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Arizona AG Sues Two for Loan Modification Fraud

AUG 23, 2012 3:08pm ET
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In a separate proceeding in late 2010, Attorney General Harris successfully prosecuted Nazarzai for contempt of court for his refusal to turn over $360,000 unlawfully taken by defendants as ordered by the court. He has been incarcerated in the Orange County jail since December 2010 because of his continued refusal to comply with the court’s order.  (caag72412)

MORAL

Three years to prosecute in a bench trial (judge only, no jury). And still no money received. But I presume the civil lawyers were well paid.  For them to take on a case and keep it going three years when pursued by the attorney general of California I would say was pretty good legal work all things considered.

CALIFORNIA REAL ESTATE INVESTOR AGREES TO PLEAD GUILTY TO BID RIGGING AT FORECLOSURE SALES

FACTS

On Aug. 15, Danli Liu, a real estate investor, agreed to plead guilty for her role in conspiracies to rig bids and commit mail fraud at public real estate foreclosure auctions in Northern California. Felony charges were filed in the U.S. District Court for the Northern District of California in Oakland against Liu.

To date, 25 individuals have agreed to or already have pled guilty to charges in this matter. Liu conspired with others not to bid against one another but instead to designate a winning bidder to obtain selected properties at public real estate foreclosure auctions in Alameda County, Calif. Liu was also charged with a conspiracy to use the mail to carry out a scheme to fraudulently acquire title to selected properties sold at public auctions, to make and receive payoffs, and to divert money to co-conspirators that would have gone to mortgage holders and others by holding second, private auctions open only to members of the conspiracy. The department said that the selected properties were then awarded to the conspirators who submitted the highest bids in the second, private auctions. The private auctions often took place at or near the courthouse steps where the public auctions were held.

The department said Liu conspired with others to rig bids and commit mail fraud at public real estate foreclosure auctions in Alameda County beginning as early as April 2009 and continuing until about March 2010.

The department said that the primary purpose of the conspiracies was to suppress and restrain competition and to conceal payoffs in order to obtain selected real estate offered at Alameda County public foreclosure auctions at non-competitive prices. These conspirators paid and received money that otherwise would have gone to pay off the mortgage and other holders of debt secured by the properties, and, in some cases, the defaulting homeowner.

A violation of the Sherman Act carries a maximum penalty of 10 years in prison and a $1 million fine for individuals. The maximum fine for the Sherman Act charges may be increased to twice the gain derived from the crime or twice the loss suffered by the victim if either amount is greater than $1 million. A count of conspiracy to commit mail fraud carries a maximum sentence of 30 years in prison and a $1 million fine. The government can also seek to forfeit the proceeds earned from participating in the conspiracy to commit mail fraud. (usattysfndca81312)

MORAL

Do not rig the bids in a public foreclosure sale or your may find yourself going to a public prison.

INDIANA BROKER GETS 10 YEARS IN FEDERAL PRISON FOR MORTGAGE FRAUD—FATHER ONLY GETS EIGHT YEARS

FACTS

Convicted of operating a mortgage fraud scheme that took advantage of unsophisticated investors, Jeremie Sheneman was sentenced to 10 years in prison despite his continued pleas of innocence.  Sheneman, who was convicted along with his father Michael in May 2011 of four counts of wire fraud, also was ordered to pay $269,967 in restitution. The younger Sheneman wrote a letter to U.S. District Judge Jon DeGuilio, arguing that evidence was withheld during his trial. Sheneman's argument, however, appeared to come too late. Both father and son have long maintained their innocence in the scheme, which federal prosecutors say ran from 2003 to 2005.

Operating under the company names Tri-State Mortgage and Superior Mortgage Lending, the Shenemans were accused of brokering deals, falsifying buyers' income and assets, forging signatures and concealing from lenders the fact that buyers have simultaneously applied for other mortgage loans, according to federal prosecutors. Investigators say they believe the Shenemans sold 60 properties, causing buyers—recent immigrants and people with limited incomes—to incur about $3.5 million in mortgage debt.

The Shenemans had maintained their innocence throughout their trial, and Michael Sheneman had argued at his sentencing that they were all victims of an economy gone bad. The older Sheneman was sentenced last October 2011 to eight years in prison. His son had delayed the process by motioning to receive a new trial by arguing that he had received ineffective council—a motion which was not granted. The case was delayed a second time after Sheneman's court-appointed trial attorney withdrew from the case because of the earlier motion alleging ineffective council.

Jeremie Sheneman was ordered to pay the same amount of restitution as his father. (mortdly8612)

MORAL

I bet he got the extra two years for not accepting responsibility for his acts. However, that really would be a shame if in fact he was innocent and it was a miscarriage of justice. If he appeals only time will tell.

IN MINNEAPOLIS TWO LOAN OFFICERS PLEAD GUILTY TO RECRUITING STRAW BUYERS TO PURCHASE REAL PROPERTY AT INFLATED PRICES

FACTS

On Aug. 13, in federal court, two mortgage loan officers pleaded guilty to recruiting straw buyers to purchase properties at inflated prices and then distributing the excess loan funds among themselves, the straw buyers, and others involved in the scheme. Chad Arthur Anderson and Troy Allen Huston pleaded guilty to one count of conspiracy to commit mortgage fraud through the use of interstate wires. The two were indicted on April 3, and entered their pleas before United States District Court Judge Joan N. Ericksen.

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