FACTS
Juan Rangel, Downey, Calif., has been sentenced to 22 years in Federal prison for running two fraud schemes—a Ponzi scheme that took in at least $30 million from more than 500 victims, and a mortgage fraud scheme that preyed on working-class homeowners by stealing the equity from their homes and secretly taking title to their properties. Rangel, who has been in federal custody since August 2008, pleaded guilty on Oct. 27, 2010 to one count of mail fraud and one count of money laundering. In the plea agreement the led to Rangel's guilty pleas, federal prosecutors and Rangel agreed to a 15-year prison sentence. But United States District Judge S. James Otero said a 22-year sentence was needed based on the devastating impact Rangel's actions had on his victims.
More than a dozen victims addressed the court during the five-hour sentencing, including an investor who had been convinced to invest money she received after her son was killed while serving as a marine in Iraq. Judge Otero said that Rangel had shown a "callous disregard in taking investment money from the mother of a fallen soldier."
The mail fraud count to which Rangel pleaded guilty related to a $30 million Ponzi scheme in which Rangel and his company, the Commerce, Calif.-based Financial Plus Investments, recruited investors through advertisements in Spanish-language newspapers, as well as in infomercials broadcast on television. Rangel and Financial Plus promised to pay investors annual returns as high as 60%, claiming Financial Plus' real estate investments and lending business generated substantial profits. However, Rangel admitted in his plea agreement that Financial Plus did not realize any profits from real estate or lending. Rangel instead used victims' money to make Ponzi payments to prior investors and for his own personal use, including the monthly mortgage payments on his $2.5 million mansion and monthly payments for his Lamborghini sports car.
The investment fraud scheme resulted in losses of approximately $20 million. Rangel also admitted that he and others operated a mortgage fraud scheme targeting Latino homeowners facing foreclosure. Rather than assisting the distressed homeowners, Rangel took titles to their homes and drained the equity out of the properties. As part of this scheme, Rangel arranged to sell the homeowners' properties, usually without their knowledge, to straw buyers. He then applied for loans in the straw buyers' names, and used a variety of falsified documents to ensure that the fraudulent loans were approved.
Rangel admitted that the mortgage fraud scheme caused lenders to fund more than $10 million in fraudulent loans.
Utilizing dozens of employees, Rangel had recruiters sign up new investors, he conducted monthly investment seminars and he sent Spanish-speaking "street teams" into neighborhoods to target homeowners who were behind on their mortgage payments. Rangel also bribed a manager at a Bank of America branch to provide false documents and to release holds on checks he deposited into his accounts—conduct for which he was convicted at trial in a separate case in May 2009.
In relation to the mortgage fraud scheme, a federal grand jury also indicted Javier Juanchi, a vice president at Financial Plus, and Pablo Araque, the owner of A-One Tax Pros. Juanchi and Araque are currently scheduled to go to trial before Judge Otero on March 29.
Rangel's son Harold was indicted along with his father in the case involving bribery of a bank officer. A warrant was issued for Harold Rangel's arrest when he failed to appear at a pre-trial hearing in 2009. (mortprofnmn21511)
FOUR MORTGAGE BROKERS SENTENCED FOR MORTGAGE FRAUD IN SACRAMENTO
FACTS
On Feb. 14, Iftikhar Ahmad was sentenced to 21 months in prison, to be followed by three years of supervised release, and restitution of $382,750 for multiple counts of mail fraud relating to a scheme involving the fraudulent submission of mortgage loan applications.
He admitted that through his company, I & R Investment Properties LLC, he bought and sold numerous properties that were funded with loan proceeds fraudulently obtained from Long Beach Mortgage Coy. Specifically, Ahmad secretly provided down payments to many of the buyers of the homes he was selling and aided the buyers in submitting loan applications that he knew contained false information about their income and employment. He also inflated the sales price of the properties.
Other participants in this mortgage fraud scheme have already pleaded guilty and been sentenced. John Ngo, a loan processor with Long Beach Mortgage, pleaded guilty in December 2007 to perjury and was sentenced to nine months in prison. William Bridge, a loan broker operating the Loan Center in San Francisco, pleaded guilty in June 2008 to tax charges and was sentenced to 21 months in prison, and Paul Bridge, also a loan broker at the Loan Center, pleaded guilty in June 2008 to paying kickbacks and was sentenced to three years of probation.
Joel Bradford, a former account executive at Long Beach Mortgage, is charged in this investigation with mail fraud in connection with the submission of fraudulent loan applications and is awaiting trial. (cvbustms21411)
MORAL
The federal authorities are still looking at fraud loans and still investigating loans that occurred as far back as 2005. These were the NINA loans, stated income loans, etc. As I have said many times you should see your attorney now if you were involved in any of these types of loans. If knowledgeable, (s)he can give you a perspective that will let you rest easier with less anxiety. Between representing people on the fraud loans and CHASE, FLAGSTAR, trustee in Bankruptcy for other lenders like FIRST MAGNUS demanding the broker indemnify them on losses we have defenses available depending on the facts. Remember, the losses are still mounting so the lenders are still chasing and suing and threatening to sue. If this is happening to you, see your attorney now.
TWO WOMEN FROM TULARE COUNTY, CALIFORNIA SENTENCED FOR MORTGAGE FRAUD IN STATE COURT
FACTS
On Feb. 17, Alma Reyes of Porterville, Calif., was sentenced to two years in State Prison for using illegal means to obtain home loans for people who could not afford them. On the same day Nelda Garcia of Visalia was sentenced for her part in the real estate fraud conspiracy.
Reyes was the ringleader, according to the DA's Office. She recruited unqualified buyers and helped them falsify loan documents. For example, one couple was able to purchase two houses in five years valued more than $1.1 million even though they had a monthly income of only $3,000. Another couple with a similar income was able to purchase two houses worth $650,000 in six months with Reyes' help.
From these sales, Reyes collected $72,000 in commissions. She also recruited other real estate professionals to join the conspiracy.
Garcia acted as the loan officer in two of the transactions. She knowingly submitted false loan documents to lenders to get loans for unqualified homebuyers. She received $14,000 in commissions. Garcia also posed as a licensed notary to obtain a $450 notary fee. She even got her daughter involved who fraudulently notarized real estate documents.
Garcia was sentenced Thursday to 11 years probation and 210 days in county jail. She is barred from working in the real estate industry. (visaliaatmes21811)
MORAL
Notice how the state prosecutors have joined in the “hunt” for mortgage fraud, the federal prosecutors are actively pursuing. End investor lenders like Chase and Flagstar are actively chasing the wholesale lenders and the brokers that sold them the loans. All the loans are those done before September 2007. Per the contract signed by the wholesale lenders and the mortgage brokers they agreed to be 100% responsible for the “life of the loan.” So when Chase or Flagstar lose money on the loan, they have decided to send it out for collection and chase the brokers. How do we know? We are defending numerous brokers and wholesalers being chased for the losses.
LAS VEGAS ATTORNEY AND LOAN OFFICER CHARGED WITH MORTGAGE FRAUD
FACTS
On Feb. 16, Stanley Walton a Las Vegas attorney and Pamela Black, a Las Vegas mortgage loan officer, were charged with conspiracy to commit bank, mail and wire fraud for allegedly participating in a scheme to obtain mortgage loans from financial institutions using straw buyers and false loan applications. They were both indicted by the federal grand jury on one count of conspiracy to commit bank, mail and wire fraud and criminal forfeiture.
According to the indictment, from about Sept. 22, 2004, to Jan. 24, 2007, Walton, Black and other unindicted co-conspirators, allegedly conspired to recruit straw buyers with good credit to purchase houses in Henderson and Las Vegas. The indictment does not charge Walton with acting as an attorney when he engaged in the alleged fraudulent conduct. The straw buyers were paid by Walton to place the homes in their names, and they did not intend to occupy the homes.
Walton and Black then allegedly created and submitted loan applications containing false and fraudulent information about the straw buyers’ employment, income, intent to occupy the property, and disposition of the loan proceeds. Walton allegedly assisted in this regard by providing false employment verifications for some of the straw buyers at a company he owned.
Walton and Black concealed from the lenders that Walton and his companies were receiving the cash back monies at closing and also concealed that, in some instances, Walton intended to use the cash to make mortgage payments and to pay straw buyers for participating in the scheme. Black received commissions from her employer as a result of the fraudulently obtained loans.
The indictment specifically identifies six homes in Henderson and two homes in Las Vegas for which mortgage loans were obtained using fraudulent documents submitted by the defendants. The indictment alleges that upon conviction, the defendants shall forfeit up to approximately $2.5 million of proceeds traceable to these alleged crimes. (usattynv21711)
MORAL
This goes back seven years according to the release from the U. S. Attorney's office. With unindicted co-conspirators alleged, it would appear there is more to follow.
HOUSTON MAN SENTENCED TO FEDERAL PRISON FOR MORTGAGE FRAUD
FACTS
On Feb. 17, Melvin Lendall Brown, a Houston area resident, was sentenced to prison for wire fraud arising from a mortgage fraud scheme. United States District Judge David Hittner sentenced Brown to 57 months in prison for his wire fraud conviction arising from an elaborate mortgage fraud scheme in which Brown was an organizer and leader. The scheme, carried out between June 2004 and June 2005, involved numerous misrepresentations on mortgage loan applications prepared for recruited straw purchasers and supported by fraudulent documents. As a result of the scheme, Brown ultimately received, often via interstate wire transfer, more than $500,000 of approximately $5 million in fraudulently induced loan proceeds from lenders to title companies. To carry out the scheme, Brown used an unincorporated business he formed under the assumed name of Brownstone Construction, which was supposedly in the business of home improvement.
People he associated with located residential real estate properties in the Houston area. Brown and others recruited and solicited individuals with good credit to act as borrowers in applications for residential mortgage loans to purchase one or more of those properties even though the borrowers had no intention of making payments on the mortgage loans. Brown, aided and abetted by at least one other person, made representations to each borrower, including that he would buy the home in the borrower’s name, make any monthly mortgage payments, find others to live in the home and pay monthly rent, take the home out of the borrower’s name after a period of time, as well as compensate the borrower.
Brown and others caused Uniform Residential Loan Applications to be made in the names of the borrowers that overstated their employment income and other assets, understated or omitted their debts and other liabilities, falsely represented that the borrowers leased the homes they resided in and received income from the rent, and falsely claimed that the borrowers intended to occupy the newly purchased homes. False and fraudulent documents were submitted, including sham lease agreements and bogus employment information. Brown also provided funds to the borrowers to use for deposits toward the purchases of those homes and for closing fees, and he often appeared with the borrowers at the closings.
At or near the closings, Brown caused title companies to disburse the fraudulently induced loan proceeds to various individuals and entities, including Brownstone Construction. He represented to the title companies that Brownstone Construction had been hired for projects to improve those properties, when in fact he did not perform or arrange for others to complete the projects. Brown received, often via interstate wire transfer, more than $500,000 of approximately $5 million in fraudulently induced loan proceeds, sent via interstate wire from lenders to title companies. Brown used the funds he received for expenditures unrelated to the properties that were purchased. (usattysdtx21711)
MORAL
Goes to prison for at least four years. Has to make full restitution. No longer able to vote. Probably can get no licenses to go into business when he gets out. Was it worth it? I don’t think so.
FORMER POLICE OFFICER IN NEW JERSEY PLEADS GUILTY TO LYING ON HIS MORTGAGE APPLICATION
FACTS
On Feb. 17, Brian Ragauckas of Secaucus, N.J., a former Jersey City, N.J., police officer admitted to making false and fraudulent statements in an application to obtain a Federal Housing Administration-insured mortgage for the purchase of a Jersey City property.
He pleaded guilty to an information charging him with making false and fraudulent statements within the jurisdiction of the United States Department of Housing and Urban Development. He entered his guilty plea before U.S. District Judge Peter G. Sheridan in Trenton federal court.
In June 2000, Ragauckas purchased a home with his wife in Secaucus. In April 2007, Ragauckas and his wife obtained a $513,700 mortgage for the residence from Hudson City Savings Bank. In September 2008, Ragauckas signed and submitted an application to Countrywide Bank FSB to obtain a $529,779 mortgage to could purchase a three-family home in Jersey City. Ragauckas falsely represented in the app that he rented the Secaucus residence, and had not owned any property in the last three years. He also failed to acknowledge the outstanding mortgage that he had with Hudson City Savings Bank when asked to list his outstanding liabilities. Additionally, Ragauckas signed an addendum in which he falsely represented that the information contained in the app was true to the best of his knowledge and belief. Ragauckas was serving as a Jersey City police officer at the time.
Ragauckas admitted that he made the false representations in order to secure the mortgage. By May 2009, the mortgage with Countrywide, which merged with Bank of America in April 2009, was in default due to Ragauckas’ inability to make payments on the Jersey City property in addition to his Secaucus residence.
The charge to which Ragauckas pleaded guilty carries a maximum potential penalty of five years in prison and a $250,000 fine. Sentencing is scheduled for June 1. (usattynj21711)
MORAL
Lying on the loan application for a mortgage can send the person to federal prison
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AN ATTORNEY SHOULD BE CONSULTED IF YOU DESIRE LEGAL ADVICE
