NINE PEOPLE INDICTED FOR MORTGAGE FRAUD OUT OF BAKERSFIELD AND LOS ANGELES.
FACTS
On July 17, a 26-count indictment was unsealed charging Eliseo Jara Jr., Sergio Jara, Antonio Perez Marcial, Lucia Yolanda Chavez, Arlene Jeanette Jara, Candace Shantel Gonzales, Joseph Shawn Chavez Jr., Melissa Rochelle Jara and Ricardo Fabian Salinas in a mortgage fraud conspiracy. The indictment was returned on July 12 by a federal grand jury in Fresno and the defendants were arrested at their residences on July 17.
The indictment alleges that Eliseo Jara and Sergio Jara owned and operated Jara Brothers Investments Inc., also known as Jara Brothers Development, a property development company. Lucia Chavez, their sister, owned Pershing Partners LLC, a property development business. Eliseo Jara and Sergio Jara also owned and operated Paragon Realty and Paragon Home Mortgage before selling Paragon Home Mortgage in 2007 to Lucia Chavez. Antonio Marcial recruited nominee buyers to purchase properties developed by JBI, Pershing Partners, and another defendant’s business. Arlene Mojardin, Candace Gonzales, Joseph Chavez, Melissa Jara and Ricardo Salinas worked at various real estate and mortgage businesses.
According to the indictment, from approximately January 2007 to 2010, the defendants carried out a scheme to defraud banks and other mortgage lenders by selling properties owned by JBI, Pershing Partners, and the defendants to nominee buyers, using loans obtained from lenders based on fraudulent loan applications and false supporting documentation. The false statements and omissions in the loan applications frequently concerned the borrowers’ income, assets, employment status, and intent to use the home as a primary residence. The defendants also often funded large down payments for the buyers of the properties without disclosing that the down payments were coming from the property developers. Defendants at times paid nominee buyers a fee of $10,000 or more per home purchase. After the property sales closed and the defendants received the loan proceeds, many of the loans ultimately went into default and the lenders either foreclosed on the properties or sold the properties through short sales at a loss. In some cases, Eliseo Jara used his companies JLE Holdings LLC and Owkins LLC to repurchase the properties from the lenders out of foreclosure or through short-sale agreements. The scheme involved more than $5 million in losses to lenders.
Eliseo Jara, Sergio Jara, Lucia Chavez, and Arlene Mojardin are siblings. Sergio Jara is married to Melissa Jara, and Lucia Chavez is married to defendant Joseph Chavez. Candace Gonzales and Melissa Jara are sisters.
The indictment also seeks forfeiture of the following assets: approximately $110,419 in cash seized from a defendant’s bank account, a 2007 Lexus GS350, and four properties owned by certain defendants.
The maximum statutory penalty for the conspiracy, bank fraud, mail fraud, and wire fraud counts is 30 years in prison and a $1 million fine. The maximum penalty for money laundering is 10 years in prison and a fine of $500,000. (usattycaed71712)
MORAL
This is what is called a “family operation." Note the loans occurred starting in 2007. So the federal people are still looking at the stated income loans.
FOUR CHARGED, ARRESTED, INDICTED FOR MORTGAGE FRAUD IN SOUTHERN CALIFORNIA
FACTS
United States Attorney Laura E. Duffy and Federal Housing Finance Agency Inspector General Steve A. Linick announced that fugitive loan broker Mary Armstrong was arrested in Las Vegas. The indictment, which was returned on May 10, and unsealed on July 12, charges Armstrong, real estate agent Teresa Rose and Armstrong's assistant William Fountain with devising and executing a mortgage loan origination fraud and kickback scheme.
As detailed in the indictment, the defendants carried out their scheme by recruiting “investors” through advertisements in the Los Angeles Times and online and encouraging them to purchase homes in Ramona, Calif., and elsewhere. The advertisements offered investors who had good credit the chance to buy property with no money down, and the defendants falsely claimed they would make the mortgage payments on the investors’ behalf using rental income they generated by renting and managing the properties. In reality, these so-called investors were nothing more than straw buyers who were promised $10,000 for each property purchased as part of the scheme. The defendants were able to secure mortgages for the properties by falsifying loan applications for the straw buyers. Among other things, the loan applications falsely claimed exorbitant income from fake employers and used sham companies to verify the borrowers’ fabricated employment and rental histories. The defendants went so far as to include fake W-2s and pay stubs to support the income claims. The defendants used these loan applications to obtain mortgages with 100 percent financing and thus avoided having to make any down payment on the properties.
The bulk of the profits the defendants made from the scheme resulted from their convincing sellers to inflate the purchase price of the properties by approximately $100,000, which was allegedly to be used for construction to improve the properties. In fact, no construction work was ever performed and the funds were instead diverted (or “kicked back”) to bank accounts controlled by the defendants. The defendants pocketed this money, made few if any mortgage payments, and allowed nearly all of the properties to swiftly fall into foreclosure.
The indictment alleges that Armstrong, Rose and Fountain purchased at least 16 properties in Ramona and in El Cajon, Calif., and Washington State as part of this scheme. In total, the defendants secured over $11 million in mortgage loans, skimmed over $1.5 million in sham construction kickbacks, and earned hundreds of thousands of dollars in additional proceeds through commissions and fees listed as part of the closing costs for each transaction. As a result of the foreclosures and defaults caused by the defendants’ failure to make the mortgage payments they promised, the defrauded mortgage lenders suffered losses of approximately $5 million. Fannie Mae purchased five of these fraudulently obtained mortgages on the secondary market and suffered losses as a result of the defaults.
On April 18, 2012, a fourth defendant, Justin Mensen, pled guilty to participating in the conspiracy. As part of his plea, Mensen admitted that he aided his coconspirators by registering sham “construction” and “development” companies and opening several bank accounts—which were used to receive kickbacks (disguised as sham construction payments) in order to conceal from the mortgage lenders and sellers that the money was being funneled to the defendants. On May 30, Rose pled guilty to participating in the conspiracy, admitting that she represented both the buyers and the sellers in each Ramona sale and arranged for inflated sales prices of the Ramona properties. Fountain was arrested in May and has pled not guilty. His trial has not yet been scheduled. (usattysdca71212)
MORAL
Since we defend cases like this I will explain what the word “information” generally means as opposed to indictment. Generally, the person accused in an information is usually cooperating with the prosecution in hopes of a lighter sentence. The prosecutors make no promises but that is generally the case.
CALIFORNIA MAN PLEADS GUILTY TO LYING TO A FEDERAL AGENT ABOUT MORTGAGE FRAUD
FACTS
Arturo Gonzalez has pleaded guilty to lying to federal agents as they investigated possible mortgage fraud and money laundering. .
Gonzalez obtained fraudulent home loans for two Joshua Tree homes in 2007 and then denied knowledge of them when investigators from the IRS and the Immigration and Customs Enforcement agency questioned him in 2010.
Federal agents interviewed Gonzalez in an attempt to find the main perpetrators of an alleged mortgage-fraud scheme and its inner workings, according to public documents. Gonzalez, whose signature and fingerprint appeared on the loan documents in question, told authorities he knew nothing about the property transactions, didn't sign any paperwork for the homes, and that he was likely a victim of identity fraud. Agents called Gonzalez a straw buyer.
Gonzalez allowed a man named Jubran Dighlawi to use his identity to buy property, according to court documents. Gonzalez received payment for use of his identity and credit to obtain two mortgages, authorities said. In a separate case, Dighlawi was indicted on charges of loan fraud in connection to three home transactions in Yucca Valley that also reportedly depended on straw buyers.
Gonzalez faces up to five years in federal prison if he fails to complete an alternative program that offers treatment and counseling. Gonzalez, who entered the guilty plea late last week, was set to appear again in court on July 13, 2012. (sduntrib71312)
MORAL
The problem here is Gonzalez probably got indicted more for the lying than acting as a straw buyer. When the agents came to see him he should have requested his attorney and there is a decent chance he would not have been indicted. That is the reason we always emphasis that when you are visited by law enforcement you should have your attorney present.
TWO SAN DIEGO MEN ADMIT GUILT IN MORTGAGE FRAUD AND SIPHONING MILLIONS IN ILLEGAL FEES
FACTS
On July 13, Simon Saeid Koli entered a guilty plea in federal court in San Diego to count one of an indictment charging him and Kian Ashkanizadeh with conspiracy to commit mail fraud, wire fraud, and money laundering in connection with a mortgage fraud scheme involving four expensive homes on Triton Street in Carlsbad, Calif. Co-defendant Ashkanizadeh entered a guilty plea to the same charge on, July 9.
Both defendants, who worked at a mortgage company called Southern California Finance, admitted that they recruited family members and friends to supply their names and signatures on mortgage loan applications as the purported buyers for these million-dollar homes. The defendants further agreed that they then fabricated the job titles, income, and assets of the purported buyers, so they could qualify for approximately $1 million in mortgage funding on each of the properties. The defendants also acknowledged that they diverted $200,000 in sham “consulting fees” and another $45,000 in fraudulent “construction fees” from each of the four transactions. The defendants took for themselves most of this extra $980,000 that they diverted from the escrow proceedings. The defendants also admitted disguising these so-called “fees” by first funneling the payments through bank accounts owned by friends and relatives and then causing the funds to be withdrawn or transferred for their own benefit.
Defendants Koli and Ashkanizadeh are scheduled to appear before United States District Judge Irma E. Gonzalez for sentencing on Oct. 26.
SAN FERNANDO VALLEY RE AGENT ARRESTED IN MILLION DOLLAR REAL ESTATE PONZI SCHEME
FACTS
On July 11, Celia Gallardo, a San Fernando Valley real estate agent and self-described real estate investor was arrested for allegedly running a million dollar-plus Ponzi scheme out of companies based in the Santa Clarita Valley. She was arrested on federal wire fraud and mail fraud charges.
Gallardo was arraigned in United States District Court in Los Angeles and pleaded not guilty to charges contained in a 16-count indictment. A federal grand jury indicted Gallardo on July 10 accusing her of bilking dozens of investors who put money into Gallardo’s purported real estate investment program. Gallardo told the investors that she would purchase condominiums in other states and that these properties would yield extremely high rates of return in very short time periods—as much as a 100% return in only 30 days, according to the indictment.
Gallardo allegedly assured victims that their money was safe. She issued “promissory notes” to investors that “confirmed” their money was being used in the purported real estate transactions. However, as alleged in the indictment, Gallardo spent a majority of investor funds on undisclosed and unauthorized purposes, including her residence, foreign luxury travel, cash withdrawals, and to repay certain earlier investors to perpetuate the scheme. The victims, including investors in California and Arizona, lost more than $1 million.
Gallardo’s scheme allegedly ran from September 2007 until September 2008.
At the July 11 arraignment, United States Magistrate Judge Carla Woerhle ordered that Gallardo be released on a $75,000 bond. The case was assigned to United States District Judge Dean D. Pregerson, who scheduled a trial for Sept. 4.
The indictment charges Gallardo with nine counts of wire fraud and seven counts of mail fraud. If she were convicted of all 16 counts in the indictment, Gallardo would face a maximum possible sentence of 320 years in federal prison. (usattycacd71212)
MORAL
Remember every person is innocent until proven guilty but over 30 years in prison is the risk. I always wonder how the “victims” can possibly believe that they can “double their money in 30 days.” The only thing that I can think of is that avarice makes them deaf, dumb, and blind to all logic.
IN MASSACHUSETTS THE FORECLOSING LENDER HAS TO PROVE POSSESSION OF BOTH THE MORTGAGE AND THE PROMISSORY NOTE OR THERE CAN BE NO FORECLOSURE
FACTS
Plaintiff Henrietta Eaton sued to avoid a post-foreclosure eviction from her home in Roslindale, Massachusetts. She claimed that the foreclosure of her home was invalid because the foreclosing lender, Green Tree Servicing LLC was not the holder of the note at the time of the foreclosure. Green Tree had been servicing the mortgage and stipulated that it was not the holder of the mortgage note.
Reversing a lower court decision, the Supreme Judicial Council of Massachusetts reviewed the meaning of the term “mortgagee,” used in the applicable statutes governing the power of sale in a mortgage. The SJC reviewed G.L. c. 244, §§ 11-17C and held that while the use of the term “mortgagee” was ambiguous, the legislative intent was clear: that it must be both the holder of the mortgage, as well as the holder of the underlying mortgage note.
In a unanimous decision, the SJC stated that G.L. c. 244, § 17B “assumes that the holder of the mortgage note and the holder of the mortgage are one and the same.” Notwithstanding this interpretation, the SJC observed that there was no language in the statutes prohibiting the use by a mortgagee of an agent to act on its behalf. Thus, the SJC held that an agent of the holder of the mortgage note, if authorized, can validly foreclose a mortgage.
The SJC said to give the ruling prospective effect in light of the “new interpretation of the relevant statute,” thus, avoiding the chilling impact which its decision would otherwise have had on the title to properties that have had a foreclosure sale in the title chain. Eaton v. Federal National Mortgage Association et al, No. 11041, slip op. (Mass. June 22, 2012),)
MORAL
A foreclosing lender should be sure that, at the time a foreclosure is commenced, the lender is the holder of the mortgage and the mortgage note or, in the case of the mortgage note, is acting on behalf of the mortgage note holder. Unfortunately this is not true in California.
OREGON HOLDS MERS IS NOT A TRUST DEED BENEFICIARY FOR NON-JUDICIAL FORECLOSURES
FACTS
On July 18, the Oregon Court of Appeals ruled that Mortgage Electronic Registration Systems Inc. does not meet the statutory definition of trust deed beneficiary under Oregon law for non-judicial foreclosures and reversed the Nov. 2010 lower court decision in Niday v. GMAC Mortgage. However, forecloses can still go forward judicially. Mortgages or deeds of trust recorded in MERS’ name in Oregon are still valid.
MORAL
It would seem at some time MERS might have to “bite the bullet.”
UTAH MAN PLEADS GUILTY TO MASSIVE MORTGAGE FRAUD IN
WEST VIRGINIA AND DID THE SAME THING IN MODESTO, CALIFORNIA
FACTS
On July 12, Raymond Paul Morris pleaded guilty to wire fraud and bank fraud in federal court for his involvement in a multi-million-dollar mortgage fraud scheme linked to properties at a Putnam County, W.Va. subdivision. Morris admitted to participating in the sophisticated multi-million-dollar mortgage fraud scheme in early 2006 along with Deborah L. Joyce and Michael Hurd.
The mortgage fraud scheme based on properties in the Stonegate subdivision involved illegal property "flipping" to out-of-state borrowers at inflated prices, using a company called The Gift Program or Advanced Capital Services that was operated at the time by co-conspirator Hurd. Hurd described The Gift Program as a “seller-funded down payment assistance program” used to provide homebuyer’s money to make down payment and initial mortgage payments on real estate purchases. Hurd further admitted that he used The Gift Program to create an elaborate scheme to defraud lenders by concealing the transfer of loan funds to the borrower from the lender. In essence, through the use of The Gift Program, lenders unwittingly funded their own down payment and made the initial mortgage payments.
Joyce obtained inflated appraisals from two local appraisers, James Thornton and Mark Greenlee, and subsequently sent the appraisals on to Raymond Morris in Salt Lake City. Morris admitted that he then identified investors in Utah to purchase the Stonegate properties at fraudulently inflated prices, while claiming that the properties were significantly undervalued. Morris then got those investors in contact with Hurd, who then used The Gift Program to conceal the transfer of a portion of the loan proceeds to the investor from the lender. Morris admitted that he received an undisclosed “commission” from Hurd for the referral.
Hurd also admitted at his plea in November 2011 that during the scheme, he wired additional loan funds to the investor to make initial mortgage payments. Once those funds ran out, the investors defaulted on the loans and the properties went into foreclosure.
Hurd, Joyce, and Morris illegally flipped a total of six properties in the Stonegate subdivision. The respective lender losses totaled almost $2 million.
At the same time, Morris and Hurd orchestrated a similar scheme in Modesto, Calif.
Hurd previously pleaded guilty in November 2011 to conspiracy to commit wire fraud and bank fraud. The defendant also pleaded guilty to mail fraud arising out of his involvement in a similar scheme in Modesto, California. Hurd acknowledged that he was involved in illegally flipping 20 properties with losses in excess of $5.5 million. As part of his plea agreement, Hurd agreed to transfer those charges from the Eastern District of California to the Southern District of West Virginia so the matters could be disposed of jointly. Morris agreed to include the lender losses suffered as a result of the Modesto illegal property flips as relevant conduct for sentencing purposes here in the Southern District of West Virginia.
Joyce was sentenced in April 2011 to three years and 10 months in prison and five years of supervised release for her involvement in the Stonegate subdivision mortgage fraud scheme. Joyce’s husband, Todd Joyce, was also sentenced in April 2011 to one year and six months in prison on mortgage fraud and tax evasion charges.
Hurd faces up to 60 years in prison and a $2 million fine when he is sentenced on Aug. 10. Morris faces up to 30 years in prison and a $1 million fine when United States District Judge Thomas E. Johnston sentences him on Oct. 29. (USATTYWDPA71212)
MORAL
A lot of money lost. A lot of money taken. But a lot of time in prison just doesn’t seem to be worth it.
THE INFORMATION CONTAINED HEREIN IS NOT LEGAL ADVICE.
AN ATTORNEY SHOULD BE CONSULTED IF YOU DESIRE LEGAL ADVICE.
