FACTS
It has come to my attention that some mortgage brokers are being telephone solicited by attorneys over lawsuits where the broker has not been served at the time and the broker is in fact unaware of the lawsuit. When this happens please check the qualifications of the attorney which can be done in part by going to the State Bar of California website much like you check brokers and salespeople on the DRE website.
Most attorneys as far as I am aware do not solicit business in this manner. The attorneys advertise, speak at seminars, have websites, publish articles for journals, newspapers and trade journals. A telephone solicitation for business can be misleading especially if you are under stress. So please check the attorney reputation first before retaining.
In the meantime, good luck and I trust you do not get sued. But remember the best time to have legal counsel is when you get the first letter buyback or loss payment demand. This is the best position to negotiate from. When served with a lawsuit in California a person only has 30 days to respond by law. In Nevada it is 20 days.
MORAL
At the first sign of a problem consult your attorney then. Do not wait until it festers into litigation. It makes it that much harder and definitely more costly.
CONSUMER FINANCIAL PROTECTION BUREAU HAS NEW INTERIM DIRECTOR
FACTS
Raj Date is the special adviser to the Treasury secretary who is running the Consumer Financial Protection Bureau until a permanent director is installed.
MORAL
We are tough but fair is quoted. My quote is we will wait and see what actually happens.
CALIFORNIA GOVERNOR BROWN SIGNS ANOTHER LEGISLATIVE BILL FOR THE PROTECTION OF THOSE SUFFERING DOMESTIC VIOLENCE TO ALLOW THEN TO CANCEL RESIDENTIAL LEASES ON 30 DAYS NOTICE REGARDLESS OF THE TERM OF THE LEASE
FACTS
AB 588, Tenancy: victims of domestic violence.
Existing law authorizes a tenant to notify the landlord in writing that he or she or a household member, as defined, was a victim of an act of domestic violence and intends to terminate the tenancy, and requires that the tenant attach a copy of a temporary restraining order, emergency protective order, or a report by a peace officer to the notice. Existing law permits the tenant to quit the premises after notification and limits the tenant's obligation for payment of rent, to 30 days as specified. Existing law requires the notice to terminate the tenancy to be given within 60 days of the date the order was issued or the report was made, or as specified.
This bill requires that the notice to terminate the tenancy be given within 180 days of the date the order was issued or the report was made, or as specified. Amends Civil Code Section 1946.7. The code sections follows with all the detail.
Civil Code Section 1946.7. (a) A tenant may notify the landlord that he or she or a household member was a victim of an act that constitutes an act of domestic violence as defined in Section 6211 of the Family Code, sexual assault as defined in Sections 261, 261.5, 262, 286, 288a, or 289 of the Penal Code, or stalking as defined in Section 1708.7, and that the tenant intends to terminate the tenancy.
(b) A notice to terminate a tenancy under this section shall be in writing, with one of the following attached to the notice:
(1) A copy of a temporary restraining order or emergency protective order lawfully issued pursuant to Part 3 (commencing with Section 6240) or Part 4 (commencing with Section 6300) of Division 10 of the Family Code, Section 136.2 of the Penal Code, Section 527.6 of the Code of Civil Procedure, or Section 213.5 of the Welfare and Institutions Code that protects the tenant or household member from further domestic violence, sexual assault, or stalking.
(2) A copy of a written report by a peace officer employed by a state or local law enforcement agency acting in his or her official capacity, stating that the tenant or household member has filed a report alleging that he or she or the household member is a victim of domestic violence, sexual assault, or stalking.
(c) The notice to terminate the tenancy shall be given within 180 days of the date that any order described in paragraph (1) of subdivision (b) was issued, within 180 days of the date that any written report described in paragraph (2) of subdivision (b) was made, or within the time period described in Section 1946.
(d) If notice to terminate the tenancy is provided to the landlord under this section, the tenant shall be responsible for payment of rent for 30 days following the giving of the notice, or within the appropriate period as described in Section 1946, and thereafter shall be released from any rent payment obligation under the rental agreement without penalty. Existing law governing the security deposit shall apply.
(e) If within the 30 days following the giving of the notice under this section the tenant quits the premises and the premises are rented to another party, the rent due on the premises for that 30-day period shall be prorated. Existing law governing the security deposit shall apply.
(f) Nothing in this section relieves a tenant, other than the tenant who is, or who has a household member who is, a victim of domestic violence, sexual assault, or stalking and members of that tenant's household, from their obligations under the rental agreement.
(g) “Household member” as used in this section means a member of the tenant's family who lives in the same household as the tenant.
MORAL
This helps the person that is abused to allow them time to recover and have up to six months to give the 30-day notice they will vacate without worrying about being sued over the remainder to the lease. The law goes into effect Jan. 1, 2012.
IF A PERSON HAS A FELONY CONVICTION THAT HAS BEEN EXPUNGED OR PARDONED THEY STILL MAY BE ABLE TO GET A REAL ESTATE LICENSE AS A MORTGAGE LOAN ORIGINATOR
SB 217 has been enrolled. If Gov. Brown signs it, the bill would go into effect Jan. 1, 2012.
.(1) Existing law provides for the licensure and regulation of mortgage loan originators by the Commissioner of Corporations under the California Finance Lenders Law and the California Residential Mortgage Lending Act. Existing law requires a real estate license endorsement by the Real Estate Commissioner under the Real Estate Law for a real estate licensee to engage in the business of a mortgage loan originator. Existing law prohibits the issuance of a mortgage loan originator license or a license endorsement to act as a mortgage loan originator if the applicant for a license or license endorsement has been convicted of, or pled guilty or nolo contendere to, a felony during the seven-year period preceding the date of the application for licensing or at any time preceding the date of application if the felony involved an act of fraud, dishonesty, a breach of trust, or money laundering.
This bill if signed by the governor would provide that an expunged or pardoned felony conviction does not require denial of a license or license endorsement but would authorize the consideration of the underlying crime, facts, or circumstances of the expunged or pardoned felony conviction when determining whether to issue a license or license endorsement.
MORAL
There is more to the bill, but this is the critical part. It allows those that have had their convictions expunged or received a pardon to work for an honest living and earn a living wage as opposed to suffering for a one time mistake that the government has forgiven by pardon or expungments.
CALIFORNIA DEPARTMENT OF REAL ESTATE UPDATE ON ELECTRONIC TRUST FUND HANDLING
FACTS
Real estate brokers are taking advantage of the electronic disbursement options made available from their banks. These options are also available for the trust fund accounts used by a broker. If done properly, trust funds can be paid out from a trust fund account via electronic disbursements. THE BROKER MUST COMPLY WITH B&PC §10145 AND 10 CCR §2834. The broker must assure that there is proper authorization for, documentation of, and protections in place for electronic disbursements.
The electronic disbursement are usually wire transfers and electronic funds transfers. While a wire transfer is an individual transaction set up between one entity and another with funds transferred from one bank account to another. An EFT is a transfer of funds initiated through an electronic terminal, telephone, computer, or other means authorizing a financial institution to debit or credit an account.
WHO CAN DISBURSE FUNDS ELECTRONICALLY PURSUANT TO DRE LAWS AND REGS?
Commissioner's Regulation 2834 applies whether a disbursement is made using a paper check or electronically. Disbursements may be made from a trust fund account of an individual broker only by the broker or one or more of the following persons if specifically authorized in writing by the broker:
• a salesperson licensed to the broker;
• a person licensed as a broker who has entered into a written agreement pursuant to Section 2726 with the broker; or
• an UNLICENSED EMPLOYEE of the broker with fidelity bond coverage at least equal to the maximum amount of the trust funds to which the employee has access at any time. (The DRE position has generally been over the years that the fidelity bond must not have any deductible. In other words it must be a zero deductible fidelity bond.)
Withdrawals from the trust fund account of a corporate broker can only be made by an officer through whom the corporation is licensed pursuant to B&PC §§ 10158 or 10211 or one of the persons enumerated in the points above, provided that specific authorization in writing is given by the officer through whom the corporation is licensed and that the officer is an authorized signatory of the trust fund account.
Policy and Procedures
There should be written policies and procedures, authorizations, segregation of duties, and monitoring in the electronic disbursement process. Supervisory oversight is especially critical to assure that trust funds are not embezzled and are accounted for properly.
Before you begin making electronic disbursements, it is advisable to create detailed policy and procedures to spell out:
• who is authorized to initiate electronic disbursements;
• how electronic disbursements will be approved by the broker;
• who will send electronic disbursements if they are not automated; and
• who will account for these transactions and reconcile accounting documentation related to electronic transactions (Commissioner's Regulations 2831, 2831.1 and 2831.2 apply).
In order to establish a recurring bill payment from the trust account on behalf of a client (e.g., mortgage payment), policies should be in place that include, but are not limited to, obtaining authorization from the client, direction of the broker for initiating the process, and an approval process that will prevent incurring of negative balances.
Proper segregation of duties reduces the chance that one person could be in a position both to commit a wrongdoing and to conceal it. At least two individuals should be involved in an electronic distribution. If possible, the authorization and transmitting functions should be separated and the recording function should also be assigned to someone who does not have either approval or transmitting duties.
For nonrecurring bill payment, access to the electronic disbursement function should be controlled and its use should be authorized and actively monitored due to the ease with which transfers can be made. Safeguards for initiating an EFT or wire transfer could include, but are not limited to:
• having a callback provision in your electronic or wire instructions that requires the bank to call someone other than the person initiating the transaction;
• using a restricted password to authorize the bank to make a transfer;
• hand delivering a letter of authorization to the bank with the transfer instructions; and
• having a policy with the bank that limits recipients of wire transfers.
Failure to establish controls could result in a trust fund shortage, such as was found on a recent mortgage loan/broker escrow audit. A designated officer, who was not a signatory on the trust account and not active in supervising the business, learned from the DRE auditor that the corporation had a minimum trust fund shortage of over $33,700 due in large part to online transfers to the business owner and the business owner's brother from escrow funds. The licenses of the corporation and designated officer were revoked.
MORAL
Read this VERY, VERY CAREFULLY. Every time we audit a broker we almost always find violations of trust accounts and shortages. It is even more important to use the above ideas from DRE in the area or property management since disbursements are made on behalf of the property owners all the time. Be absolutely certain you have a written authorization from property owners on disbursements as to which ones can be made and when and under what conditions. If in doubt review the ones you have and if not complete enough redo it. For example, payment of mortgages, utilities, property taxes, unlawful detainers to evict and repairs. In t he event of repairs if they are extensive and expensive, I would recommend getting a separate authorization of the expense notwithstanding the one you may have. Remember, property management companies are audited more often than others because of the amount of money being handles on behalf of others. If you would like us to audit you for compliance, give us a call.
CALIFORNIA DEPARTMENT OF REAL ESTATE REVOKES BROKER'S LICENSE FOR FRAUDULENT MORTGAGE SCAM
Department of Real Estate revoking licenses at a record pace
FACTS
After an extensive investigation, the California Department of Real Estate REVOKED THE BROKER LICENSE OF BIC D. PHO AND HIS AFFILIATED CORPORATIONS, MARIPOSA MORTGAGE INC. (MARIPOSA) AND VISION QUEST 21 INC. (VISION QUEST) for multiple acts of fraud involving real estate straw buyers and falsified loan applications.
In addition to revoking the real estate broker license of Pho, THE DRE ISSUED A BAR ORDER AGAINST PHO THAT PRECLUDES PHO FROM WORKING IN RELATED FIELDS FOR THREE YEARS. The Bar Order, issued on Aug. 29, bars Pho from participating in any real estate related business activity of a finance lender, mortgage banker, bank, credit union, escrow company or title company.
“Bic Pho's fraudulent activities were egregious and illegal, and he should never be allowed to work in real estate again,” stated Barbara Bigby, Acting Real Estate Commissioner. “The fraud perpetrated by Pho and others contributed to the mortgage meltdown, but the revocation of his license and the issuance of the Bar Order ensures he will not broker another mortgage loan,” Bigby added.
Pho and his corporations, based in San Jose, Calif., used multiple straw buyers and bogus loan applications to purchase properties throughout Northern California. Pho, acting through his real estate company, Vision Quest, would present a purchase offer to a seller of a single family home, indicating that the straw buyer would occupy the property. Once the offer was accepted, Pho, acting through Mariposa, would submit a loan application to a lender that falsified the straw buyer's income in order to get the loan approved. In no instance did the straw buyer ever occupy the property nor did the straw buyer make any loan payments. In some instances, Pho used his employees and relatives to perpetrate the fraud on the lenders.
MORAL
The title to this press release is directly out of the DRE press release. So please take note of the DRE comment that the DRE is revoking licenses at a record pace. If you would like to make sure you are not one of them be certain to have your attorney review your files and audit your trust accounts or in the event of a DRE audit you might find yourself on the receiving end of a DRE accusation. The audit is far less expensive than the defense of charges.
On a Second Note if you look at the August 2011 discipline section on the DRE website you will find they disciplined over 200 people in that one month alone. So I would say they are very aggressive and pursuing people very diligently. I trust all those out there have good counsel.
WOMAN FLED MODESTO, CALIFORNIA, IS CAUGHT FOR ALLEGEDLY COMMITTING MORTGAGE FRAUD ON HER MOTHER!
FACTS
MONICA LYNNE WHITTEN, 44, arrested in July 2009 for fraudulently erasing a mortgage on the Modesto home owned by her mother and stepfather according to court documents has posted a $25,000 bail at the time. She was arrested in Georgia on a fugitive warrant upon arriving from Central America, more than two years after posting bail on a real estate fraud charge in Stanislaus County.
Prosecution investigators learned that Whitten had connections in Arizona and Venezuela. But attempts to locate her came up empty until U.S. marshals detected a flight itinerary from Costa Rica to Phoenix via Atlanta, documents say. FBI agents planned to detain Whitten in Arizona, but Atlanta police beat them to it and booked her into Clayton County Jail, according to an online inmate search.
Stanislaus County Superior Court Judge John Freeland on Saturday signed an order increasing Whitten's bail to $500,000. She waived extradition and should arrive in Modesto in a few days, according to the district attorney's office.
Whitten's initial arrest came after an employee in the county clerk-recorder's office tipped off a fraud investigator to suspicious filings purporting to eliminate a mortgage without knowledge of the lender, documents say. Such schemes are rife in the valley, often encouraged by online scammers and at some public foreclosure relief seminars, a prosecutor told county supervisors two weeks ago in a briefing on real estate fraud.
MORAL
I have explained time and again. See your attorney if you have questions. If he knows what he is doing, the answers on the front end are quite cheaper usually, than on the back end when one is faced with a lawsuit by Flagstar, FDIC or indictment and/or an accusation to revoke the license by the issuing agency such as the California Department of Real Estate, California Department of Corporations, Nevada Division of Mortgage Lending. Just a word to the wise.
MATTHEW PAUL KAY, 36, A BRITISH CITIZEN FORMERLY LIVED IN WEST LOS ANGELES, DEPORTED FROM SAMOA TO FACE MORTGAGE FRAUD CHARGES IN LOS ANGELES
FACTS
On Sept. 9, 2011 MATTHEW PAUL KAY, 36, a former real estate agent and mortgage broker charged with running a multimillion-dollar mortgage fraud scheme was ORDERED HELD WITHOUT BOND after arriving in the United States to face federal fraud, identity theft and tax charges.
Matthew Paul Kay, 36, a British citizen who formerly lived in West Los Angeles and the Park La Brea district of Los Angeles, was ordered detained by United States Magistrate Judge Jay C. Gandhi.
After being named in a 25-count indictment returned by a federal grand last month, Kay was arrested Aug. 20 and subsequently deported by authorities in the Independent State of Samoa, a Pacific island nation. Kay had been living and working at a beach resort on the Samoan island of Upolu since October 2010, when he left Los Angeles.
After arriving in Los Angeles, Kay was arraigned in United States District Court in Los Angeles at which time he pleaded not guilty to the charges in the indictment. The case was assigned to United States District Judge Manuel L. Real, who scheduled a trial for Nov. 1.
Kay and unnamed co-conspirators participated in a wide-ranging and sophisticated conspiracy from 2006 to 2007 to defraud mortgage lenders out of millions of dollars, according to the indictment. Kay, who ran a mortgage brokering company and a property management company, recruited “straw borrowers” to fraudulently obtain mortgages. Using the names and credit histories of the straw borrowers, Kay and his co-conspirators submitted loan applications that contained significant false information. For example, Kay and the others falsely stated that the straw borrowers were wealthy individuals with high incomes and that they intended to live in the homes being purchased. In reality, none of the straw borrowers was wealthy, successful, or intended to repay the loans, the indictment alleges. On the basis of these false statements, Kay and his co-schemers convinced the lenders to fund nearly $6 million in mortgages on five Southern California properties specified in the indictment.
According to the indictment, Kay profited from the scheme by collecting mortgage brokering fees and rent from tenants who lived in the homes after escrow closed. He also skimmed hundreds of thousands of dollars in equity in the homes by “flipping” them—selling them at increasingly higher prices.
Kay also allegedly stole the identities of some of the straw borrowers and used their names and credit in the scheme without their knowledge or approval. Two counts of aggravated identity theft alleged in the indictment are based on one such straw borrower, whose name and credit were used by Kay and others, without his knowledge or permission, to buy homes in Valley Village and Simi Valley.
Kay is also charged with failing to file a tax return for the year 2006, despite making hundreds of thousands of dollars in that year from the mortgage fraud scheme.
The indictment charges Kay with one count of conspiracy to commit wire fraud, 21 counts of wire fraud, two counts of aggravated identity theft, and one count of failure to file a tax return. If he is convicted of all counts in the indictment, Kay faces a maximum possible SENTENCE OF 430 YEARS IN FEDERAL PRISON.
An indictment contains allegations that a defendant has committed a crime. Every defendant is presumed innocent until and unless proven guilty in court.
The charges against Kay are part of an ongoing investigation being conducted by the Federal Bureau of Investigation and IRS.
Kay was returned to Los Angeles under escort by special agents of the FBI.
MORAL
He certainly is well-traveled. British citizen, living in California, goes to work in Samoa and then has a personal escort back to the United States. Unfortunately he is limited in his current accommodations since he is held without bond and the equivalent of a federal hotel.
ANOTHER WEST LOS ANGELES MORTGAGE BANKER SENTENCED TO 18 MONTHS IN PRISON FOR FLIPPING MORTGAGES
FACTS
On September 12, 2011 RICHARD A. MAIZE, 53, OF BEVERLY HILLS, a Los Angeles mortgage banker has been sentenced to 18 months in federal prison for his role in a massive mortgage fraud scam that caused more than $18.5 million in losses to banks, including his former employer.
In addition to the prison term, which Maize was ordered to begin serving on Dec. 2, Judge Pregerson ordered MAIZE TO PAY $4 MILLION IN RESTITUTION. ABOUT $3.6 MILLION HAS ALREADY BEEN PAID to victims Lehman Brothers Bank and RBC Mortgage Co.
Maize previously pleaded guilty to charges of conspiracy to commit bank fraud and loan fraud, three counts of bank fraud and one count of making a false statement on a federal tax return. Maize and others charged in the case were involved in a wide-ranging and sophisticated conspiracy to defraud federally insured mortgage lenders out of tens of millions of dollars. As part of the scam, the conspirators obtained inflated mortgage loans on expensive homes in some of California's most exclusive neighborhoods, including Beverly Hills, Bel Air, Holmby Hills and Malibu.
Maize, was a co-founder of AMERICORP FUNDING, a mortgage banking company with offices in West Los Angeles and Pasadena that originated, brokered, funded and sold mortgage loans. Maize was Americorp's top-producing mortgage banker, closing more than $192 million in loans in 2001 and more than $245 million in loans in 2002. Maize owned 45% of Americorp until about December 2000, when he and his partners sold Americorp to Prism Mortgage Co., which later changed its name to RBC Mortgage Co. At that time, Maize became the president of the Americorp division of a Prism/RBC subsidiary.
OTHER DEFENDANTS CHARGED IN THIS CASE THAT WERE PREVIOUSLY SENTENCED, include Charles Elliott Fitzgerald, 50, of Newbury Park, who was SENTENCED TO 168 MONTHS in federal prison; THAT COMES TO 14 YEARS.
Mark Alan Abrams, 50, of Long Beach, who was sentenced to 78 months; Jamieson Matykowski, 37, of Laguna Niguel, who was sentenced to 18 months; Lila Rizk, 44, of Rancho Santa Margarita, who was sentenced to 36 months; and Kyle Grasso, 40, of Santa Monica, who was sentenced to one year in prison.
In late 1999 or early 2000, Fitzgerald and Abrams started a mortgage brokering company called DESERT PACIFIC FINANCIAL INC. The company sent mortgage loan applications to lenders for review and funding, and received commissions from those lenders when the loans closed. In late 2001, Fitzgerald and Abrams RENAMED THE COMPANY BEVERLY HILLS ESTATES FUNDING INC.
Fitzgerald and Abrams purchased homes at their real market values and then resold the properties at double or triple the prices. Armed with inflated appraisals and other false documentation, the conspirators submitted false and inflated loan application packages. Abrams and his associates recruited “straw borrowers” to obtain loans for the inflated prices. The straw borrowers allowed the conspirators to use their names and credit to obtain mortgages as part of this “property-flipping” process. As president of Americorp, Maize had contacts and business relationships with the victim lenders, which he exploited to deceive the victim lenders into approving and funding the inflated loans. He also abused his position as president and defrauded his employer, Prism/RBC, by deceiving the company into funding the inflated loans.
The case against Maize details the purchase by Fitzgerald and Abrams of a Bel Air home for $735,000, which they flipped by selling to a straw borrower for $2.37 million. A bogus loan application package went to Lehman Brothers Bank, and the bank unwittingly funded a loan of more than $1.4 million on the property—nearly double the true $735,000 purchase price—almost all of which ended up in one of the in-house escrow companies controlled by Fitzgerald and Abrams. According to the Maize charges, Lehman Brothers Bank alone was deceived into funding about 40 such inflated loans from March 2000 through July 2002. These 40 loans were for more than $28 million over the true prices of the homes. According to court documents, Maize received hundreds of thousands of dollars in kickbacks for his assistance in getting the loans approved. In 2001, he failed to report more than $175,000 of these kickbacks on his federal tax return.
MORAL
18 months for $18 million loss or serves one month for each million-dollar loss. Seems fair. Look at Fitzgerald, he received 168 months in prison or if you like 14 years! He will be able to get social security when he gets out if they let an ex-felon collect Social Security that is.
ILLINOIS MORTGAGE BROKER GETS 17.5 YEARS IN FEDERAL PRISON FOR $35 MILLION MORTGAGE FRAUD
FACTS
On Aug. 17, 2011 KENNETH STEWARD, 45, formerly of South Holland was sentenced to 17.5 years in federal prison for directing a $35 million mortgage fraud scheme involving more than 120 residences. The scheme caused various lenders and financial institutions to lose approximately $16 million on mortgage loans that were not repaid by the borrowers or fully recovered through subsequent foreclosure sales.
Steward, was arrested and charged in July 2010, pleaded guilty in June to nine counts of wire fraud, four counts of bank fraud, and three counts of mail fraud. During nearly four years between 2004 and 2008, Steward personally orchestrated the fraudulent purchase and resale of dozens of residences, and he was responsible for approximately 109 fraudulent transactions, causing lenders to issue nearly $27.8 million in loans and lose more than $14.5 million against those mortgages. Of the 109 residences at least 74 fell into foreclosure. Steward pocketed undisclosed payments and kickbacks from each transaction and Steward controlled approximately $3.1 million in post-closing funds during the course of the scheme, according to court records.
Despite almost no prospect of recovery, Senior U.S. District Judge George Lindberg ordered Steward to pay more than $13.1 million in mandatory restitution and indicated he will enter a preliminary forfeiture judgment of $35 million.
Charges remain pending against six co-defendants. The charges contain merely allegations and are not evidence of guilt. These defendants are presumed innocent and are entitled to a fair trial at which the government has the burden of proving guilt beyond a reasonable doubt.
MORAL
The mortgage fraud arrests and indictments are so voluminous nationwide that I have taken to publishing the guilty pleas and the sentencing for guidelines. Indictments are published for key states where we represent clients such as California, Nevada and Arizona. If anyone believes they are under investigation for mortgage fraud or any other white-collar crime, that person should consult legal counsel forthwith. If it is in the area of mortgage fraud we will assist or represent you at your request.
FIVE MORTGAGE INSIDERS INDICTED FOR MORTGAGE FRAUD IN IOWA
FACTS
Five people have been indicted in mortgage fraud cases by the United States Grand Jury for the Southern District of Iowa. One of the indictments returned by the grand jury CHARGES JASON KIBBEE, 37, OF KELLOGG, IOWA, with one count of wire fraud and one count of making a false statement to a financial institution. The Indictment alleges that Kibbee made false statements, used a disabled relative as a straw buyer, and forged documents in connection with a real estate transaction that he said would help a homeowner whose house was in foreclosure. Kibbee is also accused of keeping money paid by the homeowner instead of applying it to the mortgage. The indictment alleges that Kibbee was an employee of a mortgage brokerage at the time of the offenses and also owned a company that purportedly helped distressed borrowers with their mortgage loans.
The other indictment charges conspiracy to commit wire fraud against LANE ANDERSON, 37, OF ALTOONA, IOWA; DAVID MABLE, 46, OF URBANDALE, IOWA; SHANNON FLICKINGER, 42, OF EARLHAM, IOWA; AND PAUL KRAMER, 41, OF GRANGER, IOWA. The four defendants are accused of conspiring to obtain at least 13 mortgage loans through the use of false statements, straw buyers, and other false and fraudulent pretenses. The indictment alleges that Kramer was the principal of a mortgage company at the time of the alleged offense, while the other three defendants owned and operated a real estate development company.
Remember, an indictment is only an accusation and does not mean the persons are guilty. They are all innocent until proven guilty in a court of law beyond a reasonable doubt.
MORAL
I have seen the U.S. attorney dismiss indictments, I have seen them not charge people they were investigating for various reasons including innocence. However, except for one case I can remember over the years I do not recall any jury returning a not guilty verdict because of the paper trail and cooperation.
DARYL SCOTT NICHOLS, 47, OF LAS VEGAS, PLEADS GUILTY TO A SCHEME TO FRAUDULENTLY GAIN CONTROL OF CONDOMINIUM HOME OWNER ASSOCIATIONS (HOA) IN ORDER TO DIRECT BUSINESS TO A CERTAIN LAW FIRM AND CONSTRUCTION COMPANY
FACTS
On Sept. 6, 2011 DARRYL SCOTT NICHOLS, 47, of Las Vegas, pleaded guilty conspiracy to commit wire and mail fraud before U.S. District Court Judge Philip M. Pro of the U.S. District Court for Nevada for his role in a scheme to fraudulently gain control of condominium homeowners' associations in the Las Vegas area so that the HOAs could direct business to a certain law firm and construction company, announced Assistant Attorney General Lanny A. Breuer of the Justice Department's Criminal Division, Special Agent in Charge Kevin Favreau of the FBI's Las Vegas Field Office, and Sheriff Doug Gillespie of the Las Vegas Metropolitan Police Department.
Nichols admitted that, beginning in approximately November 2005, he joined a fraud scheme aimed at controlling various HOA boards of directors so that the HOA boards could award the handling of construction-related lawsuits and remedial construction contracts to a law firm and construction company designated by Nichols' co-conspirators. According to court documents, the fraud scheme operated from approximately August 2003 through February 2009.
According to court documents, in order to accomplish the scheme, co-conspirators used straw purchasers to obtain mortgage loans for units within HOA communities. Nichols admitted that he became a straw purchaser and used his name and credit to purchase condominiums at the CHATEAU VERSAILLES, SUNSET CLIFFS AND PALMILLA CONDOMINIUM COMPLEXES. Nichols admitted that his co-conspirators provided the down payments and monthly payments, including HOA dues and mortgage payments, for the condominiums and were the true owners of the properties. According to plea documents, Nichols' co-conspirators managed and operated the payments associated with maintaining straw properties owned and controlled by co-conspirators by running a so-called “Bill Pay Program” by which co-conspirators funded the properties through several limited liability companies at the direction of a co-conspirator. MANY OF THE PAYMENTS WERE WIRED FROM CALIFORNIA TO NEVADA.
Nichols admitted that he agreed to run for election to the HOA boards at the condominiums and became a BOARD MEMBER AT CHATEAU VERSAILLES AND SUNSET CLIFFS. Once elected to the boards, Nichols breached his statutory fiduciary duty to the homeowners by accepting from his co-conspirators compensation, gratuities and other remuneration that improperly influenced, or reasonably appeared to influence, his decisions—resulting in a conflict of interest. Nichols admitted that after being elected to the boards and accepting payments from his co-conspirators, he subsequently voted in a manner directed by and favorable to his co-conspirators.
According to court documents, to ensure Nichols and other straw purchasers would win HOA board elections, Nichols and his co-conspirators employed deceitful tactics such as creating fake labels and ballots, calling out-of-state homeowners in order to gather information about their voting intentions, and supplying mailing lists to co-conspirators to create forged ballots for non-voting homeowners. Nichols admitted that in approximately June 2008, at the request of his co-conspirators, he agreed to mail forged ballots from California to Las Vegas to make the forged votes for out-of-town homeowners appear legitimate.
Nichols admitted that he was given cash payments for his assistance in purchasing the properties, obtaining HOA membership status, rigging elections, and using his position to manipulate the HOA's business to enrich the co-conspirators at the expense of the HOA and the legitimate homeowners.
The maximum prison sentence for conspiracy to commit mail fraud and wire fraud is 30 years. Sentencing is scheduled for Dec. 4, 2011.
MORAL
Who are or were the co-conspirators? Is the investigation still ongoing? Is the law firm(s) under investigation? The construction company? It seems there is more to follow.
.
THE INFORMATION CONTAINED HEREIN IS NOT LEGAL ADVICE.
AN ATTORNEY SHOULD BE CONSULTED IF YOU DESIRE LEGAL ADVICE
