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Company Owner Gets Nine Years for Mortgage Fraud

SEP 27, 2012 3:50pm ET
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OWNER OF PASADENA, CA MORTGAGE CO. GETS NINE YEARS IN PRISON FOR MORTGAGE FRAUD

 FACTS

On Sept. 21, Eduardo Ruiz, the owner of Premier One Lending, a Pasadena mortgage brokerage firm, was sentenced to 108 months in federal prison for participating in a mortgage fraud scheme that obtained more than $30 million in loans. In addition to the prison term, the judge ordered him to pay $5.7 million restitution.

Ruiz has been in custody since March, when a federal jury found him guilty of conspiracy and mail fraud. The evidence presented during a three-day trial showed that while operating Premier One Lending in 2005 and 2006, Ruiz and other Premier One employees fraudulently obtained more than 100 loans from lenders in Los Angeles and Orange Counties.

As part of the scheme, Ruiz and his employees prepared mortgage loan applications that inflated borrowers’ income, often by as much as 10 times over their true income. Ruiz and other Premier One employees also obtained phony bank statements and certified public accountant letters, which they provided to the lenders in support of the bogus income figures.

According to the witnesses' testimony, many of the borrowers did not speak English and did not realize that their income had been inflated. As a result of the scheme, the borrowers obtained large mortgage loans that they were unable to make payments on. More than 20 loans went into foreclosure, causing lenders to sustain millions of dollars in losses.

Two others involved in the scheme, Gilma and Francisco Ruiz, siblings of Eduardo, received sentences of two years and 18 months, respectively. Both were recruited to help in the scheme and prepare fraudulent bank statements.

The investigation into the Premier One fraud scheme was part of Operation Inflated Income, an initiative by the Federal Bureau of Investigation, IRS-Criminal Investigation, and the United States Postal Inspection Service that targeted mortgage brokers who fraudulently obtained loans by inflating the borrowers’ income and assets and supporting those bogus claims with fake supporting documents. (usattycdca92112)

MORAL

Note the loans involved are from 2005 and 2006. Note also that this week alone we have 40 from California indicted and/or convicted and this isn’t even all of them. Then you have the 50 from North Carolina in a single item below. Remember, I said about 100 per week. And now I think that estimate is low. Probably more than 200 per week are being indicted and/or convicted nationwide.

CALIFORNIA MAN CHARGED WITH MORTGAGE FRAUD

FACTS

On Sept. 20, in a federal grand jury in Sacramento returned a six-count indictment charging Ryan William Costo with mail, wire, and bank fraud, as well as making false statements to financial institutions, all in connection with various schemes to defraud lenders, U.S. Attorney Benjamin B. Wagner announced.

According to the indictment, Costo falsely overstated his income and financial assets while applying for three separate loans: a $1.95 million loan from CitiMortgage Inc. for a Granite Bay residence; a $3 million loan from Washington Mutual Bank for another Granite Bay residence; and a $1.35 million loan from Bank of America for a 1945 North American P-51 D Mustang classic aircraft.

The indictment alleges that Costo not only made false statements about his income and various bank and stock account balances on the loan applications but also caused various false and fraudulent account statements and tax returns to be given to the lenders in order to procure the loans. As a result of the fraud, lenders reported aggregate losses of over $3 million.

The maximum statutory penalty for each violation of mail, wire and bank fraud is 30 years in prison, a fine of twice the monetary gain or loss, and a three-year term of supervised release. The maximum statutory penalty for each false statement violation is 30 years in prison, a $1 million fine, and a three-year term of supervised release.  (usaattycaed92012)

MORAL

Remember how long I have been preaching the federal prosecutors and federal agents were in California with a vengeance. Well look at this and all just in the Sacramento area! The Los Angeles area has been under attack for some time. I await more indictments from Nevada. It behooves anyone involved with bad mortgages such as these to see their attorney before federal agents even begin visiting them. Much can be done to protect you and seriously mitigate issues if you see your attorney before federal agents see you. If you would like to discuss the matter with me, then by all means call me.

CALIFORNIA COUPLE SENTENCED FOR MORTGAGE FRAUD

FACTS

 A Murrieta husband and wife, Joe Daniel and Angela Lynette Cody, were sentenced to prison terms this week for their role in a mortgage fraud scheme that saw them take equity out of Inland homeowners' property and bilk victims out of more than $1 million.

Joe Daniel Cody was sentenced Sept. 17, in U.S. District Court in Riverside to 63 months in prison and three years of supervised release. Angela Lynette Cody, received a 48-month sentence, three years supervised release and was ordered to pay more than $1 million in restitution.

According to the IRS, between May 2003 and June 2006, the couple ran All Fund Mortgage out of their Murrieta home, offering refinancing services that promised homeowners lower monthly mortgage payments if they agreed to "temporarily" sell their homes to predetermined buyers. The Codys, in fact, used straw purchasers with whom they were associated and paid between $1,000 and $25,000 to function as loan recipients to acquire properties that the defendants wanted, according to prosecutors.

Many of the homeowners ended up losing title to their homes. Usually no payments were made to lenders after the equity was taken out of the homes. Most homes ended up in foreclosure. (prent92312,murptch92112)

MORAL

I would like you all to notice the number of fraud cases for this week alone in California and also note that this does not include those still under investigation by the FBI and IRS among other agencies.  More indictments will follow.

CALIFORNIA RE AGENT SCHEDULED TO BE SENTENCED IN DECEMBER STILL ALLOWED BY STATE LAW TO PRACTICE REAL ESTATE

FACTS

Comments (3)
Does my heart good to see folks getting their due. If only our government had done this with the SEC, Wall Street and big bankers. Imagine how much improved housing would be today.
Posted by | Friday, September 28 2012 at 9:06PM ET
Curious how those borrowers did not know their incomes were inflated. Don't borrowers sign the final loan application at closing that states their income and monthly payment ..... Seems to me the borrower is just as responsible as the crooked mortgage person.
Posted by DON W | Tuesday, October 02 2012 at 6:14AM ET
I'm still waiting for the investigation on DB Structured Products,ArchBay Holdings LLC- Archbay Captial- York Captial -and Goldman again, also involved with the writing of these securities for Archbay and York, These loans are full of fraud. When are they being investigated?
Posted by Deborah L | Friday, October 05 2012 at 2:07PM ET
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