Ex-Hells Angel Leader Draws Nearly Six Years in Prison Time For Mortgage Fraud

FACTS - On Jan. 17, Raymond Foakes, a former leader of a Hells Angels chapter in Sonoma County, Calif., was sentenced to nearly 70 months in prison for his role in a $10 million mortgage fraud scheme. He was ordered to pay more than $1 million in restitution. Foakes fraudulently obtained mortgage loans for real estate in San Francisco and North Bay communities in 2006 and 2007.  Foakes pleaded guilty in October to charges of fraud, conspiracy and money laundering. Seven others still await trial.  (ap11912)

MORAL

I have often told you it is better to seek legal counsel before you talk to anyone about anything that might be questionable.

FORMER CALIFORNIA MORTGAGE BROKER PLEADS NO CONTEST TO EMBEZZLEMENT OF MORE THAN $500,000

FACTS

Louisa Katrina Dubinsky, a former real estate broker whose license has been revoked, has taken a plea deal after being accused of bilking more than $500,000 from her clients. She will be sentenced on Feb. 8. She was charged with 39 counts of embezzlement, financial elder abuse and writing bad checks. The charges are from incidents that took place in 2007.

Dubinsky was scheduled to go to trial for the charges in December 2011 but instead pleaded no contest to 15 charges of embezzlement and passing bad checks. Under the terms of the plea agreement, she faces a maximum of eight years in prison. Had she gone to trial and been convicted on all counts, she could have faced as many as 15 years in prison.

Dubinsky was president of Vision Lending and Investment at the time the crimes were committed. She also did business as Mariposa Mortgage and E-visionlending.com. Her mortgage broker's license was revoked in 2008 after an administrative law judge found three trust funds handled by her firm were short $187,000.

Charges were filed against Dubinsky in 2009 but she was not arrested until February 2011, when she turned herself into Santa Cruz County authorities after she appeared on the county's Most Wanted list in January. Dubinsky was living in Hollister at the time and has claimed she was unaware there was a warrant out for her arrest.

As part of her plea, she also will be ordered to pay restitution to some of the victims.  (stacrzsent11912)

MORAL

She is lucky the District Attorney was willing to accept a no contest plea. Under that type of plea for purposes of guilt, it is the same as a guilty plea but the plea cannot be used against you should one or more of the victims decide to sue her civilly.

MORTGAGE FRAUD IN CONNECTICUT CAN EARN YOU FOUR YEARS IN A FEDERAL PRISON

FACTS

On Jan. 6, a federal judge in Hartford, Conn., sentenced Jo'Mell Thomas to 40 months in prison, followed by three years of supervised release, for his role in an extensive mortgage fraud scheme.

Between February 2007 and April 2010, Syed Babar of New London orchestrated a scheme to obtain millions of dollars in residential real estate loans, including loans insured by the Federal Housing Administration, through the use of sham sales contracts, false loan applications and fraudulent property appraisals. He assisted Babar by recruiting straw buyers to apply for numerous residential real estate loans using false information that Babar and others had generated. The false information included information about the straw buyer's employment, income, assets and liabilities. After a closing on a house on which one of the individuals that had been recruited by Thomas had served as the straw buyer, Thomas was paid a fee.

Contrary to the representations made on the loan app, the straw buyers never occupied the homes as a primary residence. They defaulted on the loans they obtained and let the houses go into foreclosure.

In March 2007, Thomas, at the direction of Babar, agreed to open a bank account for a fictitious construction company called Sheda Telle Construction LLC. The purpose of the fictitious construction company and its bank account was to divert fraud proceeds to it and, in some cases, to falsely justify the artificially inflated sales price of houses based on renovations purportedly made to the property that, in fact, did not occur.

Almost all the money deposited into the account of Sheda Telle was derived from loan proceeds generated by real estate closings conducted as part of the underlying mortgage fraud scheme. In many instances, the money was withdrawn as cash soon after it was deposited as a result of a real estate closing. For instance, on March 19, 2008, approximately $64,995.94 was wired into the Sheda Telle account from a lawyer's trust account in connection with the sale of a home at 75 Bradley Avenue in Meriden. Approximately one week later, $64,700 was withdrawn in cash from the account. As another example, on Nov. 20, 2008, approximately $76,591.09 was wired into the Sheda Telle account from a lawyer's trust account in connection with the sale of a home at 88 Hazel Street in New Haven. The next day, $74,000 was withdrawn in cash from the account.

Between approximately March 2007 and October 2009, approximately $977,979 was deposited into the account of the fictitious construction company, and approximately $977,648 was withdrawn from the account. The money was distributed among the co-conspirators at Babar's direction.

Babar and his co-conspirators conducted approximately 30 fraudulent mortgage transactions. As a result, various lenders suffered total losses of nearly $4.75 million.

Thomas was ordered to pay restitution in the amount of $4,180,575. On Feb. 1, 2011, Babar pled guilty to his role in the scheme and was later sentenced to 10 years in jail. (usattyct1612)

MORAL

Several. 1-Notice that the federal prosecutors went back four years to 2007 to indict. 2-Federal criminal fraud included the representation that the borrower would occupy the property as the principal residence. 3-The second man involved drew 10 years in a federal jail.

FLORIDA MAN DRAWS TWO YEARS IN FEDERAL PRISON FOR MORTGAGE FRAUD

FACTS

On Jan. 12, Chief U.S. District Judge Anne C. Conway sentenced Keith Davis to two years in prison for conspiracy to commit wire fraud. He was also ordered to pay over $1 million in restitution.

DAVIS, a mortgage broker and real estate marketer, owned and operated TLC Mortgage. Davis used TLC Mortgage to market condominium projects to buyers looking for investment properties. To attract buyers to these projects, financial incentives were provided to buyers and masked on the HUD-1 to fraudulently obtain loans. From 2008 until February 2009, Davis used TLC to market condominiums to buyers, assist buyers in fraudulently obtaining loans in excess of the purchase price, and received kickbacks after closing. In total, Davis caused approximately $1,004,000.04 in loss to his victims. (usattymdlefl11212)

FLORIDA REAL ESTATE AGENT PLEADS GUILTY TO MORTGAGE FRAUD

FACTS

On Jan. 17, David Lam, a real estate agent from Parkland, pled guilty before U.S. District Judge Kenneth A. Marra for his participation in mortgage fraud schemes relating to properties in the Versailles development in Wellington, Fla.

Lam was charged and pled guilty to charges from four separate indictments. In all, he pled guilty to four counts of conspiracy to commit mail and wire fraud, in violation of Title 18, United States Code, Section 1349, and three counts of conspiracy to commit money laundering, in violation of Title 18, United States Code, Section 1956(h).

To date, five co-defendants have pled guilty and four have been sentenced.

In all four of the Versailles-related indictments, the defendants used straw buyers to submit false documentation to various mortgage lenders substantially inflating the purchase price of the properties. As part of the conspiracy, double HUD-1 Settlement Statements were prepared. One set with the real price was provided to the seller and another set with the inflated price was provided to the lender. The difference between the real price and the inflated price was either made to appear as if it were a debt owed to business entities controlled by the defendants and their co-conspirators, or was made to appear as profits to the seller. The fraudulent loan proceeds were then laundered through multiple accounts to conceal the source and distribution of the money and were ultimately used for the benefit of the defendants and their co-conspirators. In sum, the schemes to which Lam pled guilty involved more than $15 million in mortgage loans. (usattysdfl11712)

MORAL

Are you noticing how the sentences are getting heavier and heavier? If anyone is involved or has been involved in loans that are questionable over the last 10 years they should consult with an experienced attorney now before later. That allows the attorney to see what has happened and how to advise you to protect your interests.

OKLAHOMA MAN INDICTED FOR WIRE FRAUD AND REAL ESTATE FLIPPING

FACTS

On Jan. 18, a federal grand jury indicted Curtis Antonio Sherfield for four counts of wire fraud in connection with a real estate flipping scheme. 

According to the indictment, Sherfield purchased properties for resale after renovation (commonly referred to as “flipping”). It is alleged that after owning the houses for a period of months, Sherfield would create fictitious sales of the homes to his stepfather and mother without their participation and knowledge. Specifically, it is alleged that from May 2005 through September 2007, Sherfield obtained mortgages in the names of his stepfather and mother without a written power of attorney or their permission, and signed numerous false loan applications, documents supporting the applications, and closing documents in the names of his stepfather and/or mother, knowing that the information was false or fraudulent. It is also alleged that Sherfield caused lenders to wire funds representing proceeds on those fraudulent loans made in the names of his stepfather and mother to the closing company. In sum, it is alleged that the scheme involved the sale of approximately 20 properties with proceeds in excess of $850,000.00. The object of the scheme, according to the indictment, was for Sherfield to obtain the mortgages in order to personally profit from the sales.

If convicted, Sherfield faces up to 20 years in prison and a fine of $250,000, plus mandatory restitution, on each of the four counts of wire fraud.  (usattywdok11812)

MORAL

There is another kind of “flipping” the FBI is looking into in this attorneys' opinion. That is where the Realtor has an REO listing from the bank, brings in a straw buyer at a low price knowing there is a back-up buyer ready to buy at a higher price. It appears there may be much traffic in this area so a word to the wise.

FOURTH DEFENDANT IN PENNSYLVANIA MORTGAGE FRAUD SCAM SENTENCED TO FEDERAL PRISON

FACTS

On Jan. 17, Guillermo Laureiro of Jefferson Township, Pa., who pleaded guilty as an aider and abettor to a mortgage fraud scheme was sentenced to spend five months in federal prison.

Laureiro was charged by an information filed by the U.S. Attorney's Office in September 2008, as a result of an investigation conducted by the Federal Bureau of Investigation. The information outlined a scheme whereby operators and employees of First Advantage Mortgage Co., which was based in Lake Ariel and later Hamlin, and had an office in Old Forge, used false appraisals and false documents, including false W-2 forms, false real estate appraisals, and false employment records, to qualify customers for inflated mortgages and loans during 1999 through 2005. Laureiro's involvement in the scheme occurred in 2001. Some of those customers subsequently defaulted on the mortgages and loans resulting in losses to banks and other financial institutions. The amount of money involved during Laureiro's involvement in the fraudulent scheme was between $200,000 and $400,000. The entire scheme involved between $1 million and $2.5 million, and involved between 10 and 50 victims. Laureiro admitted that he prepared numerous false documents, including W-2s and employment records, to qualify borrowers for inflated mortgages.

Laureiro is the fourth defendant connected to the scheme to be sentenced in federal court. Judge Kosik also ordered Laureiro to serve three years on supervised release following his prison sentence and pay a $4,000 fine. After Laureiro is released from prison, he must spend an additional five months on house arrest. In his plea agreement, Laureiro agreed to pay restitution for losses resulting from his conduct. (usattymdpa11712)

MORAL

First they chased him on loans that occurred 10 years ago! So note as I have been saying the federal prosecutors are chasing 10 year old fraud loans, which includes the stated income loans. Second, he is the last one sentenced and only received five months! Guess who cooperated with the prosecutors.

PENNSYLVANIA MAN SENTENCED TO OVER FOUR YEARS IN FEDERAL PRISON FOR MORTGAGE FRAUD

FACTS

On Jan. 17, Kenneth McGavitt was sentenced in federal court to 57 months in prison on his convictions for mail fraud. The sentence imposed also required McGavitt to pay restitution in excess of $3,000,000.

McGavitt participated in a scheme to defraud lenders in connection with $4,000,000 of commercial loans. Buildings that the defendant owned collateralized the loans. The defendant made false representations to the lenders about the amount of lease tenants in those buildings were paying. In addition, the defendant presented the lenders with a forged amendment to a lease agreement and other fraudulent documents to secure the loans. (usattywdpa11712)

MORAL

You do not want to commit fraud on a bank.  As a federal felony, it generates federal prison time as a rule.  We have had some exceptions but do you really want to risk it?

CFPB PUBLISHES MORTGAGE ORIGINATION EXAMINATION PROCEDURES GOVERNING BANKS AND NON-BANKS

FACTS

On Jan. 11, the Consumer Financial Protection Bureau released its Mortgage Origination Examination Procedures, which are a field guide for CFPB examiners looking at both bank and nonbank mortgage originators. In its press release, the CFPB emphasized that these new procedures were a key part of its plan to regulate nonbank entities, such as independent lenders and brokers that had previously not been subject to federal supervision. The CFPB particularly noted that "the 'nonbank' mortgage sector included many of the largest subprime lenders during the housing bubble" and that it intends to address those "gaps." The newly published examination procedures describe the information that CFPB examiners will gather to evaluate mortgage originators' policies and procedures, assess their compliance with applicable laws, and identify risks to consumers in the mortgage origination process.

MORAL

I have the model examination procedures to be used. Based on that do you all have privacy manuals? Red Flag Manuals? Compensation schedules? Advertising criteria so as not to violate the 19 examples of specific prohibited claims? And the list goes on.

CALIFORNIA DRE HAS GREATER AUTHORITY TO CRACK DOWN ON MORTGAGE FRAUD AND REAL ESTATE VIOLATIONS

FACTS

SB63 has given the Department of Real Estate greater authority to look at books and records and take testimony under oath.  It is quite extensive adding, amending and repealing codes such as Bus.&Prof.C. §§10079, 01076, 10237, 10238, 10156.2, 10177, 10080.9, 10088, 10141.6 1ne 10236.7 and even includes the Vehicle Code Section 1808.51

MORAL

There are too many changes to cite them all. It is enough to say that if you are called for an audit it is better to say you would like your counsel present and not discuss anything over the telephone.

CALIFORNIA MORTGAGE BROKER PLEADS GUILTY TO STEALING $19 MILLION IN A FRAUD SCHEME

FACTS

On Jan. 10, Christopher Warren of Folsom, Calif., who was caught hiding $70,000 in his cowboy boots, pleaded guilty to federal charges in a $19 million mortgage fraud scheme. He was caught carrying the cash, $1 million in Swiss bank certificates and four ounces of platinum as he entered the U.S. from Canada in 2009.

He had flown to Lebanon, on a chartered jet a week earlier as investigators closed in. The U.S. Attorney's Office in Sacramento says the 29-year-old pleaded guilty to wire fraud and aggravated identity theft. The charges carry a maximum penalty of 20 years in federal prison at his April 24 sentencing. Prosecutors say Warren stole $7 million from a Sacramento mortgage lender and another $12 million while working at a Roseville firm in 2007 and 2008. (mernws11011)

MORAL

Now there is a unique twist. Stealing directly for the lenders instead of the borrowers.

NEW CALIFORNIA LAW LETS GOVERNMENT SEIZE THE ASSETS OF ANYONE ACCUSED OF A SINGLE LARGE-SCALE FINANCIAL CRIME

FACTS

Effective Jan. 1, AB 364 allows the seizing and preservation of assets of a criminal defendant charged with a single large-scale financial crime.  (oen,c186.11)

MORAL

It could easily mean anyone charged with one count of mortgage fraud by the state could have all their assets seized at the time they are charged before any trial. 

MARYLAND MORTGAGE BROKER SENTENCED TO OVER TWO YEARS IN PRISON FOR DEFRAUDING FAMILY, LENDERS AND OTHERS

FACTS

On Jan. 12, U.S. District Judge Catherine C. Blake sentenced Douglas Skibicki to 33 months in prison followed by three years of supervised release for two counts of mail fraud in connection with a mortgage fraud scheme in which he defrauded lenders, family and others. Judge Blake also ordered that Skibicki forfeit $1.4 million and pay restitution.

Skibicki was a mortgage originator and/or broker for a company which operated in Laurel, Md. Skibicki admitted that from April 2006 through August 2009, with the assistance of an appraiser and others, he defrauded lenders, family members and others through a series of real estate transactions.

In May 2007, the owner of a construction company was facing financial difficulties and asked Skibicki for help. Skibicki had previously assisted in refinancing the owner's residence. Skibicki agreed to purchase a 50% interest from the owner in a property for $121,000, in the name of a member of Skibiki's family. Only a garage with an attached room and an unusable outhouse existed on the property. There was no running water or operable bathroom.

On May 9, 2007, the appraiser working with Skibicki completed a fraudulent appraisal of the property, falsely representing that there was a two-bedroom, one-bathroom home on the property with a “modern” kitchen and an enclosed porch and pier. The appraiser also included photos of the front and rear of a home, falsely representing that the photos were of a home located on the property. Skibicki submitted a fraudulent loan application to a bank for a mortgage on the property in the name of the family member, which contained false statements as to the family member's income and current residence. The family member did not sign the loan application, and neither the family member nor the owner signed the settlement documents showing that a settlement for the property occurred on May 15, 2007.

Based on the false information submitted by Skibicki, the bank provided a $260,971 mortgage on the property in the name of the family member. Skibicki received $249,997.18 in the name of the family member. Skibicki told the title company handling the settlement to wire $121,000 to a bank account held in the name of the owner's construction company to pay for the 50% interest that Skibicki had purchased in the name of family member. Skibicki subsequently allowed the mortgage to go into default, leading to foreclosure proceedings.

In addition, Skibicki and another family member owned another property in Elkridge, Md. On June 2, 2006, Skibicki submitted a loan application for $350,000 to refinance the Elkridge property. Skibicki's appraiser prepared a fraudulent appraisal indicating that there was a 2,040 square foot home on the property and included photographs purporting to be of the home. In fact, the property was a vacant lot.

In August 2007, while the Elkridge property remained a vacant lot, Skibicki decided to refinance the property again, this time in his name only. On August 18, 2007, Skibicki's appraiser completed another fraudulent appraisal, stating that a 3,297 square foot, five bedroom home existed on the property, with a stone patio, an enclosed and covered porch, and a balcony. Again, the appraiser included photos of a home that existed elsewhere. Skibicki submitted a loan application to a bank seeking to refinance for $517,500, with title to the property only in Skibicki's name. The family member who owned the property with Skibicki had not given permission to take his name off the title. The loan application also falsely stated: that the purpose of the refinancing was a cash-out home improvement; Skibicki's employment and income; and that he planned to use the Elkridge property as his primary residence. Skibicki also submitted fraudulent W-2s for tax years 2005 and 2006.

Based on the false information that Skibicki provided, on October 23, 2007, the bank provided a loan in the amount of $517,500. Skibicki allowed the mortgage on the Elkridge property to go into default, leading to foreclosure proceedings.

Skibicki admitted that he made and caused to be made misrepresentations to other lenders in order to obtain mortgages on additional properties. The appraiser referred to above died before charges could be filed against him.  (Usattymd11212)

MORAL

Nice family member. Steals your property to get fraud loans. Only I do not see why the family member cannot get the property back. If the signatures are forged then title did not legally change hands and the true owner could disavow the transaction and the title could get back into his hands. Notice how this went back four years but the statute in which to prosecute gives federal agents ten years to bring charges.

FORMER EMPLOYEE OF NEW JERSEY LENDER PLEADS GUILTY TO MORTGAGE AND FORECLOSURE FRAUD

FACTS

On Jan. 12, Jorge Abbud, a former employee of a Parsippany, N.J., mortgage lender pleaded guilty to taking $138,402 in illegitimate proceeds of multiple home sales as a result of a mortgage fraud scheme.

In 2008, Abbud was an employee of a Parsippany mortgage lender. He admitted that he targeted homeowners in New Jersey who had equity in their homes, but were facing foreclosure. Abbud falsely promised to help these homeowners avoid foreclosure, keep their homes, and repair their damaged credit. He instructed the homeowners to permit the titles of their homes to be recorded in the names of third-party purchasers for approximately one to three years, promising the homeowners that he would improve their credit scores during that time, obtain mortgages with more favorable interest rates for them and return the titles of the homes to the homeowners.

Abbud said he then recruited straw buyers with good credit scores to act as buyers of the homes facing foreclosure. He told the straw buyers they were helping the homeowners keep their homes, and that the straw buyers would make money when the homes were sold back to the original homeowners. Abbud admitted that on certain occasions, and notwithstanding his promises to the homeowners and straw buyers, the homes fell into foreclosure.

Abbud sometimes caused the straw buyers to misrepresent their incomes in loan applications and other documents in order to secure the loans to purchase the homes. Abbud caused the funds disbursed by the financial institution or lender underwriting the loan to be sent to individuals and entities that were not legally entitled to them. Abbud personally obtained $138,402 in illegitimate proceeds of the home sales as a result of his scheme.

The wire fraud count to which Abbud pleaded guilty carries a maximum potential penalty of 20 years in prison and a $250,000 fine or twice the gross amount of any pecuniary gain or loss resulting from the offense. Sentencing before Judge Walls is scheduled for April 17. (usattynj11212)

MORAL

This is one of the very few where I have seen the amount of the loss so low. Usually it is in the hundreds of thousands of dollars. So watch out if anyone reading this was involved in loan modifications or buying through straw buyers. Lately there has been an increase in people buying REOs at a low price from the lender selling it when the agent knew it had a back up buyer in place and did not tell the lender. This is fraud and if caught and some of them will be and in fact have been, they are looking at federal prison.

FOUR INDICTED IN OHIO FOR MORTGAGE FRAUD

FACTS

On Jan. 11, an indictment was filed against David R. Sharrock, Richard W. Balliett, Rhonda J. McElroy and Ronald L. Kightlinger charging them with multiple counts of bank and wire fraud in connection with a mortgage fraud scheme which caused approximately $1.3 million in losses to Geauga Savings Bank, JP Morgan Chase Bank, Washington Mutual Bank and SunTrust Mortgage said Steven M. Dettelbach, United States Attorney for the Northern District of Ohio. Sharrock is also charged with making false statements to the FBI.

The indictment alleges that Sharrock, Balliett, and McElroy sold homes in the cities of Mansfied, Marion, Galion, Plymouth, Shelby, and Bucyrus, Ohio. The sellers made fraudulent misrepresentations to the mortgage lenders by providing undisclosed down payment assistance to the buyers and by submitting fictitious purchase agreements and verifications of deposits. As a result, the sellers signed false settlement statements at closing.

The indictment also alleges that Ronald L. Kightlinger acted as a straw buyer in purchasing a commercial building from David R. Sharrock in Mansfield, Ohio. Sharrock allegedly lied to FBI agents relative to whether he provided down payment assistance in the scheme.

If convicted, the defendants' sentences will be determined by the court after review of factors unique to this case, including the defendants' prior criminal records, if any, the defendants' roles in the offense, and the characteristics of the violation. In all cases the sentence will not exceed the statutory maximum. (usattyndoh11112)

MORAL

Lying to an FBI agent is strictly a “no-no.”  It is a federal offense to lie to a federal officer and you can draw up to five years in prison for the lie.  See Title 18 United States Code, Section 1001!

TEXAS MAN PLEADS GUILTY TO FORECLOSURE RESCUE SCAM IN SOUTHERN CALIFORNIA AND ELSEWHERE

FACTS

On Jan. 6, Frederic Alan Gladle, who was charged on Dec. 9, 2011, in U.S. District Court in Los Angeles with one count of bankruptcy fraud and one count of aggravated identity theft pleaded guilty for his role in operating a foreclosure rescue scam in Southern California and elsewhere that charged distressed homeowners fees in exchange for fraudulently postponing foreclosure sales.

Gladle admitted that beginning in October 2007 and continuing until October 2011, he operated a foreclosure-rescue fraud scheme that netted him more than $1.6 million in fees from distressed homeowners. According to court documents, Gladle used five aliases to avoid detection, including stealing the identity of at least one person and setting up a mobile phone account in that victim's name.

Gladle admitted that he recruited homeowners whose properties were in danger of imminent foreclosure and falsely promised to delay the foreclosures for up to six months, in exchange for a fee of approximately $750 per month. Gladle, directly or through salespersons, directed homeowners to sign deeds granting fractional interest in their properties to debtors in bankruptcy proceedings whose names Gladle found by searching bankruptcy records. The debtors were unaware that their names and bankruptcy cases were being used by Gladle in his scheme. Gladle then sent the unsuspecting debtors' bankruptcy petitions, and the deeds that transferred fractional interests to the debtors, to the homeowners' lenders to stop foreclosure proceedings.

Because bankruptcy filings give rise to automatic stays that protect debtors' properties, the receipt of the bankruptcy petitions and deeds in the debtors' names forced lenders to cancel foreclosure sales. The lenders, which included banks who received government funds under the Troubled Asset Relief Program, could not move forward to collect money that was owed to them until getting permission from the bankruptcy courts, thereby repeatedly delaying the lenders' recovery of their money. When homeowners wanted to void the deeds to the unsuspecting debtors, Gladle would forge the debtors' signatures on papers voiding the deeds.

The crime of bankruptcy fraud carries a statutory maximum sentence of five years in federal prison. The aggravated identity theft charge carries a mandatory sentence of two years.  (usdoj1612)

MORAL

There were 1,100 people who paid him over $1.6 million. My educated guess is he will do time and it may be somewhere around four to five years if not longer due to the number of “victims” and the amount of “loss.”

WASHINGTON PROPERTY MANAGEMENT COMPANY OWNERS PLEAD GUILTY FOR STEALING OVER $2.8 MILLION FROM THEIR OWN CLIENTS

FACTS

The owners of a property management company, Bryan W. Talbot and Chester D. Ransom Jr., have pleaded guilty to defrauding their clients, mortgage lenders, and the government out of more than $2.8 million.

The defendants each pleaded guilty in the U.S. District Court for the District of Columbia to charges of conspiracy to commit bank fraud, conspiracy to commit mail fraud, and conspiracy to defraud the government. They agreed to criminal forfeiture and restitution of more that $2.8 million. Under the voluntary federal sentencing guidelines, Talbott and Ransom each face between 46 to 57 months in jail. Talbott's sentencing is scheduled for May 29, and Ransom's sentencing is scheduled for April 23.

Talbott was the president and Ransom was the vice president of a property management company located in Washington that operated under multiple names.  From 2004 to the present, the defendants engaged in three separate fraudulent schemes, resulting in more than $2.8 million in losses to the victims.

Through their property management company, Esquire, the defendants entered into contracts with numerous property owners in the Washington area to manage their rental properties. Under many of the contracts, the defendant were required to collect rental payments from tenants and use those funds to pay bills relating to the properties, such as utility bills. After paying any bills and deducting an administrative fee, the defendants were required to remit the remainder of the rental payments to the property owners.

The defendants frequently collected rental payments from tenants but did not pay the bills for the properties, despite falsely representing to the property owners that the bills had been paid. Instead, the defendants used these funds for their own benefit. In addition, the defendants also sent forged bank statements to some of their clients, misstating the balances in their clients' accounts. Through this fraudulent scheme, the defendants defrauded at least 54 clients out of a total of $1,269,278.

As for the accusation of mortgage fraud, on June 30, 2004, Ransom purchased the property on North Portal Drive NW for $975,000, financing the purchase, in part, with two loans in the total amount of $731,250 from WMC Mortgage Corp., a mortgage lender. Ransom executed two deeds of trust on the property, granting WMC a security interest in the property.

On Dec. 29, 2005, Ransom filed with the District of Columbia Recorder of Deeds two forged Certificates of Satisfaction, purporting to release the WMC liens on the Portal property. Then, on Jan. 13, 2006, Ransom sold the Portal property to Talbott for $1,110,000. The defendants provided copies of the forged lien releases to the settlement company. Talbott obtained a loan in the amount of $750,000 from Fremont Investment and Loan. Talbott executed a deed of trust on the property, granting Fremont a security interest in the property. Ransom received a check in the amount of $515,034 from the settlement.

Less than a month later, on Feb. 2, 2006, Ransom again “sold” the Portal property to Talbott, this time for $1,250,000, despite the fact that Talbott was already the legal owner. The defendants provided copies of the forged lien releases to the settlement company. Talbott obtained a loan of $890,000 from First National Bank of Arizona. Talbott executed a deed of trust on the property, granting First National Bank of Arizona a security interest in the property. Ransom received a check in the amount of $801,280 from the settlement.

Tax Fraud

For tax year 2006, the defendants filed false federal and District of Columbia tax returns. For both of their federal and D.C. taxes, the defendants submitted Forms W-2 that indicated federal and D.C. income tax withholdings in the following amounts:

In fact, the defendants did not have any actual federal or D.C. income tax withholdings for tax year 2006. Talbott's false tax returns generated a federal tax refund in the amount of $66,655 and a D.C. tax refund in the amount of $30,897. Ransom's 2006 federal and D.C. tax refunds were blocked prior to disbursement. (usatty11012)

MORAL

Busy little beavers, weren't they?  I do not know how they expected to get away with it based upon the facts.

.

 THE INFORMATION CONTAINED HEREIN IS NOT LEGAL ADVICE.

AN ATTORNEY SHOULD BE CONSULTED IF YOU DESIRE LEGAL ADVICE