HUD DELAYS ENFORCING "REQUIRED USE" DEFINITION OF RESPA UNTIL JULY 16, 2009
FACTS
Among those regulatory changes to be implemented upon the effective date of Jan. 16, 2009, is the revised definition of the term "Required use." This amendment is the subject of litigation. (National Association of Home Builders, et al. v. Steve Preston, et al., Civ. Action No. 08- CV-1324, United States District Court for the Eastern District of Virginia, Alexandria Division.) For reasons related to the proper litigation of this case, HUD is again delaying the effective date of the revised definition of "Required use" until July 16, 2009. HUD is also seeking comments as to not implementing the new definition at all so builders can continue offering improvements to buyers if the buyer uses the affiliated entity and not giving the incentives if the buyers do not use the affiliated entity. (74 FR 10172)
MORAL
Seems like the builders have scored.
MORTGAGE LENDER DOES NOT GET BACK ADVANCES IT MADE TO A BORROWER THAT FILES CHAPTER 13 BANKRUPTCY IF IT DID NOT TELL THE BORROWER ABOUT THE ARREARAGES AS REQUIRED BY RESPA
FACTS
A borrower filed a Chapter 13 bankruptcy and for five years the lender paid the taxes and insurance but did not tell the borrower that it had done so and did not notify the borrower of the shortages in the escrow account as required by the mortgage and by the Real Estate Settlement Procedures Act. Borrower filed a second Chapter 13 later and the lender tried to recover the arrearages it made and the court said no.
The lender failed to comply with its obligation to notify the debtor of the increase in the debtor's periodic payments under the debtor's prior Chapter 13 bankruptcy plan. This failure to give notice of an escrow shortage constituted a waiver because it led the debtor to believe he was paying the correct amount to the lender and that the lender would not request payment of the amounts advanced for taxes and insurance. (In re Johnson, E.D. MI(2008))
MORAL
You as a lender are not sacrosanct. Comply with your own mortgage or lose the right to collect. Five years taxes and insurance should amount to several thousand dollars.
HOW DO YOU STOP A CALIFORNIA FORECLOSURE?
FACTS
Answer: By checking to see if there has been an assignment of the deed of trust when the original lender no longer holds the mortgage. I commend to you: California Civil Code Section 2932.5. "Where a power to sell real property is given to a mortgagee, or other encumbrancer, in an instrument intended to secure the payment of money, the power is part of the security and vests in any person who by assignment becomes entitled to payment of the money secured by the instrument. The power of sale may be exercised by the assignee if the assignment is duly acknowledged and recorded."
You bring this to the attention of the trustee of the deed of trust and if there is no assignment recorded or he does not have it and refuses to stop, you sue. There is an attorney fee provision in the deed of trust by no guarantee the court will award it but the buyer should stay in his home longer if the judge abides by the rule of law and not the rule of what is or is not fair.
MORAL
It depends on which judge you draw as to what will happen. If the judge follows the law you should win. If not, who knows? Good luck.
RENTING PROPERTY IN FORECLOSURE IN CALIFORNIA
FACTS
If more than one year has passed since you purchased the property and you can no longer afford the mortgage and the property goes into foreclosure or will because you cannot pay the mortgage you can still rent the property since you still own it and the rent is your money until the lender takes some action. This is true as long as no fraud is involved. So you mitigate your loss. This is not "rent skimming."
MORAL
See California Civil Code Section 890 and following. But consult an attorney before you do this because if this is correct the rent will ultimately be more than the legal fee. (Thanks Guy for reminding me.)
UNDERCOVER FEDERAL AND HUD/OIG OPERATION IN ILLINOIS NABS 24 MOST OF WHOM ARE MORTGAGE PROFESSIONALS
FACTS
There are 24 people accused, most of whom are professionals in the mortgage loan industry -- including mortgage brokers, loan officers, loan processors, attorneys, accountants, an appraiser, and a banker --named in 10 indictments charging them with federal offenses relating to mortgage fraud in the Chicago area.
Nine of the indictments were the product of an undercover investigation conducted by the FBI and the Department of Housing and Urban Development, Office of Inspector General, in which undercover law enforcement agents posed as straw buyers of houses seeking assistance in financing and closing fraudulent mortgage transactions.
The fraudulent transactions included, among other things: preparing loan applications and other documents that they knew to contain false information about the undercover agents' identity, employment, and income; creating (or explaining how the undercover agents could create) fraudulent banking information; fabricating income tax returns; creating fictitious verifications of employment and rental income; creating false appraisals; and submitting the bogus applications and supporting documents to the lenders.
In each of the undercover transactions, a cooperating individual represented that he was selling a house to a nominee buyer who intended to walk away from the property and default on the mortgage after the transaction closed. In reality, the nominee buyers were undercover agents, as were paralegals that assisted in closing the real estate transactions.
The nine loans involved in the undercover project totaled approximately $1.4 million. In the 10th case, which did not result from the undercover investigation, the defendants are alleged to have fraudulently obtained approximately $4.2 million in loans, causing losses in excess of approximately $1.1 million.
All of the charges announced on March 25, 2009 are felonies and carry maximum penalties of 20 years in prison and a $250,000 fine on each count of mail and wire fraud, and 30 years in prison and a $1 million fine on each count of mail or wire fraud affecting a financial institution. EACH INDICTMENT ALSO INCLUDES A FORFEITURE ALLEGATION TO RECOVER FROM THE DEFENDANTS THE PROCEEDS OF THEIR SCHEMES.
Remember indictments contain only charges and are not evidence of guilt. The defendants are presumed innocent unless convicted beyond a reasonable doubt. In the Chicago area, 21 defendants were arrested and then arraigned in district court on March 25, 2009.
The cases are:
United States v. Mohammed Ali Moallem and Bahidad Javid (09 CR 228).
Mohammed Ali Moallem and Bahidad Javid, both of Chicago, are charged with wire fraud affecting a financial institution. According to the indictment, Moallem, a mortgage broker and the owner of Quantum Financial Mortgage Co. in Chicago, assisted by Javid, prepared a fraudulent loan application on behalf of an undercover agent posing as the nominee buyer. Moallem then allegedly recruited Co-Schemer A, a certified public accountant, who provided an accountant's letter which falsely represented that tax returns were prepared for the fictitious identity being used by the nominee buyer for the past three years.
The indictment further alleges that Javid advised that a fictitious corporation should be used to falsely represent the nominee buyer's place of employment. Javid also allegedly instructed Co-Schemer A to prepare a 2005 tax return falsely reporting income of $72,000 and a 2006 tax return falsely reporting income of $75,000, and to prepare a verification of deposit falsely representing that the nominee buyer had an account with a balance of $91,890.30 at Plaza Bank, all to induce a lending institution to approve the loan application. Moallem allegedly purchased a cellular telephone to provide a telephone number that could be called to verify the rental residence of the nominee buyer's fictitious identity, and advised that the voicemail message for the cell phone should falsely represent that the phone number belonged to a landlord of a rental property.
Moallem and Javid allegedly prepared and submitted to First Franklin Financial Corp., a loan application and supporting documents on behalf of an undercover agent posing as a nominee buyer which contained false statements and documents, including false verifications of deposit and employment, and the false accountant letter prepared by Co-Schemer A. According to the indictment, in May 2007, Moallem and Javid fraudulently caused First Franklin to lend approximately $202,300 to an undercover agent posing as the nominee buyer.
United States v. Abe Karn, Donna Books, Hichem Julani and Daniel Lietz (09 CR 229)
Abe Karn of Oak Lawn, Donna Brooks of Chicago, Hichem Julani of Palos Park, and Daniel Lietz of Channahon, are all charged with wire fraud affecting a financial institution. Karn, a mortgage broker and the owner of Interforest Mortgage Co. in Palos Heights, and Brooks, a loan officer at Interforest, allegedly agreed to fraudulently obtain a loan for an undercover agent posing as the nominee buyer. Lietz, a vice president at Charter One Bank, allegedly opened an account in the name of an undercover agent at Charter One Bank, and then prepared a verification of deposit which falsely represented the amount in the account. Julani, a licensed appraiser, allegedly prepared an appraisal which mis-described the condition of the property and inflated its value. Brooks allegedly prepared a verification of employment falsely representing that the undercover agent worked at a fictitious entity and a verification of rent falsely representing that the undercover agent resided at a Chicago address.
Karn and Brooks then allegedly prepared and submitted to IndyMac Bank a loan application and supporting documentation on behalf of an undercover agent posing as the nominee buyer which contain false statements and documents, including the false verification of deposit prepared by Lietz, the false verifications of employment and rent prepared by Brooks, and the false appraisal prepared by Julani. According to the indictment, in July 2007, Karn, Brooks, Julani, and Lietz fraudulently caused IndyMac Bank to lend approximately $180,500 to an undercover agent posing as the nominee buyer.
United States v. Marwan Atieh and Ruwaida Dabbouseh (09 CR 230)
Marwan Atieh, of Tinley Park, and Ruwaida Dabbouseh, of Glen Ellyn, were both charged with wire fraud affecting a financial institution. It is alleged that Atieh, a mortgage broker at Citiwide Financial in Hanover Park, and Dabbouseh, a loan officer at Silo Mortgage Group in Palos Heights, prepared and submitted to Washington Mutual Bank a loan application on behalf of an undercover agent posing as the nominee buyer which contained false statements regarding the undercover agent's identity and employment. In preparing the fraudulent loan application, Atieh allegedly explained to Dabbouseh and the cooperating individual that because he believed Washington Mutual was closing down, he was not concerned about submitting a fraudulent loan package. According to the indictment, in May 2008, Atieh and Dabbouseh fraudulently caused Washington Mutual to lend approximately $144,000 to an undercover agent posing as the nominee buyer.
United States v. Ruwaida Dabbouseh and Khalil Qandil (09 CR 231)
Ruwaida Dabbouseh and Khalil Qandil of Oak Lawn, are charged with wire fraud. It is alleged that Dabbouseh prepared and submitted to Fieldstone Mortgage Co. a loan application on behalf of an undercover agent posing as the nominee buyer which contained false statements concerning the undercover agent's identity and employment. Qandil, the owner and operator of a construction and remodeling business, allegedly submitted to Fieldstone a verification of employment falsely representing that his company employed the undercover agent. According to the charges, in April 2007, Dabbouseh and Qandil fraudulently caused Fieldstone to lend approximately $153,000 to an undercover agent posing as the nominee buyer.
United States v. Khaja Moinuddin, Mohammed Nasir and Ruwaida Dabbouseh (09 CR 232)
Khaja Moinuddin of Bloomingdale, Mohammed Nasir of Glendale Heights and Ruwaida Dabbouseh were charged with wire fraud. The indictment alleges that Moinuddin, a mortgage broker at First Choice Mortgage in Bloomingdale, Nasir, a loan officer at First Choice, and Dabbouseh prepared and submitted to Comcor Mortgage a loan application on behalf of an undercover agent posing as the nominee buyer which contained false statements regarding the undercover agent's identity and employment. According to the indictment, in March 2008, Moinuddin, Nasir and Dabbouseh fraudulently caused Comcor to lend $153,000 to an undercover agent posing as the nominee buyer.
United States v. Louis L. Javell, Aysha M. Arroyo and Juan Gil (09 CR 233)
Louis L. Javell, Aysha M. Arroyo, and Juan Gil, all of Chicago, are charged with wire fraud affecting a financial institution. According to the indictment, Javell, a mortgage broker and owner of Bell Capital Real Estate in Chicago, and Arroyo, an employee at Bell Capital, met a cooperating individual and an undercover agent at Bell Capital to discuss obtaining documents which would falsely represent the undercover agent's financial condition and banking history. Arroyo allegedly suggested having a banker open a new account in the name of the undercover agent and back-date the records to make it appear that the account had been open longer. Javell and Arroyo also allegedly suggested adding the undercover agent's name to a pre-existing bank account to make it appear as if the undercover agent had an established financial history. According to the charges, Gil provided a verification of rent falsely representing that the undercover agent had resided at a Chicago address since March 2004.
Javell and Arroyo allegedly prepared and submitted to Countrywide Home Loans a loan application on behalf of the undercover agent posing as the nominee buyer which contained false statements and documents, including the false verification of rent prepared by Gil and a verification of deposit containing the false information provided by Arroyo. In August 2007, Javell, Arroyo and Gil allegedly fraudulently caused Countrywide to lend approximately $150,000 to an undercover agent posing as the nominee buyer.
According to the indictment, after the closing, Javell and Arroyo cautioned the cooperating individual to make a couple of mortgage payments to Countrywide before defaulting, because they believed that the FBI investigated all first payment mortgage defaults.
United States v. Michael Salem, Hakim A. Jaradat and Robert Goldberg (09 CR 234)
Michael Salem of Park Ridge, Hakim A. Jaradat and Robert Goldberg, both of Chicago, are charged with mail and wire fraud affecting a financial institution. According to the indictment, Jaradat, a professional tax preparer, provided a cooperating individual with false tax returns for 2005 and 2006 to support a fraudulent loan application on behalf of an undercover agent posing as a nominee buyer of a residence. Jaradat also allegedly recruited Goldberg, owner of a construction company, to provide a false verification of employment for the undercover agent. Subsequently, Goldberg allegedly agreed to provide a verification of employment to a mortgage lender which would falsely state that the undercover agent was a supervisor at Goldberg's company.
Salem, a Realtor, allegedly prepared and submitted to Countrywide Bank FSB, a loan application and supporting documentation on behalf of the undercover agent posing as the nominee buyer which contained false statements and documents, including the false tax returns prepared by Jaradat, and the false representation that the nominee buyer worked for Goldberg's company. In March 2008, Salem, Jaradat and Goldberg allegedly fraudulently caused Countrywide to lend approximately $171,000 to an undercover agent posing as the nominee buyer.
U.S. v. Hakim A. Jaradat, Oscar Paredes, Maryam Khan and Ruwaida Dabbouseh (09CR235)
Hakim A. Jaradat, Oscar Paredes of Park Ridge, Maryam Khan of Hickory Hills, and Ruwaida Dabbouseh are charged with mail and wire fraud affecting a financial institution. According to the indictment, Jaradat offered to assist in fraudulently obtaining a second mortgage loan for a transaction and, specifically, to recruit someone to prepare the fraudulent mortgage loan application. Subsequently, Paredes allegedly agreed to assist in fraudulently obtaining a mortgage loan, and suggested, first, that they produce fraudulent copies of tax returns in the name of the nominee buyer which would report income of approximately $75,000 per year, and second, that they create false documentation representing that the nominee buyer had assets in a pre-existing bank account. Jaradat allegedly provided the cooperating individual with false tax returns for 2006 and 2007 in the name of the nominee buyer.
According to the indictment, Paredes and Jaradat prepared and submitted to AmTrust Bank a loan application and supporting documentation on behalf of an undercover agent posing as the nominee buyer which contained false statements and documents, including the false tax returns prepared by Jaradat, and a false representation that the undercover agent had approximately $38,000 in a LaSalle Bank checking account.
After the title company expressed concerns about the difference between the appraised value of the residence and the loan amount, Dabbouseh allegedly referred the cooperating individual to Khan, an attorney in Palos Heights. Dabbouseh and the cooperating individual allegedly met at Khan's law office and informed Khan that the buyer and seller of the Everett residence were only nominees. According to the indictment, Khan responded by warning Dabbouseh and the cooperating individual about the potential liabilities, both criminal and civil, they all faced by fraudulently obtaining a mortgage loan, and then Kahn proceeded to falsely represent to both the title company and the lender that the appraisal was incorrect because of improvements that had been made to the Everett residence subsequent to the appraisal report. According to the indictment, in May 2008, Jaradat, Paredes, Khan and Dabbouseh fraudulently caused AmTrust Bank to lend approximately $147,250 to an undercover agent posing as the nominee buyer.
United States v. Babajan Khoshabe, Sunil Kaushal and James Kotz (09 CR 236)
Babajan Khoshabe and Sunil Kaushal, both of Chicago, and James Kotz of Munster, are charged with mail and wire fraud. Khoshabe, a mortgage broker and the owner of Nationwide Mortgage Co. met with Co-Schemer A, a certified public accountant, a cooperating individual and an undercover agent posing as a nominee buyer and agreed that he would process a fraudulent mortgage loan provided that at least six mortgage payments were made before defaulting so that Khoshabe would not be held accountable for the mortgage loan. Khoshabe also allegedly expressed concern that lending institutions would be suspicious because there was no sales contract for the sale of the property, and requested that a contract be obtained. Kaushal, a loan officer at Nationwide, allegedly prepared a false verification of employment and verification of rent falsely stating that the undercover agent resided at 6256 S. Spaulding Road, Chicago. According to the charges, Kotz, an attorney, prepared a power of attorney for the nominee seller, knowing that sale of the 89th Street residence was between persons using false identities for the purpose of defrauding the lender.
Khoshabe and Kaushal allegedly prepared and submitted to Equity Mortgage Corp. a loan application and supporting documentation on behalf of an undercover agent posing as the nominee buyer which contained false statements and documents, including the false verification of rent form prepared by Kaushal and the false real estate contract that Khoshabe requested. According to the indictment, in April 2008, Khoshabe, Kaushal, and Kotz caused Equity Mortgage to lend approximately $144,000 to an undercover agent posing as the nominee buyer.
United States v. Siamak Safavi Fard, Sunil Kaushal and Noel Parmar (09 CR 247)
Siamak Safavi Fard, of East Dundee, Sunil Kaushal, and Noel Parmar, of Skokie, are all charged with wire fraud. The indictment alleges that between April 2001 and January 2005, Fard, who owned various financial companies, Kaushal, and Parmar, a loan processor, fraudulently obtained more than $4.2 million in mortgage loans from numerous financial institutions and lenders.
According to the indictment, Fard, Kaushal and Parmar purchased the residences individually or through nominees who were promised that their credit ratings would increase by serving as the nominal owners; that Fard would be responsible for all down payments and ongoing mortgage payments; that the nominees would have no out-of-pocket expenses; that the residences would be rehabbed and resold at a profit; that the nominees would be removed from the titles of the residences after they were resold for profit; and that nominees would receive money for serving as the nominal owner.
Fard, Kaushal and Parmar allegedly prepared loan applications on behalf of the nominees which contained false statements regarding the nominees' employment, income, assets, citizenship status, intention to occupy the premises as a primary residence, and the source of down payments. Fard and Kaushal also allegedly created documentation to support the fraudulent loan applications, including false verifications of employment, false pay stubs, false tax returns, false IRS W-2 forms, false leases in support of false rental income, false Tax Certification letters from alleged tax preparers regarding the alleged preparation of nominee tax returns, false bank account statements, false verifications of deposits, false verification of existing mortgages, false appraisals, and forged powers of attorney. Fard, Kaushal and Parmar then allegedly submitted fraudulent loan applications and false supporting documentation to lenders. According to the indictment, Fard, Kaushal and Parmar fraudulently caused lenders to incur losses in the amount of at least approximately $1.1 million. (usattyndil32509)
MORAL(S)
Did you notice the one where the attorney allegedly told them of the criminal liabilities and then proceeded to take part in the criminal acts? If that is proven as true at trial, one would call than felony stupid. Did you notice how they indicted for loans that occurred in 2001 (eight years ago!)? Notice the undercover agents? They did that in California back about 1991 when the real estate marked went down then. SOOOOOO for those of you in California, Nevada and Arizona did you do any loans for nominee buyers?
PRESIDENT OF MARYLAND METROPOLITAN MONEY STORE IS SEVENTH DEFENDANT TO PLEAD GUILTY TO $35 MILLION FORECLOSURE MORTGAGE FRAUD SCHEME
FACTS
Joy Jackson, of Fort Washington, Md., pleaded guilty on March 25, 2009 to conspiracy to commit mail and wire fraud in connection with a mortgage fraud scheme that falsely promised to help homeowners facing foreclosure keep their homes and repair their damaged credit.
"Joy Jackson presided over a `money store' that was in the business of ripping off homeowners and mortgage lenders by submitting fraudulent paperwork to support over $16 million of loans that were never intended to be repaid," said U.S. Attorney Rod J. Rosenstein. "Instead of helping financially distressed homeowners keep their homes as promised, she secretly used their home equity to buy luxuries for herself, including furs, jewelry and over $800,000 on her wedding."
According to her plea agreement, Jackson was a licensed mortgage broker, but was not licensed to provide credit repair. In May 2005, Jackson and coconspirator Jennifer McCall incorporated Metropolitan Money Store, located in Lanham, Maryland, which offered foreclosure consultation and credit services to financially distressed homeowners. At that time, Jackson and other coconspirators incorporated Fordham & Fordham Investment Group, Ltd., based in Lanham and Greenbelt, Maryland to assist Metropolitan Money Store in its foreclosure consulting and credit servicing business.
From September 2004 to June 2007, Jackson, McCall and others conspired to fraudulently promise to help homeowners, who had substantial equity in their homes but were facing foreclosure because of their inability to make monthly mortgage payments, avoid foreclosure and repair their damaged credit. The homeowners were directed to allow title to their homes to be put in the names of third party purchasers (the straw buyers) for a year, during which time Metropolitan Money Store promised to improve the homeowners' credit ratings, help them obtain more favorable mortgages, and eventually return title to their homes to them. The homeowners were told that the equity withdrawn from the properties would be used to pay the mortgage and expenses on their homes and to repair their credit. The straw buyers were paid up to $10,000 to participate in the scheme and allow the properties to be put in their names. Jackson also served as a straw buyer on several properties in Maryland.
Using the homeowners' properties, the conspirators applied for mortgages to extract the maximum available equity from the homes, and prepared and submitted fraudulent loan applications to mortgage lenders to obtain inflated loans on the target properties in the straw buyers' names. At settlements, the conspirators imposed numerous fees and required seller contributions which were far in excess of industry standards; they imposed fees for services which were not performed, disclosed or explained to the homeowners; and they transferred the sale proceeds out of the escrow accounts into the conspirators' business and personal bank accounts and converted a substantial portion of those funds to their personal use.
Jackson and others obtained large cashier's checks in the names of straw buyers and Metropolitan Money Store employees in order to conceal transactions from the lenders. Jackson misappropriated the license and bond numbers of other brokerage and credit repair companies and used them to broker loans and fraudulently improve homeowners' credit scores by adding fictitious lines of credit to their credit histories.
During the conspiracy, Jackson and McCall provided a co-conspirator acting as a closing agent with more than $100,000 in kickback payments to process real estate closings quickly. Moreover, whenever Jackson requested, the closing agent permitted Metropolitan Money Store employees to close loans without him or any other closing agent being present. She directed others to prepare fraudulent settlement documents that contained false information. Jackson also paid bank employees to provide false income balances for straw buyers to lenders; add straw buyers and others onto accounts for lender verification purposes; transfer money into accounts to show a certain amount of money was in a bank account and thereafter return those funds to the original account; and shift money between Metropolitan Money Store and F&F accounts to facilitate loans in straw buyer's names.
Jackson directed others to transfer the equity proceeds of homeowners into the general checking accounts of Metropolitan Money Store and F&F, as well as Jackson's personal accounts. Jackson withdrew these funds and paid for goods and services for herself, including art, cars, clothing, credit card bills, homes, fur coats, furniture, airline trips, gambling expenses, jewelry, limousine services, student tuition and a luxury wedding for herself and a conspirator.
As a result of this scheme, the total loss attributable to Jackson, including the estimated losses to the mortgage lenders, is $16,880,884.86.
Jackson faces a maximum sentence of 30 years in prison and a $1 million fine for the conspiracy. Sentencing is November 16, 2009. As part of her plea, Jackson has agreed to pay restitution for the full amount of the victims' losses, and forfeit three residential properties in Oxon Hill, Capitol Heights and Laurel and three vehicles.
Jackson is the seventh defendant to plead guilty in the Metropolitan Money Store mortgage fraud scheme. Jennifer McCall, of Ft. Washington, a chief executive officer of Metropolitan Money Store and owner of JC and JC Investments LLC; Katisha Fordham, of Washington, a loan processor at the Metropolitan Money Store. Richard Allison, of Camp Springs, an attorney and employee of the U.S. Census Bureau; Clifford McCall of Lanham, president of Burroughs & Smythe Financial Services, Inc., based in Lanham and a director of the Fordham & Fordham Investment Group, Ltd., a foreclosure consulting and credit servicing business based in Lanham and Greenbelt; Carlisha Dixon, of Hyattsville, vice president and a director of Burroughs & Smythe Financial Services, Inc.; and Chandra Jones of Lanham, the daughter of co-defendants Jennifer and Clifford McCall, each pleaded guilty to the conspiracy and are facing a maximum sentencing of 30 years in prison. Three defendants remain scheduled for trial on July 7, 2009. (usattymd32509)
MORAL
She ran such a complex scheme she probably could have made a fortune as a CEO legally. Now it is room a board at a federal penitentiary legally.
PENNSYLVANIA BROKER PLEADS GUILTY TO MORTGAGE FRAUD
FACTS
On March 20, 2009 Debra Phillips of Pittsburgh, pleaded guilty in federal court to a charge of wire fraud conspiracy.
Phillips, who is a licensed mortgage broker operating Equitable Lending, participated in a mortgage fraud conspiracy in which she submitted loan applications to lenders knowing that they contained false representations related to borrowers' assets. Phillips also brokered loans in which borrowers concealed from the lenders that they were borrowing money to make the down payments for real estate purchases.
Sentencing is Sept. 18, 2009. The law provides for a total sentence of 20 years in prison, a fine of $250,000, or both. (usattywdpa32009)
MORAL
Admittedly, mortgage fraud is a very easy crime to commit. It is also a very easy one for the prosecutor to prove because it leaves a very distinct paper trail from the lender back to the borrower, loan officer and broker. Do not do it. You will wreck your life.
PENNSYLVANIA APPRAISER PLEADS GUILTY TO MORTGAGE FRAUD
FACTS
Craig Tengowski, a resident of Pittsburgh, pleaded guilty in federal court to a charge of wire fraud conspiracy.
Tengowski, who is a licensed appraiser, participated in a mortgage fraud conspiracy in which he submitted fraudulent appraisals that overstated the fair market values of properties that were serving as collateral for loans. Sentencing is Sept. 18, 2009. The law provides for a total sentence of 20 years in prison, a fine of $250,000, or both. (usattywdpa32009)
MORAL
Now he gets to appraise time in a federal prison depending on what the judge says on Sept. 18, 2009.
SIX ARRESTED, SEVEN DEFENDANTS CHARGED IN STATE OF WASHINGTON FOR $47 MILLION MORTGAGE FRAUD
FACTS
Six people were arrested on March 26, 2009 following a grand jury indictment for a mortgage fraud scheme that allegedly defrauded more than a dozen banks and mortgage lenders of more than $47 million. The investigation is ongoing and the amount of the fraud will likely increase. The defendants are charged in a 40 count indictment with conspiracy to commit bank, wire and mail fraud, eleven counts of bank fraud, seven counts of mail fraud, eleven counts of wire fraud, four counts of making false statements on loan applications, and seven counts of monetary transactions using criminally derived proceeds. The defendants were involved with three Bellevue, Wash., companies: Emerald City Escrow LLC, Nationwide Home Lending LLC, and Kobay Financial Corporation. Four of these defendants were scheduled to make their appearances in U.S. District Court in Seattle at 2:30 p.m., March 26, 2009.
VIKTOR KOBZAR, 32, of Federal Way, mortgage broker
CAMIE BYRON, 28, of Renton, loan officer for Kobay and Nationwide
ALLA SOBOL, 28, of Renton, mortgage broker
DAVID SOBOL, 40, of Issaquah, real estate agent
The following two defendants were arrested in Los Angeles and will be scheduled for arraignment at a later date:
VLADISLAV BAYDOVSKIY, 31, of Bellevue, Washington, mortgage broker
DONATA BAYDOVSKIY, 28, of Bellevue, part owner Emerald City Escrow
A seventh defendant, SANDRA THORPE, 55, of Shoreline, an accountant who falsified income statements and employment verification letters will be arraigned April 9, 2009.
According to a search warrant affidavit investigators have reviewed 78 loan files that were submitted by Nationwide and Kobay to lending institutions. In 69 of these loan files, the investigation alleges fraudulent information was submitted to obtain some $47 million in loans. All of the loans were closed at Emerald City Escrow. Those charged allegedly used "straw buyers" and other unqualified buyers to obtain increasing loan amounts in repeated sales of the same property. Employees and principals at Kobay and Nationwide prepared and submitted falsified loan applications and related verification documents to lenders in a scheme to conceal the fact that buyers were otherwise unqualified to obtain purchase money loans. Employees and principals of Emerald City disbursed the excess loan proceeds from the escrow accounts to themselves, or others associated with them.
One property in Medina, Washington was sold to a recruited buyer for $775,000 and within six months was sold again to a second recruited buyer for $1.2 million. The falsified loan application submitted by KOBAY on behalf of the second buyer. The loan was closed at Emerald City Escrow. Bank records indicate hundreds of thousands of dollars in proceeds from the transaction were used to benefit VIKTOR KOBZAR and VLADISLAV BAYDOVSKIY. Some of the funds allegedly went to pay VLADISLAV BAYDOVSKIY's mortgage and moorage fees for his yacht.
A second property in Newcastle, Wash. was purchased by DAVID SOBOL in August 2007, for $669,950. A month later SOBOL "flipped" the property, selling it to CAMIE BYRON for $1,000,000 - about $330,000 more than his purchase price. Using falsified loan applications that misrepresented her income and assets, BYRON obtained two loans on the property totaling about $900,000. BYRON then "flipped" the property again to another straw buyer in November 2007. The purchase price in November 2007 was $1.4 million. The loan application submitted by the buyer in November 2007 grossly inflated the buyer's income to meet the lending requirements. According to the application, the buyer earned more than $324,000 in 2005 and $385,000 in 2006. In fact, the buyer reported income to the IRS of $13,245 in 2005 and $16,600 in 2006.
In a third transaction, a recruited buyer, whose income information was substantially inflated, was used to purchase a Medina home for just under a million dollars. The conspirators then used the buyer's name and credit to obtain a construction loan of $1.95 million, pocketing the proceeds and leaving the buyer with the full loan obligation. The proceeds of the construction loan were not used to construct a new house. The buyer was forced to default on the loan.
As part of the indictment, the government is seeking the forfeiture of a number of luxury vehicles and bank accounts. The vehicles include a 2004 Lamborghini, Gallardo, registered in the name of VIKTOR V. KOBZAR, and a second 2004 Lamborghini, Gallardo, registered in the name of VLADISLAV A. BAYDOVSKIY, a 2006 BMW 750 and a 2007 BMW X5 both registered to BAYDOVSKIY, and a 31 foot Bayliner registered to BAYDOVSKIY. The government is also seeking the forfeiture of a 2008 Range Rover and a 2007 Lexus registered to the SOBOLs.
"Individuals who try to fund a lavish lifestyle by devising fraudulent financial schemes can expect to have those assets seized by the government," said Kenneth J. Hines, the IRS Special Agent in Charge of the Pacific-Northwest.
The charges contained in the indictment are only allegations. A person is presumed innocent unless and until he or she is proven guilty beyond a reasonable doubt in a court of law. The charges are punishable by up to 30 years in prison. (usattywdwas32609)
MORAL
You have to admire the ingenuity of the people in being so elaborate in the way they picked get caught and then have all the pretty toys taken away. Remember, innocent until proven guilty but if the toys are taken away how are they going to hire counsel to prove innocence and get the toys back, let alone stay out of prison.
THE INFORMATION CONTAINED HEREIN IS NOT LEGAL ADVICE.
AN ATTORNEY SHOULD BE CONSULTED IF YOU DESIRE LEGAL ADVICE.
