A Rhode Island mortgage loan processor with National City Mortgage Co. has pleaded guilty to participating in a straw-borrowing scheme that brought in more than $3.5 million in fraudulently obtained mortgages.
Miguel Valerio admitted in U.S. District Court in Providence, R.I. that he recruited and paid straw purchasers to buy 13 properties in five Rhode Island communities that they could not afford. The lenders eventually foreclosed all of these properties.
To operate this fraudulent scam, Valerio said he and Juan Hernandez, a loan officer at National City Mortgage, formed a company called Latin American Investments. Valerio said in the court hearing that the purpose of this company was to oversee rental properties. However, he said, the properties secured by the conspirators were acquired through straw buyers who applied for mortgages or bought the homes under Valerio's or his former wife's name.
Valerio admitted that the intent of the scheme was to take control of the properties, collect rent, and then sell or “flip” them within a short period of time. The profits from the sale were then going to be divided among the conspirators as well as James Levitt, a former real estate attorney who also allegedly participated in this scheme.
Valerio has been charged with two counts of conspiracy to commit bank and wire fraud. Sentencing is scheduled for March 6 where Valerio faces up to five years in prison and a $250,000 fine on each count.
Hernandez pleaded guilty in October to seven counts of bank fraud, four counts of wire fraud and two counts of conspiracy relating to this crime.
Levitt is awaiting trial on the thirteen-count indictment that was filed in May on this case.
