SEP 6, 2012

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Compliance Matters

Actor Tommy "Tiny" Lister Pleads Guilty to Mortgage Fraud

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Sardariani also admitted that in relation to another loan, he falsely told the lender that the loan was needed only briefly to extend a pre-existing escrow related to the purchase of a hospital and would be returned to the victim-lender at the close of the pre-existing escrow less than one month later. In fact, as Sardariani admitted, he did not intend to use the loan proceeds in connection with the purchase of a hospital, nor did he intend to leave the money untouched in the escrow account. Sardariani used the loan proceeds to place bets on horse races. After the lender wired $2.5 million to the escrow account that Sardariani had designated, Sardariani instructed the escrow officer to wire the funds to a Hong Kong bank account to fund the gambling. The escrow officer, Wanda Tenney, who was also charged in the case, pleaded guilty to conspiracy on Nov. 30, 2011. Sardariani’s gambling partner Christopher Woods, who was charged with money launderig in a related case, has also pleaded guilty. (usattycdca82812)

MORAL

I wonder if any of the lenders thought of doing a title search before loaning the money.

 CALIFORNIA MAN PLEADS GUILTY TO MORTGAGE ELIMINATION SCAM

FACTS

On Aug. 28, Ernesto Diaz, a South El Monte man who formerly worked as a Realtor, agreed to plead guilty in Los Angeles Federal Court to a federal mail fraud charge in a scheme that falsely promised to eliminate mortgage debts for approximately 200 distressed homeowners who each paid a $15,000 fee. Instead of working on behalf of the homeowners, the man simply sent worthless “Sovereign Citizen” paperwork to lenders—paperwork that did nothing to affect the mortgage of a single homeowner.

As part of the agreement, Diaz has agreed to cooperate in an ongoing investigation into his company, Crown Point Education Inc.

Diaz joined the Crown Point scheme in March 2010 after the company had been in business for approximately one year. Diaz spoke at seminars to recruit distressed homeowners and to train salespersons in the Crown Point program.  Diaz admitted that he and others promised distressed homeowners at these seminars that, in exchange for fees that were generally $15,000 per property, Crown Point would eliminate the homeowners’ mortgages within six to eight months through a secret process that involved sending packets of documents to lenders.

Even though he told victims that he could eliminate their mortgage woes, Diaz admitted in his plea agreement that the process had never been successful. Diaz failed to tell distressed homeowners that earlier Crown Point clients—including Diaz’s own brother—had lost their houses to foreclosure and been evicted from their houses.

Diaz admitted that another person affiliated with Crown Point filed bankruptcy documents in the names of Crown Point clients to delay foreclosure and eviction. Diaz acknowledged that Crown Point filed many bankruptcy documents without the knowledge of the company’s clients and that signatures of debtors and notaries were forged on many documents filed with the Bankruptcy Court.

Diaz admits that approximately 200 homeowner-victims paid Crown Point nearly $2.5 million for help they did not receive. The claims made to distressed homeowners were based on discredited “Sovereign Citizen” claims that mortgages are invalid because the banks did not actually lend the money used to fund mortgages and the notes were securitized.

The charge of mail fraud carries a maximum statutory penalty of 20 years in federal prison. (usattycdca83112)

MORAL

I would think if he pleads guilty as part of a plea agreement he is looking at time. However, the fact that it is filed now and he has been co-operating for some time leads me to the opinion that more indictments are coming down the road and the other people involved should seek legal counsel now since they will undoubtedly be indicted later.

Over the past three fiscal years, the Justice Department has filed more than 10,000 financial fraud cases against nearly 15,000 defendants, including more than 2,700 mortgage fraud defendants.

CALIFORNIA MAN GETS 18 YEARS AND ACCOMPLICE GETS 12 YEARS IN FEDERAL PRISON FOR MORTGAGE FRAUD

FACTS

Kenneth Powell, a defendant who pleaded guilty to what prosecutors say was one of the largest real estate fraud cases in Ventura County, said in court that his only goal was to make real estate profits for himself and his investors.  But the judge didn't believe Powell and called the case a "classic Ponzi scheme," saying people lost their life savings and some lost their houses.

Powell received 18 years in prison, while co-defendant Kathryn “Katie” Rose got 12 years and eight months.

Powell and Rose were known as "Ken and Katie" when they hosted weekend infomercials called "Academy of Real Estate," "Money Intelligence" and "The Ken & Katie Show" on KVTA-AM 1520, authorities said.

The preliminary hearing for a third defendant, Paul Charles Lascola, 70, was set for Oct. 10.

Prosecutors said just under $3 million was stolen from 15 people in Ventura, Santa Barbara and Los Angeles counties. The victims were asked to invest in the development of vacant lots or in loans secured by real estate, prosecutors said. But virtually no construction took place on the lots, and some of the borrowers had pending foreclosures or bad debts, prosecutors said. Bank records showed that new investment money was used to pay earlier investors, prosecutors said.

Prosecutor Miles Weiss had said no stolen money has been recovered.

Rose pleaded guilty to 13 felony counts, including grand theft and theft from an elderly person. Powell pleaded guilty to 15 similar white-collar felony counts.

Some of the victims appeared in court and told the judge how the financial losses have affected their lives. Jack Bertsch said he lost more than $1 million. After being diagnosed with cancer, he wanted to invest some of his money to make sure his wife would be financially secure. Bertsch said he listened to Powell and Rose on the radio and that the investment sounded like a good deal. He said he was taken advantage of and persuaded to refinance his houses to invest money.

Comments (1)
And some think it's the Dodd Frank rules that made them go under.
Posted by Anonymous | Monday, September 10 2012 at 3:11PM ET
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