LENDER INVOLVED IN $7.5M FTC SETTLEMENT CLOSES
FACTS
On Oct. 15, Mortgage Investors Corp. terminated nearly 500 employees, and announced it will cease new lending. The company blamed the move on Dodd-Frank lending regulations, claiming that MIC would not have the technological capacity to comply.
But the company has been had other problems besides supposedly not be able to comply with Dodd-Frank. In July 2013 The Federal Trade Commission reached
The company also allegedly suggested to consumers that they could get no-cost fixed rate mortgages, even though it only offers adjustable rate mortgages, the FTC alleged. (mpa101513)
MORAL
Getting nailed by the FTC is no fun. First, the company is alleged to be violating the do not call list and then false advertising. A $7.5 million settlement means the company had to agree to it. That is more than not being able to comply with Dodd-Frank. We have advised and conducted seminars on Dodd-Frank and thus far it annoys our lenders and brokers but none have said they cannot adjust.
CALIFORNIA RESIDENT CONVICTED OF LOAN MOD SCAM FACTS
On Oct. 31, a La Jolla man was sentenced to five years in prison and ordered to pay $1.4 million in restitution for defrauding homeowners around the country who had turned to his sham company for help modifying their loans. Ian Kideys was sentenced in the U.S. District Court in Indiana, where some of his victims were located, after pleading guilty in to one count of wire fraud.
Kideys' K2 Capital Management Inc. had offices in La Jolla and operated under the names U.S. Mortgage Bailout and ILoanAudit during the financial crisis.
The website for the company falsely suggested it was affiliated with the government and that it had "an experienced legal team" to help with loan modifications, the 27-count indictment in his case says. The site also offered 100% refunds in the "unlikely event that there is no favorable outcome to the loan modification request." Prosecutors say that was an empty promise
Kideys' company collected upfront fees totaling more than $3.4 million from people across the country.
Kideys filed for bankruptcy in 2012 and "also defrauded creditors and the U.S. Trustee in his personal bankruptcy case by leading them to believe he had deposited $283,000 and concealing his receipt of $228,721.28," according to the U.S. Attorney's Office news release. Kideys was sentenced to five years in that matter, a sentence that will run concurrently to the time served in the other case. (sduntrib102513)
MORAL
I would suggest he did not read the sign on the wall at the creditors meeting in the bankruptcy case. There is always a sign that states bankruptcy fraud is a felony and hiding assets is bankruptcy fraud. Every time we have gone to the creditors meeting I have always seen the sign.
HUSBAND AND WIFE PLEAD GUILTY TO CONSPIRACY TO COMMIT MORTGAGE FRAUD CAUSING $17 MILLION IN LOSSES
FACTS
On Oct. 25, Eric Elegado, a real estate agent and mortgage broker, and his wife Charmagne, a former account executive for New Century Mortgage, pled guilty to their roles in a conspiracy to commit massive mortgage fraud intending to cause and causing approximately $17 million in losses.
Beginning in at least 2005 up to and including Feb. 23, 2007, Eric and Charmagne Elegado admitted that they conspired with co-defendants Theodore Cohen, Minh Nguyen, Regidor Pacal, Alexander Garcia, Roman Macabulos, Ramin Lofti and Roderick Huerto to engage in a scheme to defraud mortgage lenders in order to obtain money and property by obtaining mortgage loans, primarily through New Century Mortgage, for unqualified buyers by falsifying and causing others to falsify the employment and salary information on the loan applications and other documents.
Eric and Charmagne Elegado admitted that these co-defendants were paid approximately $500, by either check or cash, for allowing companies that they owned to be fraudulently listed on the borrower’s loan documents. In addition, Eric and Charmagne Elegado admitted that they agreed with other coconspirators working at Eric Elegado’s mortgage companies to create fraudulent documents, such as W-2s, pay stubs, and bank statements, which were submitted to mortgage lenders, including to Charmagne Elegado while she was working at New Century Mortgage. Eric and Charmagne Elegado admitted that they made substantial profits from their roles in the scheme to defraud mortgage lenders.
The other co-defendants had previously pled guilty.
MORAL
Note how the prosecutors went back to loans that occurred 8 years ago!
LAWYER FROM LOUISIANA CONVICTED OF MORTGAGE FRAUD IN LAS VEGAS GETS THREE YEARS IN FEDERAL PRISON
FACTS
On Oct. 30, David Mark, a lawyer who worked in Las Vegas as a real estate agent, was sentenced to three years in prison for his conviction on conspiracy and fraud charges related to his involvement in a mortgage fraud scheme involving hundreds of Las Vegas homes and more than $50 million in losses. He was convicted of one count of conspiracy to commit bank, wire, and mail fraud; two counts of bank fraud; and one count of mail fraud.
Mark is free on a personal recognizance bond and must report to federal prison by Jan. 31, 2014.
Mark was employed as a real estate agent and transaction coordinator at Distinctive Real Estate and Investments, a company owned and operated by Eve Mazzarella, who was convicted of fraud in December 2011. She was sentenced to 14 years in prison.
From about March 2006 to December 2007, Mark solicited persons with good credit to act as straw buyers to purchase homes in the Las Vegas area. Mark made arrangements to purchase the homes above the sellers’ asking prices and made arrangements for the excess funds to be redirected to business entities controlled by his co-conspirators under the pretense that they would make upgrades or perform repairs to the properties. Mark caused the straw buyers to apply for mortgage loans for the homes, knowing that the straw buyers could not afford and did not intent to make the mortgage payments. Mark caused false information concerning income, employment, assets, liabilities, and intent to occupy the homes to be placed in the straw buyers’ loan applications. Once the mortgage loans were approved by the financial institutions, Mark caused the financial institutions and escrow and title companies to make third party disbursements to shell companies controlled by his co-conspirators who had an interest in the transactions. Mark’s co-conspirators defaulted on the mortgage payments causing the properties to go into foreclosure and causing losses to the financial institutions of more than $50 million. (usattynv103013)
MORAL
Now all of you in Nevada should know Eve Mazzarella. Now you know she was sentenced 14 years. I have appeared before Judge Pro on a similar type case and he is very fair and considerate.
NEW JERSEY MORTGAGE BROKER PLEADS GUILTY TO LONG RUNNING $30 MILLION MORTGAGE FRAUD SCHEME
FACTS
On Oct. 28, Lester Soto, part owner of Premier Mortgage Services, a mortgage company that was responsible for a long-running, large-scale mortgage fraud that caused losses of more than $30 million pleaded guilty and admitted his role in the scheme.
From September 2006 to May 2008, Soto and others engaged in two related mortgage fraud conspiracies. Soto and his conspirators targeted properties in low-income areas of New Jersey. After recruiting straw buyers, Soto and his conspirators used a variety of fraudulent documents to make it appear as though the straw buyers possessed far more assets and earned far more income than they actually did.
Soto and his conspirators then submitted these fraudulent documents as part of mortgage loan applications to financial institutions. Relying on these fraudulent documents, financial institutions provided mortgage loans for the subject properties. Soto and his conspirators then split the proceeds from the mortgages among themselves and others by using fraudulent settlement statements, which hid the true sources and destinations of the mortgage funds provided by financial institutions. The straw buyers had no means of paying the mortgages, and many of the properties entered into foreclosure proceedings.
Soto and his co-conspirators defrauded financial institutions out of more than $30 million.
The counts with which Soto is charged are each punishable by a maximum potential penalty of 30 years in prison and a fine of $1 million. Sentencing is scheduled for Feb. 10, 2014. (usattnj102813)
PENNSYLVANIA PASTOR GETS OVER 14 YEARS IN FEDERAL PRISON FOR MORTGAGE FRAUD
FACTS
On Oct. 29, Michael Wilkerson was sentenced to 170 months in prison and ordered to pay $1.4 million in restitution for a mortgage fraud scheme. Wilkerson and his co-defendants defrauded JPMorgan Chase Bank by fraudulently obtaining home loans valued at more than $6 million. Wilkerson was convicted at trial.
Wilkerson, a pastor at New Millennium Life Restoration Fellowship with locations in Phoenixville and Spring City, recruited one of his congregants and the congregant’s family and friends to participate in a number of real estate transactions. If they had good credit and acted as straw purchasers, Wilkerson would pay them $15,000. Wilkerson paid another $5,000 if they referred other straw purchasers to him. Wilkerson recruited at least six individuals who agreed to be straw purchasers of homes. Wilkerson’s wife, Joyce, participated in the fraud scheme by explaining the transactions to the straws, paying the straws, and also pretending to be a co-purchaser of each of the homes at the time of settlement. Real estate broker Lee Garell prepared the sales paperwork for each of the homes that was sold to the straws and, along with Michael Wilkerson, dictated the fraudulent terms set out in the settlement sheets. Denise Haines, a mortgage broker submitted fraudulent loan applications in the transactions to Chase. The applications falsely represented the appraised value of the homes, the identification of the straws, the source of funds, the borrower’s income and assets, and their intent to take possession of the homes as their primary residence. Based on the representations made in the loan documents, Haines knew she could get Chase to approve the loans without verification of the information on the loan applications. Haines and Garrell are awaiting sentencing.
When the loans were funded at the time of settlement, Michael Wilkerson, Joyce Wilkerson, Lee Garell, and Denise Haines manipulated the documents prepared at settlement and later forwarded the settlement documents to Chase to make it appear to the bank that the straws brought considerable cash to the closings, when, in fact, all the money involved at the settlement actually came from Chase. Michael and Joyce Wilkerson profited approximately $400,000 from each of the fraudulent sales. Lee Garell obtained commissions on the sales of the real estate and Denise Haines obtained commissions based on the amount of the million dollar loans obtained from Chase. After settlement on the homes, Michael Wilkerson took possession of all the homes, rented two of them, and lived in another. He paid the mortgages with the money that he obtained at the settlements and rental income for approximately six months then told the straws purchasers that they had to pay the mortgages. This last act led to the loans falling into default and then foreclosure, resulting in a loss of approximately $3 million. (usattedpa103013)
MORAL
Seems being a Pastor did not help him at all. It may have been better if he had cut a deal with the U. S. Attorneys’ Office. Or maybe they did not offer one?
THE INFORMATION CONTAINED HEREIN IS NOT LEGAL ADVICE. AN ATTORNEY SHOULD BE CONSULTED IF YOU DESIRE LEGAL ADVICE.
