DEC 20, 2012
Compliance Matters

Hard Money Lender Indicted

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FORMER OWNER, CEO AND PRESIDENT OF COMMERCIAL MORTGAGE AND FINANCE CO INDICTED FOR MAIL FRAUD, WIRE FRAUD AND SECURITIES FRAUD

HARD MONEY LENDERS TAKE HEED OF WHAT FOLLOWS AND LEARN FROM READING RATHER THAN THE HARD WAY

FACTS

On Dec. 11, Anthony F. D’Agostino, 77, the former owner, CEO and president of Commercial Mortgage and Finance Co. in Rockford, was indicted by a federal grand jury in Rockford, Ill. He was charged with 17 counts of mail fraud, one count of wire fraud, and one count of securities fraud, in connection with a scheme to defraud investors in Commercial Mortgage.

According to the indictment, D’Agostino raised capital for his business by selling installments known as Promissory Notes and Certificates of Participation to investors. The indictment alleges that D’Agostino concealed from the investors the fact that Commercial Mortgage had a negative net worth that steadily increased during the years that D’Agostino owned the company. The indictment also charges that D’Agostino concealed from the investors the fact that Commercial Mortgage was operated as a Ponzi scheme, with money received from the sales of new Promissory Notes being used to pay principal and interest owed on older Promissory Notes. According to the indictment, this fraud scheme took place from August of 1997 through Oct. 8, 2008, and exposed the investors to losses of $20 million.

The indictment also charges that D’Agostino made specific false statements to several of the investors. For example, the indictment alleges that D’Agostino told some investors that the financial condition of Commercial Mortgage was strong and that the company was doing well. In addition, the indictment alleges that D’Agostino told some investors that investments with Commercial Mortgage were safe and secure.

Each count of mail fraud and wire fraud carries a maximum penalty of 20 years in prison and a maximum fine of $250,000, or an alternate fine totaling twice the loss or twice the gain derived from the offense, whichever is greater. Securities fraud carries a maximum penalty of up to five years in prison and fine of up to $250,000. (usattndil121112)

MORAL

Notice the fact that he is 77 and that age did not stop the indictment. Notice also the language “Certificates of Participation and installments on promissory notes.” I trust the hard money lenders and investors are reading this well.  If you need assistance, give me a call.

TWO ALABAMA REAL ESTATE INVESTORS PLEAD GUILTY TO BID RIGGING AT PUBLIC FORECLOSURE SALES

FACTS

On Dec. 12, two Alabama real estate investors and their company pleaded guilty for their roles in conspiracies to rig bids and commit mail fraud at public real estate foreclosure auctions in southern Alabama. The Department of Justice announced Robert M. Brannon and his son Jason R. Brannon, as well as their company,  J&R Properties LLC pleaded guilty to an indictment in the U.S. District Court for the Southern District of Alabama charging each of them with one count of bid rigging and one count of conspiracy to commit mail fraud.

According to court documents, the Brannons and their company conspired with others not to bid against one another at public real estate foreclosure auctions in southern Alabama. After a designated bidder bought a property at a public auction, which typically takes place at the county courthouse, the conspirators would generally hold a secret, second auction, at which each participant would bid the amount above the public auction price he or she was willing to pay. The highest bidder at the secret, second auction won the property.

The Brannons and their company were also charged with conspiring to use the U.S. mail to carry out a fraudulent scheme to acquire title to rigged foreclosure properties sold at public auctions at artificially suppressed prices, to make and receive payoffs to co-conspirators, and to cause financial institutions, homeowners, and others with a legal interest in rigged foreclosure properties to receive less than the competitive price for the properties. The Brannons and their company are charged with participating in the bid-rigging and mail fraud conspiracies from as early as October 2004 until at least August 2007.

So far, eight individuals and two companies have admitted guilt in the U.S. District Court for the Southern District of Alabama in connection with this ongoing investigation.

Each violation of the Sherman Act carries a maximum penalty of 10 years in prison and a $1 million fine for individuals and a $100 million fine for companies. The maximum fine for a Sherman Act charge may be increased to twice the gain derived from the crime or twice the loss suffered by the victims of the crime if either amount is greater than the statutory maximum fine. Each count of conspiracy to commit mail fraud carries a maximum penalty of 20 years in prison and a fine of $250,000 for individuals and a fine of $500,000 for companies. The fine may be increased to twice the gross gain the conspirators derived from the crime or twice the gross loss caused to the victims of the crime by the conspirators. (usattsdal121212)

MORAL

Notice that the federal prosecutors went back eight years! As I have been saying a lot have stopped illegal acts because of the heat. But that does not stop the federal prosecutors from going back 10 years to prosecute what was already done, as was done here by going back eight years.

CALIFORNIA WOMAN TO BE CHARGED WITH FORECLOSURE AND

LOAN MODIFICATION FRAUD

FACTS

Comments (2)
Notice all small potatoes

When are All the Major 20% of Bankers -Gov't Officals-Utilities Top 20%

& top 20 of Fotune 500 & Non -Profits & Top 20% of Universities

going to Gillotines ?

Posted by Smiley Friends | Wednesday, December 26 2012 at 6:40PM ET
Anyone found guilty of fraud should be punish to the fullest extent. Though, I find it very interesting that Chase, Wells, BAC just to state a few, created more than 10,000 times the amount of fraud, and not one individual is prisoned.
Posted by Adolfo | Thursday, December 27 2012 at 10:28AM ET
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