ALABAMA MAN GETS 18 MONTHS FOR $750,000 MORTGAGE FRAUD
FACTS
On July 3, a federal judge sentenced Scott Eric Perry to 18 months in prison on false statement charges related to an almost $750,000 mortgage fraud scheme in the Birmingham area. Perry pleaded guilty in February to making false statements to lending institutions in connection to real estate transactions between February 2006 and December 2006. Along with his prison term, U.S. District Judge Karon O. Bowdre ordered Perry to pay $746,865 in restitution to Wells Fargo, J.P. Morgan Chase and Bank of America. Wells Fargo is to receive $505,764; J.P. Morgan Chase, $180,432; and Bank of America, $60,668. Perry is scheduled to report to prison Sept. 12.
Perry, doing business as Master Industries, bought houses in Jefferson County for the purpose of reselling them. From about Feb. 22, 2006 through Dec. 21, 2006, he sold numerous properties to various buyers throughout the Birmingham area. In each of these transactions, a federal Department of Housing and Urban Development form, known as a HUD-1 Settlement Statement, is required. The form is intended to disclose who is to pay and who is receive money as part of the real estate transaction.
Perry signed and submitted the statements as true and accurate but failed to disclose that he both made the down payments for the purchase of the homes and paid the purchasers at least $3,000 as an incentive to buy the properties. By submitting the false documents, Perry induced the lenders to authorize mortgage loans they would not otherwise have approved. (hsattgndal7312)
MORAL
Seems like a lot of time for a small loss relatively speaking. Note the loans go back to 2006 which means federal agents are looking at all suspicious activity reports involving questionable loans from at least 2006 forward. So far our cases seem to indicate they are still looking at 2005 as well.
CALIFORNIA MAN SENTENCED TO 144 MONTHS IMPRISONMENT FOR WIRE FRAUD AND TAX EVASION IN MORTGAGE FRAUD CONSPIRACY-OVER $1.1 MILLION IN RESTITUTION ORDERED TO VICTIMS AND IRS
On July 9, in a Riverside, Calif., federal court Gregory Flores, former manager of All Fund Mortgage, Anaheim Hills, Calif., was sentenced to 144 months in jail and three years of supervised release. U.S. District Judge J. Virginia Phillips also ordered Flores to pay over $1 million in restitution to homeowner victims and over $98,000 in restitution to the Internal Revenue Service for his role in a mortgage fraud conspiracy and evading taxes.
Flores pleaded guilty to one count of wire fraud conspiracy and one count of tax evasion. Flores, along with other co-conspirators, executed an illegal scheme by wire communication to defraud distressed homeowners facing foreclosure and lenders who made mortgage and home equity loans.
Flores or his co-conspirators contacted numerous homeowners, mostly in San Bernardino and Riverside counties, to sell or refinance their homes to others controlled by co-conspirators. Flores and others falsely claimed they could save the homeowners from foreclosure. Homeowners were also solicited through advertisements in mailings such as the “Penny Saver” or by conducting “knock and talk” and typically had poor credit.
As part of the conspiracy, Flores and others would convince the homeowner to allow an “investor” (who was really a “straw buyer”) with good credit to be added to the title of their home, sometimes forging homeowner documents, telling the homeowner they could then refinance under a more favorable term. In most cases, title was never transferred back to the homeowner, essentially stealing the equity out of the property. Few if any payments were ever made and the properties were eventually sold in the course of foreclosure proceedings.
In furtherance of the scheme, Flores and others recruited individuals with good credit to act as straw buyers, offering an opportunity to purchase an investment property with an instant tenant and receiving a “kickback” between $1,000 to $25,000 per property. Flores and others also submitted false documents and provided false statements to lenders inducing them to give mortgages and home equity loans for the properties based upon false documents and statements submitted for loan applications to lenders on behalf of straw buyers. At escrow closing, coconspirators caused the homeowners equity and/or loan proceeds to be deposited by means of the Fedwire system, into bank accounts they controlled and kept the escrow proceeds for themselves. At least 21 homeowners were victimized in a total of $1,042,866.08.
For 2004 Flores received approximately $340,000 in taxable income. Flores also opened a bank account in the name of Advantage 2000 for which escrow checks were deposited to conceal this income and never filed a tax return or paid the tax. Flores agreed he concealed this income for the purpose of evading the income tax due by creating a shell company in the name of Advantage 2000 for the purpose of disguising and diverting funds paid out of escrow. Flores received approximately $264,000 in taxable income and upon that he owed income tax of approximately $98,862.93. (usattycdca7912)
MORAL
Here you will notice the federal prosecutors are looking at loans that funded in 2003, nine years ago. Think about that. The federal investigators are still looking at 2003, 2004 and coming forward. We keep pretty decent track of the line of cases. Especially, California, Nevada and Arizona since we represent clients who have been investigated from these three states as well as elsewhere.
MORE PEOPLE TO BE INDICTED IN OAKLAND MORTGAGE FRAUD SCAM
FACTS
IN SEPTEMBER, federal investigators will charge more individuals as part of an FBI investigation into Concord-based developer Seeno Homes and its affiliates, a federal prosecutor told a judge on June 28.
"(The FBI) is still in the process of conducting an investigation, and I suspect additional charges will be filed in September," prosecutor John Hemann said in an Oakland federal court.
The 2010 FBI raid of the Seeno family's Concord headquarters has already led to the indictment of sales executive Carey Hendrickson on three counts of wire fraud. The government alleges that Hendrickson, of Martinez, who still works for Seeno Homes, participated in a scheme that inflated the value of four homes she tried to buy in a struggling Pittsburg development owned by her employer.
A federal grand jury indicted her April 24, and she faces up to 60 years in prison if convicted on all counts.
Court documents show the developer's activities fit what the mortgage industry calls a "builder bailout," which entails inflating the value of homes to help developers maintain a stronger cash flow during down housing markets. Hendrickson has been free on $50,000 bail.
Federal investigators have collected more than 4,000 pages of loan files, reports on interviews with potential witnesses and other documents. In addition, they have recovered about 20,000 emails from Hendrickson. Hendrickson is due back in court in September. (mortdly7212)
MORAL
Faces 60 years in prison and only a $50,000 bail? I would say the others should be finding attorneys right now since it looks like there will be other names in September. Damage control is the name of the game at this point.
CONNECTICUT RE AGENT PLEADS GUILTY TO $10 MILLION MORTGAGE FRAUD—MANY PRISON GUARDS IMPLICATED
FACTS
On July 5, Menachem Yosef Levitin, a young real estate agent, has admitted that he and a group of prison guards were involved in a scam involving rundown houses in New Haven that swindled $10 million from banks issuing mortgage loans. Levitin pleaded guilty to charges of conspiracy to commit mail fraud, wire fraud and bank fraud in U.S. District Court in Bridgeport. Levitin and those he recruited for the scam are accused of dividing $10 million they obtained by producing false appraisals that caused mortgage lenders, unwittingly, to value houses at $30,000 to $145,000 above their actual sales price.
After acquiring properties and participating in their abandonment to foreclosure, Levitin also is accused of orchestrating short sales. In those sales, he is accused of convincing mortgage holders who had been swindled earlier to sell him the properties again, for less than the mortgage values.
An FBI affidavit filed in the case said the buyers Levitin recruited for the scam includes six prison guards employed by the New York State Department of Corrections. Two of the guards, Ronald E. Hutchinson Jr. and Jacques Kelly, have been charged. The remaining four may be charged as the investigation continues, a federal official said.
Hutchinson pleaded guilty in January to conspiracy to commit mail and wire fraud. Kelly has pleaded not guilty to fraud charges.
A New Haven real estate agent, Charles Lessor, also has pleaded guilty to charges of conspiracy to commit mail fraud, wire fraud and bank fraud.
Between 2006 and 2008, Levitin, a licensed real estate agent, identified the 40 properties targeted in the scam and negotiated with owners who were anxious to sell. Ultimately, authorities said, the owners agreed to sell their homes for prices significantly lower than those listed on sales contracts.
Levitin and his partners also provided phony property valuations to mortgage lenders in order to obtain loans that exceeded the value of the properties. Among other things, they produced inflated appraisals, fictitious leases and phony estimates of rental income.
The participants in the conspiracy split the amount of the mortgage loans that exceeded the actual purchase prices, federal authorities said. In most cases, the buyers recruited by Levitin made mortgage payments for short periods and, eventually, walked away from the properties, the authorities said.
In most of the fraudulent transactions, the buyers used some of the fraudulently obtained mortgage money to cover the deposits and down payments on properties they were buying, federal prosecutors said.
When he pleaded guilty, Levitin agreed to forfeit to the government $160,000 and 19 houses he owns in New Haven. He faces a maximum of 30 years in prison when he is sentenced in September. (courant.com7612)
MORAL
Federal prosecutors nationwide are still pursuing loans over five years old. They have 10 years in which to prosecute from the time the loan closed.
FEDERAL COURT IN WASHINGTON STATE RULES THAT LOAN OFFICERS ARE ENTITLED TO OVERTIME PAY
FACTS
The federal court recently ruled in favor of the Department of Labor’s 2010 interpretation of the Fair Labor Standards Act that modified a 2006 DOL regulation, which largely exempted LOs from receiving any overtime pay.
The court found that 2006 regulation was based on a “misleading assumption” that LOs engaged mostly in administrative activities and thus were not entitled to overtime pay. DOL attorneys argued that most mortgage loan officers are engaged in sales and most of their compensation is based on commissions.
The 2010 interpretation concluded that the LOs perform “production work” not administrative work for their employers. “The courts finds DOL’s argument persuasive,” Judge Reggie Walton said. The court’s decision in MBA v. Labor Secretary Hilda Solis was handed down in June. While the ruling leans heavily toward entitling LOs to overtime pay, LOs that perform administrative duties are exempt from overtime. Collecting and analyzing information about customers’ income, assets, investments and debts, and determining which financial product is best for the customer is considered to be administrative work, according to DOL interpretation.
The DOL 2010 interruptive ruling says LOs who work primarily inside the office are entitled to overtime pay if they work over 40 hours a week. Once the 2010 ruling went into effect some companies started paying their loan officers a minimal salary to avoid paying overtime. However, LOs that mostly work outside the office are not eligible for overtime under the Labor Department’s interpretation. (nmn7512)
MORAL
The same is true in California. If a loan officer is more than 50% inside sales then the loan officer is entitled to overtime. This has been the rule for some time. So if you have loan officers, then you better have a very good written agreement with them. Otherwise you may find us defending you before the Division of Labor Standards Enforcement.
THE INFORMATION CONTAINED HEREIN IS NOT LEGAL ADVICE.
AN ATTORNEY SHOULD BE CONSULTED IF YOU DESIRE LEGAL ADVICE
