OHIO EX-FBI INFORMANT PREVIOUSLY CONVICTED OF MORTGAGE FRAUD THEN USED TO FIND MORTGAGE FRAUDSTERS AGAIN INDICTED FOR MORTGAGE FRAUD

FACTS

On March 6, Paul Tomko, a onetime FBI informant, pleaded guilty to charges that he ran a mortgage fraud scheme similar to the scams that agents had paid him to help investigate in 2007 and 2008. Originally Tomko said in an interview after his indictment that he had "no idea" what federal prosecutors were alleging and planned to fight the charges. But he changed his mind and pleaded guilty to five charges, including wire fraud and conspiracy, student-aid fraud and concealment/aiding and abetting. Prosecutors agreed to dismiss four charges as part of the plea deal.

U.S. District Judge Christopher Boyko scheduled sentencing for June 10. Tomko could face a prison term of up to a year or more, depending on the amount of financial loss caused by his crimes.

In 2009, Tomko pleaded guilty to fraud in connection with a dozen mortgage loans totaling nearly $1.2 million. He confessed to using straw buyers to obtain fraudulent appraisals that artificially inflated the true values of homes. His plea deal required Tomko to provide probation officers with the names of companies in which he had a financial interest and prohibited him from operating any companies without the permission of his probation officer.

According to Tomko, he worked for three years as an FBI informant, collecting $27,000 in 2007 and 2008, to assist agents in other mortgage fraud investigations. He said he provided a Cleveland house for agents to set up a surveillance network to catch fraudulent appraisers.

But a probation officer contacted Tomko at his home in November 2009, and noticed that a company called The Mortgage House was operating out of the residence, according to the indictment. Tomko told the probation officer that the company was an undercover operation linked to his informant work and that the FBI was aware of its existence. But the FBI denied they were aware of the business.  Tomko also admitted running another company in which he recruited his housekeeper to apply for fraudulent mortgage loans totaling more than $428,000 for two properties in Cleveland, and other homes in Lakewood and Lorain. The applications falsely inflated her income and assets. The housekeeper was not charged.

After the transactions closed, Tomko fraudulently pocketed about $100,000 of the proceeds by filing liens for work not performed, the indictment said.  For a time after 2010, Tomko worked as an adjunct professor at Cuyahoga County Community College, teaching courses in accounting, business administration and marketing. He was scheduled to teach courses in business math, personal finance and organizational behavior last fall prior to his indictment.  (plaindlrneohio3613)

MORAL

That in Yiddish is known as chutzpah. First he commits fraud, then turns informant and while an informant goes back to committing mortgage fraud after having been an FBI informant.

CALIFORNIA WOMAN PLEADS NO CONTEST TO THREE FELONY COUNTS INVOLVING LOAN MODIFICATIONS

FACTS

On March 4, Maria Soto pleaded no contest to three felony counts of grand theft in connection with her activities at a now-defunct Sacramento loan modification firm. The plea resulted in a stipulated term of 16 months in jail and an agreement to pay $49,925 in victim restitution.

Prosecutors alleged that, between July and November 2010, Soto operated Sacramento Equity Solutions, which offered mortgage loan modification services, and that Soto demanded and accepted illegal advance fees.

Prosecutors charged that victims were lured in with promises of help in obtaining loan modifications from lenders, but modifications never came through and victims' money was spent for fraudulent purposes.

Sentencing has been set for March 21 in Department 62 of Sacramento Superior Court. (sacb3813)

MORAL

Believe it or not, there are still people out there doing loan modifications in violation of law. For your information, no one, not even attorneys can collect an advance fee for assisting you with loan modifications.  All services must be completed totally before any fee is paid. 

TWO NORTHERN CALIFORNIA MEN AGREE TO PLEAD GUILTY FOR RIGGING BIDS AT PUBLIC FORECLOSURE SALES

FACTS

On March 7, two Northern California real estate investors agreed to plead guilty for their roles in conspiracies to rig bids and commit mail fraud at public real estate foreclosure auctions in Northern California.  Felony charges were filed in the U.S. District Court for the Northern District of California in Oakland against Peter McDonough and Michael Renquist.

Including these pleas, 29 individuals have pleaded guilt or agreed to plead guilty as a result of an ongoing antitrust investigation into bid rigging and fraud at public real estate foreclosure auctions in Northern California.

According to court documents, for various lengths of time between November 2008 and January 2011, McDonough and Renquist conspired with others not to bid against one another but instead designated a winning bidder to obtain selected properties at public real estate foreclosure auctions in Alameda County, Calif.

The U.S. Department of Justice said that the selected properties were then awarded to the conspirators who submitted the highest bids in the second, private auctions. The private auctions often took place at or near the courthouse steps where the public auctions were held. Renquist was also charged with additional counts for his involvement in similar conduct in Contra Costa County, Calif.

The department said that the primary purpose of the conspiracies was to suppress and restrain competition and to conceal payoffs in order to obtain selected real estate offered at Alameda and Contra Costa County public foreclosure auctions at non-competitive prices. When real estate properties are sold at these auctions, the proceeds are used to pay off the mortgage and other debt attached to the property, with remaining proceeds, if any, paid to the homeowner. According to court documents, the conspirators paid and received money that otherwise would have gone to pay off the mortgage and other holders of debt secured by the properties, and, in some cases, the defaulting homeowner.

Violation of the Sherman Act carries a maximum penalty of 10 years in prison and a $1 million fine for individuals. The maximum fine for the Sherman Act charges may be increased to twice the gain derived from the crime or twice the loss suffered by the victims if either amount is greater than $1 million. A count of conspiracy to commit mail fraud carries a maximum sentence of 30 years in prison and a $1 million fine. The government can also seek to forfeit the proceeds earned from participating in the conspiracy to commit mail fraud.

The charges are the latest filed by the department in its ongoing investigation into bid rigging and fraud at public real estate foreclosure auctions in San Francisco, San Mateo, Contra Costa and Alameda Counties. (usattyedca3713)

MORAL

Anyone bidding on properties at public foreclosures sales may want to seriously consider consulting an attorney now rather than later.

FORMER FLORIDA MORTGAGE BROKER GETS TWO YEARS

IN FEDERAL PRISON FOR MORTGAGE FRAUD

FACTS

On March 7, a former mortgage broker, Randolph Branham, was sentenced to two years in jail by a federal court and ordered to pay over $1.8 million in restitution, having been adjudicated guilty of multiple bank fraud violations.

In December 2012, Branham pled guilty to a five-count indictment, alleging that he had overstated his income to financial institutions and mortgage lenders on mortgage loan documents related to six pieces of property. As a part of the scheme to defraud the lenders, Branham also submitted fraudulent letters falsely inflating his income. The lenders as a result of Branham’s fraud issued approximately $2.4 million in loans. The lenders defrauded included The First National Bank of Florida (which was closed by the FDIC in September 2011), SunTrust Mortgage, Trustmark National Bank, First City Bank of Florida, IndyMac Bank (now known as OneWest Bank), and Bank of America. (You can bet the initial wholesalers and other mortgage brokers related to submitting or funding the loans will be after the brokers and funders for restitution of the losses. Anyone out there receive a letter from Janet Celotti? Mortgage Law Recover Group If so you may want to call us and speak with me or Jozef Magyar.)

Senior U.S. District Judge Lacey A. Collier sentenced Branham to two years in prison and ordered him to pay over $1.8 million in restitution to the victim lenders and the FDIC as receiver for The First National Bank of Florida due to the bank’s closure.  (usattyndfl3813)

MORAL

If you get a letter from an attorney office requesting a buy back or loss reimbursement I would suggest you give us a call before returning the call or responding to the correspondence.  In the long run you may find this less expensive than trying to do it yourself.

NEVADA MAN CONVICTED OF MORTGAGE FRAUD

FACTS

Lance Kellow faces up to 30 years in prison following his conviction in a mortgage fraud case that cost banks more than $1 million. He was convicted of one count of conspiracy to commit mail and wire fraud, three counts of wire fraud and one count of bank fraud. He also faces up to $1 million in fines for each count, and is scheduled to be sentenced by U.S. District Judge Gloria Navarro on May 31.  Kellow is free on a personal recognizance bond.

Kellow used his experience as a mortgage loan officer to commit mortgage fraud and profit. The government argued that on four occasions, he and his brothers lied to mortgage lenders to get real estate and money for their own use.

Beginning in 2007, Kellow and brothers Jason and Vince Kellow conspired to sell their houses for a significant profit to their cousin, who was not qualified to buy them. The government argued that Kellow and his brothers sent lenders loan applications that contained false statements about their cousin's employment, income, intent to occupy the property, assets and financial liabilities.

To help their cousin qualify for loans, the brothers deposited cash in his account, paid down his debt, and arranged for false verifications of employment and income, all without informing the lenders. They also omitted other property purchases and mortgage loans from their cousin's loan applications. Lenders made loans to their cousin they otherwise would not have made that enabled him to buy the properties.

The Kellow brothers received more than $500,000 from these sales. Lance Kellow received more than $100,000. Because their cousin was not financially qualified to buy the properties, he was unable to pay the mortgages and they went into foreclosure.

Vinson Kellow pleaded guilty to wire fraud in January 2012. Jason Kellow pleaded guilty to conspiracy to commit bank fraud in August 2010. Sentencing dates for both will be scheduled soon. (klastv3113)

MORAL

This was a 10-day trial with 22 witnesses and two defense attorneys representing Lance Kellow. He was found guilty by the jury on counts 1-4 and count 6. This does not include all the work that goes into preparation and motions. If you wish to see how it proceeded, go to PACER.

IN LAS VEGAS, THREE ARE INDICTED FOR MORTGAGE FRAUD

FACTS

On March 6, three people were indicted by a federal grand jury what authorities said was an $83 million mortgage fraud scheme. Derrick Phelps, who ran two now defunct mortgage industry businesses in Henderson; his wife Cynthia; and escrow officer Linda Mack were charged in the eight-count indictment.

They each face one count of conspiracy to commit bank fraud, mail fraud and wire fraud and seven counts of bank fraud. Their initial appearances before U.S. Magistrate Judge George Foley Jr. are scheduled for March 22. Between January 2003 and November 2006, the defendants devised a scheme to defraud federally insured financial institutions by recruiting straw buyers, inflating housing values and providing false information on mortgage loan applications, the indictment alleges.

Roughly 233 properties valued at more than $83 million are alleged to have been unlawfully bought during the scheme. Financial institutions lost more than $30 million when the defendants and their co-conspirators defaulted on the mortgage loans and the properties went into foreclosure, the indictment alleges.

Between 2008 and 2012, about 213 people were charged with federal mortgage fraud crimes in the state and most were convicted, Nevada U.S. attorney Daniel Bogden said.

According to the indictment, false information was provided to the financial institutions about the qualifications of the straw buyers. As part of the scheme, the indictment alleges, the defendants and their co-conspirators made offers to purchase properties above the sellers' asking prices. Sellers agreed that part of the excess funds would be redirected to the buyers after phony promises were made to upgrade and repair the properties.

The defendants profited from the unlawful mortgage dealings by obtaining commissions and fees, the indictment alleges. If convicted, Derrick Phelps, the former owner of Investors Realty and Enterprise Mortgage Services, Cynthia Phelps and Mack all face up to 30 years in prison and maximum fines of $1 million on each of the eight counts. Prosecutors are seeking more than $83 million in a forfeiture judgment from the defendants.  (lasvdgrev3613)

MORAL

Federal prosecutors, as I have said many times before have 10 years to file an indictment from the date of the last act that completed the fraud.  NOTE—Here the prosecutors went back to events that occurred in January 2003, over 10 years ago!

LAS VEGAS MAN GETS 21 MONTHS FOR MORTGAGE FRAUD

FACTS

On March 1, Jean Marc Eljwaidi, also known as Jean Joveidi, was sentenced to 21 months in prison for fraudulently enticing individuals to give him nearly $2 million for development of a local commercial real estate project that never materialized. He was also ordered by U.S. District Judge James Mahan to pay $1.8 million in restitution. 

From November 2008 to June 2009, Eljwaidi obtained funds from investors for the development of a commercial real estate project at Interstate 215 and Russell Road. In November 2008, Eljwaidi knew the project could not be completed, but still enticed individuals to make investments.

Eljwaidi provided the investors with promissory notes stating that he would use their funds to develop the project. He also said he would return their investments within a few months, along with 25 to 75 percent profit. But Eljwaidi knew he would use the funds instead to pay his personal expenses and maintain his affluent lifestyle, and to pay extension fees to keep the land from foreclosure. Eljwaidi delayed repayment by soliciting more money from investors, repaying them with nominal amounts or avoiding them altogether. Eljwaidi was permitted to self-report to federal prison by June 3.  (klastv3413)  

MORAL

Notice that in all my e-alerts there is always a prolific amount of fraud prosecutions and the mortgage fraud goes as far back as 2003. The federal prosecutors are not going to give up based upon this attorney’s experience and will keep it going for at least another three years. So if anyone was involved in mortgage fraud in the last 10 years, I suggest you see your attorney now.  You know the old expression, “An ounce of prevention is worth a pound of cure.”

 

THE INFORMATION CONTAINED HEREIN IS NOT LEGAL ADVICE. AN ATTORNEY SHOULD BE CONSULTED IF YOU DESIRE LEGAL ADVICE.