CLOSING ATTORNEY IN ALABAMA GETS TWO YEARS FOR
On June 26, Kelvin Leonard Davis, a former Birmingham, Ala., real estate lawyer, after having pleaded guilty was sentenced to two years in prison for wire fraud in connection with a mortgage fraud scheme that exceeded $1 million. He pleaded guilty to four counts of wire fraud for knowingly submitting false mortgage documents and statements to various lenders in order to obtain approval for mortgage loans. At the time of the fraudulent transactions, from October 2007 to January 2012, Davis served as the closing attorney on each of the fraudulent loan transactions.
As part of Davis’ plea agreement with the government, he agreed to forfeit $269,335 to the government as proceeds of the illegal activity.
Davis submitted false statements with loan documents in order to obtain approval for mortgage loans that would otherwise not have been approved. In many instances, Davis, while serving as closing attorney, would use his trust account to provide money to the borrower when a mortgage loan was closing. Davis would recover the money by subtracting the amount he provided from the proceeds he issued to the seller. Davis also would assess the seller a fee, ranging from $1,000 to $6,000, and make checks for the fee payable to Peaceful Valley Homes, a corporation he had formed. Total losses to the various lenders as a result of Davis’ fraud exceeded $1 million. (usatty62613ndalabama)
This started seven years ago. Like I have been saying, the government has 10 years from when the loan closes to prosecute and slowly but surely the rounds are being made.
CALIFORNIA ATTORNEY FACES ETHICS CHARGES BEFORE THE STATE BAR INVOLVING LOAN MODIFICATIONS
Pamela Stacey Gerber-Gressier, a Cerritos attorney, faces disciplinary charges of allegedly collecting illegal advanced fees from homeowners and unlawfully practicing law in several states as part of an alleged loan modification fraud scheme, the State Bar of California announced on July 9.
Gerber-Gressier is also accused of convincing a former client to withdraw his State Bar complaint in exchange for the return of unearned fees he paid her and enticing several clients to sign documents waiving their right to file malpractice claims by offering partial fee refunds, the bar association reported.
She also allegedly failed to inform the clients that they could seek the advice of an independent lawyer. According to the notice of disciplinary charges, Gerber-Gressier ran Orange County law firms under the names Prudential Law Group, Prudent Law Group and Remedy Center Law Associates and used those names to advertise loan modification services to homeowners in Illinois, Florida, Massachusetts, Ohio, North Carolina, New York, Georgia and New Jersey.
According to the bar association, Gerber-Gressier was not licensed to practice law in any of those states and did not personally evaluate the clients' cases. She also allegedly did not determine how much in legal fees to charge them, or whether they qualified for loan modifications, leaving those tasks to non-attorney staff members instead.
Gerber-Gressier is also accused of improper solicitation because the mailers she sent to prospective clients did not clearly state that they were advertisements and made it appear as though they were sent by the homeowners' respective mortgage holders, according to the State Bar.
The mailers also contained other misleading statements, including that the sender had already reviewed the terms of the recipients' mortgages, according to the disciplinary charges notice. (citynws7913)
Some of you reading this may remember a similar situation. Remember the attorney is innocent until the charges are proven and the State Bar Website states there are 108 charges.
LOAN BROKER HIT WITH $4.5 MILLION JUDGMENT-PUNITIVE DAMAGES YET TO BE DECIDED
On July 11, a jury ordered loan broker Dan Harkey to pay $4.5 million to dozens of investors for breach of fiduciary duty and breach of contract.
The jury also found that Harkey and his Aliso Viejo company, Point Center Financial Inc., acted with "malice, oppression or fraud." This allows the plaintiffs to seek punitive damages. The jury also found that Harkey had engaged in elder abuse against several of his investors.
The jurors delivered the same verdict for every plaintiff that Harkey and Point Center engaged in breach of contract and breach of fiduciary duty. Only the damages changed from plaintiff to plaintiff, a figure calculated down to the penny.
The total damages could go higher than $4.5 million before punitive damages are added. The jury awarded the same amount to each plaintiff for breach of fiduciary duty and for breach of contract. It was unclear whether the jury meant for the amounts to be treated as a single award or two awards. (ocreg71213)
If you are a “hard money investor” or a “hard money broker” you had better have competent legal counsel. When “deals” prove profitable, no one complains. But when at least one “deal” goes bad, the investor will sue or complain as a rule. At least that is what I have seen over the last 20 years.
CALIFORNIA MAN GETS 20 MONTHS IN FEDERAL PRISON FOR MORTGAGE FRAUD
On July 9, Kevin Derricott was sentenced to 20 months in prison for his role in a scheme to defraud lenders out of millions of dollars.
Derricott pleaded guilty to conspiracy to commit wire and bank fraud and bank fraud. From about February 2006 through December 2008, Derricott conspired with others to submit mortgage applications to various lenders that contained materially false information about the borrower-applicants, such as inflated salary figures, inflated assets claims or false employment information, in order to trick the lenders into making loans. Derricott also recruited borrower-applicants, procured false supporting documentation for loan applications and submitted fraudulent loan applications to lenders in exchange for a portion of the fraudulent proceeds.
He is to serve three years of supervised release following his imprisonment, with the special condition of 16 months' home confinement, and the judge ordered him pay restitution of $3.43 million. (usatty71113,aubjl)
The prosecutor chases slowly, but like a bulldog, just does not give up. He started in 2006 (seven years ago); gets indicted five years later, in 2011 and two years after that in 2013 pleads guilty. Overall it took the prosecutors five years to indict from the event and seven years to get a conviction. When you retain criminal defense, they are on as long as the case is pending and that generally means through sentencing. There are exceptions but does anyone out there really want to risk them? Remember, you can always replace money, but you cannot erase a federal criminal conviction.
MARYLAND WOMAN PLEADS GUILTY TO $2.5 MILLION
On July 12, Rhonda Scott pleaded guilty to conspiring to commit wire fraud in connection with two separate mortgage fraud schemes that resulted in losses of over $2,500,000.
Beginning in 2008, Scott agreed to participate in several fraudulent real estate transactions that settled at M&R Title Inc. and Sanford Title Services LLC. The fraudulent transactions at each title company were part of different conspiracies, both of which Scott joined. In both schemes, Scott facilitated deals between her co-conspirators, identified and recruited individuals that could be parties to the real estate transactions generating proceeds for the co-conspirators, received proceeds of the fraudulent transactions through a shell company designed to disguise her receipt of the funds, sent money to co-conspirators, and identified mortgage transactions that the co-conspirators could use to enrich themselves.
Both of the M&R Title and Sanford Title fraud schemes involved at least 25 victims, including lenders, sellers, and buyers of real estate, title insurance companies, and lien holders. The reasonably foreseeable loss associated with Scott’s conduct is at least $2.5 million.
Scott will be required to forfeit at least $2.7 million and pay restitution of at least $1 million. Scott faces a maximum penalty of 30 years in prison and a $1 million fine for conspiring to commit wire fraud. (usattymd71213)
The $2.5 million loss indicates about five years in federal prison is my best guess and there is no parole in the federal system. Notice how the loans being investigated are from five years ago?
LAS VEGAS MORTGAGE AGENT CONVICTED FOR
FRAUD SCHEME INVOLVING KICKBACKS
On July 10, Jawad “Joe” Quassani, a Las Vegas mortgage agent was convicted for his role in a “cash back at closing” mortgage fraud scheme that netted $1.43 million in fraudulent mortgage loans.
A federal jury convicted Quassani of one count of conspiracy to commit wire fraud and mail fraud, two counts of wire fraud, and two counts of mail fraud.
Quassani participated in a scheme in which the prices of two homes were falsely inflated and mortgage loans were obtained through submission of applications with false information about income and occupancy. A portion of the loan proceeds was diverted at the close of escrow to the defendant’s co-conspirators, and commissions on the fraudulent loans were paid to Quassani and his co-conspirator.
Anita Mathur and Shirjil “Sean” Qureshi previously pleaded guilty in related cases in Las Vegas to one count of conspiracy to commit bank fraud, wire fraud and mail fraud. Both are awaiting sentencing. (usattynv71113)
THE INFORMATION CONTAINED HEREIN IS NOT LEGAL ADVICE. AN ATTORNEY SHOULD BE CONSULTED IF YOU DESIRE LEGAL ADVICE.