California foreclosure attorney sentenced for fraud

One-time Modesto City Council candidate Robert Farrace, an attorney and real estate broker, was sentenced Monday to two years in federal prison for defrauding real estate lenders.

Farrace, 53, was president of the Stanislaus County Bar Association when a jury in November convicted him of three fraud counts after a five-day trial. His law license since was suspended and is likely to be revoked, and he was stripped of his position with the local bar.

Farrace's attorney asked that he be given probation with no time behind bars, insisting that Farrace thought his actions were legal.

Authorities recommended 6 1/2 years in prison, saying industry-insider knowledge helped Farrace trick lenders in order to keep two Modesto investment homes he otherwise would have lost to foreclosure, at 1529 Roseburg Ave. and at 2360 Scenic Drive.

Mortgage fraud

Farrace created a company to buy the homes from himself while concealing from lenders that he was on both ends of the deals in 2009 and 2010, trial evidence showed. He traded one mortgage payment he could no longer afford with one much lower, and tried the same with the second before investigators caught on and prevented the deal from going through, authorities said.

To keep banks in the dark, Farrace recruited a friend's father to pose as the manager of Dignitas LLC, a company Farrace created for the sole purpose of buying the two properties from himself, prosecutors said. Concealing Farrace's involvement helped him get around bank rules requiring "arms-length transactions," trial evidence showed.

His deceit cost lenders a combined $570,853, prosecutors said.

Farrace was a finalist in a 2007 race for City Council, losing in a runoff to Dave Lopez. Farrace also was a Bee community columnist in early 2010 and wrote about foreclosure strategies.

Real estate investigators with the Stanislaus County District Attorney's Office worked with the FBI and the Federal Housing Finance Agency on the case.

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Mortgage fraud Foreclosures Enforcement California
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