New Jersey Case Sees 10th Defendant Plead Guilty to Mortgage Fraud
Facts
On March 14, Robert Serao pleaded guilty and admitted his role in a $41 million mortgage fraud conspiracy in which he used his position as a loan officer for Wells Fargo Home Mortgage to get the company to release more than $4.6 million based on fraudulent mortgage loan applications.
He pleaded guilty in federal court to count one of an indictment charging him with conspiracy to commit wire fraud. He is the 10th defendant to plead guilty in the case.
While working in various positions, including branch manager, sales manager and loan officer at Wells Fargo Home Mortgage, Serao entered into a conspiracy with Stephen Corba, Charles Harvath, Joseph Witkowski and other to submit mortgage loans to his employer for financially unqualified straw buyers based upon false and fraudulent information contained in the applications, HUD-1 forms, tax returns and other documents.
Once the loans were approved and the mortgage lenders sent the loan proceeds in connection with the real estate closing on the properties, Serao's conspirators took a portion of the proceeds from the fraudulent mortgage loans. Wells Fargo Home Mortgage released more than $4.6 million based on fraudulent mortgage loan applications. Serao profited from his role in the conspiracy by increased commissions on the mortgage funds.
Harvath and Corba are among the nine others who previously pled guilty to charges associated with this scheme.
Serao faces a maximum potential penalty of 30 years in prison and a $1 million fine. (usattynj31414)
Moral
Ripping off the lender you work for when that lender is a subsidiary of a national bank can get you a great deal of prison time.
Pair Convicted of Rigging Bids at Foreclosure Sales
Facts
After a four-week trial, on March 11, in Sacramento, Andrew Katakis and Donald Parker were found guilty of rigging bids at foreclosure auctions held in San Joaquin County between September 2008 and October 2009. Katakis was also convicted of obstruction of justice charges related to deleting electronic records related to the crime in an effort to throw off federal investigators.
There were 11 others who were convicted earlier in plea bargain deals.
Some of them testified against the men, saying they cheated at auctions of repossessed homes in San Joaquin County during the mortgage meltdown in 2008 and 2009, defrauding lenders and freezing out honest buyers while splitting proceeds among members of their group.
Katakis helped finance most of the 254 homes scrutinized by the FBI and other agencies. He said he was not directly involved and had been duped by a middle man, and his attorney said authorities ignored evidence pointing to Katakis' innocence. When Katakis learned from Oak Valley Community Bank that authorities wanted his records, he bought scrubbing software and erased computer files and emails, prosecutors said.
Katakis was the owner of California Equity Management Group Inc. and managing partner of Lenders Financial Group LLC, real estate investing companies based in Modesto. Parker owned and worked for several real estate investing companies based in and around Sacramento and Stockton.
Evidence showed that after the conspirators' designated bidder bought a property at a public auction, they would hold a second, private auction, at which each participating conspirator would bid the amount above the public auction price he or she was willing to pay. The conspirator who bid the highest amount at the end of the private auction won the property. The difference between the price at the public auction and that at the second auction was the group's illicit profit, and it was divided among the conspirators in payoffs.
Jurors began deliberating at noon March 5 and continued huddling for the rough equivalent of four days before handing up the verdicts, which may result in federal prison terms. The jury could not reach a unanimous decision on whether the men had committed mail fraud as part of the scheme.
Katakis and Parker were convicted of bid rigging in violation of the Sherman Act, which carries a maximum penalty of 10 years in prison and a $1 million fine for individuals, according to the Department of Justice. The maximum fine may be increased to twice the gain derived from the crime or twice the loss suffered by the victims of the crime, if either of those amounts is greater than the statutory maximum fine. The obstruction of justice conviction carries a maximum sentence of 20 years in prison and a $250,000 fine. (usattedsac21114)
Moral
Anyone in here you know? Anyone in here you wish you did not know?
Former Fannie Mae Employee Guilty of Taking Kickbacks to Funnel Foreclosures
Facts
On March 14, Armando Granillo, a former sales representative of Fannie Mae admitted in a Santa Ana (Calif.) Federal Court that he demanded kickbacks from an Arizona Broker in exchange for sending him foreclosure listings. During the admission by Granillo he told jurors he needed the money to pay for his autistic daughter’s therapy because it was very expensive. He faces up to 20 years in federal prison.
Granillo oversaw the assignment of Fannie Mae owned foreclosures to listing agents around the Western United States. He was arrested in a “sting” in the parking lot of a Los Angeles Starbucks when he was handed an envelope with $11,200 in cash which have been videotaped with sound. (ocreg31514busp3,lat315bp1)
Moral
Presuming he told the truth about his daughter, it was understandable but not legal.
Two Get Seven Years in Prison for Mortgage Assistance Scam
Facts
On Feb. 20, Christopher Godfrey and Dennis Fischer were sentenced today to serve 84 months in prison for defrauding thousands of homeowners in a $4 million nationwide home loan modification scheme.
The defendants were convicted after a two-week trial of one count of conspiracy, eight counts of wire fraud, eight counts of mail fraud and one count of misusing a government seal.
They were reported as having stole millions of dollars from homeowners who sought help to refinance their mortgages and save their homes from foreclosure.
They scammed homeowners by selling for $400 to $2,000 what is a free application to the Troubled Asset Relief Program's housing program. They are reported to have swindled homeowners out of more than $4 million, which they used for extravagant trips to Dubai and France, luxury shopping sprees, and to pay their own mortgages on waterfront homes in Florida beach communities.
From January 2009 through May 2011, Godfrey, Fischer and their employees, operating under the name Home Owners Protection Economics Inc., made a series of misrepresentations to induce struggling homeowners to pay HOPE a $400 to $2,000 up-front fee in exchange for HOPE's help obtaining federally funded home loan modifications. Among these misrepresentations were the claims that, with HOPE’s assistance, the homeowner was guaranteed to receive a loan modification under the Home Affordable Modification Program, a part of TARP and is a federally funded mortgage-assistance program. The defendants routinely claimed that the homeowner had already been approved for a loan modification, provided phony approval codes, quoted new (and wholly fictitious) mortgage terms and due dates, touted their 98% past success rate and claimed that they were "underwriters" or were otherwise affiliated with the homeowners' mortgage companies. HOPE also claimed that it would offer homeowners refunds in the unlikely event that they did not receive a loan modification.
In exchange for the up-front fees, HOPE sent its customers, including homeowners in Massachusetts, a do-it-yourself application package, which was virtually identical to the application that the government provides free of charge. The HOPE customers had no advantage in the application process, and, in fact, most of their applications were denied. Through these misrepresentations, HOPE was able to persuade thousands of homeowners to pay more than $4 million in fees.
The defendants claimed that they operated HOPE as a non-profit, when, in fact, they operated as a for-profit telemarketing fraud scheme. Godfrey and Fischer used funds that homeowners had paid into the purported non-profit's bank account to pay for their trips to Dubai and the South of France, to shop at luxury stores, to pay for their pool service, and to pay the mortgages on their waterfront home and condominium in Florida. The remaining two defendants in the case, Vernell Burris Jr. and Brian Kelly, had pleaded guilty and were sentenced on Feb. 25. Burris received 12 months and one day. (usdoj22014)
Moral
The one day lets Burris get out a little early. Cooperate with the federal prosecutors and be first in line to serve less time.
Nevada Man Gets Over Four Years in Federal Prison for Mortgage Fraud
Facts
On March 7, Lance Kellow was sentenced to 57 months in prison and ordered to pay $834,000 in restitution for his role in a mortgage fraud scheme that caused more than $1 million in losses to federally insured financial institutions.
Kellow was convicted by a jury of one count of conspiracy to commit mail and wire fraud, three counts of wire fraud, and one count of bank fraud.
Lance Kellow, an experienced loan officer and licensed mortgage broker in southern Nevada, used his experience and knowledge to commit mortgage fraud for profit. On four different occasions, Lance Kellow along with his brothers Jason and Vince lied to mortgage lenders in order to get real estate and money for their own use.
Beginning in January 2007, the brothers conspired to sell their houses to their cousin, who was not qualified to buy them, for a significant profit. The brothers placed false information about their cousin's employment and finances in mortgage loan applications, and helped him qualify for the loans by depositing cash in his bank account and omitting and paying down his debt, all without informing the lenders. As a result of the false statements in the loan applications, the lenders made loans to the cousin that they would not have otherwise made. Using this scheme, the Kellow brothers received over $500,000 in cash from these sales. The cousin then defaulted on the mortgages, causing losses to the banks in excess of $1 million.
Jason Kellow pleaded guilty to conspiracy to commit bank fraud, and was sentenced in March 2013 to 33 months in prison and ordered to pay $1 million in restitution. Vinson Kellow pleaded guilty to wire fraud and was sentenced in April 2013 to seven months in prison. (uattynv31014)
Moral
Loans go back seven years. Prosecuted seven years post loan closings. Note how Vinson has seven months while Lance has four years and nine months to think over his transgressions. Do you think you know why there is a dramatic discrepancy?
The information contained herein is not legal advice. An attorney should be consulted if you desire legal advice.
