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Compliance Matters

Mortgage Frauder Gets Over 81 Years in Prison

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CALIFORNIA MAN GETS OVER 81 YEARS IN PRISON AND HIS MOTHER GETS 7 YEARS FOR $241 MILLION MORTGAGE FRAUD

FACTS

On Jan. 21, 2014 in Riverside, Calif. Hendrix Montecastro was sentenced by Riverside County Superior Court Judge Jeffrey Prevost to 81 years and eight months in state prison for his role in the $142 million Stonewood mortgage and securities Ponzi-style fraud that fleeced people in two states out of their homes and life savings. Montecastro was convicted of several hundred felony counts

Montecastro's mother, Helen Pedrino, 62, a Murrieta-area nurse who found investors as a master recruiter of unsuspecting church-goers, medical co-workers and attendees of get-rich seminars, was sentenced to seven years in state prison with no chance for probation.

The court also ordered them to pay more than $6 million in restitution to victims.

Hundreds were enticed to refinance their homes, draw down retirement and other savings, and max out credit cards for fraudulent investments on houses, hospitals, diamonds and Iraqi currency.

The fraud caused 201 Riverside County homes into foreclosure and claimed hundreds of victims who weren't all brought into the case. (prent12214)

MORAL

Some of you may remember this case. But consulting with their financial advisor or one hour with an attorney could have saved a lot of grief. Remember if it sounds too good to be true, then it probably is not true.

SOME OF THE ITEMS INSPECTED WHEN THE CALIFORNIA BRE AUDITS YOUR COMPANY

FACTS

Whenever you are called for an audit by the Bureau of Real Estate's investigator(s), you should request the person confirm it in writing before answering any questions. Then call your attorney which you have a right to do and discuss the matter with the attorney before talking to anyone else about the audit as all.

The audit could be triggered by many things. A disgruntled ex-employee, advertising that does not contain the BRE broker identification and the Nationwide Mortgage Licensing System's identifier if doing loans. Deposits given by borrowers where the cancellation on the back of the check does not indicate it was put into a broker escrow account.

Your attorney can explain the entire process to you. We have a manual currently being updated on how to self audit yourself should you desire. 

MORAL

An audit like anything else is looking for what you are doing wrong.  If you find it first and correct it first, it mitigates the problem quite a bit.

FLORIDA MORTGAGE BROKER PLEADS GUILTY TO MORTGAGE FRAUD THAT OCCURRED IN 2005 AND 2006

FACTS

On Jan. 28, 2014 Michelle Carducci, a mortgage broker, pleaded guilty to conspiracy to commit wire fraud affecting a financial institution and making false statements to a federal agency. She faces up to five years in federal prison.

Carducci conspired with a real estate agent and a Pinellas County, Fla., developer in the scam. The real estate agent recruited buyers to purchase houses being “flipped” by the developer using any of several companies. The buyers were told the deals would require no money from them. However, the developer was in reality providing closing funds to otherwise unqualified buyers.

Carducci helped hide this fact by submitting fraudulent loan documents with falsely inflated the buyers’ assets. Prosecutors estimate that Carducci’s role in the scheme cost lenders between $400,000 and $1 million between 2005 and 2006.

MORAL

These loans are over nine years ago. If you have been interviewed recently by federal or state authorities, including licensing agencies, it is best to see us (or your attorney) now which gives us a greater chance of mitigating any potential problems.

OREGON DEVELOPER GETS 10 YEARS IN FEDERAL PRISON FOR MORTGAGE FRAUD

FACTS

On Jan. 29, Shannon Egeland got 10 years in prison, the longest sentence meted out in a wide-ranging mortgage fraud scheme that rocked the Central Oregon real estate market.

Egeland was convicted of one count of bank fraud and one count of conspiracy to commit bank fraud. He must pay more than $13 million in restitution.

Egeland was vice president of the now-defunct Desert Sun Development Co., which is accused of orchestrating tens of millions of dollars in mortgage fraud between 2004 and 2008. Schemes managed by Egeland, along with others in the company and outside conspirators, included false tax returns, fraudulent financial statements, bogus contracts and leases, false loan applications, forgeries and money laundering.

Tyler Fitzsimons, the company's former president, previously received seven years in prison, and others involved in the fraud have received lesser sentences. Egeland received a harsher sentence largely because he continued to commit crimes while awaiting sentencing after pleading guilty in the Desert Sun case.

U.S. District Judge Ann Aiken heard a lengthy and emotional plea by Egeland, his domestic partner and her mother, asking for minimal prison time. Egeland is the family’s breadwinner and primary support for the couple’s two children because their mother suffers from a debilitating auto-immune disease. But Aiken said she had little choice but to impose the long prison sentence sought by prosecutors given the extent of Egeland’s crimes, his conduct while awaiting sentencing and the fact that he ignored warnings that what he was doing was wrong.

Egeland’s motivation for his crimes was greed, pure and simple. The judge likened Egeland’s desire for money to an addict’s desire for drugs.

After entering that plea in June 2010, Egeland got in more trouble. In late 2010 he was convicted in Grant County of selling drugs within 1,000 feet of a school and then perjured himself when testifying at his trial, resulting in another conviction.

Last June, he was convicted of second-degree theft for stealing $9 worth of goods from a Fred Meyer store. That put him in violation of his plea agreement in the Desert Sun case, which required that he break no laws while awaiting sentencing. Had Egeland complied with the agreement and been cooperative with investigators he would have been facing a far shorter sentence and his family would be far better off.

Comments (1)
Some Scary stuff. I always read about these kind of fraud schemes and how they get caught. I wonder how many actually get away with it.
Posted by Ron Eaton | Monday, February 10 2014 at 11:27AM ET
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