FACTS
On Oct. 13, a federal grand jury returned a two-count indictment charging Hubert Rotteveel with mail fraud for a mortgage fraud scheme.
According to the indictment, Rotteveel acted as a real estate salesperson for 13 properties in Dixon that were purchased by two people. Rotteveel inflated the values of the properties and worked with loan officers to provide false information to lenders about the income and liabilities of the purchasers in order to induce the lenders to fund loans for the properties. For most of the transactions, when the sales closed, the escrow officer distributed funds to a bank account in the name of Windmill Properties, a company owned by Rotteveel, without disclosing to the lenders that these payments were made. A total of more than $700,000 was distributed to Windmill Properties under this scheme, and the lenders lost more than $3 million when all 13 properties underwent foreclosure.
If convicted, Rotteveel faces a maximum statutory penalty of 30 years in prison and a $1 million fine. (usattyedca101311)
MORAL
Would anyone like to bet that some loan officers are probably going to be indicted as well? As I have been writing for several years, the federal agents and prosecutors are chasing the mortgage fraud cases with tenacity and like a bulldog, they do not let go. This all relates to the mortgage crisis and the breakdown in the economy for which mortgage brokers are blamed since they are at the bottom of the food chain. However, it is my understanding that now bank executives are being chased and we may see some indictments coming down from that direction. In the interim, for those of you that may be concerned for one reason or another, it is better to consult your attorney now rather than wait until a federal agent knocks on the door.
CONNECTICUT FEDERAL COURT HEARS NEW YORK WOMAN PLEAD GUILTY TO COMMITTING MORTGAGE FRAUD FOR OVER 10 YEARS
FACTS
On Oct. 12, MARLEEN SHILLINGFORD OF NESCONSET, N.Y., waived her right to indictment and pleaded guilty before United States Magistrate Judge Donna F. Martinez in Hartford to one count of conspiracy to commit wire fraud and one count of conspiracy to commit money laundering. The charges stem from SHILLINGFORD's participation in a multi-million-dollar mortgage fraud scheme that involved more than 40 properties located in Bridgeport, Conn.
SHILLINGFORD was involved in the operation of WAIKELE PROPERTIES CORP., a real estate company with offices at 3770 Main Street in Bridgeport and 320 Endo Boulevard in Garden City, N.Y., FROM APPROXIMATELY 2001 TO AUGUST 2011, SHILLINGFORD and others conspired to obtain fraudulent mortgages for the purchase of more than 40 multi-family properties in Bridgeport.
As part of the scheme, SHILLINGFORD and her co-conspirators purchased existing multi-family houses, and vacant parcels of land and erected new houses on them to sell. The co-conspirators recruited individuals to purchase the properties, acted as the buyers' real estate agent and assisted the buyers in applying for residential mortgage loans to purchase the houses. SHILLINGFORD and her co-conspirators then prepared loan applications for the buyers that included fraudulent information concerning, among other things, the buyers' employment, income, assets and liabilities, previous property ownership and intention to make the properties their primary residences. The co-conspirators also provided false and fraudulent supporting documentation, including false letters from fictitious employers, false earnings statements, and fraudulent bank records.
After the loans were approved, the illicit proceeds of the scheme were wired into the Waikele Properties bank account, transferred to SHILLINGFORD and others, and used to continue the mortgage fraud scheme.
Contrary to the representations made on the loan applications, several straw purchasers never occupied the houses as their primary residences and subsequently defaulted on the loans. As a result of the scheme, mortgage lenders have suffered more than $7 million in losses.
SHILLINGFORD is scheduled to be sentenced by United States District Judge Robert N. Chatigny on Dec. 30, at which time she faces a maximum term of imprisonment of 40 years. The government also is SEEKING THE FORFEITURE OF 20 PROPERTIES LOCATED IN BRIDGEPORT, AND $26,372.32 THAT WAS SEIZED FROM A BANK ACCOUNT HELD BY WAIKELE PROPERTIES. (usattyct101311)
MORAL
Think about this. She got away with it for over 10 years. However she may spend the next 40 in a federal prison. We need to see what Dec. 30 will bring.
IOWA MORTGAGE BROKER GETS OVER THREE YEARS IN FEDERAL PRISON FOR MORTGAGE FRAUD-FATHER IMPLICATED
FACTS
On Oct. 12, after having pled guilty, JUSTIN MICHAEL RAY, CEDAR RAPIDS, IOWA a mortgage broker who schemed with his father to defraud a mortgage lender was sentenced to more than three years in federal prison.
In a plea agreement, Ray admitted he paid his father to apply for a loan and purchase Ray's home in Robins, Iowa, for $711,500. Ray knew his father did not have the means to pay the mortgage for the home, his father would have to provide false information to obtain the loan, and his father did not intend to live in the home. Ray used the proceeds from the fraudulent sale of his home to pay his father by writing a check to a third party, to conceal the source of the money.
Ray was sentenced in Cedar Rapids by United States District Court Chief Judge Linda R. Reade to 37 months' imprisonment. A special assessment of $200 was imposed, and he was ordered to make $203,097.86 in restitution to the mortgage lender he defrauded. He must also serve a five-year term of supervised release after the prison term. There is no parole in the federal system. (usatty101311ndia)
MORAL
Nice fellow. Gets his father in trouble. He must really love his father.
MINNESOTA MAN GETS EIGHT YEARS IN FEDERAL PRISON FOR$43 MILLION MORTGAGE FRAUD
FACTS
On Oct. 13, in federal court in St. Paul, United States District Court Judge Richard H. Kyle SENTENCED TROY DAVID CHAIKA TO 102 MONTHS IN PRISON on seven counts of wire fraud, three counts of mail fraud, and one count of conspiracy to commit wire fraud and mail for conspiring with others to bilk mortgage lenders out of more than $43 million.
Between 2005 and 2008, Chaika conspired with others, including DUSTIN LEE LAFAVRE, prosecuted in a separate action, to obtain money fraudulently through over 100 residential property transactions. To further this scheme, Chaika and LaFavre negotiated with builders of new properties as well as owners of existing properties to buy both single pieces of property and property groupings, known as “bulk purchases,” at greatly reduced prices. Chaika and LaFavre then solicited real estate purchasers by promising them large cash pay-outs, or “kickbacks,” from lenders' funds.
Chaika and LaFavre failed to tell potential buyers about the reduced prices they had negotiated for the properties, choosing instead to quote them the grossly inflated prices. By charging buyers the higher prices, Chaika and LaFavre acquired enough cash from loan proceeds to pay buyers their kickbacks and still have money left for themselves and their co-conspirators. Once a potential buyer was recruited through this scheme, Chaika and LaFavre, or someone working on their behalf, drafted a purchase agreement that reflected the inflated sale price only and failed to disclose to lenders the kickback amounts. Occasionally, Chaika, LaFavre, or someone working for them drafted a so-called addendum to the purchase agreement, setting forth the planned kickback, or “pay-out,” to the buyer, but that document was never provided to the lender.
In several instances, Chaika and LaFavre, or others on their behalf worked with buyers and mortgage loan officers to prepare false documents for use in the application process. In addition, Chaika and LaFavre sometimes loaned buyers money for down payments or to pad their bank balances while the application process was pending. Because of those material misrepresentations, numerous lenders agreed to fund mortgage loans for the purchase of the residential properties. Furthermore, after the mortgage loans were secured, property title companies prepared documents and handled closings based on the fraudulent information provided by Chaika and LaFavre or others on their behalf. Again, those misrepresentations were material.
In furtherance of this scheme, Chaika prompted no fewer than seven wire transfers of loan proceeds from which he and others obtained cash kickbacks. He also caused false documents to be sent through the U.S. mail and by commercial carriers on at least three occasions.
On Sept. 29, LAFAVRE WAS SENTENCED TO 48 MONTHS IN PRISON ON ONE COUNT OF CONSPIRACY. (usattmn101311)
MORAL
1. Read the facts so you know EXACTLY what conduct is illegal. If anyone has done any of the above just maybe you want to give me a call under attorney client privilege to see what can be done about it.
2. Note that federal prosecutors are still going back to loans that funded in 2005 and coming forward.
3. On another note HUD is using its special agents to audit FHA files where the insurance has been paid and are actively pursuing it in California and elsewhere.
TRUTH-IN-LENDING LAWSUIT BY A BORROWER ‘BITES THE DUST'
FACTS
Fernando Briosos filed a lawsuit against Wells Fargo Bank in relation to the refinance of tow of his mortgage loans through Wells Fargo. Plaintiff contended that Wells Fargo violated California law and the federal Truth in Lending Act. He claimed that defendant made fraudulent statements and hid information regarding his ability to pay for loans to induce him to refinance. Further yet, plaintiff argued that at a loan's closing, defendant Wells Fargo did not completely disclose his rights to notice and rescission.
The trial court judge said dismissed. The case was dismissed without prejudice which means the plaintiff can refile. (Briosos v. Wells Fargo Bank, Case No. 4:10-cv-02834-lb)
MORAL
This is why I have never cared for “forensic audits” on mortgage loans. The lenders in my opinion will not negotiate, will always fight and never rescind. Therefore, the borrower wastes money in the most part for paying for such an audit. If you know of a winner on one, I would like the case citation to review because I have never read one, not one.
THE INFORMATION CONTAINED HEREIN IS NOT LEGAL ADVICE.
AN ATTORNEY SHOULD BE CONSULTED IF YOU DESIRE LEGAL ADVICE
