigua Abstract”), GSM Financial LLC, and Savvy Professional Title Company (“Savvy”), each with its principal office listed as 5449 South Semoran Boulevard, Suite 200, Orlando, Florida. Through those companies, and up until August 2008, Martin conducted various schemes, including foreclosure fraud, reverse mortgage fraud, and completely sham transactions, to defraud financial institutions out of more than $5 million.
Through Antigua H&M, Martin obtained money from people facing foreclosure by promising that Antigua would bring their past due mortgages current through refinancing and forward their payments to their lenders. He then used the foreclosure payments himself and did not pay the banks.
Through Savvy and Antigua Abstract, Martin marketed reverse mortgages to seniors, sent fraudulent financing packages to support the mortgage applications, arranged the mortgage closings himself, and then diverted mortgage proceeds to his personal use. Martin also created wholly fictitious agreements between fake buyers and fake sellers to receive mortgage proceeds.
This case was investigated by the Federal Bureau of Investigation (FBI), Internal Revenue Service (IRS), and Orange County Sheriff's Office. It is being prosecuted by Assistant United States Attorney Vincent A. Citro.
This case is part of the Middle District of Florida’s Mortgage Fraud Surge, a joint effort by the U.S. Attorney’s Office for the Middle District of Florida, the Federal Bureau of Investigation, Tampa and Jacksonville Divisions, and numerous other federal, state, and local law enforcement agencies. The Surge focuses intensive investigative and prosecutorial resources on the mortgage fraud crisis that plagues middle Florida and has contributed to the current economic situation nationwide. It is designed to accelerate mortgage fraud cases in order to bring perpetrators to justice quickly and provide maximum deterrence. For more information on the Middle District of Florida’s Mortgage Fraud Surge, please contact Steve Cole, Public Affairs Officer for the United States Attorney’s Office.
may, 14, 2009
Augusta Man Pleads Guilty in Mortgage Fraud Scheme
AUGUSTA, GA—
Edmund A. Booth, Jr., United States Attorney for the Southern District of Georgia, announced today that Walter Edward Stuckey, Jr, age 52, of Martinez, Georgia, pled guilty to one count of mail fraud in violation of Title 18, United States Code, Section 1341, in connection with a mortgage fraud scheme.
Booth said that during the guilty plea hearing in U.S. District Court before U.S. District Judge J. Randal Hall, the evidence showed that between 2002 and continuing until 2006, Stuckey devised a scheme to defraud mortgage lenders by providing false representations and omissions on mortgage applications through the operation of a mortgage brokerage company known as All-Star Lending in Augusta, which was managed by Stuckey. Booth noted that the evidence at the hearing also showed that nine of the homes involved in Stuckey’s scheme have gone into foreclosure.
Booth stated the offense of mail fraud carries a maximum statutory penalty of 20 years and a $250,000 fine. After completion of a pre-sentence investigation and report, a sentencing date will be scheduled. Booth stated that “the Department of Justice has made it a top priority to pursue and prosecute mortgage fraud and we are vigilantly doing that in the Southern District of Georgia.”
April, 9, 2009 - Georgia
"STING" SENDS FORMER LOAN OFFICER TO PRISON FOR MORTGAGE FRAUDProperty’s Price Inflated by $2 Million to Get Multi-Million Dollar Kickback
GAINESVILLE, GA—ANDREW JOHN SMITH, 29, of Cleveland, Georgia, was sentenced today by United States District Judge William C. O’Kelley to serve over 3 years in prison on a federal charge of conspiracy to commit bank, wire and mail fraud arising from a mortgage fraud scheme.
United States Attorney David E. Nahmias said of the case, “We will continue to use undercover ‘sting’ operations to stop the closing of fraudulent loans before the proceeds are disbursed, especially when a loss of over a million dollars to such frauds could seriously impact the lending banks during these difficult times. We remain committed to the prosecution of mortgage frauds, which has so devastated our local and national economy, and anyone involved in such fraud should fear that everyone else involved in the deal may be cooperating with the FBI.”
FBI Atlanta Special Agent in Charge Gregory Jones said, “This investigation should send a clear message to those criminals involved in mortgage fraud that the FBI may also be at the closing with cameras rolling and a set of handcuffs.”
FDIC-OIG Special Agent in Charge, Southeast Region, C. Ed Slagle said, “This investigation should serve as a warning to those who continue to attempt mortgage frauds in ever increasing amounts at a time when the community has already been so negatively impacted by such frauds.”
SMITH was sentenced to 3 years, 6 months in prison to be followed by 5 years of supervised release. The court has ordered SMITH to pay restitution but has not yet set a final amount. SMITH pleaded guilty to the charge on January 9, 2009.
According to United States Attorney Nahmias and information presented in court: In early 2007, SMITH was employed as a part-time Loan Officer by United International Mortgage (UIM) in Buford, Georgia, when he originated a fraudulent loan for his own residence. SMITH was later recruited by an UIM co-conspirator not named in the indictment to refinance UIM loans with other lenders, as well as to sell UIM foreclosed properties on which construction was not complete to unqualified straw borrowers funded by other lenders. SMITH’s own loan for his residence had been included in the UIM portfolio of non-performing loans facing imminent foreclosure.
On June 9, 2008, SMITH and his UIM co-conspirator were caught in an FBI/FDIC-OIG (Federal Deposit Insurance Corporation-Office of Inspector General) “sting” after SMITH had arranged for the sales price of a Pendergrass, Georgia, property to be inflated from $2 million to $4 million. Prior to his arrest, SMITH submitted fraudulent documents to federally insured banks to arrange a $3.2 million purchase money mortgage loan to finance the purchase of the property. SMITH then negotiated a side agreement with the sellers (who were, unbeknownst to SMITH, cooperating with the FBI) for the secret kickback of $2 million to his shell company. SMITH was arrested by federal agents at the property during a subsequent meeting to negotiate his multi-million dollar kickback for the “deal.”
Notably, the property at issue was sold for its true market value of $1.8 million immediately upon conclusion of the FBI’s sting operation.
The FBI investigation is ongoing.
April, 30, 2009 Indiana
Seven Local Residents Charged With Mortgage Fraud Crimes Involving Nearly $20 Million in Fraudulent LoansIncludes Windsor Village Properties, Near Arlington and 21st St.
Timothy M. Morrison, United States Attorney for the Southern District of Indiana, announced that seven persons were charged today in U.S. District Court in Indianapolis with crimes related to an alleged mortgage fraud scheme occurring between 2003 and 2005. They are:
TAMARA E. SCOTT, a/k/a, TAMARA PENN, Indianapolis, Indiana, age 49DONALD T. BROWN, Lebanon, Indiana, age 66STEPHEN SCOTT BROWN, Indianapolis, Indiana, age 37AARON J. WARREN, Indianapolis, Indiana, age 40MARK ROTH, Westfield, Indiana, age 54JERRY J. JAQUESS, Carmel, Indiana, age 67TIMOTHY A. BROWN, Indianapolis, Indiana, age 441
The first four individuals were each charged with one count of conspiracy to commit wire fraud and one count of money laundering. The last three individuals were each charged with one count of wire fraud and one count of money laundering.
The charges follow an investigation by Special Agents of the Internal Revenue Service - Criminal Investigation Division and the United States Attorney’s Office, with assistance by the Federal Bureau of Investigation. The investigation is not complete and is continuing.
According to the charges set forth in the seven separate Informations, between November, 2003 and August, 2005, a total of 149 fraudulent loans amounting to $19.7 million dollars were obtained by the charged defendants from three different lenders, including 60 loans from the Argent Mortgage Company, 86 loans from People’s Choice Mortgage / Countrywide Home Loans, and 3 loans from The Money Station. The total estimated loss is $8,055,243. Each of the individuals charged are responsible for some, but not all, of the loans charged as set forth in their respective charging documents. Multiple defendants are charged in many of the loan transactions.
The mortgage fraud schemes charged were all accomplished in the same general fashion. Participants in the schemes located properties and arranged to purchase them at a fair market value generally by means of an option agreement or unrecorded land contract. Investors were located who were willing to invest their good credit, but no money, to be the purchasers of these properties at a much higher price than that negotiated with the seller. Most of these investors were unwitting participants in the scheme; the majority were located in Virginia and were friends and relatives of one of the participants in the scheme. The investors generally never saw the properties they were purchasing. They were told that they were joining an investment club, that they would not have to make any payments on the properties, and that the properties would be managed for them by various participants (including renting the properties and paying all bills). These investors received money for participating in the investment club, generally $4,000 for each property purchased in their name. Mortgage brokers participating in the schemes allegedly prepared fraudulent loan applications, containing false statements, including: that the investors owned bank accounts, stock and other assets which they did not own; that the investors had income which they did not actually have; and that the investors were making the down payments on the properties from their own funds. In reality, other participants in the schemes actually provided the down payments for the properties, and were paid a fee of $1,000 - $3,000 for doing so. Appraisers were employed by scheme participants to prepare appraisals which vastly overstated the values of the properties, in order to support the sales price which was ultimately shown on the closing documents. The false loan applications, appraisals, and other fraudulent documents were then submitted to the lenders. The lenders, relying upon the false statements in the loan packages, issued the loans. The loans were funded via wire transfers of money from the lenders to a title company, which the scheme participants used to assist them in preparing false closing documents and issuing title company checks. At the time the loans closed, the properties sold for the fraudulently inflated sales price, and the fraudulently obtained loan proceeds were shared by scheme participants. The sellers were paid the amount they had negotiated to receive, and the scheme participants shared the excess proceeds. The scheme participant who had located the properties generally received $1,000 per property located. The loan processors were generally paid $500 for assisting in obtaining the loan. The scheme participant funding the down payment was paid $1,000 - $3,000 for each down payment they loaned. The scheme participant who recruited the investors and assisted them in signing the loans papers was paid $1,000 per loan. The remaining amounts were split between scheme participants and also used to pay existing mortgages on earlier purchased properties to keep the scheme from being detected by the lenders.
Of the fraudulent loans charged, fifty-two (52) loans related to the purchase of properties from individual sellers, generally individuals who either did not have their homes listed to sell, or had them listed as “for sale by owner.” These loans totaled $10,452,750 and were all issued by Argent Mortgage Company.
The remaining ninety-seven (97) fraudulent loan transactions charged all relate to the sale of duplexes in the Windsor Village neighborhood, located near Arlington Avenue and 21st Street, on the east side of Indianapolis. These properties were all owned by one person, thru various land trusts. Participants in the schemes negotiated with this individual to purchase all of the duplexes at a price of $50,000 each (the last group of these properties actually sold for $60,000). Investors were recruited to purchase each of these duplexes for $120,000 each. Inflated appraisals were obtained showing that the properties were worth $120,000 each. Immediately prior to the closing of the sale, the original owner transferred the properties via quitclaim deeds to scheme participants. Scheme participants were then shown as the sellers of the properties on the closing documents and investors who had been recruited were shown as the buyers. Fraudulent loan packages had been prepared and submitted to the lenders. Scheme participants funded the down payments. Lenders funded a loan in the amount of $96,000 on each of the ninety-seven (97) properties (a total of $9,312,000 in loan proceeds). After the properties closed, the original owner was paid his negotiated price (less any appropriate closing costs) and scheme participants received the remaining proceeds (generally in excess of $70,000 for each property). Eight of the Windsor Village loans were funded by Argent Mortgage Company and three of the loans were funded by The MoneyStation. The remaining eighty-six (86) loans were all originally funded by People’s Choice Mortgage, a warehouse lender in Kentucky who had a correspondent lending agreement with Countrywide Home Loans in California. Countrywide Home Loans purchased all of these loans shortly after they were funded. All of the Windsor Village properties went into early payment default, that is, no payments were made on the mortgages and the lenders suffered a loss for the entire amount of the loans.
All of the loans involved in the schemes went into default, and the lenders either foreclosed on the homes or took other action, including granting deeds in lieu of foreclosure or allowing short sales of the properties. Many of the duplexes in Windsor Village later re-sold in 2007 and 2008, generally for amounts between $3,500 and $15,000.
In addition to the fraud or conspiracy charges, each defendant is charged with money laundering for allegedly conducting financial transactions in excess of $10,000 with the proceeds of the illegally obtained loans.
Al Patton, Special Agent in-Charge, IRS Criminal Investigation, Chicago Field Office said: "Mortgage fraud adds to the underground economy that erodes the integrity of our tax system and it threatens the financial health of our communities. IRS-Criminal Investigation has an ongoing commitment to jointly working with other federal and state law enforcement agencies to pursue those individuals who manipulate the mortgage loan process for their own financial gain."
A description of the role of each individual charged today follows.
TAMARA E. SCOTT, a/k/a, TAMARA PENN, was allegedly involved in the business activities of most of the entities used to purchase, sell and manage properties in the fraudulent transactions, including Showhomes Property Management LLC, Star Consulting LLC, Realty Options LLC, EU Group LLC and Land Economics LLC. She purportedly attended closings and signed fraudulent documents, received checks for fraudulent loan proceeds, deposited those checks to corporate bank accounts, obtained cashiers’ checks to pay co-conspirators, and directed others in the disbursements to be made from the corporations. She owned and operated Showhomes Properties Management LLC, the entity created to manage the properties, including finding renters, collecting rents, and paying mortgage payments and other expenses. She obtained monies to “front” down payments, either by purchasing a cashier’s check from a bank account or by finding someone else to “front” the money (often DON BROWN or STEPHEN SCOTT BROWN). As part of the Windsor Village transactions, TAMARA SCOTT allegedly added the names of investors to bank accounts of numerous entities and forged their signatures on bank account signature cards, to make it appear that the investors had assets which they did not have.
TIMOTHY A. BROWN (TA BROWN) and his father DONALD T. BROWN (DT BROWN) were also allegedly involved in funding down payments for investors on fraudulent real estate transactions. TA BROWN purportedly incorporated Brown Funding Inc., opened a bank account in that name and, along with DT BROWN, allegedly used that bank account to fund down payments. Both TA BROWN and DT BROWN obtained down payment checks and provided them to someone else to take to the closings. After the closing, both TA BROWN and DT BROWN purportedly received return of the down payments, plus the $1,000 - $3,000 fee, from the fraudulent loan proceeds. Both TA BROWN and DT BROWN borrowed some of the money for down payments from individuals each knew, but did not tell those individuals that their money was being used to fund fraudulent real estate transactions. In addition, TIMOTHY BROWN was himself the seller on some of the real estate transactions. He agreed to allow other scheme participants to share in the fraudulent loan proceeds, and he even funded the buyers’ down payments on some of these properties he was selling. DT BROWN, along with TAMARA SCOTT, purportedly added investors’ names to the Brown Funding, Inc, bank account in order to convince the lenders that the investors had access to money which they did not have.
STEPHEN SCOTT BROWN (SS BROWN) was involved in the mortgage brokerage business and allegedly assisted in brokering many of the loans with Argent Mortgage Company and The MoneyStation. He purportedly filled out false loan applications, obtained false documents, obtained inflated appraisals, and submitted the fraudulent loan packages to the lenders, knowing the documents to be false. SS BROWN allegedly received $1,500-2,000 for each fraudulent loan which he brokered. SS BROWN also assisted in funding some of the fraudulent down payments, by borrowing money from a friend of his who was unaware that the money was being used to fund fraudulent real estate ventures. SS BROWN picked up the cashier’s check for the down payment and either provided the check to the title company or to a co-conspirator, who would take it to the closing. After the closing, SS BROWN would allegedly get a check back from the fraudulent proceeds, plus a fee of $1,000 - $3,000.
AARON J. WARREN negotiated the purchase of properties at a fair market price and then purportedly recruited investors to purchase them at an inflated price. He allegedly provided fraudulent information to a mortgage broker to assist the investor in obtaining fraudulent loans, including fraudulent documents that showed that these investors worked for, and had substantial income from WARREN’s company, Warren Property Group LLC, when in fact they did not. WARREN then caused the fraudulent loan proceeds to be paid to him by preparing a “consulting agreement” showing that his company, Warren Property Group, was entitled to this money for services rendered.
MARK ROTH was involved in the mortgage brokerage business and also allegedly assisted in brokering numerous loans thru Argent Mortgage Company and The MoneyStation Inc. Through his years of experience in the business, ROTH had developed relationships with Argent Mortgage Company employees. ROTH prepared the Argent mortgage broker application packages for Web Mortgage Company LLC and American Funding Solutions Inc., to assist these companies in being able to broker loans through Argent. ROTH also opened and ran the Indianapolis branch office of 1 Start Mortgage. RO st TH, alone and with the assistance of others, purportedly prepared and submitted to the lenders false and fraudulent loan applications along with false supporting documentation for the loans, knowing that the documents were false when he submitted them. On some occasions, ROTH also requested other individuals to “front” down payment checks for the investors. ROTH allegedly received money from the fraudulent loan proceeds. He opened an entity and bank account in the name WJP Roth Investments Inc., and purportedly used this bank account to deposit the fraudulent loan proceeds which he received. ROTH was also partners with JERRY J. JAQUESS in Homevestors LLC, a company involved in the purchase of the first eleven Windsor Village properties.
JERRY J. JAQUESS owned and operated Homevesters LLC, a company involved in the development and construction of new real estate properties, as well as the purchase and sale of existing residential real estate properties. JAQUESS allegedly used this company to negotiate the purchase and sale of the first eleven Windsor Village properties. On each of the properties, JAQUESS entered into a land contract (and other documents) immediately preceding the closing, showing that Homevestors LLC was purchasing the property from the owner for $50,000.00. He also entered into agreements to sell the properties to investors for $120,000.00 each. In early February 2005, prior to the first purchase agreements ever being finalized, JAQUESS, or individuals associated with him, caused three of the Windsor Village properties to be listed on the Metropolitan Indianapolis Board of Realtors Multiple Listing Service (MLS) showing a list price of $120,000. JAQUESS did not own the properties at the time they were listed and did not even enter into land contracts to purchase these properties (for $50,000 each) until mid-March 2005. These properties were the first three Windsor Village properties closed (on March 17, 2005). A few days after these properties closed, JAQUESS and his associates purportedly caused these three sales (at $120,000 apiece) to be placed on the MLS. This allowed JAQUESS and other individuals allegedly involved in the scheme to show these three properties as comparables on appraisals to be prepared for all of the remaining Windsor Village properties, thus making it appear that each of those properties was worth $120,000. JAQUESS attended the closings as the seller of the properties, and generally also took the buyer’s (investor’s) down payment check to the closings. JAQUESS signed the loan closing documents on behalf of Homevestors LLC, including the false HUD-1 Settlement Statements, showing that the investors were providing the down payments, which he knew to be untrue. After the closing, JAQUESS received checks to Homevestors LLC for the amount of the fraudulent loan proceeds (generally more than $70,000 per property). JAQUESS then caused Homevestors LLC to issue checks disbursing the fraudulent loan proceeds. Included in these checks were payments purportedly totaling approximately $42,000 payable to JAQUESS personally, or a family member of his, as well as checks to repay the individuals “fronting” the down payment (plus $1,000 - $3,000 fee) and checks to pay the investors $4,000 for each property purchased.
According to Assistant U. S. Attorney Susan Heckard Dowd, who is prosecuting the cases for the government, TAMARA SCOTT, DONALD BROWN, STEPHEN SCOTT BROWN and AARON J. WARREN each face a maximum possible prison sentence of fifteen (15) years and a maximum possible fine of $1,000,000.00. MARK ROTH, JERRY JAQUESS and TIMOTHY BROWN each face a maximum possible prison sentence of thirty (30) years and a maximum possible fine of $1,000,000. An initial appearance will be set for each of the defendants before of a U.S. Magistrate Judge in Indianapolis.
Fontana Woman Convicted in Mortgage Fraud Case Involving More Than $1 Million in Fraudulent Loans
20, April, 2009 California
The fourth defendant in a mortgage fraud scheme that fraudulently collected more than $1 million in loan proceeds was convicted today on federal charges for acting as a “straw borrower” who posed as the purchaser of one of the properties.
Lisa Lievanos, 45, was convicted of five felony counts – conspiracy, two counts of wire fraud, money laundering and making false statements to special agents with the Federal Bureau of Investigation.
As a result of today’s convictions, Lievanos faces up to 60 years in federal prison when she is sentenced on July 13 by United States District Judge Florence- Marie Cooper.
Three other defendants in this case previously pleaded guilty for their roles in the mortgage fraud scheme. They are:
Angela Cotton, 39, of Fontana, who ran a bogus title company and is scheduled to be sentenced by Judge Cooper on June 15;
Terral Toole, 41, of Irvine (formerly of Lake Elsinore), who is scheduled to be sentenced by Judge Cooper on June 1; and
Miles Davis, 46, of Glendale (formerly of Reseda), a loan processor, who was sentenced by Judge Cooper to three years of probation, including six months of home detention.
The evidence presented at Lievanos’ trial showed that Cotton found properties in Rancho Cucamonga and, with the assistance of real estate professionals and people such as Lievanos who agreed to sell their personal information, fraudulently “purchased” one of the properties and obtained a $635,000 loan.
A second loan involved a refinance of Lievanos’ residence, which netted the defendants $526,500. In the loan application, Lievanos included false employment information, income information, occupancy declarations, and rental agreements relating to her financial condition.
On the loan applications, the four defendants allegedly included false employment information, which included verifying the amounts of income of the straw buyer. As part of the scheme, Cotton established fraudulent escrow companies to complete the fraudulent sale transactions.
As a result of the fraudulent conduct related to the scheme, banks suffered losses of nearly $2 million.
RIVERSIDE, CA—The former president of Mortgage One Corporation in Hesperia has been convicted of four federal charges related to a scheme to defraud the United States Department of Housing and Urban Development and private lenders by fraudulently obtaining federally insured loans and selling those notes to private lenders.
John Richard Varner, 55, of Hesperia, was found guilty late Wednesday of one count of conspiracy to defraud HUD, one count of bank fraud and two counts of subscribing to false income tax returns. As a result of the convictions, Varner faces a maximum statutory sentence of 41 years in federal prison. Following the reading of the jury’s verdicts after a nearly four-week trial, United States District Judge Virginia A. Phillips revoked Varner’s bond and remanded him into custody after hearing from prosecutors that Varner is realistically facing a sentence of more than 12 years in prison, and after learning that he remained in the real estate industry following his arrest in this case in 2007.
Varner becomes the fifteenth defendant convicted in a wide-ranging investigation into fraud related to HUD-backed mortgages. Varner was at the center of a scheme that was run out Mortgage One Corporation, which was based in Hesperia, and M-1 Capital Corporation, which was based in Riverside and Rancho Cucamonga. From 1997 until 2002, the two companies were in the business of approving, funding and then selling home mortgage loans, typically obtaining mortgage insurance of the loans from the Federal Housing Administration, which is an agency within HUD. Mortgage One and M-1 Capital obtained FHA mortgage insurance for their loans without HUD review due to their status as HUD-approved Direct Endorsement Lenders. They obtained and kept Direct Endorsement Lender status by submitting false documents, including bogus audits, to HUD.
Varner and his co-defendants defrauded HUD by submitting fraudulent loan application documents in order to qualify the loans for FHA insurance. The loans went to borrowers who either did not meet the FHA requirements to qualify for the mortgages and/or were only “straw buyers.” Mortgage One and M-1 Capital sold the funded loans to banks, such as the FDIC-insured Firstar Bank, N.A. and Chase Manhattan Mortgage Corporation, using the same fraudulent documents. More than 1,000 of the 3,813 FHA-insured loans approved by Mortgage One and M-1 Capital went into foreclosure and, as a result, HUD and private lenders lost at least $23 million.
Varner was found guilty of filing false tax returns for the years 1999 and 2000 when he failed to report income that he used for personal expenses such as a Corvette, a $153,000 RV, jewelry and more than $150,000 deposited into a personal investment account.
Thirteen Charged with Mortgage Fraud Run Out of Islip, New York Mortgage Brokerage Firm Bridgewater Funding, LLC
New York, NY
May, 28, 2009
LEV L. DASSIN, the Acting United States Attorney for the Southern District of New York, JOSEPH M. DEMAREST JR., the Assistant Director-in-Charge of the Federal Bureau of Investigation's New York Field Division ("FBI"), BRIAN G. PARR, the Special Agent-in-Charge of the New York Field Office of the United States Secret Service ("USSS"), JON T. RYMER, the Inspector General of the Federal Deposit Insurance Corporation ("FDIC-OIG"), and RONALD J. VERROCHIO, the Inspector-in-Charge of the New York Division of the United States Postal Inspection Service ("USPIS"), announced today the unsealing of a 15-count Indictment charging MICAH MEYERS, STEPHEN CAPUTO, DAWN HUGHES, FNU LNU, a/k/a "Eddie Garcia," JAKOB GEARWAR, BRIAN URRARO, MICHAEL DIDIO, DANIEL HAMPTON, JENNIFER MOSCHITTA, VICTOR AVENDANO, ADRIAN AVENDANO, JANET MCGUINNESS, and LIAM LEAVEY in connection with their roles in a sub-prime mortgage fraud scheme involving dozens of mortgages, totaling more than $10 million, on residential properties in Long Island and the New York City area.
According to the Indictment filed in Manhattan federal court:
From 2005 through 2007, the defendants, many of whom were employees of the Islip, N.Y., mortgage brokerage firm Bridgewater Funding, LLC, targeted residential properties, generally in the $200,000 to $500,000 range, in Long Island and the New York City area. In some instances, the defendants targeted properties whose homeowners were facing foreclosure, and fraudulently convinced them that selling their properties to the defendants would be a way to pay off their debts and "save" their homes. In other instances, the defendants identified target properties they believed could be resold quickly, or "flipped." To purchase the properties, the defendants, either directly or in the name of straw purchasers, submitted mortgage loan applications that contained false information regarding, for example, the applicant's creditworthiness and intention to live in the residence. The loans thereby obtained typically exceeded the actual purchase price of the property, producing a "spread" from which the defendants profited. Straw purchasers, who were recruited via payment of substantial fees, promises of investment profits, and otherwise, were told not to worry about mortgage payments because the defendants would make the payments for several months and thereafter repurchase and/or resell the property. In fact, the defendants often failed to make mortgage payments, causing certain affected straw buyers to go into default on their mortgages.
As a result, mortgage lenders were forced either to foreclose on those properties or to re-purchase the properties from the straw buyers for less than the face amount of the loan. This often left the original homeowner (who had been promised that selling his or her home would be a way to "save" it) facing eviction. In other instances, the defendants rented the property to tenants and used the rent and other monies earned from the scheme to make mortgage payments on behalf of the straw buyers for a certain period of time before allowing the mortgages to go into default. In other instances, the defendants made mortgage payments for several months before "flipping" the property to yet another straw purchaser—who fraudulently obtained a new mortgage with the defendants' assistance, restarting the fraudulent scheme.
MICAH MEYERS, 30, of East Islip, New York, JAKOB GEARWAR, 30, of Brightwaters, New York, and FNU LNU, a/k/a "Eddie Garcia," were loan officers employed by Bridgewater, who supervised and coordinated the recruitment of straw buyers and the submission of fraudulent loan applications and other documents to the lenders.
BRIAN URRARO, 31, of Oakdale, New York, was the office manager of Bridgewater, who supervised the loan officers and assisted them in submitting fraudulent loan applications and other documents to the lenders.
MICHAEL DIDIO, 27, of Bellport, New York, was a loan processor at Bridgewater, who assisted loan officers in submitting fraudulent loan applications and other documents to the lenders. DIDIO also acted as a straw buyer by signing and submitting fraudulent loan applications and other documents to lenders in order to obtain home mortgage loans for multiple properties within a short period of time.
DANIEL HAMPTON, 40, of North Babylon, New York, falsely verified to mortgage lenders the employment information for certain straw buyers. HAMPTON also recruited individuals to act as straw buyers for the fraudulent scheme.
STEPHEN CAPUTO, 54, of East Setauket, New York, and DAWN HUGHES, 37, of Lindenhurst, New York, acted as the buyers' attorney, sellers' attorney, and/or settlement attorney for fraudulent transactions. CAPUTO and HUGHES knowingly assisted in closing fraudulent mortgage loans and making payments that were not disclosed to the lenders, in furtherance of the fraudulent scheme.
VICTOR AVENDANO, 62, of Lindenhurst, New York, ADRIAN AVENDANO, 30, of Lindenhurst, New York, JENNIFER MOSCHITTA, 26, of East Islip, New York, JANET MCGUINNESS, 31, of Lindenhurst, New York, and LIAM LEAVEY, 30, of Lindenhurst, New York, acted as straw buyers by signing and submitting fraudulent loan applications and other documents to lenders in order to obtain home mortgage loans for multiple properties within a short period of time, among other things.
Four Indicted in $3 Million Mortgage Fraud and Foreclosure Rescue Scheme
New York, May, 20, 2009
LEV L. DASSIN, the Acting United States Attorney for the Southern District of New York, JOSEPH M. DEMAREST JR., the Assistant Director-in-Charge of the Federal Bureau of Investigation's New York Field Division ("FBI"), and BRIAN G. PARR, the Special Agent-in-Charge of the New York Field Office of the United States Secret Service ("USSS"), announced the filing yesterday of a six-count Indictment against LAVETTE M. BILLS, KIRK LACEY, OMAR HENRY, and PETER CHEVERE, charging them with perpetrating a mortgage fraud scheme involving loans totaling over $3 million on at least six different residences. BILLS, 36, of Briarcliff Manor, New York, and LACEY, 36, of Pembroke Pines, Florida, were previously charged in a criminal Complaint filed in Manhattan federal court on March 17, 2009. HENRY, 26, of the Bronx, New York, and CHEVERE, 21, also of the Bronx, New York, surrendered to authorities this morning and are expected to be presented later today in Manhattan federal court.
According to the Indictment filed yesterday in Manhattan federal court:
BILLS was the Chief Executive Officer of MTC Real Estate, Inc., in the Bronx, and LACEY, HENRY, and CHEVERE all worked for MTC during various periods between 2008 and in or about March 2009. BILLS targeted homeowners who had fallen behind on their mortgage payments and whose homes were facing foreclosure by running radio advertisements and appearing on radio programs representing that she was a foreclosure specialist and had the ability to keep a home from going into foreclosure. BILLS and LACEY were then able to convince some of these homeowners to sell or transfer their homes to BILLS or to a company BILLS controlled, NNI, LLC. This was usually done via a "short sale," in which the lender agreed to sell the property for less than the balance owed on the loan and to discharge the remainder of the loan. In at least one case, involving a residence on Tinton Avenue in the Bronx, BILLS convinced the homeowner to place BILLS' name on the deed to the house and to "gift" the equity in the house to BILLS, in return for BILLS' fraudulent promise to transfer the house back to a relative of the homeowner. However, without the knowledge of either the lenders who approved the short sales, or of the selling homeowners, BILLS and LACEY or their co-conspirators "flipped" the properties to third-party straw buyers at a higher price, usually on the same day or within a short period of time. The sales price in the second transactions–the "flips" -- was often significantly higher–typically by $150,000 or more -- than the short sale price, yet the homeowners typically received little or no money from the sale of their homes.
To accomplish this, BILLS and LACEY deceived both the straw buyers and the lenders who were providing the mortgages to finance the purchases. In some instances, the straw buyers thought that they were helping the homeowner "save" his or her home from foreclosure, or they were told that they were purchasing an investment property. The straw buyers were also often told that they would not need to make mortgage payments on the property, either because the payments would be made on their behalf, or because the payments would be covered by the rental income from the property. The defendants convinced lenders to give the straw buyers mortgages to purchase properties the straw buyers could not otherwise afford by falsifying certain personal and financial information about the straw buyers. For example, the defendants prepared and submitted to the lenders documents containing false statements about the straw buyers' employment, income, and assets.
As a result of their fraud, the defendants profited from their "flips" of the properties; the homeowners lost title to their homes; the straw buyers became liable on hundreds of thousands of dollars they were unable to repay; and the lenders suffered losses from those loans, which eventually went into default.
Each defendant is charged with one count of conspiracy to commit bank fraud and wire fraud. In addition, BILLS is charged with three counts of bank fraud, one count of wire fraud, and one count of false statements; LACEY is charged with one count of wire fraud and one count of bank fraud; and HENRY and CHEVERE are charged with one count of bank fraud. The conspiracy charge, bank fraud charges, and false statement charge each carry a maximum potential sentence of thirty years in prison and a fine of the greater of $1,000,000 or twice the gross gain or loss resulting from the crime. The wire fraud charge carries a maximum sentence of twenty years in prison and a fine of the greater of $250,000, or twice the gross gain or loss resulting from the crime.
The Indictment also seeks forfeiture of the alleged proceeds obtained from the charged offenses. The case is assigned to Chief United States District Judge KIMBA M. WOOD.
Mr. DASSIN praised the work of the FBI and USSS for their assistance in this case.
Assistant United States Attorneys AMY LESTER and JASON MASIMORE are in charge of the prosecution.

New York, May, 19, 2009
Leader of Multimillion-Dollar Mortgage and Insurance Fraud Scheme Sentenced to 51 Months in Prison
LEV L. DASSIN, the Acting United States Attorney for the Southern District of New York, announced that DOMINICK DEVITO was sentenced to 51 months in prison today by United States District Judge BARBARA S. JONES in Manhattan federal court for mortgage fraud, insurance fraud and obstruction of justice.
According to Counts One, Thirteen and Fourteen of the Indictment, the charges to which DEVITO pleaded guilty; other documents filed in the case; and statements made during the guilty plea and sentencing proceedings:
From January 2002 through November 2004, DEVITO was the leader of a fraudulent real estate investment scheme that purchased multimillion-dollar residential properties in various communities in Westchester County -- including Purchase, New York -- with loans obtained through the submission of false and misleading information to banks and other lenders. DEVITO identified properties for sale, orchestrated the purchase of the properties, and performed construction work at the properties.
In addition, from January 2003 through February 2005, DEVITO engaged in a scheme to defraud insurance companies by submitting false and misleading insurance claims and supporting documents for water damage caused by broken pipes at several of the homes he and his co-conspirators had purchased as part of the mortgage fraud scheme.
DEVITO obstructed justice in connection with his sentencing in 2003 in Manhattan federal court for racketeering and mortgage fraud in an earlier case. Specifically, DEVITO submitted false and misleading information regarding the value of his assets and his personal net worth following his sale of a property located in Purchase, New York.
DEVITO, 45, pleaded guilty before Judge JONES on July 22, 2008. In addition to his 51-month prison term, Judge JONES ordered a supervised release of 3 years and ordered DEVITO to forfeit a total of $1.4 million.
DEVITO's co-defendant JOHN LISCIO was sentenced on March 31, 2009, to 12 months in prison and three years of supervised release. LISCIO was also ordered to pay $50,000 in restitution. DEVITO's other co-defendant, ROBERT DIDONATO, was sentenced on April 13, 2009, to 18 months in prison and three years of supervised release. DIDONATO was also ordered to pay $18,000 in restitution and to forfeit $112,000. The last remaining defendant, LOUIS CORDASCO, JR., is scheduled to be sentenced on May 27, 2009.

May 7, 2009
Five People Charged in $14 Million Mortgage Fraud
Acting United States Attorney Michelle L. Jacobs announced today that a federal grand jury in the Eastern District of Wisconsin returned a twenty four count indictment charging five people with wire fraud and money laundering in connection with a mortgage fraud scheme. Charged were Paul J. Zaleski, 60, formerly of Richmond, Illinois; Michael Pembroke, 45, of Twin Lakes, Wisconsin; John F. Hochrek, Jr., 48, of Spring Grove, Illinois; Patricia Lynn Kay, 47, of Kenosha, Wisconsin; and Robert Farrell, 29, formerly of Richmond, Illinois.
According to the indictment Zaleski, is alleged to be the leader and organizer of the scheme. He is charged with 17 counts of wire fraud in violation of Title 18, United States Code, Section 1343 and five counts of money laundering in violation of Title 18, United States Code, Sections 1956 and 1957. Pembroke and Kay are each charged with five counts of wire fraud and one count of money laundering. Hochrek is charged with seven counts of wire fraud, and Farrell, with six counts of wire fraud. If convicted, each defendant faces up to 20 years in prison for each wire fraud offense and up to 30 years in prison for each money laundering offense.
The indictment alleges that Zaleski orchestrated the purchase of at least 40 real estate properties by straw buyers who were led to believe that they were acting as members of an investment group. In order to secure mortgage loans, Zaleski and Farrell, working as loan originators at First Security Financial Services in Kenosha, Wisconsin, prepared fraudulent loan applications in the names of the buyers. The applications contained, among other false representations, inflated appraisals, some of which were prepared by Hochrek. The purpose of the scheme was to funnel mortgage funds to Silver Creek Investments, Northpointe Development and Lakeside Property Management, all shell companies that were controlled by Zaleski, Pembroke and Kay.
The indictment also alleges that fraudulently obtained funds were subsequently laundered in transactions that involved the inducement of straw buyers and the purchase of additional properties.
Over the course of a two year period, numerous mortgage lenders advanced more than $14 million in fraudulently procured funds, at least $2 million of which was deposited into accounts for the shell companies. The loans subsequently went into default and foreclosure.
An initial appearance for Pembroke, Hochrek and Kay has been scheduled for May 14, 2009 before Judge William E. Callahan, Jr. Zaleski and Farrell have been arrested in California and are awaiting return to Wisconsin.
The case was investigated by Internal Revenue Service, Criminal Investigation Division and the Federal Bureau of Investigation. The case is being prosecuted by Assistant U.S. Attorney Carol L. Kraft.
According to Acting United States Attorney Michelle Jacobs “this case, and others like it, have serious ramifications not only for the defrauded lenders but also for the residents of the neighborhood where the properties are located. This demonstrates the commitment we all share to protect consumers from fraud and help to ensure the integrity of the mortgage market and other credit markets”. She also commended the work of the law enforcement agencies involved in this lengthy investigation.
New York, March, 23, 2009
Manhattan Real Estate Developer Pleads Guilty in $27 Million Mortgage Fraud Scheme
LEV L. DASSIN, Acting United States Attorney for the Southern District of New York, announced that MICHAEL HERSHKOWITZ, a Manhattan real estate developer, pleaded guilty today in Manhattan federal court to participating in a $27 million mail and wire fraud conspiracy. According to the criminal Complaint, Information, and other documents filed in this case, as well as statements made during HERSHKOWITZ’ guilty plea proceeding:
HERSHKOWITZ, working through Manhattan real estate development company, The Kingsland Group, Inc., and related entities (collectively, "The Kingsland Group"), fraudulently induced approximately 70 individuals to lend the Kingsland Group over $27 million, purportedly to fund the renovation of approximately sixteen multi-family apartment buildings located in upper Manhattan. HERSHKOWITZ and a co-conspirator, IVY WOOLFTURK, falsely represented that the lenders would hold, as collateral for the loans, interests in bona fide first mortgages in the various properties in which they thought they were investing. In fact, the lenders did not hold recorded, first mortgages in the properties. Instead, the lenders were provided with forged documents falsely reflecting that the mortgages had been properly recorded with the City of New York. Interest was paid on the loans for some years after they were first made, but ultimately the principal on the loans was not repaid when due and it was determined that the lenders did not have valid first mortgages on the properties in question.
HERSHKOWITZ, 52, of New York, New York, pleaded guilty before United States District Judge P. KEVIN CASTEL to a onecount Information charging conspiracy to commit mail and wire fraud -- a charge which carries a maximum term of 20 years in prison. The Information also contains a forfeiture allegation for over $27 million, representing the funds obtained through the fraud. HERSHKOWITZ is scheduled to be sentenced on September 9, 2009.
IVY WOOLF-TURK, 52, of Port Washington, New York, pled guilty to an identical charge on February 25, 2009; she is scheduled to be sentenced on May 27, 2009.

April 28, 2009
United States Attorney's OfficeMiddle District of Florida Contact: (904) 301-6300
Mortgage Fraud Conspirators Sentenced
Tampa, FL—
United States Attorney A. Brian Albritton announces that U.S. District Judge James S. Moody today sentenced Victor Thomas Clavizzao (age 46, of St. Petersburg) to 5 years in federal prison for conspiring to commit mortgage fraud. The court also ordered Clavizzao to pay $2,074,895.60 in restitution and to forfeit an additional $5,946,300. Clavizzao had entered a guilty plea on September 23, 2009.
According to court documents, Clavizzao acted as mortgage broker in the purchase of 13 different properties. Clavizzao conspired with other to submit false and fraudulent information (e.g., fraudulently inflated income) to various lenders in order to induce the lenders to fund bad loans.
Clavizzao’s co-defendant, Mark Lepzinski (age 51, of Clearwater) a Pinellas property flipper who obtained fraudulent loans with Clavizzao's help, was previously sentenced by U.S. District Judge James D. Whittemore to 13 months in federal prison for his role in the conspiracy.
This case was investigated by the Federal Bureau of Investigation. It was prosecuted by Assistant United States Attorney Thomas N. Palermo.
New York, April, 28, 2009
Former Hedge Fund Manager Arthur G. Nadel Indicted on Fraud Charges
LEV L. DASSIN, the Acting United States Attorney for the Southern District of New York, announced that ARTHUR G. NADEL, 76, of Sarasota, Florida, was indicted today on securities, mail, and wire fraud charges stemming from a ten-year scheme to defraud investors out of millions of dollars. NADEL previously was arrested in this case on January 27, 2009. As alleged in the fifteen-count Indictment filed in Manhattan federal court:
From 1999 through January 2009, NADEL perpetrated a scheme to defraud investors in six different funds: (a) Victory IRA Fund Ltd.; (b) Scoop Real Estate LP; (c) Victory Fund Ltd.; (d) Valhalla Investment Partners; (e) Viking Fund, LLC; and (f) Viking IRA Fund, LLC (collectively the "Funds").
NADEL solicited prospective clients to invest in the Funds by making various misrepresentations about the performance and value of the Funds, including that the net asset value of each of the Funds was tens of millions of dollars. NADEL also claimed to investors that his purchases and sales of securities in the Funds had generated cumulatively more than $271 million in gains. In truth, NADEL’s trading resulted in an overall net loss in the Funds.
To further the scheme, NADEL created and caused others to create false and fraudulent client account statements, among other documents, that reflected fictitious positive returns consistent with the returns NADEL represented to investors he had achieved.
Based, in part, on NADEL's false statements, from 1999 through January 2009, more than 350 clients invested more than $360 million with the Funds. NADEL received tens of millions of dollars in management fees and performance incentive fees and, moreover, transferred and caused to be transferred millions of dollars in investor money in the Funds to accounts and entities that he owned and/or controlled. The investors in the Funds did not authorize NADEL to make these transfers, and NADEL failed to disclose them.
NADEL is charged with six counts of securities fraud, one count of mail fraud, and eight counts of wire fraud. Each securities fraud count carries a maximum sentence of 20 years in prison and a maximum fine of $5 million, or twice the gross gain or loss from the offense. The mail fraud count carries a maximum sentence of 20 years in prison and a maximum fine of $250,000, or twice the gross gain or loss from the offense. Each wire fraud count carries a maximum sentence of 20 years in prison and a maximum fine of $250,000, or twice the gross gain or loss from the offense. If found guilty on all counts, NADEL faces a combined statutory maximum sentence of 280 years’ imprisonment. NADEL is also subject to mandatory restitution. The Indictment includes forfeiture allegations which would require NADEL to forfeit the amount of money involved in the charged crimes.
NADEL is currently detained pending his meeting bail conditions set by United States District Judge DENISE L. COTE following NADEL's January arrest. NADEL is expected to be arraigned on the Indictment by United States District Judge JOHN G. KOELTL on April 30, 2009.
Mr. DASSIN praised the work of the Federal Bureau of Investigation, and thanked the United States Securities and Exchange Commission for its assistance. He added that the investigation is continuing.

April 16, 2009
Real Estate Company Owners Sentenced for $35 Million Mortgage Fraud
The two owners of a Roseville real estate company were sentenced today in federal court for mortgage fraud in connection with a scheme involving at least 162 properties, principally in north Minneapolis, and mortgage proceeds of approximately $35 million.
On April 16 in Minneapolis, United States District Court Judge Joan Ericksen sentenced Jonathan Edward Helgason, 46, Chisago City, and Thomas Joseph Balko, 38, Rogers. The defendants were charged on April 11, 2008, and pleaded guilty on April 17.
Helgason, a licensed real estate agent, was sentenced to 96 months in prison and three years of supervised release. Balko was sentenced to 84 months and three years of supervised release. Restitution will be ordered at a later date.
According to their plea agreements, Helgason and Balko were the owners of numerous companies, including TJ Waconia, Total Title LLC, Complete Real Estate Services, Inc. and CityWide Management, LLC and Investor’s Warehouse LLC (the TJ Group).
From approximately 2005 to 2007, Helgason and Balko executed a scheme to defraud and to obtain money by means of false and fraudulent pretenses. Using the TJ Group, Helgason and Balko purchased approximately 162 properties throughout the Twin Cities metropolitan area, principally in north Minneapolis. They would then resell the property within a few weeks to an “investor” who would purchase the property, sight unseen, at a price set by Helgason and Balko without negotiation, oftentimes $20,000 to $60,000 more than the TJ Group had paid.
According to the plea agreements, people were told by Helgason and Balko that the investors were simply “lending” their credit to TJ Waconia. In exchange for “lending” their credit, the investors would receive a kickback payment of about $2,500 and a promise of an additional payment after two years when the TJ Group was to repurchase the property from the investor.
Through the scheme, the defendants perpetrated a fraud on the lenders who were led to believe that the “investors” were the actual owners of the properties, when, in fact, the “investors’” ownership was in name only. During the two-year period during which the investor owned the property, the TJ Group was responsible for all payments and maintenance on the property. In some instances, Helgason and Balko also provided investors with funds to pay the buyer’s portion of the property purchase price and worked with others to provide lenders with false loan applications on behalf of the investors so that they would qualify for the loan, according to the plea agreements.
The two men, on behalf of the investors, obtained approximately $35 million in mortgage proceeds to purchase the properties from the TJ Group. Ultimately, the scheme collapsed, and the TJ Group did not repurchase the properties or continue making payments to the investors in order to pay their mortgages. The investors were left owning properties with mortgages that exceeded their property’s market value.
At the sentencing hearing held today, Minneapolis City Council President Barb Johnson and Mike Christienson, Director of the Minneapolis Department of Community Planning and Economic Development both testified regarding the significant impact suffered by the city and the community as a result of the fraud.
March 26, 2009
SIX ARRESTED IN $47 MILLION MORTGAGE FRAUD SCHEME
Mortgage Brokers and Escrow Company Allegedly Defrauded Banks and Financial Institutions
Six people were arrested today following a grand jury indictment for a mortgage fraud scheme that allegedly defrauded more than a dozen banks and mortgage lenders of more than $47 million. The investigation is ongoing and the amount of the fraud will likely increase. The defendants are charged in a 40 count indictment with conspiracy to commit bank, wire and mail fraud, eleven counts of bank fraud, seven counts of mail fraud, eleven counts of wire fraud, four counts of making false statements on loan applications, and seven counts of monetary transactions using criminally derived proceeds. The defendants were involved with three Bellevue, Washington companies: Emerald City Escrow LLC, Nationwide Home Lending LLC, and Kobay Financial Corporation. Four of these defendants will make their initial appearances in U.S. District Court in Seattle at 2:30 this afternoon:
VIKTOR KOBZAR, 32, of Federal Way, mortgage broker
CAMIE BYRON, 28, of Renton, loan officer for Kobay and Nationwide
ALLA SOBOL, 28, of Renton, mortgage broker
DAVID SOBOL,40, of Issaquah, real estate agent
These two defendants were arrested in Los Angeles and will be scheduled for arraignment at a later date:
VLADISLAV BAYDOVSKIY, 31, of Bellevue, Washington, mortgage broker
DONATA BAYDOVSKIY, 28, of Bellevue, part owner Emerald City Escrow
One additional defendant, SANDRA THORPE, 55, of Shoreline, an accountant who falsified income statements and employment verification letters will be arraigned April 9, 2009.
According to a search warrant affidavit made public today, investigators have reviewed 78 loan files that were submitted by Nationwide and Kobay to lending institutions. In 69 of these loan files, the investigation alleges fraudulent information was submitted to obtain some $47 million in loans. All of the loans were closed at Emerald City Escrow. Those charged allegedly used “straw buyers” and other unqualified buyers to obtain increasing loan amounts in repeated sales of the same property. Employees and principals at Kobay and Nationwide prepared and submitted falsified loan applications and related verification documents to lenders in a scheme to conceal the fact that buyers were otherwise unqualified to obtain purchase money loans. Relying on the falsified statement, lenders extended loans that exceeded the value of the property and the borrower’s ability to re-pay the loan. Employees and principals of Emerald City disbursed the excess loan proceeds from the escrow accounts to themselves, or others associated with them.
One property in Medina, Washington was sold to a recruited buyer for $775,000 and within six months was sold again to a second recruited buyer for $1.2 million. The falsified loan application submitted by KOBAY on behalf of the second buyer reported a monthly income of $45,000 a month with assets of more than $800,000. In fact the buyer was a house cleaner making between $18,000 and $20,000 a year. The loan was closed at Emerald City Escrow. Bank records indicate hundreds of thousands of dollars in proceeds from the transaction were used to benefit VIKTOR KOBZAR and VLADISLAV BAYDOVSKIY. Some of the funds allegedly went to pay VLADISLAV BAYDOVSKIY’s mortgage and moorage fees for his yacht.
A second property in Newcastle, Washington was purchased by DAVID SOBOL in August 2007, for $669,950. A month later SOBOL “flipped” the property, selling it to CAMIE BYRON for $1,000,000 — about $330,000 more than his purchase price. Using falsified loan applications that misrepresented her income and assets, BYRON obtained two loans on the property totaling about $900,000. BYRON then “flipped” the property again to another straw buyer in November 2007. The purchase price in November 2007 was $1.4 million. The loan application submitted by the buyer in November 2007 grossly inflated the buyer’s income to meet the lending requirements. According to the application, the buyer earned more than $324,000 in 2005 and $385,000 in 2006. In fact, the buyer reported income to the IRS of $13,245 in 2005 and $16,600 in 2006.
In a third transaction, a recruited buyer, whose income information was substantially inflated, was used to purchase a Medina home for just under a million dollars. The conspirators then used the buyer’s name and credit to obtain a construction loan of $1.95 million, pocketing the proceeds and leaving the buyer with the full loan obligation. The proceeds of the construction loan were not used to construct a new house. The buyer was forced to default on the loan.
“Mortgage Fraud is at the heart of many of the financial problems we face today. These arrests attest to the fact that we will vigorously pursue persons engaged in such scurrilous and harmful activity,” said Robert Bethel, Inspector in Charge of the Seattle Division of the U.S. Postal Inspection Service.
As part of the indictment, the government is seeking the forfeiture of a number of luxury vehicles and bank accounts. The vehicles include a 2004 Lamborghini, Gallardo, registered in the name of VIKTOR V. KOBZAR, and a second 2004 Lamborghini, Gallardo, registered in the name of VLADISLAV A. BAYDOVSKIY, a 2006 BMW 750 and a 2007 BMW X5 both registered to BAYDOVSKIY, and a 31 foot Bayliner registered to BAYDOVSKIY. The government is also seeking the forfeiture of a 2008 Range Rover and a 2007 Lexus registered to the SOBOLs.
“Individuals who try to fund a lavish lifestyle by devising fraudulent financial schemes can expect to have those assets seized by the government,” said Kenneth J. Hines, the IRS Special Agent in Charge of the Pacific-Northwest. “In light of that fact, it makes no sense for anyone to ever pursue ill-gotten gains.”
The charges contained in the indictment are only allegations. A person is presumed innocent unless and until he or she is proven guilty beyond a reasonable doubt in a court of law.
The charges are punishable by up to 30 years in prison
Eight Sentenced in Multimillion-Dollar Mortgage Fraud and Foreclosure Rescue Schemes
New York,NY - LEV L. DASSIN,
the Acting United States Attorney for the Southern District of New York, announced that ALEKSANDER LIPKIN, a/k/a "Alex," GARRI ZHIGUN, GALINA ZHIGUN, JOSEPH PAPERNY, FAINA PETROVSKAYA, JOHN GELIN, TOMER SINAI, and DANIEL MIKHLIN were each sentenced by United States District Judge RICHARD J. HOLWELL in Manhattan federal court for their roles in a multimillion-dollar, sub-prime mortgage fraud scheme, as charged in United States v. Aleksander Lipkin, et al., S2 06 Cr. 1179. LIPKIN was sentenced to 110 months in prison for his role as a leader of the mortgage fraud scheme as well as his involvement in another foreclosure rescue scheme charged in United States v. Maurice McDowall, et al..
According to the Indictment, other documents filed in the case, and statements made during the various guilty plea and sentencing proceedings:
From 2004 through January 2007, LIPKIN was a leader in a wide-ranging mortgage fraud scheme involving mortgage brokers and loan processors who worked at the Brooklyn mortgage brokerage firm, AGA Capital NY, Inc., and its successors, as well as real estate appraisers, loan account executives, a paralegal, a lawyer, straw buyers, and others. LIPKIN and his co-defendants submitted loan applications containing false information and material omissions, as well as other false documentation such as bank statements, to obtain loans that otherwise would not have been funded. For example, acting through straw purchasers, LIPKIN and his partner, GARRI ZHIGUN, purchased a block of ten rent-regulated condominium apartments in a building on Manhattan's Upper West Side. LIPKIN, GARRI ZHIGUN and their associates obtained mortgages for the straw purchasers to finance 100 percent of the purchase price of the Apartments. However, none of the documents submitted to the lenders disclosed that certain buyers were seeking to purchase more than one apartment as a "primary residence," or that the apartment was already occupied and therefore unsuitable for a primary residence, or that the apartment was subject to rent regulation laws.
Then, only months after initial purchase of the block of apartments, LIPKIN, GARRI ZHIGUN and their co-defendants resold, or "flipped," the apartments to other straw-buyers, at prices almost twice the amount of the initial purchase price. They did so by submitting false information and documents to various lenders, and thus obtained almost $13 million in additional loans. Most of those additional loans are now in foreclosure.
During the course of the mortgage fraud scheme, AGA Capital, and its successors, brokered over one thousand home mortgages and home equity loans with a total face value of at least $200 million dollars and earned at least $4 million in commission fees on the loans. The various lenders defrauded by the scheme have claimed actual losses of approximately $11.6 million on loans that have completed foreclosure.
Of the 27 defendants charged in United States v. Aleksander Lipkin, et al., 25 pleaded guilty; one of the defendants -- ALEXANDER KAPLAN -- was found guilty following a jury trial and is scheduled to be sentenced on September 10, 2009.
In addition to the 110-month prison term, LIPKIN, 30, was sentenced to five years' supervised release. Judge HOLWELL also sentenced LIPKIN to a concurrent term of 110 months' in prison for his role in a separate mortgage foreclosure rescue scheme to which LIPKIN pleaded guilty in United States v. Maurice McDowall, et al., 07 Cr. 1054. LIPKIN was also ordered to forfeit $7 million and pay approximately $11.6 million in restitution.
GARRI ZHIGUN and JOSEPH PAPERNY were sentenced by Judge HOLWELL on May 28, 2009. GARRI ZHIGUN, 32, supervised the operations of AGA Capital and was LIPKIN's business partner, as described above. GARRI ZHIGUN was sentenced to 100 months in prison, three years' supervised release, and was ordered to forfeit $2.5 million and pay approximately $11.6 million in restitution. JOSEPH PAPERNY, 36, was a mortgage broker and was sentenced to 30 months in prison, three years' supervised release, and was also ordered to forfeit $1 million and pay approximately $11.6 million in restitution.
GALINA ZHIGUN and FAINA PETROVSKAYA were sentenced by Judge HOLWELL on May 21, 2009. GALINA ZHIGUN, 55, was the record owner and registered broker of AGA Capital and was sentenced to 38 months in prison and three years' supervised release. In addition, GALINA ZHIGUN was ordered to pay a fine of $7,500, forfeit $1 million, and pay $1 million in restitution. PETROVSKAYA, 36, was a loan processor and was sentenced to time served, 30 months' supervised release with six months of home confinement, and was also ordered to pay a fine of $2,000.
JOHN GELIN, TOMER SINAI, and DANIEL MIKHLIN were sentenced by JUDGE HOLWELL on May 20, 2009. JOHN GELIN, 41, was one of the investors who recruited and used straw buyers to purchase real estate and created fake bank statements and other fraudulent documents to submit to lenders. GELIN was sentenced to 36 months in prison, three years' supervised release and was ordered to forfeit $1 million and pay approximately $11.6 million in restitution. SINAI, 31, was a licensed real estate appraiser who inflated appraisals for the defendants. SINAI was sentenced to 9 months in prison, three years' supervised release, and was ordered to forfeit $70,000. MIKHLIN, 32, was a mortgage broker and was sentenced to 27 months in prison, three years' supervised release, and was ordered to forfeit $240,000 and pay approximately $11.6 million in restitution.
February 27, 2009

BELLEVUE MAN SENTENCED TO SEVEN YEARS IN PRISON FOR MORTGAGE FRAUD SCHEME
Obtained More than $27 Million in Fraudulent Loans on 54 Home Sales

CHRISTOPHER G. BROOKS, 39, of Bellevue, Washington was sentenced today in U.S. District Court in Seattle to 84 months in prison, three years of supervised release and $2,491,956 in restitution for Conspiracy to commit Wire Fraud. BROOKS and his wife Amani Moss were arrested in July 2008, following a lengthy mortgage fraud scheme where they used straw buyers to purchase homes for a price above the homes’ actual value. The homeowners agreed to accept the inflated price, while returning the excess to a company that was controlled by BROOKS. BROOKS obtained more than $27 million in fraudulent loans on 54 different transactions.
At sentencing U.S. District Judge Ricardo S. Martinez noted the impact of BROOKS’ scheme and those of others like him saying, “one institution involved here has filed for bankruptcy, two are no longer in business, several others of the 15 banks or financial institutions that were identified as victims in this particular case have had to substantially reduce their workforce as a result of the collapse of the sub-prime mortgage industry. Is Mr. Brooks alone responsible for that? No, of course not. But his actions, his behavior, along with many others that jumped on this particular band wagon to commit fraud, set in motion this chain reaction of economic and financial adversity that spread not only throughout our entire country but to global financial markets as well.”
According to records filed in the case, between January 2005, and May 2007, while working as mortgage brokers, BROOKS created and licensed a business called Peachtree Development. Working with other co-conspirators, BROOKS identified properties where the seller would be willing to overstate the sales price, with the difference between the true sales price and the overstated price going to Peachtree Development. BROOKS and his wife Amani Moss would recruit straw buyers who had good credit to “purchase” the homes at the inflated price. The straw buyers would be paid $7,000 to $10,000. BROOKS would prepare false mortgage loan documents on behalf of the straw buyers and submit them to the lenders falsifying the straw buyers’ income and employment. The lenders made inflated loans to the straw buyers, the home seller was paid off, with the excess going to Peachtree Development. Ultimately, the straw buyers would default on the loans, leaving the lenders with significant losses.
March 3, 2009
Lanexa Area Man Sentenced on Attempted Coercion and Enticement of a Minor Charge
( Richmond , Virginia ) -
David J. Bishop, age 51, of Lanexa, Virginia, was sentenced today to 228 months in prison, followed by 10 years of supervised release. Bishop was found guilty of Attempted Coercion and Enticement of a Minor on December 1, 2008. Dana J. Boente, Acting United States Attorney for the Eastern District of Virginia, made the announcement after sentencing by United States District Judge James R. Spencer.
According to court documents, Bishop engaged in several sexually explicit conversations over the telephone with an adult female in Kansas posing as a 6 year-old girl. The individual, who had originally engaged in sexually explicit chats with Bishop online, recorded the conversations while working under the supervision of the Federal Bureau of Investigation. A subsequent forensic examination of Bishop’s computer seized during a search warrant execution at his residence also revealed hundreds of saved images of child pornography. During the sentencing hearing, the United States produced evidence that the defendant had sexually abused two young children, who were relatives of the defendant, over 30 years ago.
This case was investigated by the Federal Bureau of Investigation. Special Assistant United States Attorney Samuel E. Fishel of the Virginia Attorney General’s Office; and Assistant United States Attorney Brian R. Hood prosecuted the case on behalf of the United States.
New York, feb. 18, 2009
Four Indicted in Mortgage Fraud Scheme Involving Over $10 Million in Loans
LEV L. DASSIN,
the Acting United States Attorney for the Southern District of New York, and JOSEPH M. DEMAREST, JR., the Assistant Director-in-Charge of the New York Office of the Federal Bureau of Investigation, announced the unsealing of charges against SHARMON HOWELL, a/k/a "Sharmon Wade," DAVID MOORE, JUNE PERSAUD, and OSCAR ANCRUM, a/k/a "Red," a/k/a "Manny," for their roles in a "sub-prime" mortgage fraud scheme involving more than two dozen loans which totaled over $10 million. HOWELL, 35, of Queens, New York, was arrested earlier this morning in Manhattan and is expected to be presented later today in Manhattan federal court. PERSAUD, 45 of Brooklyn, New York, is expected to surrender to authorities tomorrow. MOORE, 40, of Brooklyn, New York, and ANCRUM, 54, of New York, New York, remain at large. According to the Indictment unsealed in Manhattan federal court earlier today:
From 2006 through 2007, HOWELL was the leader of a scheme to obtain dozens of home mortgage loans by fraud. Specifically, the defendants submitted to various banks and lenders mortgage applications and supporting documentation which contained false and misleading information. The defendants obtained over $10 million in sub-prime mortgages for individuals and on terms that the lender would not have approved had the defendants not submitted the fraudulent documents.
To further the fraud scheme, the defendants recruited individuals, or "straw buyers," to purchase properties in and around New York City. The straw buyers were recruited from, among other places, a halfway house in New York City that served individuals recently released from prison and a public housing complex in Brooklyn. The defendants told the straw buyers that, by purchasing the homes, they would be assisting sellers who were trying to save their homes from foreclosure and/or that purchasing the homes would be a good investment opportunity. Several of the straw buyers were also told that they would not have to worry about paying the mortgage because the defendants would make payments for several months, and thereafter would repurchase and/or sell the properties from the straw buyers.
The defendants typically obtained mortgages on behalf of the straw buyers for amounts greater than the actual sale price of the homes. To do so, the defendants obtained fraudulent appraisals for the homes, and misrepresented to the lenders various material facts about the straw buyers' income, assets, debts, and intent to live in the properties they were purchasing.
After obtaining these mortgages, the defendants distributed among themselves the difference or "spread" between the price of the house and the inflated value of the mortgage. Thereafter, in some instances, the defendants rented the property out and made mortgage payments for a time before allowing the mortgage to go into default; in other instances, the defendants simply failed to make mortgage payments as promised, resulting in the straw buyers of certain of the properties going into default on the mortgage. Currently the vast majority of the mortgages obtained by the defendants are in default and/or foreclosure.
Each defendant is charged with one count of conspiracy to commit bank fraud and wire fraud. In addition, HOWELL and MOORE are charged with six counts of bank fraud and two counts of wire fraud; PERSAUD is charged with two counts of bank fraud and one count of wire fraud; and ANCRUM is charged with two counts of bank fraud. The conspiracy charge and the bank fraud charges each carry a maximum potential sentence of thirty years in prison and a fine of the greater of $1 million, or twice the gross gain or loss resulting from the crime. Each wire fraud charge carries a maximum sentence of twenty years in prison and a fine of the greater of $250,000, or twice the gross gain or loss resulting from the crime.
The Indictment also seeks the forfeiture of $10 million from the defendants. The forfeitures represent the alleged proceeds obtained from the charged offenses.
Detroit Man Pleads Guilty to Scheme to Obtain Fraudulent Mortgages
A Detroit resident, who obtained and caused to be obtained numerous fraudulent mortgage loans, entered a plea of guilty to the charges of wire fraud and conspiracy to commit mail fraud and wire fraud, announced United States Attorney Terrence Berg.
Mr. Berg was joined in the announcement by Andrew G. Arena, Special Agent in Charge, Federal Bureau of Investigation, Detroit Field Office.
Myron L. Hooker, age 42, entered the guilty pleas in United States District Court before Judge Julian Abele Cook, Jr. Hooker pleaded guilty without a plea agreement and faces the statutory maximum penalty for the offenses: 5 years imprisonment and a fine of up to $250,000 for the conspiracy charge, and 20 years imprisonment and a fine of up to $250,000 for the wire fraud charge.
Information presented to the Court at the time of the pleas showed that Hooker conspired and agreed with other defendants charged in the case, to defraud and obtain money and funds from lending institutions, banks and individuals by means of false and fraudulent pretenses, representations and promises. In executing the conspiracy and scheme to defraud, Hooker obtained fraudulent mortgage loans on numerous properties in the Detroit metropolitan area and arranged to have the illegal proceeds and profits from those loans split between himself and his co-conspirators.
U.S. Attorney Terrence Berg said, “The conviction of Myron L. Hooker for mortgage fraud related crimes, underscores the seriousness with which my office, the Department of Justice, and the FBI take allegations of mortgage fraud, a growing criminal enterprise which has damaged the integrity of our real estate markets and undermined the ability of lending institutions to protect themselves from debilitating losses.”
According to information presented to the Court, beginning in January, 2003, Hooker orchestrated the fraud by coordinating and directing the activities of loan officers, straw buyers, collusive sellers, real estate appraisers, and closing agents, some of whom are also charged in the indictment. For instance, Hooker obtained falsely inflated appraisals on real estate and paid straw buyers to act as purchasers of the property. To bolster the straw buyer’s credit-worthiness, false income and asset documentation was provided by Hooker. Relying on the falsely inflated appraisals and fraudulent documentation, lending institutions approved and disbursed loans. These loans often subsequently went into default leaving the lending institutions with insufficient collateral and substantial losses, well in excess of $1,000,000.
A sentencing hearing was set by Judge Cook for August 20, 2009.
january, 23, 2009
DALLAS, Texas—Three Dallas businessmen, Mark Manners, Robert L. Loeb, and Andrew Siebert, who were involved in a massive mortgage fraud scheme that they ran in the area, were sentenced this afternoon by U.S. District Judge Barbara M.G. Lynn, announced James T. Jacks, acting U.S. Attorney for the Northern District of Texas.
Mark Manners was sentenced to 30 months in prison, followed by three years of supervised release, and ordered to pay $1,762,362.71 in restitution.
Robert L. Loeb was sentenced to 18 months in prison, followed by two years of supervised release, and ordered to pay $2,027,841,34 restitution.
Andrew Siebert was sentenced to 60 months in prison, followed by three years of supervised release, and ordered to pay $2,027,841.34 restitution.
Their co-defendant in the scheme, Charles Cooper Burgess, 53, was sentenced in March 2008 to nearly 22 years in prison and ordered to pay more than $3 million in restitution for his role in this mortgage fraud scheme and another scheme involving golf course property in Arkansas. Burgess pled guilty in January 2006 to his involvement in two fraudulent schemes, one involving mortgage fraud and one involving defrauding individuals who invested in golf course property in Arkansas. In November and December 2006, Burgess testified about Manners and Siebert’s extensive role in the mortgage fraud scheme. At the conclusion of that trial, both Manners and Siebert were convicted.
Regarding the mortgage fraud scheme, Burgess admitted that he recruited 20 straw buyers with good credit but limited funds to sign loan and closing documents to purchase homes. As part of a signed “investor management agreement,” Burgess promised to provide the down payment at closing as well as make all mortgage payments. When Burgess’s company needed additional funds for borrower down payments, Siebert agreed to steal bank escrow funds for the borrowers’ down payment. As part of the scheme, Siebert also falsified settlement document on at least 20 loan closings. Siebert only agreed to steal these escrow funds if Burgess agreed to pay Siebert $5000 from each closing as a “kickback payment.” Evidence at trial showed that Siebert stole escrow funds on 20 separate loans and then concealed the theft of these lender funds by falsifying loan closing documents.
Siebert stole lender funds held in escrow and then provided these funds to Manners prior to closing so that Manners could purchase a cashier’s check in the name of the straw buyer. When Siebert received the cashier’s check back from Manners, Siebert falsely certified to the lender on the settlement statement that the down payment came from the borrower. On the settlement statement, Siebert also fraudulently accounted for disbursements to Burgess’ company by falsely listing the expense as a phony lien pay off, or as a “marketing and relocation fee” due to Burgess’ company. Eleven different lenders testified at trial that Siebert falsified the settlement statements to conceal his wrongful and fraudulent release of lender escrow funds. Each lender testified that the loan would never have been funded if the lender had known about the fraudulent use of lender escrow funds.
From December 2002 through March 2004, Siebert stole escrow funds which resulted in the loss of $2,027,841 to 16 different lenders. As a result of Siebert submitting false certifications on settlement statements for each of these 20 loans, Siebert and Manners fraudulently induced the disbursement of loans totaling more than $7 million.
PHOENIX, Arizona—On April 8, 2009, Dustin Michael Thompson, 30, and Sean Paul McLaughlin, 29, were indicted on four counts of Wire Fraud and one count of Conspiracy to Commit Wire Fraud as a result of their involvement in a cash back mortgage fraud scheme. Thompson was arrested on March 13, 2009 in Las Vegas on a criminal complaint and is detained pending trial. McLaughlin received a summons to appear in federal court on the charges.
The case against the pair is based on an investigation which alleges that from October 19, 2005, through June 5, 2007, they conspired to commit mortgage fraud in the Phoenix area. Thompson and McLaughlin submitted mortgage loan applications on behalf of buyers, that included friends and family members, containing false information. Following the funding of the loans, Thompson and McLaughlin received cash back that they used for personal expenses and to perpetuate the scheme. Most of the homes purchased during the conspiracy have foreclosed.
A conviction for each count of Wire Fraud and Conspiracy to Commit Wire Fraud is punishable by a maximum term of 30 years in prison, a $1,000,000 fine or both. The investigation in this case was conducted by the Federal Bureau of Investigation and the Internal Revenue Service, Criminal Investigation Division. The prosecution is being handled by Kevin M. Rapp, Assistant U.S. Attorney, District of Arizona, Phoenix.
June, 23,2009
CHICAGO—Forty-one defendants are facing federal charges relating to various mortgage fraud schemes in five separate cases made public today by federal law enforcement officials. In some of the schemes, the defendants were charged with falsely inflating the values of dilapidated homes in urban areas. Other schemes feature a twist where defendants were charged with deals involving million-dollar condominiums in a Chicago high-rise and sprawling homes in affluent suburbs. A total of 37 individuals and four businesses, including a title company that closed on allegedly fraudulent loans, are facing new federal charges relating to mortgage fraud in five separate cases in Chicago, federal law enforcement officials announced today. The defendants include a vice president of the title company, mortgage brokers, loan officers, real estate investors, appraisers and an attorney. Together the cases involve more than $48 million in fraudulently-obtained mortgages issued by various lenders and secured by scores of residential properties in the Chicago area, including two in the suburbs of Wheaton and Glenview. As a result, the various lending companies suffered millions of dollars in losses after the loans went into default and the properties were foreclosed upon.
Among the cases announced today are:
nineteen defendants, including LaSalle Title Company and three other businesses, who allegedly schemed to fraudulently obtain loans totaling more than $10 million on 70 residential properties in Chicago, including many blighted homes on the city’s south side, resulting in losses totaling approximately $5.8 million to various mortgage lenders;
10 defendants accused of scheming to fraudulently obtain loans totaling more than $17.2 million on various multi-million-dollar condominiums and penthouses at 33 West Ontario St., known as Millennium Centre;
six defendants accused of fraud and using stolen or fictitious identities to fraudulently obtain approximately $3 million in home loans from various lenders by submitting false applications for loans; and
the chief executive of a Burr Ridge mortgage lender who allegedly defrauded GMAC Bank out of approximately $15 million in funding more than 450 fictitious residential loans.
“Mortgage fraud is a serious issue that affects not just financial institutions but ordinary citizens who may have invested in such financial institutions or who hope to purchase, sell or refinance a home by honestly setting forth their finances. Today’s charges also show that the mortgage fraud issue affects suburbs as well as cities,” said Patrick J. Fitzgerald, United States Attorney for the Northern District of Illinois
Mr. Fitzgerald announced the charges with Robert D. Grant, Special Agent-in-Charge of the Chicago Office of the Federal Bureau of Investigation, and Barry McLaughlin, Special Agent-in- Charge of the U.S. Department of Housing and Urban Development Office of Inspector General in Chicago.
Just a year ago, 67 defendants were charged in a dozen mortgage fraud-related cases in Chicago, and another two dozen defendants were charged in multiple cases this past March stemming from an undercover investigation in which law enforcement agents posed as straw buyers of houses. In addition, scores of other defendants have been prosecuted in dozens of routine cases in the last couple of years, signifying the high priority that federal law enforcement officials give mortgage fraud in an effort to deter others from engaging in crimes relating to residential and commercial real estate.
All of the charges announced today are felonies and carry various maximum penalties, including 30 years in prison and a $1 million fine on each count of mail and wire fraud if a financial institution was affected, or 20 years in prison and $250,000 fine if there was no financial institution impact. As an alternative, the court may impose a maximum fine totaling twice the gain to any defendant or twice the loss to any victim, whichever is greater. If convicted, the four business entities charged each face a maximum penalty of five years probation and a $500,000 fine. If convicted, the Court would determine the appropriate sentence to be imposed under the advisory United States Sentencing Guidelines.
The public is reminded that indictments contain only charges and are not evidence of guilt. The defendants are presumed innocent and are entitled to a fair trial at which the government has the burden of proving guilt beyond a reasonable doubt.
Details of the cases announced today follow:
United States v. Lisnek, et al.
In one of the most comprehensive mortgage fraud schemes ever charged in Chicago, a Buffalo Grove couple, acting through two real estate investment companies they controlled, allegedly directed a scheme in which 15 individual defendants and four businesses purchased distressed properties, including from the U.S. Department of Housing and Urban Development, and then resold them for fraudulently inflated prices approximately two to three times the purchase price. Between 2002 and 2007, the defendants allegedly fraudulently obtained mortgage loans in excess of $10 million on approximately 70 residential properties throughout Chicago, including many on the city’s south side in and around the Englewood neighborhood. As part of the alleged scheme certain defendants paid other defendants to make homes “camera ready,” by making them appear as though they had been rehabilitated.
Richard Lisnek, 56, a licensed mortgage broker and president of K&L Real Estate, Inc., and American Eagle Mortgage, Inc., and his wife, Judy Kien, 50, an attorney and president of D&J Properties II, Inc., both of Buffalo Grove and who had offices in Arlington Heights, together with 4 13 other individuals and two other businesses, were charged with various counts of mail fraud and wire fraud in a 22-count indictment that was returned today by a federal grand jury. Other defendants include another mortgage broker, three real estate appraisers, a title company and one of its vice presidents. Lisnek and Kien allegedly provided funds to buyers, which they falsely represented to lenders were the buyer’s own funds for down payments. Various other defendants allegedly made false representations concerning the buyer’s employment, financial condition, contribution towards the purchase price and intention to occupy the home, and the sales price, condition and value of the property. After fraudulently obtaining the loans, the victim lenders incurred losses totaling approximately $5.8 million because they were unpaid, causing the residences to be foreclosed upon and resold for amounts less than the outstanding mortgage loan balance. The indictment seeks forfeiture of the alleged loss amount.
According to the indictment, Lisnek solicited individuals with good credit to buy distressed properties from K&L Real Estate and D&J Properties by promising that they would not have to invest any of their own money and promising to repair the property and make the mortgage payments until the home was restored or provide funds to rehabilitate the property and assist in obtaining tenants under HUD’s Section 8 subsidized housing program.
Lisnek recruited Alfredo Hilado, 50, of Bloomington, Ill., and Mark Vargo, 53, of Elmhurst, to recruit other buyers, knowing the transactions would be financed by making false statement to mortgage lenders. Lisnek paid Vargo and others to make the distressed properties appear what Lisnek called “camera ready” or “picture ready” by making cosmetic repairs to front and rear exteriors so the homes would look fully restored or better than their actual condition.
Three licensed real estate appraisers, James Heiland, 63, of Barrington Hills; Brandon Bradford, 37, of Chicago; and Vlad Ostromogilsky, 38, of Glenview, allegedly prepared inflated appraisals, falsely representing that those properties were fully rehabilitated, knowing that they would be used to support fraudulent loan applications.
Lisnek and licensed mortgage broker Alex Bulmash, 32, of Lincolnwood, president of Investment Group, Inc., which operated as Investment Mortgage Group (IMG) in Lincolnwood and Skokie, allegdly caused employees of IMG including Bulmash’s brothers, Michael Bulmash, 29, of Norridge, and Allen Bulmash, 29, of Chicago, and Anthony Navickas, 28, of Chicago, to prepare and submit false loan applications and supporting documents, such as verifications of deposit and rent and property leases, on behalf of buyers of distressed properties from K&L and D&J.
Lynn Liskiewicz, 48, of Chicago, a vice president and regional manager of LaSalle Title Company, located at 100 North LaSalle St., Chicago, allegedly caused Lasalle Title to close sales by K&L, D&J and Lisnek by creating false closing documents concealing that the down payments represented as the buyer’s funds were actually provided by the sellers, that the purchase price was inflated, and that lenders were being deceived into financing all or a greater portion of the sale than portrayed for buyers with little or no equity in the property being purchased. The fraudulent closings included Kien signing settlement statements, known as HUD-1s, on behalf of sellers falsely representing the source of the buyer’s funds.
Hilado, Vargo, and additional defendants Joanne Ruiz, 47, of Elmhurst; Kenneth Turner, 32, of Woodridge; and Antoinette Laws, 47, of Chicago, purchased property from K&L and D&J knowing that they and others signed false loan applications to fraudulently obtain mortgages.
The indictment seeks forfeiture of $5.8 million from the defendants. All 19 defendants will be ordered to appear for arraignment in U.S. District Court. The Government is being represented by Assistant U.S. Attorneys Brian Netols and Steven Block.
United States v. Askar, et al., (08 CR 0036)
Ten defendants were charged with one or more counts of wire fraud in a 23-count indictment returned June 16 and unsealed later last week after several defendants were arrested in connection with an alleged mortgage fraud scheme involving seven condominiums and two penthouses at “Millennium Centre,” located at 33 West Ontario, Chicago. The developer of the 59-story building containing some 350 luxury residences offered units ranging in price from approximately $618,500 to $2.1 million.
Mhde Askar, 23, of Chicago, and Mahmoud Saleh, 35,of Hinsdale, operated M&M Millennium Management Company and participated in an incentive program offered by Millennium Centre’s developer, through which M&M received from the developer at the time of purchase a rebate equal to up to three years of mortgage payments, without being required to return any of the rebated money if M&M sold the unit within the three-year period.
Between July 2004 and December 2006, Askar, Saleh and their co-defendants allegedly fraudulently obtained more than $17.2 million in loans to purchase the nine Millennium Centre units. Askar and Saleh purchased the units in Askar’s name or the name of nominee buyers to obtain a rapid and high financial return through the rebated mortgage payments, and then resold the units at increased prices to nominee buyers through fraudulently obtained mortgages, retaining both the rebated mortgage payments and the resale profits.
Askar, Saleh, Advar Shaltapour, also known as “Eddie Shaltapour,” 39, of Chicago; Manuel Aguilar, 48, of Chicago; Catherine Kirk, 43, of Chicago; Warren McKeithen, 48; Nancy S. Praseuth, 32, of Huntley; Margarita Garcia, 34,of Elk Grove; and David Ibarra, 43, of Chicago, either recruited others or served as nominee buyers by promising or being promised that they would not have to provide any of their own money, they would received cash back at closing, others would make mortgage payments on their behalf, and the property would be in their name for only approximately a year before it was sold.
Askar, Saleh, Aguilar, Kirk and McKeithen submitted and caused others to submit false mortgage loan applications concerning nominee buyer’s employment, income, assets and intention to occupy the residence being purchased, including to Ahmad Karkukly, 33, of Palatine, who was a loan officer at Countrywide Home Loans, Inc. Karkukly allegedly used his position to obtain approval of fraudulent loan applications on behalf of Askar, Praseuth, and Garcia, among others.
Askar, Shaltapour and Karkukly were released on bond after being arrested on these charges. Saleh remains in federal custody pending a detention hearing. Arrest warrants are outstanding for Aguilar and Ibarra, while Kirk, McKeithen, Praseuth and Garcia will be ordered to appear for arraignment at a later date in U.S. District Court.
The indictment seeks forfeiture of $17,203,221 from the defendants.
The Government is being represented by Assistant U.S. Attorney Diane MacArthur.
United States v. Okulaja, et al., (08 CR 0179)
Six defendants were charged with one or more counts of wire fraud in a three-count indictment returned June 16 and unsealed later last week after several defendants were arrested in connection with an alleged mortgage fraud scheme involving the purchase of two multi-million-dollar single-family residences in suburban Wheaton and Glenview. Between February and September 2007, the defendants allegedly fraudulently obtained loan proceeds totaling $3,393,435 from Countrywide Home Loans and Washington Mutual Bank FA (WAMU).
Regarding the Wheaton residence, the indictment alleges that in February 2007, Lilya Domnenko, 43, of Wheaton, agreed to purchase 919 Arbor Lane, which her husband, Viktor Domnenko, 48, of Wheaton, had built through his construction company, Creative Builders. Lilya Domnenko submitted loan applications to WAMU for $990,000 and $241,000, falsely stating that she was an employee of Creative Builders and earned $37,500 a month. Viktor Domnenko allegedly received approximately $80,000 of the fraudulently obtained loan proceeds after the sale.
In June 2007, Olanrewaju J. Okulaja, 29, of Chicago, asked Festus Segbawu, 49, of Oak Park, to recruit a nominee buyer to purchase 919 Arbor Lane from Lilya Domnenko. Segbawu and Al Holman, 39, of Berwyn, recruited an individual to use a stolen identity and introduced this individual to Okulaja, who allegedly paid another individual to obtain false employment information to support the bogus nominee purchaser’s loan application.
Okulaja and Mhde Askar, 23, of Chicago, allegedly helped prepare and submitted to Countrywide a fraudulent loan application for $1.15 million, falsely stating that the nominee purchaser was employed, had substantial monthly income, savings and funds for the down payment, which, in fact, were provided by Askar, according to the indictment.
At the closing on June 25, 2007, Lilya Domnenko endorsed a check for her sale proceeds of $129,490 and gave the funs to Okulaja and Askar, knowing that they had no disclosed connection to sale of 919 Arbor Lane, the indictment alleges. Approximately two months later, Viktor Domnenko gave Okulaja and Holman checks for $10,000 and $30,000, respectively, as additional payment for recruiting the nominee buyer of the residence.
Regarding the Glenview residence, in 2007 Okulaja and others allegedly recruited a nominee buyer to purchase a residence at 1619 Sunset Ridge. Again, Okulaja and Askar allegedly helped prepare and submitted to WAMU a fraudulent loan application for $2.3 million, falsely stating that the nominee purchaser was employed, had substantial monthly income, savings and funds for the down payment, which, in fact, Okulaja and Askar knew were provided by another individual who expected to receive an eight percent profit on the short term use of the funds.
At the closing on Sept. 21, 2007, Okulaja and Askar caused the title company to issue two checks—one for $674,830 payable to a company that Okulaja had created to make his receipt of loan proceeds appear legitimate and which he shared with Askar and another individual, the indictment alleges, and a check for $730,000 payable to a company controlled by the individual who had provided the funds that were used by the nominee buyer.
Lilya and Viktor Domnenko, and Askar are free on bond following their arrests in this case. Okulaja remains detained in federal custody, while an arrest warrant is outstanding for Segbawu. Holman is scheduled to be arraigned along with Okulaja and Askar on June 26 in U.S. District Court.
The indictment seeks forfeiture of $3,393,435 from the defendants.
The Government is being represented by Assistant U.S. Attorney Diane MacArthur.
United States v. Luckett
Lawrence A. Luckett, formerly chief executive officer and 25 percent owner of the former Home Mortgage, Inc., in Burr Ridge, was charged with bank fraud in a criminal information filed today. Luckett, 52, of Chicago, and formerly of Lemont, will be ordered to appear for arraignment at a later date in U.S. District Court.
According to the charges, Home Mortgage funded loans it made by borrowing money from other lenders. After issuing a mortgage, Home Mortgage sold the loan to a third party, typically a financial institution that invested in mortgages, and used the proceeds from the sale of the loan to repay its lender. Between August 2007 and March 2008, Luckett and an employee he directed allegedly submitted requests to GMAC Bank and an affiliated lender for more than 450 fictitious residential mortgage loans, causing GMAC a loss in excess of $15 million.
As part of the scheme, Luckett and his employee allegedly fabricated and submitted to GMAC documents relating to borrowers, biographical and property information for non-existent loans purportedly to be made by Home Mortgage. Instead of using the money advanced by GMAC to fund loans, Luckett allegedly used the money to continue operations of Home Mortgage and to pay various personal expenses.
The charges also seek forfeiture of $15 million. If convicted, bank fraud carries a maximum penalty of 30 years in prison and a $1 million fine.
The Government is being represented by Assistant U.S. Attorney David Glockner.
United States v. Beck, et al.
Six defendants were charged with one or more counts of wire fraud in a nine-count indictment returned today for allegedly engaging in a $3 million mortgage fraud scheme in the Chicago area. The indictment alleges that between February and December 2006, Alshawntus Beck, 35, of Plainfield, operated three companies—Compass Investments and Development Corp., 3834 West Maypole Inc., and West Horizon Construction, which purported to be in the business of buying, repairing and reselling real estate.
Assisted by Michelle Parker, 41,of Chicago, a loan officer at an area mortgage broker, Beck allegedly brought three nominee buyers to the brokerage to apply for loans to purchase from him three condominium units located at 3834 West Maypole in Chicago. Steven Corbett, 41, allegedly fraudulently applied for loans using the fictitious identity “Al Spann;” while Kevin Keller, 43, and Jimmie D. Johnson, 38, all of Chicago, allegedly fraudulently applied for loans using stolen identities. Beck also allegdly recruited Otis Robinson III, 29, of Chicago, to create false real estate appraisals inflating the value of properties that Beck bought for himself and through nominees.
According to the indictment, Parker obtained false verifications of rent for Corbett and Buyer A. Similarly, Beck obtained forged documents falsely stating that Corbett was an employee of West Horizon Construction, and that Buyer A was an employee of Compass Investment and Development Corp., and Parker submitted the false documents to a lender to fraudulently obtain the loans. Parker also submitted to a lender a forged document provided by Beck that falsely stated that Keller had approximately $8,000 in a bank account that did not exist.
As part of the scheme, Parker also processed false loan applications for Keller, using a stolen identity, to purchase properties 3817 West Maypole and 6828 South Indiana in Chicago. The loan application for the Maypole residence was supported by a forged document that Beck provided, which falsely stated that Keller was an employee of West Horizon Construction, the indictment alleges. The loan application for the Indiana Avenue residence was supported by a falsely inflated appraisal, allegedly created by Robinson using the name of a real estate appraiser whose identity Robinson had stolen.
The indictment also alleges that Beck purchased two properties in his own name: 3849-51 West Maypole and 2023 North Bingham in Chicago. The application for the loan to purchase the Maypole property was supported by a false verification of rent provided by Parker, and both loan applications were supported by falsely inflated appraisals provided by Robinson. Four months after buying 2023 North Bingham, Beck sold the property to Buyer B for a price that was 56 percent higher than Beck had paid by using another falsely inflated appraisal provided by Robinson, the charges allege.
The indictment seeks forfeiture of $3 million from the defendants. Arrest warrants were issued for all six, who will also be ordered to appear for arraignment at a later date.
f
ebruary,19, 2009
CHICAGO —Six Chicago area defendants were indicted on federal charges for allegedly fraudulently obtaining more than $10 million in mortgage loan proceeds from various lenders by submitting false loan applications and supporting documents, federal law enforcement officials announced today. The defendants, who include loan officers, processors, a contractor and an unlicensed appraiser, were each charged with one or more counts of mail, wire or bank fraud in an eight-count indictment that was returned by a federal grand jury yesterday. As part of the alleged scheme, the indictment specifies eight residential properties—seven of them on the south side of Chicago—upon which mortgage loans were fraudulently obtained between 2002 and 2007.
Two of the defendants, Deangelo McMahan, 36, of Hazel Crest, and Fred Haywood, 37, of Chicago, both of whom were loan officers for various mortgage lenders, were initially indicted in December. Four new defendants are Rita McKenzie, 39, of Round Lake Beach, a loan processor; Steve Young, 51, of Flossmoor, a loan officer; Carl McMahan, 42, of Round Lake Beach, Deangelo McMahan’s brother who operated a purported home re-construction business; and Sumira Persaud, 32, of Blue Island, an unlicensed appraiser. Arrest warrants have been issued for McKenzie and Carl McMahan, while the others will be ordered to appear for arraignment at a later date in U.S. District Court, including Deangelo McMahan and Haywood, who were previously released on bond.
According to the indictment, the defendants schemed to arrange for buyers with good credit, but insufficient income, to purchase homes by promising them money for acting as nominees, knowing that in most cases the buyers did not intend to occupy the homes as their primary residences or fulfill any long term payment obligations. The defendants and others caused false information to be included in mortgage loan applications regarding the applicant’s income, assets, employment, intention to occupy the home and the source of the down payment so the applicant would falsely appear to qualify for a loan. They also allegedly schemed to create false appraisals that did not reflect the fair market value of the properties and were designed to create excess value. In some instances the defendants funneled excess cash they generated from inflated appraisals on the properties to sham businesses they had created, while other times they flipped the properties from one sale to another to make a profit, the charges allege.
The indictment also seeks forfeiture of $2,383,020, which reflects the loss suffered by various mortgage companies that were victims of the alleged fraud scheme.
The charges were announced by Patrick J. Fitzgerald, United States Attorney for the Northern District of Illinois; Robert D. Grant, Special Agent-in-Charge of the Chicago Field Office of the Federal Bureau of Investigation; and Thomas P. Brady, Inspector-in-Charge of the U.S. Postal Inspection Service in Chicago.
The government is being represented by Assistant U.S. Attorney Jason Yonan.
Each count of mail and wire fraud carries a maximum penalty of 20 years in prison and a $250,000 fine, while bank fraud carries a maximum penalty of 30 years in prison and a $1 million fine. The Court, however, would determine the appropriate sentence to be imposed under the advisory United States Sentencing Guidelines.
july 16, 2009 ORLANDO, FL
United States Attorney A. Brian Albritton announces that Garry S. Martin (age 36, of Orlando) has pleaded guilty to conspiring to commit money laundering in connection with various mortgage fraud schemes. Martin faces a maximum penalty of 20 years in federal prison.
According to the plea agreement, Martin was convicted in the United States District Court for the Eastern District of New York in 2006 for engaging in mortgage fraud. Martin had made several applications to secure mortgages from Citimortgage, Inc., a subsidiary of CitiBank. Those applications contained several false statements, including inflated values for the borrower’s income and assets.
The terms of Martin’s supervised release for his 2006 conviction prohibited him from offering various real estate services. After Martin had been placed on supervised release in the Middle District of Florida, however, he maintained his real estate sales agent license and obtained his real estate brokers license. He also formed various companies, including Antigua Housing and Management, Inc. (“Antigua H&M”), Antigua Real Estate, Antigua Abstract LLC (“Antigua Abstract”), GSM Financial LLC, and Savvy Professional Title Company (“Savvy”), each with its principal office listed as 5449 South Semoran Boulevard, Suite 200, Orlando, Florida. Through those companies, and up until August 2008, Martin conducted various schemes, including foreclosure fraud, reverse mortgage fraud, and completely sham transactions, to defraud financial institutions out of more than $5 million.
Through Antigua H&M, Martin obtained money from people facing foreclosure by promising that Antigua would bring their past due mortgages current through refinancing and forward their payments to their lenders. He then used the foreclosure payments himself and did not pay the banks.
Through Savvy and Antigua Abstract, Martin marketed reverse mortgages to seniors, sent fraudulent financing packages to support the mortgage applications, arranged the mortgage closings himself, and then diverted mortgage proceeds to his personal use. Martin also created wholly fictitious agreements between fake buyers and fake sellers to receive mortgage proceeds.
This case was investigated by the Federal Bureau of Investigation (FBI), Internal Revenue Service (IRS), and Orange County Sheriff's Office. It is being prosecuted by Assistant United States Attorney Vincent A. Citro.
This case is part of the Middle
Cape Coral Man Sentenced for Role in $30 Million Mortgage Fraud Case
FORT MYERS, FL
—U.S. Attorney A. Brian Albritton announces that U.S. District John Steele today sentenced Ronald Luczak (age 37, of Cape Coral) to 22 years in federal prison for his role in a large mortgage fraud scheme. Luczak must also pay approximately $5.9 million in restitution to his victims. He had pleaded guilty to wire fraud and money laundering charges on September 10, 2008.
According to court documents, between September 2005 and December 2006, Luczak and his company, Cape Coral Equity and Development (CCEDG), obtained more than $30 million worth of mortgages on at least 37 Cape Coral properties. Despite that CCEDG was responsible for making the mortgage payments, CCEDG recruited 33 “straw buyers” and reported on the mortgage applications that the straw buyers were purchasing the properties. CCEDG also falsely inflated the properties’ values, fraudulently reported the purported buyers’ incomes, provided false schedules of real estate and assets supposedly owned by the buyers, falsely reported the buyers’ occupations and employment, and falsely stated that the buyers intended to use the properties for their primary residences. Luczak paid the straw buyers’ mortgage obligations with other straw buyers’ mortgage proceeds in a Ponzi-type arrangement.
Luczak and CCEDG personally received more than $5.8 million from the scheme.
Luczak’s wife, Lisa Luczak and Sandra Mainardi, a New Jersey loan processor, previously were sentenced to 46 months each for their part in the scheme.
This case was investigated by the Internal Revenue Service (IRS), with the assistance of the Federal Bureau of Investigation (FBI). It was prosecuted by Assistant United States Attorney David Haas.
This case is part of the Middle District of Florida’s Mortgage Fraud Surge, a joint effort by the U.S. Attorney’s Office for the Middle District of Florida, the Federal Bureau of Investigation, Tampa and Jacksonville Divisions, and numerous other federal, state, and local law enforcement agencies. The Surge focuses intensive investigative and prosecutorial resources on the mortgage fraud crisis that plagues middle Florida and has contributed to the current economic situation nationwide. It is designed to accelerate mortgage fraud cases, to bring perpetrators to justice quickly and provide maximum deterrence. For more information on the Middle District of Florida’s Mortgage Fraud Surge, please contact Steve Cole, Public Affairs Officer for the United States Attorney’s Office.
19 february, 2009
Tampa , Florida -A federal jury today found LARRY P. NARDELLI (age 49, of Tampa ) guilty of six of eight counts in which he was named as a defendant in a 47-count indictment. The maximum penalty NARDELLI faces is 135 years' imprisonment and a $4.5 million fine. The sentencing hearing is scheduled for June 15, 2009 . NARDELLI was indicted on July 24, 2008 , along with three other co-defendants. According to testimony and evidence presented at trial, NARDELLI, operating through Bay Area Holdings Group and Elba International, entered into several bogus purchase/sale contracts with co-defendant MICHAEL A. TRINGALI, operating through G & T Land Development. They pretended that NARDELLI had made down payments totaling $21.5 million to purchase properties owned by TRINGALI, all for the fraudulent purpose of providing an apparent source of funds which TRINGALI, in applying for loans at federallyinsured banks, could point to as equity to be contributed toward the purchase of three of the seven properties described in the indictment. The evidence presented at the trial established that the conspirators created a scheme in which they agreed that co-defendant NEIL MOHAMED HUSANI, operating through Capital Force, Inc., would enter into a contract with a seller to purchase vacant land in the Sarasota area and then would immediately flip the property to co-defendant TRINGALI at approximately double the price. Co-defendant TRINGALI then applied for a loan at a federally-insured bank to obtain funding for the purchase. Relying on the sham contracts entered into with defendant NARDELLI, TRINGALI falsely represented to the various banks that he had the required equity, typically approximately 35% of the value of the land, to contribute toward the purchase of the property. TRINGALI also submitted false financial information about himself and his company. Co-defendant JOHN A. YANCHEK, in his capacity as the closing attorney for the conspirators, prepared false escrow letters and closing documents. As a result of the criminal activities of the conspirators, the victim banks unwittingly loaned TRINGALI monies totaling approximately 140% of the value of the land. The conspirators purchased the vacant land from the seller and distributed the excess funds among themselves in various amounts. Ultimately, TRINGALI was unable to pay off the loans. On February 4, 2009 , co-defendant YANCHEK (age 49, of Sarasota ), a practicing attorney licensed by the State of Florida , pleaded guilty to three counts charging him with conspiracy, making false statements to a federally-insured bank in connection with loan, and money laundering. He is awaiting sentencing. No date has been set. On November 3, 2008 , co-defendant TRINGALI (age 46, of Sarasota ) pleaded guilty to conspiracy to make false statements to federally-insured banks in connection with loans, to commit bank fraud, and money aundering. TRINGALI is scheduled to be sentenced on March 9, 2009 .
Co-defendant HUSANI (age 38, formerly of Sarasota ) is a fugitive who was recently arrested in Jordan . Efforts are underway to have him extradited back to the Middle District of Florida to be prosecuted.
The total face amount of the commercial loans fraudulently obtained from seven banks was $82.7 million. This investigation was conducted jointly by Federal Bureau of Investigation and the Internal Revenue Service, Criminal Investigation. The investigation is continuing. The case is being prosecuted by Assistant United States Attorney Terry A. Zitek
may, 11, 2009
Sarasota Attorney Sentenced in Mortgage Loan Fraud

TAMPA, FL—United States Attorney A. Brian Albritton announces that United States District Judge James D. Whittemore today sentenced John A. Yanchek (age 49, of Sarasota) to five years in federal prison for a conspiracy to commit loan fraud, bank fraud, and money laundering. The court also ordered Yanchek to forfeit $7.6 million. Yanchek had pleaded guilty on February 4, 2009.
According to court documents, Yanchek was a licensed Florida attorney who did business as the law firm of John A. Yanchek, P.A., in Sarasota, Florida. Yanchek represented G & T Land Development LLC and Steeplechase Properties LLC, legal entities owned and/or controlled by his co-conspirators, that purchased and developed commercial real estate in the Sarasota area. Yanchek also functioned as a closing agent.
According to the plea agreement, Yanchek entered into a conspiracy to make false statements to federally-insured banks in connection with applications for commercial loans used to purchase vacant land in the Sarasota/Manatee area for development. The object of the conspiracy was to obtain enough loan money to allow the conspirators to purchase the property without contributing any equity of their own and to receive excess loan proceeds for their personal use. Yanchek, as the closing attorney for the loans, made false statements to the banks regarding the financial resources of the borrower, the amount and source of equity contributed by the borrower, compliance with the seller's obligation to provide marketable title to the property, and distribution of the loan proceeds.
Yanchek cooperated with the government and testified at the jury trial of his codefendant,Larry P. Nardelli, who was convicted on February 19, 2009 and is awaiting sentencing.Yanchek's co-defendant Michael A. Tringali also has pleaded guilty and has cooperated with the government. Tringali received a 41-month sentence.
Yanchek's co-defendant Neil M. Husani remains a fugitive.
Former Cape Coral Woman Sentenced for Role in $30 Million Mortgage Fraud Case
april, 16, 2009
FORT MYERS, FL—U.S. Attorney A. Brian Albritton announced today that U.S. District Judge John Steele has sentenced Lisa Luczak (age 33) to three years and 10 months in federal prison for her role in a complex mortgage fraud scheme. Sentencing for her husband and co-defendant, Ronald Luczak (age 37), was postponed as a result of Mr. Luczak moving to withdraw his previously entered plea of guilty. Both had pled guilty on September 10, 2008.
According to court documents, between September 2005 and December 2006, the Luczaks and their company, Cape Coral Equity and Development (CCEDG), obtained more than $30 million from mortgages on at least 37 properties located in Cape Coral. The properties were purchased by 33 “straw buyers” that CCEDG recruited into the investment scheme. CCEDG obtained these mortgages by making misrepresentations during the loan application processes. These misrepresentations included inflation of property values, fraudulent incomes, false schedules of real estate/assets owned, falsely stating that intended use of the property was for primary residence instead of as an investment property, false occupations/employment, and failure to disclose that CCEDG would be responsible for the making the mortgage payments.
The Luczaks and CCEDG received more than $5.8 million from the fraudulently obtained mortgages. The Luczaks paid the straw buyers mortgages with subsequent straw buyers’ loan proceeds in a Ponzi-type scheme.
april,28, 2009 Tampa, FL—United States Attorney A. Brian Albritton announces that U.S. District Judge James S. Moody today sentenced Victor Thomas Clavizzao (age 46, of St. Petersburg) to 5 years in federal prison for conspiring to commit mortgage fraud. The court also ordered Clavizzao to pay $2,074,895.60 in restitution and to forfeit an additional $5,946,300. Clavizzao had entered a guilty plea on September 23, 2009.
According to court documents, Clavizzao acted as mortgage broker in the purchase of 13 different properties. Clavizzao conspired with other to submit false and fraudulent information (e.g., fraudulently inflated income) to various lenders in order to induce the lenders to fund bad loans.
Clavizzao’s co-defendant, Mark Lepzinski (age 51, of Clearwater) a Pinellas property flipper who obtained fraudulent loans with Clavizzao's help, was previously sentenced by U.S. District Judge James D. Whittemore to 13 months in federal prison for his role in the conspiracy.

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