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Having an Anti-Money Laundering Policy

NOV 1, 2012 4:38pm ET
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Real estate escrow officer Billie Bishop was found not guilty in the jury trial. The co-defendant that went to trial with her was convicted of making a false statement to a bank. Bishop was the only defendant who was cleared. She had been charged with wire fraud and making a false statement to a bank.

Prosecutors had alleged that Bishop played a key role in the scheme by processing 77 fraudulent real estate transactions. The scheme involved the ring paying more than the asking price for homes. The extra amount was supposed to go into an account for construction upgrades, though it was actually controlled by gang member Darnell Bell. No upgrades were ever made; instead, the funds were pocketed. The homes, many of which were bought with no money down, went into foreclosure because the straw buyers walked away from them.

Bishop’s attorney, Gastone Bebi, said prosecutors couldn't prove to the jury that she knew the construction work wasn't being done. The total escrows she processed amounted to less than 20% of her business, he said, and she had no idea the scheme was a fraud.  (sduntr102112)

MORAL

I would say Bishop had one darned good attorney.

COLORADO WOMAN GETS TWO YEARS IN FEDERAL PRISON FOR MORTGAGE FRAUD

FACTS

Kathy J. Mascarenas, also known as Kathy Oliver, was sentenced by U.S. District Court Judge Blackburn to serve 24 months in federal prison for wire fraud. Following her prison sentencing, Mascarenas was ordered to spend three years on supervised release. Judge Blackburn also ordered Mascarenas to pay restitution totaling $1,776,162.21. She will surrender to the Bureau of Prisons once a facility is designated.

Kathy Mascarenas pled guilty to two counts of wire fraud on March 20. She was indicted on April 22, 2010 along with co-defendants Steven Mascarenas and Katrina Roberts. Roberts was sentenced to 20 months in prison on July 27. Steven Mascarenas plead guilty on July 12 and is scheduled to be sentenced by Judge Blackburn on Nov. 16.

Beginning on Dec. 1, 2004 and continuing until Feb. 28, 2007, Kathy Mascarenas and a co-defendant assisted Steven Mascarenas in devising a scheme to defraud lenders that funded mortgage loans and for obtaining money from them by means of false pretenses. Specifically, Kathy Mascarenas conducted financial transactions as necessary to facilitate, perpetuate, and conceal the mortgage fraud as it related to the sale of residences.

She put false information on applications when she purchased two of the houses involved in the scheme. She issued checks and purchased cashier’s checks for the buyers’ earnest money and down payments; she issued checks and obtained a cashier’s check to compensate the buyers for their participation; and she deposited loan proceeds into accounts under her control.

She used entities which concealed Steven Mascarenas’ involvement as the orchestrator of the scheme and obscured the extent of her own involvement. She sometimes used her maiden name, Kathy Oliver, or entities created under that name.

Roberts prepared appraisal reports for the purpose of the six properties in the scheme. In them, she falsely represented that the fair market values of the properties were from $100,000 to $325,000 great than their actual sales prices. To make the inflated values appear legitimate, Roberts falsely represented that purchases, which were actually sales at market value, were “distressed” sales or “quick” sales below market value, and that the properties had been “exposed on the open market at below market value.”

The loss amount is approximately $1,776,671.73 from the scheme.  (usattyco103012)

MORAL

Note two things. One is that the federal prosecutor is chasing loans that funded eight years ago. Two when a person does mortgage loans the use of the mails, telephones, faxes and Internet, the federal prosecutors charge them with mail and/or wire fraud. But it all amounts to mortgage loans that funded eight years ago as mortgage fraud. Why don’t you think NINA, SISA loans and start to wonder?

FLORIDA MAN PLEADS GUILTY TO SHORT SALE FRAUD

FACTS

On Oct. 30, Guerard Wallace Howard pleaded guilty to one count of wire fraud; he faces a maximum penalty of 20 years in federal prison. His sentencing hearing is scheduled for Jan. 16, 2013, before Senior U.S. District Judge G. Kendall Sharp.

Between November 2007 and August 2011, Howard operated Provincial Real Estate Administrative Services Inc. Using Provincial, Howard made properties appear to be in poor condition during appraisals, through a scheme known as reverse staging. Reverse staging is a process wherein someone manipulates the short sale price by intentionally downgrading a property’s appearance and falsely representing the condition of a property in advance of bank appraisals.

Reverse staging is done in an effort to acquire the property at below market price. In this case, it included Howard removing receptacle plates and pulling wires from the walls to falsely represent to an appraiser that the house required rewiring, electrical service upgrades, and repair work. In some instances, it also involved spraying the house with a foul-smelling prank product and falsely representing to an appraiser that the odor was due to mold or other potential biohazard issues that required expensive remediation costs. The reverse staging effectively caused the lender to agree to the below market offer made by Howard through Provincial. The property was then immediately resold at a profit.

In addition to reverse staging, Howard also engaged in an illegal scheme known as commission shifting, whereby Realtor commissions that should have been borne as an expense in the resale transaction were paid as part of the short sale transaction. The shifting of these costs, from the resale to the short sale, resulted in the short sale lender bearing Realtor commission costs that should have been borne by Howard. This resulted in a higher profit to Howard, to the detriment of the short sale lender. Howard illegally obtained $219,414.52 during the short sale flipping of 13 properties in Brevard County.  (usattyndfl103012)

MORAL

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