CFPB AUDITORS FIND THE GFE IS NOT COMPLETED PROPERLY
FACTS
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MORAL
Now that is what I call picky. However, if you have a story about your audit let me know. We will not reveal your name or the name of your company. Your information will help other professionals as well as yourself by allowing them and you to make corrections to quality control plans and keep out of trouble. As here many of you now will make certain the LO email address is put on the GFE form. Please remember what the CFPB finds, in my opinion the licensing agencies in California, Colorado, Nevada, Alabama and elsewhere will also look for in their audits.
LOS ANGELES MAN GETS 37 MONTHS IN FEDERAL PRISON FOR HELOC SCAM
FACTS
On Oct. 2, federal Judge Manuel L. Real sentenced David Han to 37 months in federal prison for his participation in a home equity line of credit scheme that resulted in losses of more than $1 million. Judge Real also ordered the defendant to pay $1,065,000 in restitution.
Han pleaded guilty to four counts of bank fraud based on his submission of home equity loan applications to four different banks. The HELOC applications were all submitted under the alias “Young He Kim” and were all to be secured by the same property. Han submitted the HELOC applications in a “shotgun” approach in order to obtain approval and funding before any of the banks recorded liens on the property. In addition to concealing his true identity, Han made false representations on his loan applications about his employer, his employment status, and his income.
Once the loans funded, Han directed the proceeds to be deposited into bank accounts that he had opened under the alias, and then he wrote checks to cash or purchased cashier checks to withdraw the funds. After accessing more than $700,000 in loan proceeds, Han sent checks that prosecutors allege were counterfeit—purportedly to be partial loan re-payments—to the banks, which then made additional funds available to Han. Han accessed over $300,000 of these funds before the banks realized that the checks were counterfeit. (usattycacd10212)
MORAL
He now has three years room and board at a federal hotel. Of course, his freedom of movement is restricted.
CALIFORNIA ATTORNEY INDICTED FOR MORTGAGE LOAN MODIFICATION SCAM
FACTS
On Oct. 2, United States Attorney Laura E. Duffy announced that Dean G. Chandler, an attorney from Oceanside, and telemarketing salesman Shelveen Singh were arraigned in Federal Court in San Diego. They were charged in a 50-count indictment of defrauding thousands of homeowners in an $11 million loan modification scheme. According to the indictment, these defendants (and two others previously arraigned) used Chandler’s Oceanside-based law firm, 1st American Law Center to persuade victims to pay thousands of dollars each by deceptively touting 1ALC’s purported success and legal resources and falsely promising that 1ALC would successfully modify their residential mortgage loans.
As alleged in the indictment, the defendants and their co-conspirators used high-pressure sales tactics and outright lies to prey on homeowners located across the country who were struggling to make their monthly mortgage payments and were at risk of losing their homes to foreclosure. Among other alleged lies, the conspirators falsely promised to have a team of attorneys pre-screen client applications—claiming that these attorneys only approved 30% of those seeking to use 1ALC’s services—and boasted of having a 98% success rate in obtaining loan modifications. 1st American Law Center’s telemarketers were encouraged (using call “scripts” and other training) to say virtually anything to customers in order to close the deal. The indictment alleges that among other ruses, employees pretended that that they had helped “thousands” of happy homeowners save their homes, that 1ALC had been in business for 20 years, that clients’ fees would be deposited into a client-trust account and remain untouched until the client was satisfied, and that there was a money-back guarantee. Conspirators even persuaded financially strapped homeowners to pay 1ALC’s fees instead of the clients’ monthly mortgage payment.
Chandler appeared in television commercials and on the company’s websites as the attorney in charge of the company, soliciting customers throughout the United States. He, Singh, Anthony Calandriello and Michael Eccles are charged with conspiring to commit the offenses of mail fraud and wire fraud through the operation of 1st American Law Center. Chandler is also charged with money laundering because he conducted financial transactions with the proceeds of the fraudulent conspiracy.
Nine other participants in 1ALC’s telemarketing scheme have already entered guilty pleas in federal court for their roles in the criminal enterprise and the subsequent cover-up. (usattycasd10212)
MORAL
Remember they are all innocent until proven guilty in a court of law. But, you would think they would have an attorney in waiting like a lady in waiting? Except for the one that is an attorney that is.
DENVER WOMAN GETS FIVE YEARS IN FEDERAL PRISON FOR MORTGAGE FRAUD
FACTS
On Sept. 27, U.S. District Court Judge Marcia S. Krieger sentenced Vicki Dillard Crowe, also known as Vicki R. Dillard, for mail and wire fraud in connection with a mortgage fraud scheme. Following her prison sentence, Judge Krieger ordered Crowe to spend three years on supervised release. She was also ordered to pay $2,408,142.37 in restitution to the victims of her crime. Crowe pocketed close to $1,000,000 during the course of her fraudulent scheme. Crowe was immediately remanded into custody at the conclusion of the sentencing.
Beginning in June 2004 and continuing through December 2006, Crowe knowingly devised and intended to devise a scheme to defraud various financial institutions and commercial lenders and to obtain money and property from various financial institutions and commercial lenders by means of materially false and fraudulent pretenses, representations, and promises. The scheme was executed in connection with the residential mortgage loans related to 19 properties in Metro Denver.
As part of the scheme, Crowe worked with at least one mortgage broker to obtain mortgage loans in order to purchase the residential properties, at least two of which were purchased in the name of Crowe’s husband because Crowe was concerned that she would not qualify for the required mortgage loans. In order to qualify, Crowe made and caused to be made at least one materially false representation, including: 1) inflating or fabricating employment or rental income and/or assets of the defendant or her husband; 2) falsely representing defendant Crowe’s job title; 3) failing to disclose all the properties she had recently purchased; 4) failing to disclose all of her financial liabilities; and 5) falsely stating that the property would be a primary residence for the borrower.
Crowe persuaded, and caused someone else to persuade, the property seller to falsely inflate the sale price of the property so that Crowe could receive the inflated portion of the sale price as “up front” money, or shortly after, the closing purchase transaction. Sometimes the “up front” money was falsely characterized on a HUD-1 settlement statement as a payment to the broker, although the broker would then pay Crowe the money. At other times, the “up front” money was falsely characterized as a payment to a remodeling company that was supposed to perform specified remodeling work, although the work was never performed, and Crowe actually received the money that was issued to these remodeling companies. Crowe used much of the “up front” money to make the mortgage payments on the numerous properties that she had purchased. She also refinanced mortgages on a couple of the properties so that she could obtain additional money as a result of the refinance transaction.
In order to qualify for the refinancing of the mortgages, Crowe made the same false statements about employment and income. (usattco10512)
MORAL
Pay attention. She was indicted and convicted for mortgage fraud committed in 2004 to 2006, meaning the federal agents pursued her for crimes committed between six and eight years ago! Do you see that when you “smell” an investigation you should see your lawyer immediately? Do not wait until after you have been interviewed.
PHILADELPHIA MAN GETS 25 YEARS IN FEDERAL PRISON FOR HOME FORECLOSURE RESCUE SCAM
FACTS
On Oct, 1, Anthony J. DeMarco III, was sentenced to serve 25 years in prison for conspiracy and fraud charges in connection with a mortgage fraud scheme involving more than $30 million in loans. Between 2006 and 2009, DeMarco owned and operated DeMarco REI Inc., a foreclosures rescue company. In addition to DeMarco, three others charged in the conspiracy pleaded guilty and were also sentenced to prison: Michael Richard Roberts to 10 years; Sean Ryan McBride to 63 months and Eric Bascove to 41 months. DeMarco pled guilty in March to a 15-count indictment charging conspiracy, mail fraud, wire fraud, bank fraud, and money laundering.
DeMarco REI was headquartered in Philadelphia and employed Roberts and Bascove, among others. Roberts was the vice president of sales. DeMarco’s business claimed to be able to assist homeowners facing imminent foreclosure. Between June and December 2008, the defendants would scour public records filings to find homeowners in financial distress and pitch a “sale-leaseback” arrangement to them. The pitch was that DeMarco REI would buy the homeowner’s house, the homeowner would remain in the house and pay rent to DeMarco REI, and when the homeowner got back on his or her feet financially, the homeowner could buy back the house.
The defendants solicited straw buyers for properties, used fraudulent documents to obtain mortgage loans from lenders, stole the sellers’ equity in the homes at closing, and eventually failed to make the monthly mortgage payments. DeMarco used the sellers’ equity to run his company and to pay lavish personal expenses. The houses went into foreclosure with the straw buyers listed on the mortgage, the original homeowners facing eviction from their homes, and the mortgage lenders stuck with loans in default. Only one couple ever acquired the means to repurchase their home, but after they wired approximately $245,000 to DeMarco at his direction and for that purpose, DeMarco instead used their money to purchase a Ferrari for himself and jewelry for his girlfriend and to pay miscellaneous expenses.
McBride was a title agent and chief financial officers at Settlement Engine Inc., Pittsburgh. Settlement Engine closed approximately 30 loans for DeMarco REI from June 2008 to early December 2008. McBride pleaded guilty to conspiracy, wire fraud, and bank fraud; Roberts pleaded guilty to conspiracy, wire fraud, and bank fraud; Bascove pleaded guilty to conspiracy and bank fraud.
At the time of indictment, the U.S. Attorney’s Office for the Eastern District of Pennsylvania’s Civil Division filed a verified complaint and temporary restraining order to help the original homeowners save their homes. The complaint and temporary restraining order sought novel relief that would bring all the individuals and entities that have a stake in the homes before the court in an orderly process by which the damage caused by the defendants’ alleged fraud could be mitigated. In 2011, U.S. District Court Judge Michael Baylson approved conversion of the temporary restraining order into an injunction that stopped foreclosures and evictions that were related to the alleged fraud and that set forth the details of the mediation process. Currently, the majority of the banks and the original homeowners are still in the process of attempting to reach resolutions. (USATTYEDPA101112)
MORAL
Hooray for this U.S. Attorney. The homeowners may get some relief.
PENNSYLVANIA WOMAN FACES UP TO 170 YEARS IN FEDERAL PRISON FOR MORTGAGE FRAUD
FACTS
On Sept. 20, Denise Bonfilio was found guilty by a federal jury of nine counts of wire fraud and money laundering conspiracy in connection with a mortgage fraud scheme. She was tried before United States District Judge Joy Flowers Conti in Pittsburgh.
According to Assistant United States Attorney James Y. Garrett, who prosecuted the case, the evidence presented at trial established that Bonfilio participated in a mortgage fraud scheme that included presenting to lending institutions fraudulent loan applications that overstated the borrowers' financial condition in connection with loans collateralized by properties located in the Sewickley and Fox Chapel sections of Allegheny County, Pa. Bonfilio submitted documents to the lenders that overstated the true sales prices of the properties, fraudulent appraisals that overstated the true fair market values of the properties, and fraudulent settlement statements that represented that the funds associated with the loans were to be distributed contrary to the way the funds were actually distributed. In addition, the indictment alleges that Bonfilio represented to some of the purchasers of the properties that she intended to use money from the transactions to make improvements to the properties, when in fact, she used a substantial portion of those funds for her personal benefit.
Judge Conti deferred sentencing to a date to be determined pending the completion of a presentence report. The law provides for a total sentence of 170 years in prison, a fine of $2,250,000, or both. Pending sentencing, the court continued Bonfilio on bond. (usattywdpa92012)
MORAL
Based upon this attorney’s experience it is highly unlikely she will be sentenced to 170 years or anything close to it. Otherwise, again based upon this attorney’s opinion and experience, the judge would not have left Bonfilio free on bond with that kind of sentence looming as a reality.
THE INFORMATION CONTAINED HEREIN IS NOT LEGAL ADVICE.
AN ATTORNEY SHOULD BE CONSULTED IF YOU DESIRE LEGAL ADVICE.
