FACTS
During the week of Dec. 5, three conspirators in a Valley mortgage-fraud ring say a Mesa minister with a worldwide following masterminded the scheme. A former loan officer, escrow agent and straw buyer who have pleaded guilty as part of a deal with federal authorities SAY THEY HELPED CLINT ROGERS launder millions of dollars through his ministry.
In a plea agreement made public FORMER SCOTTSDALE LOAN OFFICER ERNEST BABBINI told prosecutors that he SUBMITTED $5.5 MILLION IN PHONY MORTGAGE-LOAN DOCUMENTS ON 15 HOMES PURCHASED BY ROGERS AND HIS WIFE, ANGELA FAITH ROGERS.
The plea agreements provide insight into a form of mortgage fraud commonly referred to by authorities as a cash-back operation, in which participants lie on applications about home values, transfer title from one buyer to another while obtaining loans on the bloated price and then pocket the difference.
BABBINI, ALONG WITH FORMER SCOTTSDALE ESCROW AGENT DREW HULL AND TEMPE HOMEBUYER SHANNON KATO, admitted in court documents that they used "double escrow" transactions and sales to bogus family trusts in order to artificially inflate the values of the properties and hide the identity of the purchaser from banks.
CLINT ROGERS IS THE HEAD OF MESA-BASED CLINT ROGERS MINISTRIES and conducts faith-healing events at churches throughout the United States, Africa, Asia, Europe and elsewhere. He and his wife are scheduled for trial on Valentine's Day 2012.
"My client has always maintained his innocence and does so to this day," Rogers' lawyer, Eric Kessler, said.
Rogers and his wife were indicted by a federal grand jury in March, accused of fraudulently obtaining $5.5 million in financing for 15 homes bought in 2006 and 2007. Authorities say they got about $2.5 million in cash, which they concealed in ministry accounts.
Federal authorities said the case against the Rogers's is significant because of the number of homes involved and the amount of cash they generated. They said the defendants obtained anywhere from $113,000 to $530,000 in cash back from each home sale.
The couple's home purchases were detailed in a 2009 investigation by The Arizona Republic, which found that they bought 26 homes in less than two years and that nearly all of them went into foreclosure. 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. Records show that 15 of the homes were sold to Rogers by Tempe resident Shannon Kato.
In an October plea agreement, Kato said his role in the scheme was to act as the straw buyer, purchasing homes in his name, the name of his company or a fictitious family trust. "So, it would appear that I had purchased the property from the seller, and then turned around and sold it at a higher price to Clint Rogers, Angela Rogers, another Rogers family member or a Rogers-controlled entity," Kato said in court documents.
One of the homes was among those detailed by The Republic in 2009.zProperty records show that Kato purchased a house on Merion Way in Paradise Valley on May 3, 2006, for $1.4 million. On the same day, Kato sold the home to Clint Rogers for more than $1.9 million. The house was foreclosed on and sold in April 2008 for $1.35 million.
In his plea agreement, Kato said he once signed a home-warranty deed claiming to be a trustee of the Whistle Family Trust in order to sell a home from F. Whistle to Clint Rogers. "The Whistle Family Trust did not exist," Kato admitted in court documents. "This was a way to artificially inflate the sales price that would be financed and conceal cash back to Clint Rogers."
Kato described how a settlement statement provided to the bank for one home sale showed that Rogers would receive $420 cash on the purchase without disclosing that $529,804 had gone to World Holdings LLC, a company Rogers controlled.
In her plea agreement, Hull said they submitted simultaneous loan applications to keep lenders from discovering multiple home purchases. She said applications listed false income and lied about occupancy in order to get the loans. "I had incentive to close the deals because I would receive extra compensation from the escrow company in the form of bonuses," Hull said in court documents.
Rogers' lawyer declined to discuss the plea agreements. But, in a May court filing, he said Rogers was a victim of fraud and pointed the finger at Kato, Babbini and Hull.
Rogers, in court documents, said Kato encouraged him to get involved in what he believed was a legal real-estate investment. He said Kato was the one who set up the "double escrow" deals and created the trusts. Rogers maintained that he sought legal advice to ensure it was not against the law. Rogers said Babbini in some cases forged his signature on the loan documents without his knowledge. Rogers also maintained that Hull worked directly with Kato and Babbini to create the phony trusts and fraudulent loan documents.
Rogers and his wife have been charged with 13 counts of conspiracy, money laundering and wire fraud.
In exchange for pleading guilty and cooperating with authorities, Babbini, Kato and Hull will be charged with one felony count of conspiracy. They each face up to a $250,000 fine, five years in prison and five years' probation (azrep12711)
MORAL
It will make for an interesting trial. Especially since it is to start on Valentine's Day, 2012.
CALIFORNIA AG CAUSES ARREST OF TWO SOUTHERN CALIFORNIA MEN FOR $6 MILLION LOAN MODIFICATION SCAM
FACTS
On Dec. 7, Attorney General Kamala D. Harris announced the arrests of two Southern California men who, under the guise of an attorney-backed loan modification company, collected more than $6 million from homeowners nationwide for services that were never performed.
CHRISTOPHER FOX AND CURTIS MELONE (AKA CURTIS KUBAT), were ARRESTED DEC. 6, on 37 felony counts, including conspiracy, grand theft and unlawful collection of advance fees. FOX AND MELONE, ALONG WITH KING HARRIS III OF ST. LOUIS, collected more than $6 million in up-front fees through Orange County-based Green Credit Solutions. The Attorney General's office will seek extradition of Harris, who currently faces federal mail and wire fraud charges in Missouri.
In June 2009, the Attorney General's office launched an investigation of GREEN CREDIT SOLUTIONS, later renamed GUARDIAN CREDIT SERVICES AND GET MY CREDIT GRADE, in response to numerous consumer complaints filed with the office, as well as with the Better Business Bureau, the California Department of Real Estate and the State Bar of California.
Through witness interviews, analysis of the company's marketing materials, and its business and financial records, DOJ investigators uncovered a scheme in which thousands of victims paid $3,500 for what they believed were attorney-backed loan modification services to reduce their interest rates, monthly payments or principal balance.
From November 2008 to October 2009, Fox, Melone and Harris collected more than $6 million from thousands of homeowners across California and nationwide. Victims were told their funds would be held in a so-called "attorney escrow account" until services were completed. In fact, those fees were often deposited into the account of a disbarred attorney and then promptly transferred to GCS.
Likewise, the company fraudulently claimed that loan modification services would be performed by attorneys; Harris is a disbarred Tennessee attorney and marketing materials referred to his alleged partners at the defunct law firm of "Smith Harris PLLC." (CAAG12711)
MORAL
Take money for a loan modification, before the services are completed, do not put it into a trust account and the AG may be looking at the person for criminal prosecution.
THREE CALIFORNIA MEN PLEAD GUILTY TO MORTGAGE FRAUD
FACTS
On Dec. 6 and 7, JAMES STANLEY WARD, EDWARD GEORGE LOCKER, AND RICHARD FERGUSON TIPTON pleaded guilty in federal court in San Francisco to conspiracy to commit mail and wire fraud.
Defendants admitted that they deceived investors in Mountain View, Calif.-based private money lender JIM WARD & ASSOCIATES INC., AND ITS SUCCESSOR, JSW FINANCIAL INC. Using funds obtained from investors, the defendants, through JWA and JSW, arranged and serviced private money loans to borrowers who built single family homes. JWA and JSW offered investors the opportunity to invest in fractional interests in these loans and in the BLUE CHIP REALTY FUND LLC AND SHORELINE INVESTMENT FUND LLC.
JWA and JSW generated and provided documents to investors that represented that Blue Chip and Shoreline made and invested in loans that were secured by deeds of trust on real property. However, the defendants knew that those representations were false, because JWA and JSW did not secure investments in Blue Chip and Shoreline.
WARD, LOCKER AND TIPTON were indicted by a federal grand jury on June 21, and charged with 18 counts alleging conspiracy to commit mail and wire fraud, mail fraud, and wire fraud, in violation of 18 U.S.C. Sections 1349, 1341, and 1343. Under the terms of their plea agreements, Ward, Locker, and Tipton each pleaded guilty to conspiracy to commit mail and wire fraud.
Ward, Locker and Tipton are currently scheduled to be sentenced before Judge William H. Alsup in San Francisco, pursuant to the following schedule: March 13, 2012 (Ward), June 5, 2012 (Locker), and June 26, 2012 (Tipton).
The maximum statutory penalty for conspiracy to commit mail and wire fraud in violation of 18 U.S.C. Section 1349 is 20 years imprisonment and a fine of $250,000, or twice the gross gain or loss, whichever is greater, plus restitution. Case #: CR-11-0393 WHA (usattynd12711)
MORAL
Like I said, the federal prosecutors are still at it “hot and heavy.”
SINCE MAY OVER 45 PEOPLE IN THE SACRAMENTO AREA HAVE BEEN INDICTED FOR MORTGAGE FRAUD. NOW THERE ARE 11 MORE AND COUNTING
FACTS
On Dec. 8, SERGEY SHCHIRSKIY, a Sacramento man who was sentenced to two years in state prison for attempted extortion, was among 11 PEOPLE INDICTED in connection with one of the largest mortgage fraud cases to hit Sacramento. Sergey Shchirskiy was convicted in 2005 of threatening the owner of a local auto body shop who had reported the theft of a customer's Mercedes-Benz.
A federal grand jury charged Shchirskiy with wire and mail fraud as part of a wide-ranging federal investigation into mortgage fraud in the Sacramento region that has so far yielded indictments against 45 people. Many of the defendants are members of the local Russian American community. Collectively, they are charged with defrauding more than $16 million from several lenders.
"The investigation is still ongoing, and more indictments are still to come," said Assistant U.S. Attorney Steve Lapham.
Shchirskiy pleaded not guilty on Friday to the charges before U.S. Magistrate Judge Kendall Newman. Newman ordered Shchirskiy and two other defendants detained after federal prosecutors argued they were possible flight risks. Shchirskiy, an immigrant from the former Soviet Union, has been living in the United States under a green card.
Shchirskiy was convicted by a jury in Sacramento Superior Court in August 2005 after he threatened a local auto body shop owner. The body shop owner had reported the theft of a Mercedes-Benz from his shop. Court records say Shchirskiy demanded $10,000 for the return of the vehicle and threatened to burn it.
In addition to Shchirskiy, SACRAMENTO RESIDENTS KHADZHIMURAD BABATOV AND ROMAN MALAKHOV were ordered detained by the federal court. Public records show that BABATOV IS PART-OWNER OF A NORTH HIGHLANDS RESTAURANT CALLED KAVKAZ VIP. HE ALSO IS CO-OWNER OF A MORTGAGE COMPANY CALLED M & A MARKETING. MALAKHOV WAS AN M & A EMPLOYEE.
According to the grand jury, M & A recruited straw buyers who took out mortgage loans using phony documents for homes that later went into foreclosure. This latest group to face indictment bought seven homes in Sacramento, West Sacramento and Lincoln and obtained home equity loans on the properties before walking away from them. The foreclosures resulted in losses of more than $1.5 million to lenders. According to the grand jury, Shchirskiy helped recruit straw buyers for homes in Sacramento and Lincoln and got a $10,000 fee from LOCAL TAX PREPARER VERA KUZMENKO, a central figure in the ongoing federal probe.
The grand jury indicted Kuzmenko in May, alleging that she recruited dozens of straw buyers and helped them fill out bogus loan applications. Kuzmenko, who has pleaded not guilty, has denied personally handling any of the loans and property sales and has blamed the problems on the lender. (sacbee121011)
MORAL
It seems I have heard the "lender is at fault” several times before in other cases. Remember they are innocent until proven guilty. BUT if you sign the 1003 on a stated income loan and tell the borrower what to put down, and it is not true, then it becomes fraud and criminal fraud if the lender relies on it. The lender underwrites or does not underwrite the loan has nothing to do with the underlying false income. The borrower signs the 1003 under oath and the mortgage loan originator is the one who assists the borrower in applying for the loan. We defend enough of these cases to know where we can and where we cannot win from the facts. See your attorney if you have been involved with any questionable loans since 2005. The trend seems to be that indictments are coming down now for loans completed in 2005 to the present although I have seen some 2004 loan indictments as well. Remember, the federal prosecutors have 10 YEARS FROM THE DATE THE LOAN FUNDED to indict!
HAVE YOU NOTICED THE INCREASE IN CALIFORNIA INDICTMENTS LATELY OVER OTHER STATES? I HAVE.
MAN AWAITING SENTENCING FOR CALIFORNIA STATE CONVICTION ON MORTGAGE FRAUD NOW IS ALLEGED TO HAVE COMMITTED MORE MORTGAGE FRAUD WHILE ON BAIL!
FACTS
A Turlock, Calif. homeowner two weeks ago signed over part interest in his property to a man who promised to save the family home. Chances are, he didn't know that his would-be savior was convicted of fraud only three weeks before the transaction while out of custody to await sentencing in state prison.
Now federal authorities are after ALAN DAVID TIKAL, whose collaborators including unidentified agents in Stanislaus County, preyed on at least 590 mortgage reduction victims with more than $201 million at stake, according to an affidavit.
"The scheme continued to operate while Tikal was incarcerated and after his release," Special Agent Joseph Camillucci says in the document. He works for President Barack Obama's Troubled Asset Relief Program and apparently continued to track Tikal's companies after his February arrest on a grand jury indictment from Alameda County.
TIKAL AND HIS KATN TRUST appeared to have dealings with at least 20 families in Stanislaus County. But he was charged only in Alameda County and remained in custody until PLEADING NO CONTEST ON HALLOWEEN TO TWO FELONY COUNTS.
His plea deal would net a 16-month term in state prison; the prosecutor in that case has said a judge could impose a three-year, eight-month sentence if Tikal fails to appear at a sentencing scheduled for Dec. 21.
TIKAL was previously based in Las Vegas and apparently moved with his wife to Brentwood in Contra Costa County, where she and others allegedly continued the scheme, the affidavit says. Federal agents served search warrants on Dec. 7, on their house, which doubles as an office, a TARP spokesman in Washington said. Federal authorities believe Tikal and his associates engage in mail and bank fraud opening a door for federal prosecution.
According to the affidavit, victims were concentrated in Stanislaus and San Joaquin counties, as well as Sacramento, the Bay Area and Southern California. The affidavit describes methods similar to those that got Tikal in trouble in the Bay Area, where he or collaborators convinced people they could obtain new loans at a 75% discount for a fee, typically about $1,100. Many stopped paying premiums to legitimate lenders, paid Tikal instead and eventually lost their homes, authorities say. Some were induced to file phony documents at county offices, documents say.
A webinar observed by The Sacramento Bee suggested Tikal relied on a "vapor money" theory, telling homeowners they could get out of traditional loans because the government backs banks with "vague promises" and not gold. He told customers he was a private banker with "access to enormous lines of credit in the banking industry."
Bank account records obtained by federal authorities showed that TIKAL AND HIS WIFE, TAMARA SILVA, pocketed more than $1.4 million in homeowners' fees in 2010, the affidavit says.
Agents sought evidence on entities identified as LEARN TO BREAK FREE, CARING ABOUT AMERICA, BIOSPHERE ALTERNATIVES LLC, PC MARKETING LLC, AMERICAN PREMIER INVESTMENTS, LAMAR EQUITIES, SHERWOOD ARCHER LLC AND WALGREEN PARTNERS LLC. It also lists "CALIFORNIA-BASED REPRESENTATIVES SUCH AS BRANDON LE, ALAN MIDDICK, MARIO MACIAS, BRUCE BLANKENHORN, LUIS DE LEON, LUIS PEREZ, MIRIAM MANGRUM, JAVIER ORDONEZ AND JOSE, PAUL AND DANIEL CASTELLANOS." (modbee12811)
MORAL
If any of the above is true, I would suggest that a lot of people need a lot of lawyers and need them now.
DENVER REAL ESTATE SALESPERSON, BROKER AND APPRAISER SENTENCED TO FEDERAL PRISON FOR MORTGAGE FRAUD
FACTS
Three men were sentenced for implementing a mortgage fraud scheme. U.S. District Court Judge Philip A. Brimmer sentenced CEDRIC LIPSEY, A LICENSED REAL ESTATE AGENT, TO SERVE 63 MONTHS IN FEDERAL PRISON. Losses caused by the fraud totaled over $4.2 million. Lipsey was also ordered to pay restitution to the victims of his crime. Judge Brimmer SENTENCED PHILIP A. MARTINEZ, A MORTGAGE BROKER, TO SERVE 50 MONTHS IN FEDERAL PRISON. Martinez was also ordered to pay restitution to the victims of his crime. And in a separate but related case, Judge Brimmer SENTENCED LICENSED APPRAISER DAVID VUKOVINSKY TO SERVE 12 MONTHS AND ONE DAY IN PRISON and pay restitution.
Beginning in April 2004 and continuing until March 2006, Cedric Lipsey, aided and abetted by Philip Martinez, did knowingly devise and intend to devise a scheme to defraud lending companies that funded residential mortgage loans and to obtain money from them by means of materially false and fraudulent pretenses, representations, and promises. To implement the scheme, the defendants utilized Vukovinsky's inflated appraisals.
Lipsey orchestrated the purchase and resale or refinancing of numerous residential properties, including the sale of one of his own homes, by paying individuals to participate as “investors” in what he referred to as an investment “opportunity.” Lipsey and Martinez arranged for these so-called “investors” to use their good credit to obtain mortgage loans to purchase the properties. Shortly after the first set of loans that helped these individuals purchase properties, Lipsey caused them to sell the properties to a second set of buyers at substantially higher prices, with Lipsey and Martinez taking a combination of commissions, fees, and proceeds from the first and second transactions.
Lipsey falsely represented that the first buyers would be purchasing and had purchased the properties for less than their actual market value. The first sales were not “distressed”, as the defendants represented to facilitate their fraud. In fact, the first buyers purchased the properties at or near their market value, and there was no legitimate reason for the substantial increase in price when the same properties were resold shortly thereafter.
Lipsey and Martinez arranged to have a variety of fraudulent documents submitted to the lenders in support of the loan applications. These consisted primarily of documents purporting to show proof of the borrowers' employment, proof of the borrowers' assets, and sources of the borrowers' asset, and incomes. The defendants also used forged signatures where necessary to facilitate the scheme. Furthermore, Lipsey enabled certain appraisers to create false reports which reflected that the subject properties were “comparable” to the higher quality or otherwise more valuable properties, when they were not. (usattyco12611)
MORAL
Notice how the federal prosecutors went back to loans in 2004? Over seven years ago. Remember, they have 10 years to prosecute. The prosecutions seem to be coming “hot and heavy." I am seeing many more with heavier sentences in addition to all the civil lawsuits we are defending brought by FDIC, Flagstar, Chase, HUD and others.
FIVE IN ALBANY, NY SENTENCED FOR MORTGAGE FRAUD
FACTS
On Dec. 6, JORDAN LACCETTI, a loan officer for RIVERTOWN FINANCIAL SERVICES, in Albany, together with ATTORNEY KEVIN P. WHEATLEY AND GEOFFREY GOLDMAN, who RAN A BRANCH OF AAPEX MORTGAGE, which operated out of the Rivertown suite of offices, received jail time following a conviction for mortgage fraud.
Laccetti admitted that he completed an application for a loan through Aapex Mortgage that contained INFLATED INCOME AND ASSET INFORMATION. He pleaded guilty to one count of falsifying business records in the first degree and received ONE YEAR IN JAIL, A FINE AND RESTITUTION TOTALING $908,000.
Wheatley, and the others, sentenced by Albany County Court Judge Stephen Herrick, RECEIVED A TERM OF 3½ to 10 YEARS IN PRISON for his role. Wheatley was also ordered to pay restitution of over $5 million to the victims of the fraud.
He had pleaded guilty in July to one count of grand larceny in the second degree and to scheming to defraud in the first degree. When he pleaded guilty, Wheatley became disbarred from the further practice of law.
Wheatley had admitted to Judge Herrick that that from May 2005 through March 2008, he and others at Rivertown defrauded mortgage lending institutions and owners of residential real estate.
The scheme was accomplished through the use of “straw” buyers who provided inflated income and asset information to fraudulently obtain loans to buy properties in the Capital Region and the Hudson Valley, as well as New Jersey and Pennsylvania.
Rivertown, of 1762 Central Ave., Albany, solicited homeowners who were in financial distress to sell their homes. The company would then agree to lease the homes back to them and to apply their net equity as a down payment on their eventual repurchase of the homes. In many cases, however, the homes were not sold back to customers, and some homeowners were actually evicted from their homes.
Other Rivertown defendants pled guilty in connection with this scheme in Albany County Court. They include:
Goldman pled guilty to one count of grand larceny in the second degree and one count of scheme to defraud in the first degree. He RECEIVED 4 TO 12 YEARS IN PRISON and must pay fines and restitution totaling $5.6 million.
JONATHAN GOLDMAN, an owner and officer of Rivertown and the straw buyer for approximately 16 transactions. With his brother Geoffrey Goldman and Wheatley, Jonathan GOLDMAN WAS ALSO AN OWNER OF GRIFFON TITLE AGENCY, which operated out of the Rivertown suite of offices. Jonathan Goldman pleaded guilty to one count of scheme to defraud in the first degree and received 1 1/3 to 4 years in prison, a fine, and restitution totaling $3.5 million.
JESSICA PERYEA, a LICENSED REAL ESTATE BROKER, the sales director for Rivertown, and a straw buyer for at least five transactions in New York and Pennsylvania pleaded guilty to one count of grand larceny in the third degree. Peryea received 1 to 3 years in prison, a fine, and restitution totaling $3 million. (ncgaz12611)
MORAL
This is a state prosecution. Note the loans prosecuted funded in 2005, seven years ago and some of the people drew sentences of up to ten to fourteen years. The lawyer was disbarred and received up to 10 years in state prison.
TEXAS COUPLE INDICTED FOR MORTGAGE FRAUD. TOTAL INVOLVED TO DATE IS 22
FACTS
On December 7, 2011 DIANNE R. JOAQUIN and her husband KENNETH W. JOAQUIN of San Antonio, were indicted on allegations of helping out in a mortgage fraud scheme that resulted in $50 million in losses to lenders. They face federal charges of bank fraud, engaging in a monetary transaction in property derived from unlawful activity, and conspiracy. They are the latest to be charged in a sweep called “Operation Stolen Dreams” by the Justice Department, FBI and Internal Revenue Service.
According to court records, they are ACCUSED OF AIDING A MORTGAGE SCAM BY LEDALE LASHETTE COLES, who ran SUPREME MORTGAGE GROUP, LLC one of several entities used in a scheme blamed primarily on ROBERT BROOKS of Dallas. Dianne Joaquin worked for Coles, according to the records.
Coles has pleaded guilty to money laundering and faces up to 10 years in prison.
BROOKS AND HIS WIFE, CHERYL, ARE AMONG 22 PEOPLE INDICTED in San Antonio in June 2010 on charges that they conspired in a flipping scheme that caused $50 million in loans to go into default.
Records state that Coles helped with more than $1 million in fraudulent loans, and the Joaquins are alleged to have aided Coles in obtaining about half of that, according to court records.
The defendants in the Brooks indictment also include McKinney lawyer RICHARD HOWARD, FORMER BEXAR COUNTY SHERIFF'S DEPUTY GEORGE AUTOBEE, a San Antonio real estate agent, mortgage processors, and escrow and title officers.
The Brooks indictment said that from May 17, 2005, through Feb. 21, 2008, Brooks obtained properties at or about market value, then offered people $10,000 to $25,000 each to act as straw buyers for the homes at inflated prices. Using falsified documents, Brooks obtained mortgage loans for the straw buyers and then let the mortgages go into default, the indictment alleges.
Brooks' scheme, the indictment alleges, was aided by appraisers, title officers, escrow officers, mortgage processors and others who helped submit false documentation and information to lenders. Several have pleaded guilty, while the Brooks await trial. (express-new.net12711)
MORAL
Remember. Innocent until proven guilty but with what appears to be the ringleader already having pled guilty it would seem he might be cooperating with the prosecutors.
THE INFORMATION CONTAINED HEREIN IS NOT LEGAL ADVICE.
AN ATTORNEY SHOULD BE CONSULTED IF YOU DESIRE LEGAL ADVICE
