OWNER OF PASADENA, CA MORTGAGE CO. GETS NINE YEARS IN PRISON FOR MORTGAGE FRAUD
On Sept. 21, Eduardo Ruiz, the owner of Premier One Lending, a Pasadena mortgage brokerage firm, was sentenced to 108 months in federal prison for participating in a mortgage fraud scheme that obtained more than $30 million in loans. In addition to the prison term, the judge ordered him to pay $5.7 million restitution.
Ruiz has been in custody since March, when a federal jury found him guilty of conspiracy and mail fraud. The evidence presented during a three-day trial showed that while operating Premier One Lending in 2005 and 2006, Ruiz and other Premier One employees fraudulently obtained more than 100 loans from lenders in Los Angeles and Orange Counties.
As part of the scheme, Ruiz and his employees prepared mortgage loan applications that inflated borrowers’ income, often by as much as 10 times over their true income. Ruiz and other Premier One employees also obtained phony bank statements and certified public accountant letters, which they provided to the lenders in support of the bogus income figures.
According to the witnesses' testimony, many of the borrowers did not speak English and did not realize that their income had been inflated. As a result of the scheme, the borrowers obtained large mortgage loans that they were unable to make payments on. More than 20 loans went into foreclosure, causing lenders to sustain millions of dollars in losses.
Two others involved in the scheme, Gilma and Francisco Ruiz, siblings of Eduardo, received sentences of two years and 18 months, respectively. Both were recruited to help in the scheme and prepare fraudulent bank statements.
The investigation into the Premier One fraud scheme was part of Operation Inflated Income, an initiative by the Federal Bureau of Investigation, IRS-Criminal Investigation, and the United States Postal Inspection Service that targeted mortgage brokers who fraudulently obtained loans by inflating the borrowers’ income and assets and supporting those bogus claims with fake supporting documents. (usattycdca92112)
Note the loans involved are from 2005 and 2006. Note also that this week alone we have 40 from California indicted and/or convicted and this isn’t even all of them. Then you have the 50 from North Carolina in a single item below. Remember, I said about 100 per week. And now I think that estimate is low. Probably more than 200 per week are being indicted and/or convicted nationwide.
CALIFORNIA MAN CHARGED WITH MORTGAGE FRAUD
On Sept. 20, in a federal grand jury in Sacramento returned a six-count indictment charging Ryan William Costo with mail, wire, and bank fraud, as well as making false statements to financial institutions, all in connection with various schemes to defraud lenders, U.S. Attorney Benjamin B. Wagner announced.
According to the indictment, Costo falsely overstated his income and financial assets while applying for three separate loans: a $1.95 million loan from CitiMortgage Inc. for a Granite Bay residence; a $3 million loan from Washington Mutual Bank for another Granite Bay residence; and a $1.35 million loan from Bank of America for a 1945 North American P-51 D Mustang classic aircraft.
The indictment alleges that Costo not only made false statements about his income and various bank and stock account balances on the loan applications but also caused various false and fraudulent account statements and tax returns to be given to the lenders in order to procure the loans. As a result of the fraud, lenders reported aggregate losses of over $3 million.
The maximum statutory penalty for each violation of mail, wire and bank fraud is 30 years in prison, a fine of twice the monetary gain or loss, and a three-year term of supervised release. The maximum statutory penalty for each false statement violation is 30 years in prison, a $1 million fine, and a three-year term of supervised release. (usaattycaed92012)
Remember how long I have been preaching the federal prosecutors and federal agents were in California with a vengeance. Well look at this and all just in the Sacramento area! The Los Angeles area has been under attack for some time. I await more indictments from Nevada. It behooves anyone involved with bad mortgages such as these to see their attorney before federal agents even begin visiting them. Much can be done to protect you and seriously mitigate issues if you see your attorney before federal agents see you. If you would like to discuss the matter with me, then by all means call me.
CALIFORNIA COUPLE SENTENCED FOR MORTGAGE FRAUD
A Murrieta husband and wife, Joe Daniel and Angela Lynette Cody, were sentenced to prison terms this week for their role in a mortgage fraud scheme that saw them take equity out of Inland homeowners' property and bilk victims out of more than $1 million.
Joe Daniel Cody was sentenced Sept. 17, in U.S. District Court in Riverside to 63 months in prison and three years of supervised release. Angela Lynette Cody, received a 48-month sentence, three years supervised release and was ordered to pay more than $1 million in restitution.
According to the IRS, between May 2003 and June 2006, the couple ran All Fund Mortgage out of their Murrieta home, offering refinancing services that promised homeowners lower monthly mortgage payments if they agreed to "temporarily" sell their homes to predetermined buyers. The Codys, in fact, used straw purchasers with whom they were associated and paid between $1,000 and $25,000 to function as loan recipients to acquire properties that the defendants wanted, according to prosecutors.
Many of the homeowners ended up losing title to their homes. Usually no payments were made to lenders after the equity was taken out of the homes. Most homes ended up in foreclosure. (prent92312,murptch92112)
I would like you all to notice the number of fraud cases for this week alone in California and also note that this does not include those still under investigation by the FBI and IRS among other agencies. More indictments will follow.
CALIFORNIA RE AGENT SCHEDULED TO BE SENTENCED IN DECEMBER STILL ALLOWED BY STATE LAW TO PRACTICE REAL ESTATE
Teresa Rose, a Ramona real estate agent who will be sentenced in early December for her admitted role in a mortgage fraud scheme is still allowed by state law to practice real estate. She pleaded guilty in May 2012 to acting in a conspiracy that federal authorities said involved inflated home prices, fraudulently obtained mortgages and kickbacks. Until Rose's sentencing is final, she can still list homes, show them to clients and sell them, according to officials with the California Department of Real Estate.
State law allows the DRE to suspend, revoke or deny a license if the license holder enters a guilty plea to or is convicted of a felony. However, the agency cannot by law act until the conviction is final and the time for an appeal has passed.
Generally, the right to appeal comes after sentencing, the law states. If the defendant doesn't file an appeal, the sentencing is considered final.
Rose's record with DRE shows she's licensed and has no disciplinary action against her. Following her conviction, she left Coldwell Banker Country Realty in Ramona and now hangs her license with licensed broker Jonathan Patrick Mann, who lists a Laguna Beach address, public records show. Rose has at least seven Ramona listings under Mann's brokerage, based on listing information.
Rose is one of four people that federal investigators say were involved in a scheme to inflate real estate prices, obtain mortgages fraudulently and skim more than $1.5 million in kickbacks. The probe found that the defendants failed to pay the mortgages on the 16 properties identified in court records and they eventually went to foreclosure.
Investigators said the scheme involved more than $11 million in home loans. More than $1.5 million of that was skimmed and hundreds of thousands of dollars were earned through commissions and fees, government officials said. In all, lenders suffered about $5 million in losses.
Rose was an agent at Coldwell Banker Residential Brokerage at the time. She faces one count of conspiracy to commit wire fraud and to launder money. Her maximum sentence is five years in prison and a fine of up to $250,000. Her sentencing is set for Dec. 3, 2012. 9sdutr92212)
Oddly enough if you Google the name “teresa rose realtor ramona” as of Sept. 23, you will pull up a website that shows her picture and still at Coldwell Banker Country Realty notwithstanding the DRE website has her listed as licensed to Jonathan Patrick Mann as her broker.
SEVEN INDICTED IN SACRAMENTO FOR MORTGAGE FRAUD
On Sept. 14, a federal indictment was unsealed charging seven people, including a Ventura man, with running a multistate Ponzi scheme and related mortgage fraud activities that prosecutors said cost investors and lenders a combined $17 million.
The years long investigation resulted in the arrest of Lawrence Leland Loomis. He and his 76-year-old father-in-law, John Hagener, were charged with operating a fraudulent, California-based investment fund that cost more than 100 investors more than $7 million.
Loomis and five other defendants are also charged in a 50-count indictment with costing lenders $10 million in losses through two mortgage fraud operations. One of those charged, Peter Woodard, is from Ventura, authorities reported.
Prosecutors said all three frauds were operated through Loomis Wealth Solutions, which was based in California and also worked with investors in Illinois, Washington and elsewhere from 2006 through 2008.
Loomis and Hagener were charged with bilking investors through a program called Naras Funds in 2007 and 2008. The indictment said Loomis encouraged investors to tap their home equity and retirement accounts to buy shares in the funds and to help purchase residential real estate.
He and his father-in-law allegedly promised 12% annual returns and said the funds were guaranteed, but the indictment claims the men used investors' money to pay themselves, their companies' operating expenses, and to prop up the scheme by paying later investors with money from earlier victims.
Loomis and Hagener had court appearances on Sept. 14, while the others were to appear later.
Loomis and a real estate appraiser, Darren Fehst of Halifax, Nova Scotia, are also charged in connection with a mortgage fraud scheme in which Loomis is accused of paying Fehst thousands of dollars to overstate appraisals so properties could be sold for inflated prices.
Loomis and four others also are charged with buying about 200 properties in Arizona, California, Florida and elsewhere while falsifying the sales prices and costing lenders about $10 million.
Those others are Woodard, Michael Llamas, Joseph Gekko and Dawn Powers. All are charged with mail and wire fraud. Each fraud charge carries a maximum possible sentence of 20 years in federal prison (ventstr91412)
Note the investigation goes back to 2006 over eight years ago. Rumor is the investigation took over four years. So be aware of this.
TOTAL OF 50 INDICTED AND CHARGED WITH MORTGAGE FRAUD IN NORTH CAROLINA
On Sept. 21, 2012, the U. S. Attorney in Charlotte, N.C., announced nine defendants were charged in the latest takedown in the Operation Wax House mortgage fraud investigation in the Western District of North Carolina.
A second superseding indictment in the Western District of North Carolina charging six defendants with federal offenses including mortgage fraud conspiracy, bank bribery conspiracy, money laundering conspiracy, and wire fraud was returned by a federal grand jury sitting in Charlotte. Three additional defendants were charged separately by criminal bills of information accompanied by plea agreements.
The mortgage fraud and bank bribery conspiracies alleged in the superseding indictment represent part of an ongoing investigation, Operation Wax House, conducted by the FBI and IRS-CI into mortgage fraud targeting the Mecklenburg and Union County communities of North Carolina’s Western District.
According to allegations contained in the charging documents, from about 2006 through about 2007, a mortgage fraud cell was operating in Union and Mecklenburg Counties in North Carolina, primarily targeting the neighborhoods of Providence Downs South, Woodhall, Chatelaine, Firethorne, Piper Glen, and Stratford on Providence. Operations of the mortgage fraud cell, according to the charges, began when a promoter would agree with a builder to purchase a property at the “true price.” The cell would then arrange for a buyer to purchase the property at an inflated price. In most circumstances, the buyer would agree to purchase the property in his or her own name and sign whatever documents were necessary, in exchange for a hidden kickback. The builder would sell the property at the inflated price, the lender would make a mortgage loan on the basis of that inflated price, and the difference between the inflated price and the true price would be extracted at closing and distributed among the conspiracy, according to the allegations contained in the indictment.
Individuals and entities participating in the alleged mortgage fraud activities included promoters, mortgage brokers, lawyers, real estate agents, builders, and buyers. The bill of indictment also describes a bank bribery conspiracy to bribe a bank insider to provide false verifications of deposit and an embezzlement scheme by attorney Michelle Mallard from her trust account.
The nine defendants bring to a total of 50 the number of individuals charged to date in connection with Operation Wax House.
The three defendants charged by criminal bills of indictment and who have agreed to plead guilty to the charges are: Arketa Banks, a buyer in the scheme, who was charged with mortgage fraud conspiracy; Jeffery Viegas, a builder who was charged with bank fraud; and Bonnette Bradley, who participated as a broker in the scheme, was charged with bank fraud. (usattwenc92112)
Notice how the prosecutors are coming more and more after the straw buyers?
FORMER VICE PRESIDENT OF PIERCE COMMERCIAL BANK PLEADS GUILTY TO MORTGAGE FRAUD
On Sept. 18, a former senior vice president and loan officer at Pierce Commercial Bank pleaded guilty to a mortgage fraud scheme that resulted in the collapse of the bank. Shawn L. Portmann pleaded guilty to conspiracy to make false statements in loan applications and to make false statements to the Department of Housing and Urban Development and one count of making a false statement in loan applications.
Under the terms of the plea agreement, both Portmann’s attorney and prosecutors will recommend a sentence between 10 and 14 years in prison when sentenced by U.S. District Judge Benjamin H. Settle on Jan. 28, 2013.
Between 2004 and 2008, Portmann and the other defendants conspired to submit false documents within various loan documents and applications. They falsified information about the borrowers’ qualifications as well as their intention to reside in the homes being financed. Based on a review of a sample of loans, the co-conspirators caused more than 270 loans that contained false and fraudulent documents and information to be funded by Pierce Commercial Bank representing in excess of $45 million in loan proceeds. More than 100 of these loan files have defaulted, causing in excess of $10 million in loss to Pierce Commercial Bank, secondary investors and HUD. The indictment details multiple false statements included in loan documents regarding an applicant’s employment, income, and intention to reside in the property. (usattywdwa91812)
Here the prosecutors went back eight years to loans that occurred in 2004.
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