FACTS
On Nov 5, ARTHUR GONZALES DIAZ, an Anaheim resident was arraigned on seven felony counts of grand theft and one misdemeanor count of engaging in business as a real estate broker without a license. He is accused of targeting and defrauding Hispanic victims of more than $87,000 in bogus real estate deals. Diaz faces a maximum sentence of eight years in state prison.
Beginning in 2008 Diaz is accused of posing as a mortgage broker even though his license had been suspended for the last decade. Diaz is accused of convincing Spanish-speaking victims into giving him money for real estate deals which he pocketed. Diaz is being held on $75,000 bail. (ap11510)
MORAL
Ask to see the license or go to the California Department of Real Estate and check out the name for a license. If none, then you should be leery to start before you start parting with your money.
CALIFORNIA MORTGAGE BROKER INDICTED FOR EVADING INCOME TAXES
FACTS
ON NOV. 4, BRIAN KEITH CORTEZ OF FRESNO was indicted by a federal grand jury on allegations of evading the assessment of income taxes.
According to the indictment, Cortez was a real estate and mortgage broker who operated businesses in Fresno named Mortgage Express, Mortgage Express Inc., and Valley Investment Properties. Mortgage Express and Mortgage Express Inc. functioned as home mortgage brokers, providing, among other things, refinancing on mortgages and services for securing financing for home purchases.
The four-count indictment alleges that Cortez generated substantial income through these businesses, and that he evaded the assessment of his income taxes from the years of 2003 through 2006.
If convicted, Cortez faces a maximum statutory penalty of five years in prison, a $250,000 fine, or both. (frsnobee11410)
MORAL
I thought he and everyone else know about 1099’s. The federal IRS looks for those that have missed three years in a row of failing to file. Then they send out a special agent instead of a revenue agent. The difference is while a revenue agent will negotiate, a special agent in this one attorney’s opinion will not and the only reason you are agreeing to file at that time is because of the threat of criminal prosecution. When a client sees us and we become aware he has not filed, we recommend he see his CPA or we will find him one. I can argue tax adjustments with the IRS; it is pretty difficult to argue prison time on a felony. He is innocent until proven guilty but remember if guilty it is a felony and he can lose his real estate license as well as a lot of other rights. Remember, file, if you do not have the money to pay, still file. Filing with few exceptions avoids criminal action.
COLORADO CHANGES RULES ON ADVERTISING MORTGAGE LOANS
FACTS
New Requirements Change Advertising Rules for Mortgage Loan Originators. On September 30, 2009, updates to Rule 8-1-1, entitled Mortgage Loan Originator Advertising, became effective.
To review the entire advertising rule, please visit: Rule 8-1-1, entitled Mortgage Loan Originator Advertising. (iss. No.6, November 2010)
MORAL
You may ask why I reprint this here. The reason is we defend more people for violating the advertising rules. The regulatory enforcement people regularly read the paper. Since they work in the mortgage enforcement department, they naturally read the mortgage ads. Finding a violation they know they will find others if they audit the mortgage broker and/or lender. So in a way by not paying attention to your advertising compliance, you ask the regulatory people to please come out and audit you because I have more violations than the one you see here.
FLORIDA BROKER AND PART OF HER FAMILY PLEAD GUILTY TO MORTGAGE FRAUD
FACTS
On Nov. 5, YVETTE GONZALES VALDES, a broker at the center of a Homestead, Fla., mortgage fraud ring admitted in federal court that she defrauded two lenders. She pleaded guilty to conspiring to commit wire fraud after brokering bogus loans for her son-in-law, VICTOR PEREZ, on two South Miami-Dade properties.
The Miami Herald's 2008 series ``Borrowers Betrayed'' found Valdes' company, BEST CHOICE MORTGAGE, had written more than 100 loans based on false and misleading financial information. Valdes faces a maximum sentence of 30 years in prison and a $1 million fine, and was ordered to pay $386,500 in restitution.
PEREZ, ALONG WITH VALDES' DAUGHTER, JEANNINE VALDES-PEREZ, AND BROTHER, JOSEPH GONZALEZ, also pleaded guilty on Nov. 5, for their roles in the scheme. (miamihrl11610)
MORAL
As I have written before many times, the family that commits fraud together gets to go to prison together.
THREE OF 10 IDAHO DEFENDANTS SENTENCED FOR MORTGAGE FRAUD
FACTS
On Nov. 1, three of 10 defendants charged in a mortgage fraud case were sentenced in Boise, Idaho. MICHAEL J. HYMAS, FORMERLY OF BOISE, was sentenced to 21 months in prison, three years of supervised release, 80 hours of community service, and $544,647 in restitution for wire fraud. Hymas pled guilty to the charge in March 2010. SHAUNTEE K. FERGUSON, OF BOISE, WAS SENTENCED to five years of supervised release, 80 hours of community service, and $365,829.69 in restitution for making a false statement to a financial institution. Ferguson pled guilty to the charge in June 2010. CHRISTOPHER R. GEORGESON, FORMERLY OF BOISE; CURRENTLY OF PHOENIX, was sentenced to one month in prison, three years’ supervised release, 11 months of home detention, and $103,356.64 in restitution for wire fraud. Georgeson pled guilty to the charge in March 2010. Four other defendants have pled guilty to a variety of charges and are awaiting sentencing, one defendant has been sentenced, and two other defendants are awaiting trial.
Michael Hymas was an insurance agent in Meridian, Idaho, and a silent partner with Stanley Ferguson, Michael Hymas's son-in-law, and Shauntee Ferguson, Michael Hymas's daughter, in the buying and selling of real estate, or flipping of real estate, in order to gain profits from the sales. In 2002, as part of their scheme to defraud and obtain money by false pretenses, Michael Hymas, Shauntee Ferguson and Stanley Ferguson falsely inflated their monthly personal income and falsely claimed rental income, falsely stated that residences would be used as primary residences when in fact they were intended as investment properties only, falsely represented the employment status of Shauntee Ferguson, and falsely provided bank accounts as a source of funding. They submitted the fraudulent documents to loan brokers. As a result, between 2004 AND 2006, they caused the financial institutions and mortgage lenders to fund approximately 21 fraudulent loans for an approximate total value of $7.59 million. The financial institutions and mortgage lenders incurred losses of approximately $1.6 million.
On Nov. 19, 2004, Shauntee Ferguson applied for a residential construction loan in the approximate amount of $337,250. The residence was intended for investment purposes only by Hymas, Shauntee Ferguson and Stanley Ferguson. It was not intended for personal occupancy, as misrepresented on the loan application. After the residence was completed and sold, Hymas and the Fergusons shared in the profits from the sale. In order to obtain the loan, Hymas and Shauntee Ferguson provided false information to the mortgage company. Hymas caused a false rental agreement to be prepared; falsely representing he was paying the borrower, Shauntee Ferguson, rental income of $2,500 per month. He also misrepresented that Ferguson was the marketing manager at his insurance company, that she'd been employed there for three years, and that she earned $9,000 per month. Hymas caused an employee at his insurance agency to confirm these misrepresentations when Ferguson's employment was verified. Hymas also caused Ferguson's name to be placed on his checking account so that the checking account was represented on her loan application as a personal asset with a value of approximately $31,000. Based on the misrepresentations, the funding on the residential loan was authorized.
On Nov. 16, 2005, Shauntee Ferguson applied for a residential construction loan in the approximate amount of $520,000. On her loan application, Ferguson falsely stated that she had a monthly income of $10,000 and was employed as the marketing manager at an insurance agency. In fact, she was not employed and had no monthly income. Ferguson also claimed she had an account balance of approximately $102, 000 when in fact her name was placed on the account to give the appearance that she had access to the funds. Ferguson also falsely represented on the loan application that she planned to occupy the residence as her primary residence when in fact the property was intended solely for investment purposes. Based on the misrepresentations, the funding on the residential loan was authorized.
On Nov. 21, 2006, Christopher Georgeson applied for a residential construction loan in the approximate amount of $292,000. On his loan application, Georgeson falsely stated he had a monthly income of $41,666.67 when in fact he had monthly income of approximately $8,000. Georgeson also falsely stated he had gross rental income of $2,300 per month when in fact he had no rental income. Based on these misrepresentations, the funding on the residential loan was authorized. At the loan closing, $93,000 was paid to Crestwood, Inc. The property was subsequently the subject of a foreclosure proceeding due to non-payment of the monthly mortgage by Georgeson.
STANLEY J. FERGUSON, OF BOISE, PLED GUILTY TO WIRE FRAUD IN MAY 2010. On June 29, 2006, Ferguson applied for a residential construction loan in the approximate amount of $1,499,999, for a residence in Eagle, Idaho. On his loan application, Ferguson falsely stated he had a monthly base employment income of $23,500 when in fact he had no monthly base employment income. Ferguson also falsely stated he had gross rental income of $2,138.50 per month when in fact he had no rental income. He falsely stated that the property would be his primary residence. Based on these misrepresentations, the funding on the residential loan was authorized. At the loan closing, a sum of money was paid to Crestwood, Inc. The property was subsequently the subject of a foreclosure proceeding due to non-payment of the monthly mortgage by Ferguson. FERGUSON FACES A MAXIMUM SENTENCE OF TWENTY YEARS IN FEDERAL PRISON, a fine of up to $250,000, and supervised release of up to three years. Sentencing is set for Nov. 29.
BRENT BETHERS, OF EAGLE, IDAHO, WAS SENTENCED ON SEPT. 20, to one month in prison, 11 months of home detention, three years of supervised release, $23,913 in restitution, and a fine of $6000 for Wire Fraud. Bethers pled guilty to the charge in March 2010. Bethers was a loan officer in Meridian, Idaho. In June 2006, Stanley Ferguson approached Bethers regarding financing for a residence in Eagle. Bethers prepared a loan application on which he falsely represented that Ferguson had monthly income of $25,638 per month when in fact Ferguson's monthly income was substantially less than this amount. BETHERS ALSO REPRESENTED ON THE LOAN APPLICATION THAT FERGUSON INTENDED TO OCCUPY THE RESIDENCE AS HIS "PRIMARY RESIDENCE" WHEN IN FACT THE PROPERTY WAS FOR INVESTMENT PURPOSES. The mortgage company relied upon these false representations and authorized a loan of approximately $1.5 million to Ferguson.
TRAVIS HYMAS, FORMERLY OF THE BOISE AREA, CURRENTLY OF CEDAR HILLS, Utah, pled guilty to making a false statement to a bank in March 2010. On March 28, 2007, Hymas applied for a residential construction loan in the amount of $154,800 for a residence in Nampa, Idaho. On his loan application, Hymas falsely stated he had a monthly gross income of $15,000 when in fact he had a monthly gross income of approximately $3,000. He also falsely represented that he had personal property with a value of approximately $100,000. Based on these misrepresentations, the funding on the residential loan was authorized. HYMAS FACES A MAXIMUM SENTENCE OF 30 YEARS IN FEDERAL PRISON, a fine of up to $1,000,000, and supervised release of up to five years. Sentencing is set for Dec. 15, before U.S. District Judge Edward J. Lodge in Boise.
SHANE HYMAS and Laurie Krechelle Hymas, both formerly of the Boise area, currently of American Fork, Utah, each pled guilty to bank fraud in April 2010. On Aug. 23, 2006, Shane and Laurie Hymas applied for refinancing on a loan in the amount of $104,500 for a residence in Star, Idaho. On their loan application, the Hymas' falsely stated they had a combined monthly gross income in the amount of $33,000 when in fact they had a monthly gross income of between $10,000 and $15,000. They also falsely represented that they had gross monthly rental income of $2,550 when in fact they had no rental income. Based on these misrepresentations, the funding on the residential loan was authorized. They each face a maximum sentence of 30 years in federal prison, a fine of up to $1,000,000, and supervised release of up to five years. Sentencing for both defendants are set for Jan. 18, 2011, before U.S. District Judge Edward J. Lodge in Boise.
PAUL REDONDO AND MELODY C. REDONDO, both OF MERIDIAN, IDAHO, WERE INDICTED IN OCTOBER 2010 for multiple counts of bank fraud, wire fraud, and false statement to a financial institution. According to the indictment, in March through August 2009, Melody Redondo, a licensed real estate agent, FAILED TO DISCLOSE MULTIPLE OFFERS TO A MORTGAGE COMPANY ON A SHORT-SALE RESIDENTIAL PROPERTY, FAILED TO DISCLOSE A DUO-CONTRACT WITH SIMULTANEOUS CLOSINGS ON THE SAME REAL ESTATE TRANSACTION, and forged a quitclaim deed and personally notarized the forged deed. The indictment also alleges that the Redondo's fraudulently overstated their monthly income and falsely represented rental income on multiple loan applications. In May 2009, the Redondo's filed a joint bankruptcy petition and discharged approximately $1,429,000 in debts. A trial is scheduled for Jan. 10, 2011, before Chief U.S. District Judge B. Lynn Winmill in Boise. (usattyid11210)
MORAL
Notice there are eight people listed although they talk about three at the beginning. Note that part of the felony is stating it is for the primary residence on the loan application and in fact it was an investment. Note the federal prosecutors went back six years to 2004 and kept coming forward to fraud that occurred in 2009. This is why you should have a good attorney that understands mortgage fraud.
LAS VEGAS ATTORNEY AND TWO OTHERS ARRESTED ON FORECLOSURE RESCUE SCAM CHARGES
FACTS
On Nov. 4, Nevada Attorney RAMON DY-RAGOS, and his partners JESUS BACA a.k.a. JESSE BACA and LUIS O. BACA were indicted for allegedly operating a foreclosure rescue scam in Las Vegas during 2008 and 2009 under the business name of “SAVE YOUR HOUSE.”
Save Your House is alleged to have lured customers to pay large up-front fees ranging from $1000.00 to $3995.00. The defendants informed the victims they could prevent foreclosure by having customers stop paying their mortgage and ceasing all contact with the bank holding their mortgage. The defendants falsely claimed they would modify mortgages through negotiation with the mortgage holders or suing the mortgage holders.
Dy-Ragos and Jesus Baca are indicted on two felony counts of Theft—Obtaining Money in Excess of $2,500 by material misrepresentation, two felony counts of Theft—Obtaining Money of $250.00 to $2,500.00 by material misrepresentation and one misdemeanor count of conspiracy. Luis O. Baca is indicted on one misdemeanor count of conspiracy.
The case was investigated and is being prosecuted by the Attorney General’s Mortgage Fraud Task Force within the Bureau of Consumer Protection. An initial appearance date has been scheduled for Nov. 18th, in Las Vegas District Court Department 6.
VIRGINIA WOMAN FACES FEDERAL PRISON FOR CREDIT REPAIR BUSINESS DELVING IN MORTGAGE FRAUD
FACTS
SHANITA LACY, a Chesapeake woman who ran a credit repair business targeting distressed homeowners faces federal felony charges in a mortgage fraud conspiracy case. Instead of repairing homeowners' credit, Lacy is accused of arranging fraudulent loans in an inflated housing market and skimming the proceeds for herself. When the housing bubble began to deflate, the loans went into default and the homeowners lost their homes.
Lacy is accused of arranging eight fraudulent loans totaling more than $1.5 million. The charges were filed after A TWO-YEAR FBI INVESTIGATION. A plea agreement hearing is scheduled for Dec. 6 in federal court, an indication that Lacy might have agreed to plead guilty. She faces potential prison time and forfeiture of any fraudulent proceeds that can be recovered.
Lacy's Virginia Beach-based company was called CLEAN SLATE FINANCIAL SERVICES. When distressed—often first-time—homeowners came to her for help juggling their bills, Lacy exuded an image of success and affluence. She dressed well, drove fancy cars and lived in a big new house in an upscale subdivision in Great Bridge.
Here's how the alleged conspiracy worked, according to court papers filed by prosecutors: Homeowners were advised to sell their property to a straw buyer—an "investor," in Lacy's terminology—for a year while their credit was being "repaired." During that time, they were told, they would be relieved of making house payments and at the end of the year, they could repurchase the home. The straw buyers were recruited with a $5,000 incentive payment and assurances that they stood to profit from rising real estate values.
Lacy then arranged for a new, larger mortgage on the property, often making fraudulent statements to the lender, prosecutors allege, overstating the straw buyer's income, for example, or INDICATING FALSELY THAT THE STRAW BUYER INTENDED TO OCCUPY THE HOME. At closing, Lacy paid off the original mortgage and pocketed the difference, promising to send money to the straw buyers to cover the monthly payments. For a while she did, but after a few months the payments stopped.
Meanwhile, the real estate market was tanking. The straw buyers, stuck with inflated mortgages and no equity, defaulted on the loans. At least one declared bankruptcy. The original homeowners were left to fend for themselves. (virg.plt11410)
MORAL
Notice how she dressed well and drove fancy cars? Anyone reading this ever see a con man not dress well and drive fancy cars? Remember she is innocent until proven guilty but if guilty and because of the harm to the people personally, it is likely she will do some time in a federal prison. Did you notice how the FBI investigation took two years? That is not because the agents are slow. It is because it takes that long to get federal grand jury subpoenas issued, served, returned and then to go through all those loan files to find the incriminating data which they usually do find. So if anyone reading this knows of an investigation do not think that because a year has passed you are safe. The federal government has up to 10 years to file charges and I suggest if you were involved see a lawyer now or give us a call if you do not have one.
PIERCE COMMERCIAL BANK OF WASHINGTON CLOSED BY STATE REGULATORS DUE TO MASSIVE MORTGAGE FRAUD
FACTS
Pierce Commercial Bank was closed by state regulators, becoming the 11th bank to fail in Washington State in 2010. The state Department of Financial Institutions is reported as stating the Pierce Commercial failure was a combination of heavy losses from lending in both construction and mortgages.
FEDERAL AGENCIES ARE CONDUCTING A CRIMINAL INVESTIGATION OF MORTGAGE LOSSES AT THE BANK. In September, a BELLEVUE RESIDENT, MARK ASHMORE, was convicted in federal court in Seattle on four counts of wire fraud and conspiracy in connection with a mortgage fraud scheme against Pierce Commercial and other lenders.
In a civil lawsuit filed last summer, prosecutors asked a judge to order SHAWN PORTMANN, the senior vice president of Pierce Commercial's mortgage lending division from 2005 to July 2008, to turn over $102,000 in cash that he allegedly handed to an associate in a bag early this year.
The suit disclosed that the Federal Bureau of Investigation began investigating the bank's home lending division in June 2009. According to the lawsuit, the FBI concluded that Portmann alone originated 5,253 loans for more than $990 million, nearly half of the mortgage-subsidiary's total and THAT MORE THAN HALF OF THE LOANS WERE FRAUDULENT.
Portmann has not been charged with any crimes, and has denied all allegations in the civil case. The total banks closed this year including Pierce amount to 143. (seattims11510)
MORAL
With 143 bank failures you will see more and more people being served with FDIC investigative subpoenas if not being sued outright by the FDIC. If you are served with an FDIC subpoena I highly recommend you do not ignore it and see your attorney. Otherwise you may wish you had. We are aware of seven in California in the last 30 days let alone the lawsuits.
THE INFORMATION CONTAINED HEREIN IS NOT LEGAL ADVICE.
AN ATTORNEY SHOULD BE CONSULTED IF YOU DESIRE LEGAL ADVICE
