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Arrested Broker's Cooperation Brings Down SoCal Fraud Ring

JAN 10, 2013 3:00pm ET
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CALIFORNIA EMPLOYEES OF DISCOVERY HOMES HAVE BEEN INDICTED FOR MORTGAGE FRAUD

FACTS

Employees of a Seeno development company have been implicated in a mortgage fraud ring, expanding an investigation into real estate dealings by the Contra Costa construction family's various corporations.

An FBI complaint, unsealed the week of Dec. 13, 2012 alleges a loan agent with Discovery Homes, a Seeno company, confessed to her part in submitting fake loan documents in 2008 in order to qualify for a loan on a Fairfield house. Also that year, a Pittsburg couple that had trouble getting traditional bank loans was directed by a Seeno employee to apply for a loan through a Southern California mortgage broker that the FBI claims had set up a mortgage fraud ring.

The referral was made by a top Seeno sales executive, Carey Hendrickson, who was indicted on three counts of wire fraud.

The 15-page complaint based on an FBI investigation is the latest travail for Seeno family companies, which have been accused of making criminal threats, breaking environmental laws and racketeering by former business associates in Nevada. This month, a Las Vegas health department accused a Seeno company in Nevada of illegally installing septic systems on a golf course.

These developments come on the heels of a 2010 raid on the Concord company's headquarters. Earlier court documents illustrate a pattern in the developer's activities during the housing bust that fit what mortgage industry experts call a "builder bailout," which entails inflating the value of homes to help allow developers to maintain a more robust line of credit during down times.

A Seeno spokesman noted that the new criminal complaint does not mention any family members and asserted the company may have been duped along with the homebuyer.

Along with the FBI complaint, arrest warrants were filed for George Zevada, Miguel Arenas Sr., Tony Phan and Troy Chattariyangkul on Dec. 4 on suspicion of one count of wire fraud. Those four are associated with the alleged fraud ring, not with the Seeno companies.

The Southern California fraud ring came crashing down shortly after the Aug. 21 arrest of mortgage broker Chang Park on suspicion of one count of wire fraud. He cooperated with FBI investigators as part of a deal with the U.S. attorney's office and tipped them off to his former boss Zevada.

Zevada co-owned Silverline Mortgage of Pasadena, a mortgage brokerage that obtained fraudulent tax and income-employment documentation from Arenas, an accountant with Miro Accounting, according to the complaint. Arenas would provide fraudulent W-2 and 1040 forms and pay stubs.

Zevada also allegedly paid kickbacks to underwriters Phan and Chattariyangkul, who worked with mortgage lender Homecomings Financial, to process and approve loan applications for unqualified buyers, the complaint alleges. For each loan, the underwriters would get a $700 kickback.

In early 2008, Park received a phone call from Diana Bruce, a Discovery Homes loan officer, who wanted help with her own personal mortgage loan application. Park told Bruce she did not meet requirements for loan approval, and that "he would need to produce false documents in order to get her loan approved," according to the FBI.

Arenas, the CPA, fabricated tax statements showing Bruce had an annual income of $430,000; her loan was then funded by Homecomings Financial, the FBI complaint alleges. Bruce's actual salary was $180,374.

Bruce purchased a house in the 700 block of Greentree Circle in Fairfield, a Seeno-built home, for $505,000. When the FBI interviewed Bruce in August 2012, she admitted her paperwork was fraudulent and that she knew Park was submitting fake documents to the lender, according to the complaint. Bruce has not been charged.

On April 4, 2008, Don and Linda Anderson signed a sales contract with Discovery Homes to buy a house on Canyon Oaks Drive in Pittsburg for $525,000.  The Andersons needed a $417,000 mortgage and $108,000 down payment.

The Andersons told the FBI they did not have sufficient funds for the down payment, but took advantage of an offer from Discovery Homes. Seeno sales agent Joe Sterlino told the couple Discovery Homes would loan them money by securing a deed of trust on their existing home, also in Pittsburg, according to the FBI. Still, the Andersons did not qualify for the mortgage, as together the couple earned less than $65,000 a year, and Linda Anderson had bad credit. The couple tried to get a loan through Chase Bank and Countrywide and were rejected. They explained their problems to Sterlino, who has not been charged, and he told them to try Park in Southern California, the complaint alleged.

Sterlino told the FBI that he learned about Park through Hendrickson, the Discovery Homes district sales manager scheduled for a federal trial March 11, the complaint alleged.

The Andersons got their loan through Park within a week, again from Homecomings Financial. Phan was the underwriter for their loan, using fraudulent documents purporting Don Anderson earned $12,921 a month at his job, collecting $3,500 a month in rent and possessing $165,000 in bank accounts, according to the FBI. The Andersons, who never saw the fraudulent documents, still live in the Canyon Oaks house, according to public records. However, it was assessed at $301,500 last year.

In 2009, Homecomings Financial went under.  (concostatmes122012)

MORAL

That is what I would call “enterprise.” However, it is criminal enterprise and people are innocent until proven guilty. Did you get or do any loans through any of the named people here?

MORTGAGE FORGIVENESS DEBT RELIEF ACT AND DEBT CANCELLATION EXTENDED THROUGH DEC. 31

FACTS

The American Taxpayer Relief Act of 2012 includes extending the Mortgage Forgiveness Debt Relief Act through Dec. 31. The law affects homeowners who are granted principal forgiveness on their loan, due to a short sale, a deed-in-lieu of foreclosure, or have lost their home to foreclosure.

The Mortgage Forgiveness Debt Relief Act allows homeowners who get their mortgage debt forgiven through either a short sale or loan modification to have taxes forgiven up to $2 million or $1 million if married and filing separately.

Comments (2)
While the summary of the relief act (now extended) is accurate, most readers will not grasp the distinction that it has limited application to cash out refinances, which have been the bulk of loans in trouble. The protection does not apply to the extent of the cash out. However, there are other exceptions in the Internal Revenue Code that are more widely helpful, and state law can provide protection in many cases. Borrowers facing Cancellation of Debt Income (CODI) need to see a tax attoney, as CPAs cannot advise on (and are often unaware of)provisions of state law that may protect the borrowers.
Posted by | Friday, January 11 2013 at 2:21PM ET
So now everyone in the industry will suffer from the actions of these thugs who thought they could get away with it?

CA Needs to stop allowing Realtors to shlep loans too. It's non arms-length.
Posted by | Friday, January 11 2013 at 4:17PM ET
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