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Arizona Man Gets Five Years for Mortgage Fraud

AUG 2, 2012 4:23pm ET
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ARIZONA MAN GETS FIVE YEARS FOR MORTGAGE FRAUD

FACTS

On July 25, U.S. District Judge Paul G. Rosenblatt sentenced Clint Bryson Rogers of Scottsdale to five years in federal prison for his role in a mortgage fraud conspiracy. Rogers pleaded guilty on Jan. 18 to conspiracy to commit the crimes of false loan application, wire fraud and money laundering.

Rogers admitted as part of his guilty plea that he conspired with Shannon Kato a real estate investor; Ernest Babbini, a loan originator; and Drew Hull, an escrow officer; to get mortgage loans to buy at least 15 homes in a short period of time by lying about his income and assets. Rogers also admitted that, in addition to purchasing homes with the loan proceeds, he artificially inflated the sales prices in order to divert more than $2.5 million of the proceeds to himself or entities under his control. Evidence presented at sentencing showed that Rogers spent these additional proceeds on, among other things, international travel, luxury cars, and transfers to his investment accounts.

Judge Rosenblatt found at sentencing that at least 10 banks fell victim to the scheme and that their losses exceeded $2.5 million. Kato and Hull are scheduled to be sentenced on Aug. 22 and Babbini’s sentencing is scheduled for Oct. 1. (usattyaz72512)

MORAL

The fraud goes on, the sentencing goes on and more to follow. Who will be next?

A REMINDER THAT ALL EMPLOYERS PAYING CALIFORNIANS A COMMISSION MUST HAVE A SIGNED WRITTEN CONTRACT WITH THE EMPLOYEE BY JAN. 1, 2013 AND GET A SIGNED RECEIPT FROM THE COMMISSIONED EMPLOYEE

FACTS

By Jan. 1, 2013, whenever an employer (in or out of California) enters into a contract of employment with an employee for services to be rendered within California and the contemplated method of payment of the employee involves commissions, the contract shall be in writing and shall set forth the method by which the commissions shall be computed and paid.

The employer shall give a signed copy of the contract to every employee who is a party thereto and shall obtain a signed receipt for the contract from each employee. In the case of a contract that expires and where the parties nevertheless continue to work under the terms of the expired contract, the contract terms are presumed to remain in full force and effect until the contract is superseded or either party terminates employment. (ab1396, Lab. C. §2751)

MORAL

The law became effective this past Jan. 1, but is not enforceable until Jan. 1, 2013. The key part to remember is to get the written receipt from the employee. This means if you pay any commission. It not only includes 100% commission employees but any employee that receives any commission at all.

CALIFORNIA LAW FIRM SHUT DOWN IN CIVIL LAWSUIT BY CFPB FOR DEFRAUDING HOMEOWNERS SEEKING MORTGAGE HELP

FACTS

The new Consumer Financial Protection is now exercising its muscles on those deceiving consumers. It has shut down the offices of Los Angeles attorney Chance Edward Gordon by accusing him of defrauding homeowners seeking mortgage help. The CFPB filed a complaint “under seal.” It then obtained a temporary restraining order against Gordon and froze his assets. The seal was lifted the week of July 24. Gordon’s office number is now answered by a recording from a receiver appointed by U.S. District Judge Ronald S. W. Lew.

The CFPB complaint alleges that Gordon and a non-lawyer associate, working through at least 11 businesses, engaged in an ongoing, unlawful mortgage relief scheme that preyed on financial distressed homeowners nationwide. (Consumer Financial Protection Bureau v. Gordon, 2:12-cv-6147 (C.D. Cal., filed July 17, 2012.

FEDERAL JUDGE IN FLORIDA SENTENCES EX-TITLE COMPANY OWNER TO 18 MONTHS IN FEDERAL PRISON

FACTS

On July 25, U.S. District Judge Henry Lee Adams, Jr. sentenced Cynthia Darlene Strickland to 18 months in federal prison following her guilty plea to a mortgage fraud scheme. As part of the sentence, the court ordered Strickland to pay restitution to victims in the amount of $531,356. The court also entered a judgment against Strickland for $178,625, which was the amount of money she received as a result of the scheme. Strickland had pled guilty. She was a licensed title agent and the owner of Premier Title Group Inc., a title agency in Jacksonville, Fla.

According to court documents, the orchestrator of the scheme was Juan Carlos Gonzalez. Gonzalez entered into contracts to buy residential real estate properties and retained a retained a licensed real estate appraiser, Barry Westergom, to appraise the properties. Westergom fraudulently appraised the properties at values that were significantly inflated above the agreed purchase price.

Gonzalez recruited third-party buyers to enter into a second contract that listed the fraudulently inflated appraised value as the purchase price. Gonzalez applied for mortgage loans in the name of the third-party buyers, and in support of the applications he submitted the second contract, the fraudulent appraisal, and false financial information about the buyers. Based upon this information, banks and other mortgage lenders approved the loans.

Gonzalez recruited Strickland to be the closing agent for the transactions. Strickland’s plea agreement describes a transaction that was funded by first and second mortgage loans that Gonzalez fraudulently obtained from Lehman Brothers Bank. As part of her responsibilities as closing agent, Strickland prepared a standard settlement statement that identified various expenses, payments, and disbursements related to the transaction.

On the settlement statement, Strickland represented that the purchase price of the property was $725,000, the inflated appraised value, when, in fact, the purchase price was $570,000, the price Gonzalez had negotiated with the sellers. Although Strickland knew that two contracts existed, one for the lower price negotiated with the sellers and one for the higher price based on the inflated appraisal, she did not inform the bank of these facts.

Comments (4)
I guess the bank didn't do their do dillegence to source and season downpayment funds. I agree that what the parties involved did is wrong but I also feel that at that time some lenders were just too greedy to institute some common sense underwriting standards. Which is why we have a housing crisis. Greed, greed, greed!!! Oh wait..... let's blame the mortgage brokers!
Posted by keith d | Friday, August 03 2012 at 2:43PM ET
So why hasn't Babbini been sentenced? And did Babbini break his Federal Probation orders by committing another act before sentencing on this fraud. Suzanne Kensington-Like was owner of Global Mortgage LLC and some plaintiffs filed $100,000.00 against Global and $50,000 against Babbini but looks like both filed bankruptcy to avoid paying the judgments. Drew Hull, Escrow Agent received 5 years probation in this indictment this week.
Posted by | Saturday, November 10 2012 at 10:43AM ET
So why hasn't Babbini been sentenced? And did Babbini break his Federal Probation orders by committing another act before sentencing on this fraud. Suzanne Kensington-Like was owner of Global Mortgage LLC and some plaintiffs filed $100,000.00 against Global and $50,000 against Babbini but looks like both filed bankruptcy to avoid paying the judgments. Drew Hull, Escrow Agent received 5 years probation in this indictment this week.
Posted by | Saturday, November 10 2012 at 10:44AM ET
Defendant accused of being part of 2nd fraud

By Robert AnglenThe Republic | azcentral.comSat Nov 10, 2012 3:16 PM

A defendant in a Valley-wide mortgage-fraud case who agreed to work with federal prosecutors as part of a plea deal now is being accused of trying to broker a bogus investment deal.

In exchange for a lighter sentence, former Scottsdale loan officer Ernest Babbini confessed last year to working with a Mesa minister to submit millions in phony loan documents.

But the CEO of an international trading firm headquartered in Texas says that at the same time Babbini was cutting his deal with prosecutors, he tried to broker a fake investment with the seller of diesel fuel.

Darren Yancy, president and chief executive of Yancy & Associates, recently added Babbini to his Blacklist blog, which warns investors about potential fraud schemes and questionable ventures.

"This world is full of liars, crooks, and thieves and we have had enough," the Blacklist site states. "If you engage with our firm as a buyer, supplier, broker, mandate, etc. and you do not perform -- we are going to let the world know."

Babbini could not be reached for comment. His lawyer, Michael Reeves of Phoenix, said Thursday he was unaware of the accusation and could not speak about it.

In an interview last month, Yancy said Babbini and another individual used "cut-and-paste" paperwork to pass themselves off as middlemen in the fuel sale. He said they approached a well-known company directly and offered to help facilitate the transaction.

Babbini and his partner produced a fake "sales-and-purchase-order agreement and pay order on a D2 transaction," Yancy said in the Blacklist memo. D2 refers to a grade of fuel.

A review of the paperwork immediately raised red flags, Yancy said. He said the buyer in the deal was out of Turkey. Yancy said he filed a report with the FBI.

Federal authorities would not comment last week on the accusation, or about how it could affect Babbini's plea agreement in the mortgage-fraud case.

Records show Babbini is the only one of five conspirators in the mortgage case not yet sentenced. Babbini last year confessed to helping Mesa minister Clint Rogers launder $5.5 million through his international ministry. Babbini, along with former Scottsdale escrow agent Drew Hull and Tempe homebuyer Shannon Kato, called Rogers the ringleader in a cash-back scheme in which participants lied on applications about home values, transferred title from one buyer to another while obtaining loans on the bloated price, and then pocketing the difference.

Rogers and his wife, Angela Faith Rogers, confessed this year to milking 15 homes of cash between 2006 and 2007. Clint Rogers was sentenced in July to five years in prison. His wife received a deferred sentence until 2014.

Property records show that Rogers and his wife bought homes that other sellers had purchased for thousands of dollars less just hours, days or weeks earlier. Last week, Kato was sentenced to 24 months in prison and Hull was sentenced to five years of probation. Each was ordered to pay $225,000 in restitution.
Posted by | Sunday, November 11 2012 at 5:06PM ET
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