HUD/RESPA SAYS WE WILL EXERCISE RESTRAINT IN ENFORCING THE NEW RULE FOR THE FIRST 120 DAYS BUT -- AND I DO MEAN BUT--IT IS STILL THE LAW
FACTS
On Nov. 13, 2009 the U.S. Department of Housing and Urban Development announced that for the first four months of 2010, the staff of the Mortgagee Review Board will exercise restraint in enforcing new regulatory requirements under the Real Estate Settlement Procedures Act, due to take full effect on Jan. 1, 2010. The MRB instructed its staff to exercise such restraint in considering an action against FHA-approved lenders who have demonstrated that they are making a good faith effort to comply with RESPA's new requirements.
HUD is also asking other federal and relevant state enforcement agencies to exercise the same 120-day restraint in enforcement for non-FHA originators and other settlement service providers who demonstrate the good faith effort to implement RESPA's new rules.
In determining whether a mortgagee has made a good faith effort, MRB staff will consider whether the mortgagee has relied on the new RESPA rule and other written guidance issued by the Department, and the extent to which the mortgagee has made sufficient investment and commitment in technology, training, and quality control designed to comply with the new rule.
On Jan. 1, 2010, HUD will require that lenders and mortgage brokers provide consumers with a standard Good Faith Estimate that clearly discloses key loan terms and closing costs. Closing agents will also be required to provide borrowers a new HUD-1 Settlement Statement that clearly compares consumers' final and estimated costs. The new RESPA rule became effective on Jan. 16, 2009, but provided a one-year transition period for the mortgage industry to incorporate these changes. HUD will continue to work with the mortgage industry during this period, including providing a comprehensive set of frequently asked questions (FAQs) on its website. (hud no. 09-215, 11-13-09)
MORAL
Be very, very careful here. HUD is not saying it will not enforce the new GFE and the new HUD-1. It is saying we will take into consideration your mistakes if you are attempting to comply in good faith. In other words you still have to do it, or else!
Notice there is nothing in the above press release from HUD that states it will not enforce the new GFE and HUD-1. It only says that if HUD wants to discipline you for not using it properly, it will consider whether you attempted to use them in good faith.
FBI ADDS "SHORT SALE FLIPPING" TO ITS LIST OF RECOGNIZED MORTGAGE FRAUD SCENARIOS
FACTS
The FBI recently added short sale flipping, dubbed "flopping" by some mortgage fraud experts, to its list of recognized real estate fraud. Fraud experts warn that some of the real estate flipping they see today involves the same kind of insider deals and manipulated sale prices that plagued the housing bubble.
In a June 2009 report on mortgage fraud, FBI officials described various forms of short sale flipping fraud. Each type involves misrepresenting the value of a house to a lender. Banking experts point out that those losses trickle down to taxpayers, who have bailed out the banking industry. (hertrib.comfl111509)
ARIZONA BROKER PLEADS GUILTY TO CASH BACK SCAM
FACTS
Jeffrey Todd Crandell of Mesa, Ariz., pleaded guilty on Nov. 9, 2009, to six counts of bank fraud for his role in a mortgage fraud scheme. Sentencing will take place on Feb. 22, 2010, before U.S. District Court Judge G. Murray Snow.
Crandell was the leader of a sophisticated cash-back mortgage fraud scheme. In 2005, he obtained the rights to various parcels of real estate located in Queen Creek, Ariz., obscured his interest in those properties by placing them in the name of his brother-in-law, and then recruited friends and acquaintances to buy the properties for inflated prices -- often hundreds of thousands of dollars more than the cost of the land. Crandell also acted as the mortgage broker for each transaction. In that capacity, he was responsible for preparing the buyer's loan applications. Crandell included multiple lies in the applications in order to persuade the lender to approve the loans. He inflated the buyer's incomes and assets and stated -- falsely -- that the buyer's would be making the down payment. At closing, Crandell supplied the down payment on behalf of the buyer and provided a cash kickback to them. The properties eventually went into foreclosure.
Each conviction for bank fraud carries a maximum penalty of 30 years in federal prison, a $1,000,000 fine, or both.
NOTE WELL THE FOLLOWING
Crandell's conviction is part of an initiative called "Operation Cash Back" in which 40 defendants -- including many real estate professionals -- were indicted and arrested in June 2008. To date, 30 have been convicted through guilty pleas or following trial. (usattyaz111009)
MORAL
Did you ever give cash back to the borrower after closing? Like from your commission? Guess what?
FIVE MORE LAWYERS LOSE THE RIGHT TO PRACTICE LAW DUE TO LOAN MODIFICATIONS FIASCO
FACTS
Five more lawyers accused of cheating homeowners desperate to modify their mortgages have lost or given up their right to practice law pursuant to a State Bar of California announcement. Among the lawyers is a 75-year old businessman from Costa Mesa who launched the American Basketball Association, the World Football League and the World Hockey Association in the 1970s. The State Bar notice said that Gary L. Davidson had resigned from the bar with discipline charges pending.
Timothy D. Thurman resigned with charges pending. Additionally, he was arrested by the FBI in October 2009 for allegedly forging the signature of U.S. District Court Judge Gary A. Fees on an order to stop a client's eviction. Eric Douglas Jonson of Culver City, Calif., also resigned from the State Bar.
The State Bar has also ordered two Orange County attorneys put on inactive status, involuntarily. The lawyers are Sean Rutledge of Irvine, California and Paul Lucas of Aliso Viejo, California. Both allegedly ran large mortgage-loan modification offices that allegedly claimed thousands of clients. Rutledge allegedly headed the United Law Group and Lucas headed Lucas Law Center that allegedly generated 45 State Bar complaints and 89 Better Business Bureau complaints. He and his company have been allegedly placed in receivership by the Federal Trade Commission in FTC v. Lucas Law Center,8-09-cv-770-DOC.(ladj91109p4)
MORAL
Since Senate Bill 94 was passed and went into effect immediately on Oct. 11, 2009, if you are doing loan modifications in any form and taking advance fees in any form under any name, if it smells like loan modification, I suggest you retain legal counsel now and give him a healthy retainer to stay out of trouble. Because later you may not have the funds to afford competent counsel. Some of you know exactly what I mean.
CALIFORNIA REALTOR FOUND NOT GUILTY ON 13 FELONY COUNTS INVOLVING MORTGAGE FRAUD
FACTS
Joseph Aram Babajian was found not guilty on 13 felony charges involving an alleged $40 million mortgage fraud and the jury deadlocked on eight other counts including conspiracy and money laundering. He allegedly pleaded guilty to a misdemeanor charge of collecting unearned fees in real estate transaction as part of a plea agreement that left him subject to a fine up to $10,000 and to paying up to $35,000 in restitution. His professional real estate license is not affected by his guilty plea. However, his two co-defendants were convicted (Realtor Kule John Grasso and appraiser Lial Marie Rizk) of several counts of conspiracy, bank and loan fraud. Babajian was represented by Thomas A. Mesereau Jr. of Mesereau & Yu in Los Angeles.
FORMER DIRECTOR OF SALES FOR COLORADO LUXURY HOME BUILDER PLEADS GUILTY TO FRAUD IN LOS ANGELES
FACTS
Benjamin Serranno, who previously lived in Parker, Col. and is the former director of sales for a Colorado real estate company that built luxury homes throughout the state, agreed to plead guilty to a federal conspiracy charge, admitting that he and other company officials participated in a $16 million "builder bailout" scheme in which buyers of $1 million-plus homes were paid kickbacks if they purchased homes from the company. In a related plea agreement also filed in United States District Court, Serrano agreed to plead guilty to one count of conspiracy.
In the court documents, Serrano admits his role in a scheme to bring needed revenue to his company and admits working with Kristin A. Clark, a licensed real estate agent in Los Angeles, and Bradley Bishop, a former loan officer at Washington Mutual Bank and, later, Bank of America. Both Clarke and Bishop previously pleaded guilty to bank fraud charges.
In his plea agreement, Serrano admits to participating in a conspiracy with Clark and Bishop, as well as others at the company, to defraud Bank of America, Wells Fargo Bank, Washington Mutual Bank and other federally insured financial institutions. In the scheme, people associated with the company agreed to pay illegal kickbacks to individuals who agreed to buy homes in one of the company's five developments. To conceal the illegal kickbacks from the banks, Serrano and others would record bogus second deeds of trust on the company's properties, according to papers filed in court. The second deeds of trust were recorded in favor of shell corporations controlled by the company for an amount equal to the kickback. Once someone agreed to buy a home, Bishop would tell Clark what information needed to be listed on the buyer's loan application in order for him or her to qualify for a home loan at Bank of America, and Clark would use that information to obtain the bogus documentation required by the bank. When the properties were sold and loans funded, the banks would use part of the loan proceeds to pay off the bogus second deeds of trust recorded against the property. That money, which was paid to the company's shell corporations, was then used to pay the kickbacks to the buyers. The kickbacks typically ranged between 20% and 23% of the homes' sales price, which all sold for more than $1 million.
In one instance discussed in Serrano's plea agreement, a buyer agreed to purchase a home in Parker for $1,277,500. In exchange, the company agreed to pay the buyer a kickback of approximately $269,000 out of the loan proceeds. Serrano and others at the company agreed to this sale knowing that the buyer had used a false identity to obtain a home loan from Wells Fargo. Serrano admitted in the plea agreement, he paid for the buyer to fly to Los Angeles to obtain a better fake identification. FBI agents in Colorado followed up on this sale and discovered that the buyer later defaulted on the loan and the property was sold for $533,000, resulting in a loss of $694,500 to the bank.
Special agents with the FBI in Los Angeles first began investigating Clark, Bishop, Serrano and others involved in the scheme in April 2008 after a woman contacted Bank of America to report that her identity had been stolen and used to apply for a $1 million home loan for property in Colorado. Bishop and Clark later pleaded guilty to their involvement in the conspiracy and agreed to cooperate with the government in its on-going investigation into Serrano and others at the company.
Bishop and Clarke each pleaded guilty earlier this year pursuant to plea agreements that have been partially unsealed. According to Bishop's plea agreement, between January 2008 and April 2008 -- a time when the real estate market was in sharp decline -- he processed 11 fraudulent loans worth $12,571,366 that were used to buy properties built by Serrano's former company. According to Clark's plea agreement, she prepared the fraudulent loan applications and submitted fictitious tax returns, W-2s and payroll stubs in support of the fraudulent loans. Clark further admitted that she used her two real estate companies, K&K Investments and Cardinal and Gold Investments, to secretly funnel kickbacks to the buyers.
Serrano agreed to plead guilty to one count of conspiracy, which carries a statutory maximum penalty of five years in federal prison. Serrano is scheduled to make his initial court appearance in United States District Court on Dec. 14.
Clark pleaded guilty to 13 counts of bank fraud, which each carries a statutory maximum penalty of 30 years in federal prison. Bishop pleaded guilty to 11 counts of bank fraud. (usattycdcx111209)
MORAL
I trust you have read all the mortgage fraud cases we publish. We represent and defend those accused of mortgage fraud. If you have been involved in ay "stated income" loans, "owner-occupied-primary residence" checked on the 1003 or other creative ideas, even thought the borrower signs the 1003 as to correctness, I suggest you consult your attorney now before the federal government consults with you later.
I trust you also noted how the woman reported her identity had been stolen in one of the loans. This is the purpose of the FTC required "Red Flags Identity Theft" manual you are required to have in your office as of June 1, 2010 (if they do not extend it again). Make sure you have it or you can be liable for not checking the Red Flags that show up in the process of doing a loan such as "Hawk Alerts", etc. If you do not have one you can purchase one from us.
SEVEN CHARGED IN OAKLAND WITH MORTGAGE FRAUD
FACTS
On Nov. 12, 2009 a federal grand jury indictment was unsealed charging seven people with 53 counts of conspiracy to commit wire fraud, wire fraud, and money laundering for their roles in a mortgage fraud scheme that involved more than 100 properties in Northern California.
The indictment names Amy Schloemann, aka Amy Kinney; Karim Akil, aka Scott Kinney, aka Scott Kenney; Wonda Louise Kidd; Michelle McGuire; Kaska Clay, aka Mark Lane, aka Michael Lewis; James Ross; and Darnell Thomas.
According to the indictment, from October 2004 through July 2007, the defendants participated in a conspiracy to defraud involving more than 100 properties that provided profits in the millions to members of the conspiracy through the fraudulent purchase of real estate and the laundering of profits. The indictment alleges that the defendants and their associates recruited and controlled individuals in key positions, including straw buyers, real estate appraisers, notaries and escrow agents. The defendants encouraged straw buyers and others to purchase homes throughout Northern California by falsely promising: to pay them large sums of money and at times paying them large sums of money; that the real estate transactions were legal; that the buyers would not be responsible for the mortgage payments; and that the mortgage payments would be taken over by another person shortly after the purchase of the property.
The indictment states that the defendants directed straw buyers to sign mortgage loan applications that contained false information and false supporting documentation, and paid the straw buyers thousands of dollars in exchange for allowing the defendants to purchase property in their names. The defendants are also alleged to have hired notary publics who were willing to notarize documents by falsely attesting to having witnessed signatures on loan documents when in fact the documents were not signed in the presence of the notaries. (If I were one of these notaries I would see a lawyer immediately)
According to the indictment, the defendants increased their profits on the purchase of properties by submitting documents to lenders, including purchase and sale agreements that falsely inflated the purchase prices of the properties, thereby causing the lenders to unwittingly provide loans in amounts that exceeded the true purchase prices and values of the properties. Once the properties were purchased, the defendants disbursed funds from the escrow accounts into bank accounts held by the defendants. The defendants also regularly failed to make the mortgage payments on the purchased properties, causing lenders to foreclose on the properties which resulted in financial losses to the lenders and damaged the credit ratings of the buyers.
Amy Schloemann, aka Amy Kinney, was a licensed Realtor and president of Hiddenbrooke Mortgage in Vallejo, Calif. She completed and caused others to complete false loan application for straw buyers and fictitious buyers. She also acted as a real estate broker for both straw buyers and fictitious buyers.
Karim Akil, aka Scott Kinney, aka Scott Kenny, was the president of Marsh Group Corp. in Oakland. He was the husband of Schloemann. Akil employed and paid co-conspirators to recruit individuals to act as straw buyers of real estate. Schloemann and Akil held signature authority on business checking accounts in the names of Hiddenbrooke Mortgage Group, Marsh Group, the Brooke Property Management Company and Sanford and Son MTG. Schloemann and Akil used these accounts to launder the profits of the fraudulent scheme, to make deposit payments on real property purchases in the names of straw and fictitious buyers and to make payments to co-conspirators.
Michelle McGuire worked as a personal assistant for Akil. She was responsible for assisting in the completion of loan applications for straw buyers and fictitious buyers and submitting these loan applications and supporting documentation to lenders. She was paid hundreds of thousands of dollars for her involvement in the fraud scheme.
Wonda Louise Kidd was a manager and escrow officer of Financial Title Co. in Castro Valley, Calif. Kidd was the escrow officer on more than 100 properties involved in this scheme, disbursing profits to Schloemann and Akil through wire transfers and checks to their various accounts.
James Ross and Darnell Thomas worked with Akil to recruit straw buyers to purchase real property. Thomas also falsified information on a loan application submitted to a lender for a property he purchased. They were each paid hundreds of thousands of dollars for their involvement.
Kashka Clay, aka Mark Lane, aka Michael Lewis, was a real estate agent who purchased two properties using the alias, Mark Lane. Clay also authorized the use of his telephone number to falsely represent to lenders that Clay's number belonged to a certified public accountant.
Schloemann and McGuire were arrested on Nov. 2, 2009 and made their initial appearance in federal court in Oakland on that date. They are currently out on bond. Kidd, Clay and Ross were arraigned in Oakland federal court and were released on $100,000 bond. Thomas is scheduled to be arraigned. Akil, who is presently serving a sentence in state custody, is scheduled to appear on Nov. 19, 2009 for arraignment. The case is assigned to District Judge Phyllis Hamilton. The defendants are scheduled to make their initial appearance before Judge Hamilton on Nov. 25, 2009 at 1:30 p.m.
The charges of conspiracy to commit wire fraud and wire fraud each carry a maximum penalty of 20 years in prison and a $250,000 fine. The charge of money laundering carries a maximum prison sentence of 10 years and a fine of $250,000 or twice the amount of the criminally derived property involved in the transaction. (usattyndca111209)
CALIFORNIA MAN GETS ALMOST EIGHT YEARS IN FEDERAL PRISON FOR MORTGAGE FRAUD-RELATED IDENTITY THEFT
FACTS
Visanio Eugene Vann of Thousand Oaks, Calif., was sentenced to nearly eight years in federal prison without parole, for orchestrating an identity theft scheme in which he used personal identifying information taken from dozens of mortgage and credit files to fraudulently obtain credit cards that were used to purchase more than $1 million in goods and services.
U.S. District Judge S. James Otero sentenced Vann to 95 months in federal prison. Judge Otero also ordered Vann to pay more than $1 million in restitution to eight banks that suffered losses during the course of Vann's nearly four-year-long scheme.
Vann pleaded guilty to three felony charges: mail fraud, use of unauthorized access devices and aggravated identity theft. When authorities searched Vann's residence last year, they discovered mortgage files in the names of 145 people and 46 credit files that belonged to other people.
Vann obtained personal identifying information and used the data to fraudulently obtain credit cards and checks from victim banks. Vann also fraudulently obtained driver's licenses, which allowed him to use the credit cards and checks. In an attempt to conceal his activities, Vann maintained mail drops in Beverly Hills, where he had victim financial institutions send the fraudulently obtained credit cards and checks.
In issuing the 95-month prison sentence, Judge Otero considered Vann's lengthy criminal history, which includes fraud convictions that go back 25 years, and Vann's lavish lifestyle that included designer clothing, a Mercedes Benz CLK 430 convertible, high-end nightclubs and restaurants and his $1,400 purchase of a purebred puppy with a fraudulent credit card. (nmn1109)
MORAL
He has a purebred puppy and now for the next eight years he has a purebred federal prison where there is no parole. Did you note he had over 145 mortgage files in his home?
FORMER MORTGAGE BROKER IN GEORGIA PLEADS GUILTY TO $20 MILLION DOLLAR MORTGAGE FRAUD
FACTS
On Nov. 5, 2009, Edward William Farley of Hoschton, Ga., pleaded guilty in federal district court to committing a mortgage fraud, a real estate investment Ponzi scam involving over 150 victims, a check-kiting scheme and a bankruptcy fraud.
Farley, a former mortgage broker, operated through Creative Home Search, Southern Land Partners, Georgia Land Group, and Global Mortgage in Dunwoody and Norcross, Ga., to defraud mortgage lenders through same-day flips of properties. Farley paid an appraiser to fraudulently inflate the value of each property by $50,000 to $100,000, and recruited often unqualified investor/borrowers to purchase them from one of his companies. The loan applications of these investor/borrowers who were purchasing the properties were often supported by false income, employment, bank deposits, bank statements, W-2s, and/or leases. However, as is common with flips, Farley did not purchase the properties he was selling to the investor/borrowers until after the fraudulently obtained loan proceeds on the second purchase had been disbursed. At that time he purchased the properties for up to $100,000 less than the amount of the inflated mortgage loans he had arranged for the investor/borrowers in the second purchase, thereby causing lenders to lose millions of dollars.
In the real estate investment-Ponzi part of the scheme, Farley then began to operate under the name of Alliance Resource Management in Lawrenceville, Ga., to conceal his new source of income from prior victims. He falsely represented that ARM was in the business of purchasing primarily residential properties which were being renovated and sold at a profit, when ARM had insufficient equity and income to do so. Real estate investors and lenders, including private investors, corporate lenders, and banks, were induced through false promises that their investments and loans were fully secured by a first security position in property, plus a personal guarantee, and sometimes title insurance. Farley also provided promissory notes falsely promising ARM investors an interest rate between 14% and 60%. The same property was used to "fully secure" multiple investors and lenders, causing losses in excess of $20 million, with any victim repayments made from scheme proceeds generated from new investors and lenders in what is commonly known as a Ponzi scheme.
Farley also received $1.2 million from Washington Mutual Bank in a check-kiting scheme by transferring funds he did not have among several ARM bank accounts, and withdrawing scheme proceeds before the "insufficient funds" checks were returned. He then used $400,000 in investor funds solicited for property refinance loans to address the check-kiting problem.
Near the end of the scheme, Farley diverted assets of ARM to himself after a bankruptcy petition was filed, and concealed that diversion from the United States Bankruptcy Court and ARM creditors.
Farley was charged in criminal information on Oct. 15, 2009 with bank fraud and conspiracy, which included the bankruptcy fraud. He pleaded guilty to those charges on Nov. 5, 2009. He could receive a maximum sentence of up to 60 years in prison and a fine of up to $2,000,000, plus full restitution to all victims. There is no parole in the federal system. Sentencing is scheduled for Feb. 3, 2010, at 10:30 a.m., before United States District Judge Timothy C. Batten, Sr. (usattyndga11509)
MORAL
Busy little beaver, wasn't he?
FEDERAL GRAND JURY INDICTS BRIAN K. JACKSON FOR NEVADA MORTGAGE FRAUD SCHEME
FACTS
Brian K. Jackson, currently of Anaheim, Calif., was indicted by the Federal Grand Jury in Las Vegas on Oct. 21, 2009, and charged with conspiracy to commit bank fraud, mail fraud, and wire fraud for his involvement in a Nevada mortgage fraud scheme involving straw buyers and falsified mortgage loan documents.
On Tuesday, Nov. 10, 2009, Jackson was arrested in the Los Angeles area, and appeared before a U.S. Magistrate Judge there and was released on a $50,000 surety bond. Jackson is scheduled to be arraigned by U.S. Magistrate Judge George W. Foley in Las Vegas on Friday, Nov. 20, 2009, at 8:30 a.m.
The indictment alleges that from about 2002 to May 14, 2008, Jackson, owner of Unlimited Properties, a now-revoked Nevada limited liability corporation, participated in a conspiracy to defraud financial institutions by causing money from mortgage loans to be diverted to his own use and benefit. Jackson solicited and paid persons (straw buyers) to apply for mortgage loans in their name. The loans were processed through Sapphire Mortgage, located in Henderson, Nev. Jackson caused false and fraudulent information to be placed in the straw buyers' mortgage loan applications concerning their employment, income, assets, intent to occupy property, etc. Jackson caused the same home to be purchased multiple times by different straw buyers at ever increasing prices. Jackson caused the "equity" to be diverted to him personally or his company, Unlimited Properties. Jackson also placed renters in the properties, and caused the mortgages to default.
The indictment specifically discusses several transactions involving a home located at 2061 Scenic Sunrise Drive in Las Vegas. Between March 2002 and late 2004, Jackson twice orchestrated the sale of the property using two straw buyers and the placement of false information in their loan applications. In June 2004, Jackson also orchestrated the sale of the Scenic Sunrise property to himself and falsely stated in his loan application that he intended to reside in the property when he knew he did not. During this period, Jackson also leased the Scenic Sunrise property to another individual and accepted money from the individual as guarantee that he would purchase it in the future, even though Jackson knew that the property at the time was owned by the first straw buyer and was in the process of being sold to the second straw buyer. The indictment alleges that Jackson or his company received about $179,000 from these fraudulent transactions.
In May 2008, the owner of Sapphire Mortgage, Cindy Birkland, was arrested and charged in state court in Las Vegas with mortgage fraud related offenses. If convicted, Jackson faces up to 30 years in prison and a $1,000,000 fine. (usattynv111209)
MORAL
He has serious problems. Did you notice, as I have been telling you all along, how they went back seven years? Did anyone reading this do anything they should not have in the last seven years?
FORMER OHIO LOAN OFFICER, LOCAL RADIO SHOW HOST AND FAMILY MEMBER INDICTED FOR $4.5 MILLION MORTGAGE FRAUD IN OHIO
FACTS
An Ohio federal grand jury has indicted James L. Mack, a former loan officer at the Centerville branch of Republic Bank, Walter A. Millat, and his son William E. Millat, all of Dayton, charging the three men with operating a scheme to fraudulently obtain more than $4.5 million in mortgage loans by fraudulently orchestrating the purchase and sale of more than 100 properties in the Dayton area between 2001 and 2006.
The indictment charges each man with one count of conspiracy, four counts of mail fraud and four counts of bank fraud. Each count is punishable by up to 30 years' imprisonment. The indictment also charges William Millat and Walter Millat with conspiracy to launder money, punishable by up to 20 years' imprisonment. The indictment also seeks forfeiture of the proceeds of the scheme.
The indictment identifies Mack as a former mortgage loan officer at the Republic Bank branch in Centerville. William Millat and his father, Walter Millat, operated various real estate businesses and corporations in the time period covered by the indictment. Between April 2005 and May 2006, William Millat hosted a Saturday morning radio call-in talk show entitled "Real Estate Investing for Everyone" on a Dayton radio station.
The indictment alleges that William Millat and Walter Millat recruited investors through newspaper ads in Dayton, New York City and Indianapolis to participate in a plan to buy and renovate single-family houses in distressed inner city neighborhoods in Dayton. Investors were promised a 50% return on their investment if they would invest for three months.
The men are charged with directing potential buyers to Mack and preparing false and fraudulent loan documents. Prospective buyers were promised that they would receive the properties without putting any money down, receive a check at closing, and that the properties would be renovated, rented, and generating positive cash flow without any cost to the buyers. The scheme victimized at least 12 separate individual property investors.
The three allegedly used the buyers' information and created false documents to obtain all the mortgages from Republic Bank, netting more than $2 million in proceeds for themselves through the scheme.
An indictment is merely an accusation. All defendants should be presumed innocent until and unless proven guilty in court. (usattysdoh111209)
MORAL
Did you notice how the federal government indicted them for loans that occurred in 2001? This is over EIGHT YEARS AGO. I told you previously on several occasions the government can go back 10 years. Here is proof of eight of those years. Like I have been saying, if anyone out there has been overly creative, see your lawyer now not later.
STATE OF OREGON FINES BROKER AND HER COMPANY AND ISSUES CEASE AND DESIST ORDER
FACTS
Victoria Bigham and her business, Pacific Rim Mortgage Inc., have been fined $30,000 by the state Department of Consumer and Business Services. They were accused of committing numerous incidents of mortgage fraud and of unethical violations, according to the state. The state suspended $22,500 of the fine, as long as the company and Bigham complied with terms of a cease-and-desist order issued by the state.
Tigard-based Pacific Rim, which closed $180 million in loans in 2007 and was one of the region's largest women-owned businesses, lost its license to do business. Bigham has been prohibited from working as a loan originator, supervisor or owner in the mortgage lending business, though she is still allowed to work as a loan processor. A state began investigation found that Bigham made private loans to cover expenses related to mortgage loans she was originating -- but did not follow rules requiring her to disclose these private loans to lenders.
"The violations were so egregious that we could no longer allow Pacific Rim and Ms. Bigham to continue as licensed mortgage brokers," said David Tatman, administrator of the state Division of Finance and Corporate Securities in a news release.
Bigham shut down Pacific Rim at the end of 2008. She has left the industry and is now attending college, according to a former colleague. (prtlndbusjl101309)
MORAL
From $180 million in business to egregious conduct. Sounds like a lot and may affect her ability to find work after graduation. Like I say follow the rules, you make less but you sleep better.
HOUSTON MORTGAGE BROKER GETS 15 YEARS IN FEDERAL PRISON WITHOUT PAROLE FOR MORTGAGE FRAUD
FACTS
On Nov. 9, 2009 Clarence Lewis III, of Houston, was sentenced to 15 years in federal prison without parole for running a mortgage fraud scheme.
Lewis was convicted May 13, 2009, of conspiracy to commit mail and wire fraud and four counts of wire fraud by Judge Hughes following a bench trial. The United States proved that as part of a conspiracy, Lewis obtained more than $12 million in fraudulent residential mortgage loans during the course of his five-year mortgage fraud scheme beginning in 2002.
Lewis held both a mortgage broker's license and real estate broker's license which he used in the execution of his scheme to defraud. Motown Mortgage Group and Lewis and Associates Realtors were the entities under which Lewis operated. In addition, he used an assumed name business -- Astro Construction -- to extract loan proceeds from the real estate closings. The loans on the majority of the properties obtained by fraud fell into default and the properties were foreclosed.
In addition to the prison term, Judge Hughes ordered Lewis to pay restitution. Lewis has been in federal custody without bond following his conviction on May 13, 2009, and will remain in custody to serve his sentence. (usattysdtx11909)
MORAL
Fifteen years without parole for fraud loans done since 2002 (over seven years ago). Anybody out there relate to this?
THE INFORMATION CONTAINED HEREIN IS NOT LEGAL ADVICE.
AN ATTORNEY SHOULD BE CONSULTED IF YOU DESIRE LEGAL ADVICE
