CALIFORNIA ATTORNEY FACES DISBARMENT BECAUSE OF WHAT COURT OFFICIALS CALL A BOGUS PREDATORY LENDING LAWSUIT SCHEME
Sharon L. Lapin, the attorney of record in 130 predatory lending lawsuits filed from August 2009 to November 2010 was found guilty of most of the 26 allegations of professional misconduct. The Greenbrae attorney was allegedly involved in what court officials called a bogus predatory lending lawsuit scheme and foreclosure rescue scam faces disbarment after a decision by a State Bar Court hearing judge the week of Nov. 5. Lapin claimed innocence and said she would appeal also stating, "I never engaged in a scheme to defraud clients."
She was excoriated in a judgment after being found "culpable of multiple counts of professional misconduct, including moral turpitude, aiding the unauthorized practice of law, sharing fees with a nonlawyer, participating in a nonlegal lawyer referral service, failure to perform legal services with competence, failure to maintain only legal or just actions and failure to avoid representing adverse interests," the State Bar said in a report by spokeswoman Laura Ernde.
Lapin worked as a contract attorney for an organization that operated under names including US Loan Auditors LLC, US Loan Auditors Inc., My US Legal Services and US Legal Services. She received $177,000 from August 2009 through November 2010 without having to provide legal services, officials said.
When asked if there was any value that clients received, respondent testified that they were able to stay in their homes that much longer. She insisted, despite overwhelming evidence to the contrary, that she was entitled to the monies as reimbursement for costs. Yet she could not explain how costs could exceed $34,000 per month. She kept no time records of her alleged hourly services to justify her $350 hourly fee.
The court found that homeowners would pay 1% of their mortgage value to a foreclosure "rescue" organization for a "forensic loan audit" that was then used to persuade them they had a good case against lenders even though the audits merely provided routine boilerplate information. Organization staffers who were not lawyers then handled many legal filings.
Judge Armendariz ordered Lapin's license pulled as of Nov. 10 pending disbarment, which becomes effective when approved by the state Supreme Court. (sjmercnew111012)
I have explained for years that in my opinion, forensic audits are worthless and a waste of money. Since February 2009, the State Bar's Office of Chief Trial Counsel has received thousands of complaints against attorneys regarding loan modification fraud. More than 100 attorneys have been disciplined, including 22 who have been disbarred.
CALIFORNIA LO SENTENCED TO 10 YEARS IN FEDERAL PRISON FOR ALMOST BRINGING AN ARIZONA BANK TO ITS KNEES
On Nov. 5, U.S. District Chief Judge Roslyn O. Silver sentenced Thomas Gregory Alexander in Arizona Federal Court to 10 years in federal prison, to be followed by five years of supervised release. Alexander was also ordered to pay $5,463,769 in restitution.
Alexander worked as a loan originator for American Mortgage Funding between 2005 and 2007. Though AMF, Alexander assisted borrowers to qualify for loans from Mesa Bank (now known as Sunrise Bank of Arizona). Borrowers used the loan funds to acquire parcels of land in Maricopa County and to fund the construction of custom homes on those parcels.
Alexander used a scheme to defraud Mesa Bank by creating fraudulent documents for unqualified borrowers. In many cases, Alexander directed the borrower to sign a blank Uniform Residential Loan Application, which he and co-conspirators would complete by 1) overstating the borrower’s monthly income; 2) overstating the amount of money in the borrower’s bank accounts; 3) falsely representing that the borrower would make a down payment at closing; and 4) misrepresenting the intent of the borrower to use the property as a primary residence. Alexander and his co-conspirators would also alter Verification of Deposit documents to falsely overstate the amount of money in the borrowers’ bank accounts and alter the borrower’s credit report to falsely represent a higher credit score. Alexander and his co-conspirators also submitted false documents to show that the borrowers had made the required 5% to 10% down payments when, in fact, none of the borrowers ever actually paid a down payment.
Alexander also directed many of the borrowers to acquire loans to purchase lots from Sea Rock LLC, a company that he owned. The borrowers were unaware that they were purchasing lots owned by their loan originator. Alexander ultimately received a significant amount of profit from the lot sales because he directed a co-conspirator to create false appraisals to inflate the prices of the lots.
In total, Alexander’s mortgage fraud scheme induced Mesa Bank to issue over $40 million in loans and caused tens of millions of dollars in losses to the bank. The substantial loss eventually led to Mesa Bank’s merger into Sunrise Bank of Arizona. (usattyaz11512)
A quote from Lexis Nexis that was put in its 2012 Mortgage Fraud Report—“And the schemes are only expected to worsen, says Tim Coyle, senior director for real estate and mortgage fraud at LexisNexis. ‘As the market has evolved, the obvious crush of fraud and misrepresentation in the foreclosure, short sale and REO [real-estate-owned] worlds has forced the issue of collusion to the forefront.’”
POINT TO BE MADE: How many of you remember what I have been saying about reviewing files for fraud. Especially when there is a foreclosure on a loan where you were the MLO? What about the Compare Ratio in HUD/FHA when the loan goes through a Direct Endorsement lender? If loans are questionable, it is a lot easier to discuss it with us before a problem occurs.
MINNESOTA COUPLE SENTENCED FOR $5 MILLION MORTGAGE FRAUD SCHEME AMONG OTHER THINGS
On Nov. 9, in federal court, James Hoffman and Teresa Hoffman, a Stillwater couple, were sentenced in connection with a $5 million mortgage fraud scheme. U, S. District Judge David S. Doty gave James Hoffman 78 months in prison and ordered him to pay $344,409.26 in restitution. Judge Doty sentenced Teresa Hoffman to 12 months and one day in prison.
From August of 2001 through 2009, James Hoffman conspired to defraud mortgage lenders and obtain money from those lenders. Teresa Hoffman began participating in the scheme in August of 2006. The defendants allegedly recruited straw buyers to purchase real estate in both Minnesota and Wisconsin with the proceeds of fraudulent mortgage loans arranged by James Hoffman and in some instances by both defendants. The defendants owned several entities, which arranged financing for the fraudulent transactions.
From August 2001 through 2008, the couple lived in a Hastings home without ever owning it. James Hoffman arranged for a series of straw purchasers to buy the property entirely with the proceeds of fraudulent loans. From June 2001 through 2008, the couple used a Spicer Lake property as their vacation home without ever owning it by also arranging fraudulent mortgage loans for a series of straw buyers. Starting in June 2006, the couple, through three of their businesses, purchased apartment buildings in Rochester, Sauk Rapids, and Spicer. They converted the apartments into condominiums and sold them to straw buyers with a loss to mortgage lenders is approximately $5 million. During the course of the conspiracy, the defendants received loan proceeds that were wire transferred by the lenders.
Between 2005 through 2010, the Hoffmans spent money gained from the scheme to pay for luxury items such as lawn services, Caribbean cruises, country club fees, boat and boat trailers, swimming pool maintenance, luxury furniture, and private school tuition, rather than using those funds to pay the taxes owed to the IRS. (loansafe.org11212)
Did you notice that the loans went back 11 years? So the federal prosecutors do chase loans funded 11 years ago.
LAS VEGAS MORTGAGE AGENT FOUND GUILTY OF FRAUD
On Nov. 9, Heidi Haischer, a Las Vegas mortgage agent, was found guilty for participation in a mortgage fraud scheme that netted $1.2 million in fraudulent mortgage loans.
After a four-day trial before U.S. District Judge Miranda Du in the District of Nevada, a federal jury convicted Haischer of one count of wire fraud and one count of conspiracy to commit wire fraud for submitting fraudulent loan documents to purchase two homes.
Haischer submitted to lending institutions loan applications in which she misrepresented her income, submitted false verification of employment and misrepresented her intent to reside in one of the properties as her primary residence. Evidence at trial established that Haischer participated in an illegal property flipping ring that fraudulently obtained properties that Haischer and her co-conspirators intended to sell for a profit. Haischer and her co-conspirators also enriched themselves by collecting brokerage commissions generated by the sales of the properties.
Co-conspirator Kelly Nunes was convicted in a related case in Las Vegas on Feb. 2 of one count of bank fraud and one count of conspiracy to commit wire and bank fraud. (usattynv11912)
The federal prosecutors are still out there investigating loans from 2005 to the present. Here is one person that will lose her MLD license if not already lost.
NEW JERSEY WOMAN GETS 37 MONTHS FOR PHONY MORTGAGES
On Nov. 9, Crystal Paling was sentenced to 37 months in prison for her role in a wire fraud and money-laundering scheme involving phony mortgages issued for properties in New Jersey and Florida. This was following a three-week trial.
Paling was convicted of both counts charged in the indictment against her: conspiracy to commit wire fraud and conspiracy to commit money laundering.
Paling acted as the closing agent for fraudulent mortgage loans orchestrated by her co-conspirators, Daniel Verdia, Jaye Miler and Sandra Mainardi. The co-conspirators put together buyers and sellers in real estate transactions that they could control and then filed false and fraudulent loan applications containing inflated income figures for the borrowers.
Paling wired loan proceeds due to the sellers from a trust account that she controlled to an account in the name of Capital Investment Strategies, a shell company owned by Verdia and Miller. She concealed illicit payments to Capital Investment Strategies by failing to disclose them on the settlement statements. She collected a portion of the disclosed closing fees that appeared on the settlement statements. She also received undisclosed kickbacks paid from Capital Investment Strategies to her own shell company, XL Partnership. Paling retained some mortgage loan proceeds in the trust account and used them to pay back the mortgages on certain properties in order to keep the loans in good standing until the lender’s buyback period expired.
In addition to the prison term, Judge Sheridan sentenced Paling to three years of supervised release and ordered her to pay $532,497 in restitution.
Five others charged in the scheme have pled guilty: Verdia and Miller each pleaded guilty to one count of conspiring to commit wire fraud and money laundering and were sentenced to 30 months and six months, respectively; Donald Apolito pleaded guilty to tax evasion and was sentenced to five years of probation; Robert Gorman, pleaded guilty to subscribing to false tax returns and was sentenced to two years of probation and Mainardi pleaded guilty in Florida federal court to one count of wire fraud and was sentenced to 46 months in prison. (usattynj11912)
Read the sentences and you pick out the ones that had the best lawyers.
BUILDER GUILTY OF MORTGAGE FRAUD IN TEXAS
On Nov. 8, Larry Reisman pleaded guilty to federal charges in the Eastern District of Texas to making a false statement in connection with an FHA-insured home loan. He is the 20th conviction in this scheme.
Reisman, who operated Springfield Custom Homes, was involved in a widespread mortgage fraud scheme involving homebuyers, recruiters, homebuilders, mortgage brokers, loan officers, and a title company employee. Reisman admitted that in order to enable homebuyers to purchase a home from him, he secretly supplied the down payment funds to the homebuyer so the homebuyer could qualify for an FHA-insured mortgage loan and that he falsely represented to FHA that he did not supply any of the down payment funds. Reisman’s scheme resulted in losses to mortgage lenders, including Fannie Mae and Freddie Mac.
Reisman faces up to five years in federal prison at sentencing and restitution of $1.5 million. A sentencing date has not been set. (usattyedtx11812)
Remember how I have been saying the federal prosecutors are still chasing the fraudulent loans? Remember how I have been saying the lenders such as Chase, Flagstar, FDIC and Mortgage Law Recover Group and Celotti Law Firm have been chasing brokers, loan officers and lenders to pay for losses on loans that went into foreclosure and sale? Now we have those trying to resolve the matters on their own and appear to be faring worse than the results we have been getting. The main problem? They usually come to us after they try to settle on their own and give up potential available defenses in the process.
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