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Arrested Broker's Cooperation Brings Down SoCal Fraud Ring

JAN 10, 2013 3:00pm ET
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According to the indictment, virtually all of the information submitted by McMillian in connection with the loan applications was false. The names and other personal information of the purported borrowers consisted of either stolen or fictitious identities, or were of persons who never intended to live in the houses or make the mortgage payments.

The telephone numbers of the purported employers actually belonged to co-conspirators or others who had agreed to falsely verify the borrowers’ employment. McMillian also arranged for Day to prepare misleading and fraudulent real estate appraisal reports on the three Reservoir Hill properties and a fourth property owned by McMillian herself, which McMillian then submitted to the bank in support of the loan applications.

Based on the information provided in the loan applications, the false employment verifications, and fraudulent appraisals, the bank agreed to extend financing on each of the four properties, totaling $1.094 million.

At each of the four settlements, McMillian directed the settlement agent to transfer a substantial portion of the loan proceeds to her or to businesses associated with Oladosu, either pursuant to an assignment contract or to pay for purported renovations to the property. In fact, no repairs or renovations were carried out on any of the properties. The mortgage on each property soon went into default with mortgage payments either not made at all, or only one or two payments being made

The defendants each face a maximum sentence of 30 years in prison for the conspiracy and for each of eight counts of wire fraud affecting a financial institution. McMillian and Day had their initial appearance on Dec. 20, 2012. Oladosu is a fugitive. (usattymd122012)

MORAL

Here the federal prosecutors went back five years. They are on a roll and in this attorneys opinion will not stop or slow down for at least another two years.  So for all those that had creative mortgages over the last 10 years I suggest you see your attorney now to evaluate your risks.  We are available should you so desire to speak with us.

MASSACHUSETTS LAWYER GETS SIX YEARS IN FEDERAL PRISON FOR MORTGAGE FRAUD

FACTS

On Dec. 20, 2012, Marc D. Foley, a former attorney who operated a real estate practice in Needham, was sentenced for his role in a fraudulent mortgage scheme. U.S. District Judge Richard G. Stearns gave Foley 72 months in prison, to be followed by 36 months of supervised release. In September 2012, Foley was convicted by a jury of 33 counts of wire fraud and five counts of money laundering.

In December 2006 and January 2007, Foley participated in a scheme to defraud six mortgage lenders in connection with $4.9 million in real estate loans for the purchases of 24 condominium units in Dorchester. When Foley and an associate acting under his direction closed the loans, documents sent to the mortgage lenders falsely represented that funds ranging from $9,300 to $39,000 had been collected at the closings from the borrowers, when in fact the borrowers made no down payments and paid no funds at the closings. Furthermore, Foley entered into an undisclosed agreement with the seller to subtract from the seller’s proceeds all the funds that were reported to the lenders as coming from the borrowers. Foley also used various other means to conceal from the lenders that the borrowers had not provided funds for the purchases.  (usattyma122012)

MORAL

Even attorneys are not immune from federal prosecution. Note this one gets six years at a federal hotel for something he did six years ago. As I have said, the federal government has 10 years from when the loan closes to indict people for mortgage fraud.

DALLAS MAN GETS NEARLY 16 YEARS IN FEDERAL PRISON FOR MORTGAGE FRAUD

FACTS

On Dec. 21, 2012  Gregory Lashon Thomas was sentenced to 189 months in federal prison and order to pay over $2 million in restitution following his conviction at trial on various offenses related to a multi-million-dollar mortgage fraud scheme he ran in the Dallas area. In addition, the court ordered forfeiture in the amount of $218,148 and ordered that Thomas surrender to the custody of the Bureau of Prisons on Feb. 5.

Thomas was convicted on all four counts of the indictment—one count of conspiracy to commit mail fraud and three counts of mail fraud. The two co-defendants, charged in the case, Aja D. Crawford, a/k/a Aja Abercrombie and Ernest Ohenekitiwa McMillan, each pleaded guilty last year to one count of conspiracy to commit mail fraud, as charged in a superseding indictment. Each faces a maximum statutory sentence of five years in prison and a $250,000 fine. Restitution could also be ordered.

Thomas ran two real estate “investment” businesses called Investor Source and Myriad Investments. Thomas located sellers who wanted to unload excess properties and were willing to kick back substantially all of their proceeds to the defendant. Thomas then recruited straw buyers, including co-defendant McMillan, and worked with loan officers, including co-defendant Crawford, to prepare and submit fraudulent loan applications on the buyers’ behalf.

The loan applications contained numerous material false statements, such as overstating the buyer’s income level or assets. For instance, the evidence showed that one of the straw buyers, who had just been released from federal prison and was living in a halfway house and earning minimum wage, falsely represented on his loan application that he made nearly $100,000 per year and had an account with more than $34,000. That loan application also identified a Washington Mutual bank account that actually belonged to the defendant. Not only was the bank account controlled by the defendant, he and the loan officer altered a bank statement to make it appear as if the account was owned by the straw buyer.

Thomas received a substantial kickback from the seller after each of the transactions closed and then disbursed a portion of those kickbacks to the co-defendants and others involved in the fraud. Thomas also assisted the buyers in closing on the properties by obtaining cashier’s checks, in the buyer’s name, for the down payment on the properties.

Evidence at sentencing showed that the scheme involved approximately $5 million in fraudulently obtained loans and approximately $2 million in losses to various mortgage lenders. (usattydallastx122112)

MORAL

On and on it goes and where it will stop, nobody knows.

 

THE INFORMATION CONTAINED HEREIN IS NOT LEGAL ADVICE.

AN ATTORNEY SHOULD BE CONSULTED IF YOU DESIRE LEGAL ADVICE.

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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