FOUR CONVICTED IN CALIFORNIA FOR DEFRAUDING HUNDREDS OF VICTIMS IN LOAN MODIFICATION SCAM
On May 8, four men were convicted in Orange County Superior Court of defrauding hundreds of victims in a real estate scam that included fraudulently collecting upfront fees for loan modification services and sending fake letters with the CitiFinancial or CitiMortgage logos offering home loan modification assistance. Victim losses in this case are estimated to be in excess of $130,000. All four defendants are scheduled to be sentenced on July 29.
Jacob John Cunningham and John D. Silva pleaded guilty to one felony count each of conspiracy to collect illegal upfront fees and conspiracy to commit theft by false pretenses. Cunningham and Silva are each expected to be sentenced to six months in jail and five years formal probation, during which they will be prohibited from engaging in loan modification or loan consulting practices. They are also ordered to jointly pay $60,000 toward restitution by their sentencing date and will be ordered to pay additional restitution in an amount to be determined at a later hearing.
Justin Dennis Koelle pleaded guilty to one felony count each of conspiracy to collect illegal upfront fees and conspiracy to commit theft by false pretenses. He is expected to be sentenced to nine months in jail, five years of formal probation, during which he will be prohibited from engaging in loan modification or loan consulting practices, and ordered to pay restitution in an amount to be determined at a later hearing.
Dominic Adam Nolan pleaded guilty to one felony count of conspiracy to collect illegal upfront fees. He is expected to be sentenced to six months in jail, five years of formal probation, during which he will be prohibited from engaging in loan modification or loan consulting practices, and ordered to pay restitution in an amount to be determined at a later hearing.
Previously, Andrew Michael Phalen had pleaded guilty on June 4, 2012 to one felony count each of conspiracy to collect illegal upfront fees and conspiracy to commit fraud. He was sentenced to one year in jail, five years formal probation, during which he is prohibited from engaging in loan modification or loan consulting practices, and ordered to pay restitution in an amount to be determined at a later hearing.
Between January 2009 and March 2012, Cunningham, Koelle, Phalen, Nolan and Silva created numerous fraudulent loan modification businesses. They sent a promotional letter to people throughout the United States with an offer to restructure their home loans, in which the defendants referred to the homeowner’s specific lender and principal balance, and charged the homeowner upfront fees for loan modification services. The letter was fraudulently designed to appear as if it came from the victims’ lenders.
When victims called the number on the letter, the defendants falsely told the victims that they could get a complete refund of the fee their company charged if their loan was not modified and that the company had over a 95% success rate. After the victims gave Cunningham, Koelle, Phalen, Nolan or Silva their money, the defendants kept that money without securing loan modifications for the distressed victims. They did not return or refund the victims the fees they paid for a loan modification.
In order to avoid having their theft discovered, Cunningham, Koelle, Phalen, Nolan and Silva regularly changed the names, phone numbers, and addresses of the companies they operated.
In late December 2011, after over a hundred victims from California and other states submitted complaints to various law enforcement agencies and the Better Business Bureau regarding the defendants’ loan modification activities, Cunningham, Nolan and Silva started a new fraudulent scheme, in which they would send out forged conditional approval letters to victims with a CitiFinancial or CitiMortgage Logo in the letterhead. They stated in the forged letters that they could offer the homeowner a low interest rate of 2.8% or less to refinance their home loan. Cunningham, Nolan, and Silva also attached escrow instructions with the letter, directing the homeowner to deposit between $3,500 and $4,600 directly into the defendants’ bank accounts.
Cunningham, Nolan and Silva had no affiliation to CitiFinancial or CitiMortgage or any authorization to offer a loan on behalf of CitiFinancial or CitiMortgage. They made no efforts to qualify the victims for loans with CitiFinancial or CitiMortgage. (ocdaprrel5913)
Notice how this goes back four years to January 2909. Do you know any one that paid them or their companies for loan modifications that has not contacted the District Attorney? Notice this includes not only loan modifications but also loan modification services? Advising on loan modifications and collecting an advance fee for the advice can be considered illegal.
STRAW BUYER IN SAN DIEGO PLEADS GUILTY TO CONSPIRACY TO COMMIT MORTGAGE FRAUD
On May 8, Timothy E. Shannahan pled guilty to conspiring to commit mortgage fraud by acting as a straw buyer in a $5 million scheme.
In pleading guilty Shannahan became the fourth person to admit conspiring with Kathryn Sylvester, the former CEO of Sylvester Financial Inc. According to court records, Sylvester was responsible for recruiting straw buyers—whom she directed to submit false mortgage loan applications in order to purchase properties throughout Southern California between 2005 and 2008.
Shannahan admitted conspiring with Sylvester between January 2007 and May 9, 2008, to fraudulently induce lenders to fund mortgage loans. Shannahan falsely claimed on a mortgage loan application that he earned $50,000 per month as the vice president and director of marketing for Real Realty Solutions in order to obtain mortgages for a residence located on Nautilus Street in La Jolla. In total, Shannahan admitted that the loans obtained in his name resulted in losses of $400,000 to $1 million. For her part, Sylvester, according to her indictment, is alleged to have played a role in approximately 80 fraudulent loans on 28 foreclosed properties resulting in losses in excess of $5 million. Her case is pending.
Shannahan is scheduled to appear before District Judge Lorenz on July 29 for sentencing. (usattysdca5813)
Notice now the FBI is indicting straw buyers. People that loan their credit to allow buying of property making fraudulent statements including that it would be the primary residence of the purchaser straw buyer. If you are involved in any kind of investigation, you should state you want your attorney present and only that. Remember, this is in your best interest.
CALIFORNIA REAL ESTATE AGENT PLEADS GUILTY TO MORTGAGE FRAUD
On MAY 6, Ricardo Fabian Salinas pleaded guilty to bank fraud in connection with a mortgage fraud scheme in Bakersfield.
From 2007 to 2010, Salinas, Eliseo Jara, Sergio Jara and other co-defendants ran a scheme that defrauded banks and mortgage lenders by selling properties to nominee buyers using loans obtained with fraudulent applications and false documentation. At the time of the scheme, Salinas was a licensed real estate agent. Salinas purchased a residence as a nominee buyer from Jara Brothers Investments.
They caused materially false statements and omissions to be submitted to the lender concerning Salinas’ income, the funds on deposit in his bank account, his rent expense, the source of funds for closing costs, and his lack of intent to occupy the property as his personal residence. They also caused false supporting documentation to be submitted. Ultimately, the property that Salinas purchased from JBI went into foreclosure when the loan payments were not made.
Salinas admitted in his plea that the losses attributable to his role in the fraud scheme were approximately $575,000.
Salinas is scheduled to be sentenced on Feb. 4, 2014. The maximum sentence is 30 years in prison. The other eight defendants in this case have pleaded not guilty. (usattyedca5613)
Notice that more and more of the indictments are against Californians and the loans date back six years. You may be investigated and interviewed now, but you may not get indicted for up to 10 years while the federal agents are investigating. Better to retain your attorney now than later. It just may be the attorney can represent you well enough to prevent or reduce the charges to be filed.
CALIFORNIA MAN CHARGED WITH MORTGAGE FRAUD
On May 6, Valeri Kalyuzhnyy was charged in a five-count grand jury indictment with making false statements on a loan and credit application and money laundering.
The indictment alleges that Kalyuzhnyy caused the preparation and submission of loan applications to federally insured lenders that falsely stated various homebuyers’ income, employment, assets, and intent to occupy the homes as their primary residences. According to the indictment, Kalyuzhnyy was responsible for the origination of almost $4 million in residential mortgage loans.
Kalyuzhnyy pleaded not guilty at his arraignment and released on a $50,000 bond. If convicted, Kalyuzhnyy faces a maximum penalty of 30 years in prison and a $1 million fine. (usatyedca5613)
TEXAS DEBT COLLECTOR CAN BE SUED IN CALIFORNIA FOR WRONGFULLY TRYING TO COLLECT ON A MORTGAGE AFTER FORECLOSURE
Maribel Monroy purchased real property in Richmond, Calif. and executed two promissory notes secured by deeds of trust with the lender WMC Mortgage Corp. She later defaulted on the loans and the first Deed of Trust foreclosed.
Heritage Pacific Financial LLC acquired the promissory note on the second mortgage after the foreclosure. Heritage then sued Monroy for fraud based on her application with WMC. Monroy demurred to the complaint, which Heritage had been allowed to amend three times, and cross-complained for violation of the Fair Debt Collection Practices Act for attempts to collect a debt not owed.
She request summary judgment (no trial) against Heritage. Heritage admitted it was a debt collector but the FDCPA did not apply to it. The trial court granted Monroy demurrer, which dismissed the complaint and granted her judgment against Heritage on her cross-complaint. Heritage appealed.
The 1st District Courts of Appeal said affirmed. There was no showing that WMC assigned any right to sue for fraud only the write to try to collect on the promissory note. Under the FDCPA, a debt collector may not use any false, deceptive or misleading representation or means in connection with the collection of any debt.
A violation includes “the threat to take any action that cannot legally be taken.” Here, Heritage threatened Monroy with a lawsuit that had no merit for two reasons. First, its claims based on fraud had no merit as the trial court found. Second, Heritage received the assignment of the Monroy’s Note after the foreclosure of the first deed of trust, which extinguished the second deed of trust securing Monroy’s note under the antideficiency statute. There was no triable issue of fact that Heritage could seek payment for the note. (Heritage Pacific Financial LLC vs. Monroy, 1st Dist., No. A135274, 4-25-13; 2013 DJDAR 5402).
She agreed to $1 in damages. However the FDCPA allows for attorney fees and litigation costs which the court awarded against Heritage in the amount of $89,489.60. Now you know why Heritage probably appealed.
UTAH LEGISLATURE AMENDS MORTGAGE LICENSING ACT TO REQUIRE CREDIT REPORTS FROM APPLICANTS SEEING MORTGAGE BROKER LICENSURE
The Utah legislature has amended the Utah Residential Mortgage Practices and Licensing Act. In addition to other unchanged requirements, applicants for licensure as a residential mortgage lender must now authorize the division to obtain credit reports, which were not previously required.
I trust your credit is good in Utah if you intend to be a mortgage loan originator.
THE INFORMATION CONTAINED HEREIN IS NOT LEGAL ADVICE. AN ATTORNEY SHOULD BE CONSULTED IF YOU DESIRE LEGAL ADVICE.