HUD NEIGHBORHOOD WATCH AND HOW IT CAN BE MISLEADING
FACTS
You all know what Neighborhood Watch is if you do FHA loans. You also know if your Compare Ratio exceeds 200% your approval can be removed and your password no longer works for the FHA connection. But did you know that the Neighborhood Watch could be misleading? Think about it? Think about how the Compare Ratio could possibly be over 200% and yet you followed the guidelines to the letter. There is a way this is true.
MORAL
I will give you a little hint this week--September 2007 and the real estate market crash.
FBI MORTGAGE FRAUD CASES SOAR
FACTS
The number of mortgage fraud cases being investigated by the FBI alone has increase six fold according to Robert S. Mueller III, the director of the Federal Bureau of Investigation. There are more than 2,900 pending cases as of the end of the first quarter of fiscal year 2010. (12-31-01). The majority of the cases involve losses of more than $1 million. (latb1031810)
MORAL
I can tell you there has been a noticeable increase in our caseload of mortgage fraud defense.
ARIZONA MORTGAGE FRAUD LEADER SENTENCED TO NEARLY 17 YEARS IN FEDERAL PRISON FOR $9.5 MILLION LOSS
FACTS
On March 15, 2010, Mario G. Bernadel, a citizen of Haiti, was sentenced to nearly 17 years in prison for his conviction on multiple counts for leading a mortgage fraud scheme in Phoenix that cost banks over $9 million.
Bernadel was found guilty by a jury in September 2009 on 19 counts related to mortgage fraud, including mail, wire, and bank fraud, and transactional money laundering. Bernadel led a two-year conspiracy involving the purchase of 37 properties using fraudulent loan documents and receiving cash back at closing. Seven co-conspirators were also charged and have pleaded guilty for their involvement in the conspiracy and many will be sentenced in the next few months.
The case against Bernadel and seven others was based on an investigation by the Federal Bureau of Investigation, which revealed that from December 2005 through March 2007 they conspired to commit mortgage fraud in Phoenix. Bernadel and others fraudulently submitted mortgage loan applications, on behalf of straw buyers, under false pretenses, obtaining and disbursing the proceeds of fraudulently obtained loans, including directing portions of the proceeds to bank accounts in Bernadel's and other defendants' control. Bernadel prepared or directed others to prepare fraudulent loan applications misrepresenting salary, assets and liabilities. Bernadel used the proceeds from the fraud to live a lavish lifestyle including purchasing several expensive homes and luxury vehicles. Evidence presented at his sentencing demonstrated that he continued to engage in mortgage fraud while in custody after his conviction. The conspiracy resulted in a loss to lending institutions of approximately $9,500,000.
Following the completion of his sentence, Bernadel, who has legal residence in the U.S., will be deported by the Department of Homeland Security to his home country of Haiti. Bernadel's prosecution is one result of Operation Cash Back, an initiative in which over 50 defendants were indicted and arrested, including many real estate professionals in 2007 and 2008. Bernadel is the 48th defendant to date who has been convicted through Operation Cash Back. (usattyaz31510)
CALIFORNIA AG SHUTS DOWN PHONY FORECLOSURE RELIEF COMPANIES AND GETS MONEY FROM THEM
FACTS
On March 22, 2010, California Attorney General Edmund G. Brown Jr. shut down two fraudulent foreclosure-assistance companies and secured a court judgment that prohibits three individuals from working in the real estate industry and provides more than $1 million in restitution for victims left with "false hope" after paying upfront fees for nonexistent loan-modification services.
"George Escalante, Cesar Lopez and Adrian Pomery used their loan-modification companies to sell false hope to hundreds of Californians facing foreclosure," Brown said. "This judgment shuts their companies down, locks them out of the real estate industry and pays back more than $1 million to the victims."
On July 7, 2009, Brown filed suit against two affiliated companies based in Orange County, U.S. Foreclosure Relief Corp. and H.E. Servicing, Inc., as well as their executives, George Escalante and Cesar Lopez, and legal representative Adrian Pomery. The suit was filed jointly with the Federal Trade Commission and the State of Missouri as part of "Operation Loan Lies," a massive federal-state crackdown on loan-modification fraud.
The joint investigation, initiated in March 2009, found that the defendants used aggressive telemarketing tactics to convince distressed homeowners to pay $1,800 to $2,800 in upfront fees for loan-modification services that included reductions in principal and lower interest rates. In sales calls, H.E. Servicing, for example, claimed it had successfully negotiated 10,000 loan modifications. However, a full review of internal records found the company opened only 2,960 loan-modification files and completed only 311. It is estimated that California homeowners accounted for 15% to 20% of the company's opened loan-modification files.
Brown's judgment permanently shuts down U.S. Foreclosure Relief and H.E. Servicing and prohibits the defendants from ever working in the real estate and loan-modification industries again.
Additionally, the judgment will provide more than $1 million in relief to victims paid through frozen company funds and the sale of Escalante's jewelry, 2007 Mercedes SUV, 2007 Mercedes sedan and 2009 Toyota Tundra. Separately, Lopez declared bankruptcy in June 2009 and relinquished possession of a 2007 Cadillac Escalade SUV and 2008 BMW S Series sedan as part of those proceedings.
Under the judgment, a court-appointed independent receiver will oversee the repayment program. Victims can access more information about this program by visiting the receiver's website at
The FTC's enforcement division will monitor the defendants' compliance with the judgment, and if they are found to have misrepresented their financial condition and inability to pay, the judgment, in full, will become due immediately. The full judgment requires total payment of $8.6 million from Escalante, US Foreclosure Relief and H.E. Servicing as well as $3.3 million from Lopez and $3.4 million from Pomery.
While in operation, H.E. Servicing spent $70,000 a week on radio and television advertising in 100 media markets nationwide and had plans to spend an additional $10,000 to $30,000 a week with the goal of bringing in an estimated $270,000 a week in new business. A report prepared by an outside accountant found that in the first six months of 2009 alone, the company made $4.5 million in net income.
Earlier this month Brown filed an amended complaint naming Brandon L. Moreno and his law firm, Cresidis Legal, as additional defendants in the case. This comes after investigators found that Moreno served as the legal affiliate for H.E. Servicing after Pomery departed. These defendants are not part of the judgment, and Brown will continue to prosecute the case against them.
By law, all individuals and businesses offering mortgage-foreclosure consulting, loan-modification and foreclosure-assistance services must register with Brown's office and post a $100,000 bond. It is also illegal for loan-modification consultants and businesses to charge up-front fees for their services. (caag32210)
MORAL
Two lawyers and several individuals and two companies equal million dollar forfeiture, loss of cars. Still think you want to do foreclosure relieve and loan modifications. The one attorney Pomery has a $3.4 million judgment against her and only two years out of law school.
EVEN THOUGH MANY HAVE STOPPED THE CALIFORNIA REAL ESTATE COMMISSIONER IS STILL INVESTIGATING OVER 1,300 LOAN MODIFICATION COMPLAINTS
FACTS
With the new power and authority given to the Commissioner by Senate Bill 36, the California Department of Real Estate can look at all your business records and take your testimony under oath. So if you have a complaint from a consumer, I suggest you resolve it with the consumer before the DRE resolves it for you.
MORAL
Who would you rather discuss the complaint with? The consumer? Or the Commissioner?
MORTGAGE FRAUD FROM MODESTO, CALIFORNIA
FACTS
Deputy District Attorney W.R. McKenzie of the Stanislaus County District Attorney's office prosecutes the real estate fraud cases. Among then quoted in the Modesto Bee are:
1. Bounthavy Manivong, accused of stealing $1 million from roughly 35 victims who believed they were giving Manivong money to invest in properties. "He just took the money and spent it," McKenzie said. Manivong faces five years in state prison when he is sentenced April 19, 2010 after pleading no contest to five counts of identity theft and one count of tax evasion.
2. Hector Leonel Picart, who posed as a mortgage broker, was sentenced to four years in prison for taking $18,500 from an elderly victim to put into escrow for the purchase of a home. Picart cashed the check and kept the money. Picart agreed to return the money to the victim but wrote two bad checks. He pleaded no contest to one count of grand theft.
3. Selena Corral pleaded no contest to one count of grand theft after she cashed a man's refinancing check that left the victim with a second mortgage and Corral with a $5,000 windfall. She will be sentenced April 12, 2010.
4. David George and Lorna Martin were working at a brokerage firm and a bank when they forged documents to take out fraudulent loans with the hope of earning a commission. They were sentenced to four months in jail for grand theft. (modbee31410)
MORAL
Since one deputy district attorney is handling the real estate fraud cases he is now an expert at it so I would not recommend getting into real estate fraud trouble in his county. Especially when you can go to prison for four years for stealing $18,500!
SALINAS, CALIF. MORTGAGE BROKERAGE ORDERED TO PAY $315,000 IN CIVIL FINES
FACTS
A civil judgment against the corporate officers and employees of Ed Veronick Mortgage Loans of Salinas, Calif. has been ordered and they are to pay $315,000 in fines for illegal business dealings and conspiracy, the Monterey County District Attorney's Office said.
The office's Real Estate Fraud Unit charged the defendants with engaging in civil conspiracy and illegal business practices between June 2004 and June 2007 to gain an advantage over competitors and benefit from illegal profits from commissions on loans. The District Attorney's spokesmen said some defendants voluntarily gave up their licenses, while Ronnie Esparza, an employee, was determined by the judge to have committed fraud. This means some former clients may get restitution.
The spokesmen said the corporate officers partnered with Esparza, who is unlicensed, in June 2004 to market loans and products mostly to Latino residents. They said Esparza managed the Salinas office and was paid from loan commissions. (california31210)
MORAL
They played, they lost and in some cases may lose their license. However, a check of the DRE website only reveals the corporation and the designated officer. There is no discipline and there are no salespeople licensed to the company.
SAN DIEGO MAN PLEADS GUILTY TO MORTGAGE FRAUD
FACTS
On March 5, 2010, Darnell Bell, an accused leader of a mortgage fraud scheme that resulted in the theft of at least $20 million in borrowed bank funds over several years, pleaded guilty to racketeering, wire fraud, bank fraud and money laundering before U.S. District Judge Nita Stormes.
Bell and other members of the ring based in San Diego used straw buyers and false loan applications to purchase more than 100 properties from 2005 to 2008. The group typically would submit offers on properties that were above the asking price and used false appraisals to secure much higher loan amounts, prosecutors said. The deals were structured in a way that resulted in cash kickbacks, prosecutors said.
Ultimately, the straw buyers defaulted on the loans and lenders foreclosed the properties, but the conspirators never had any of their own funds in any of the transactions, prosecutors said.
Bell is the fourth defendant in the group of about two dozen people accused in the case who pleaded guilty to criminal charges. The others are Michael Ivy, Diana Jaime and Marcus Dozzell. (sdbusjl362010)
MORAL
Note that the federal prosecutors are still very active and go back five years in this case to get people that committed mortgage fraud. Mortgage fraud crimes are a top priority with the government because of the Great Recession over the past three years caused by the unprecedented drop in property values and the unprecedented foreclosures. It is at such a point that the lenders are suing the brokers that gave them the loans for any reason when they go late and suing the borrowers on the second mortgages after foreclosures.
SAN FRANCISCO MAN SENTENCED TO 21 MONTHS IN FEDERAL PRISON FOR MORTGAGE FRAUD
FACTS
Michael Chou was sentenced to 21 months in prison and ordered to pay $360,800 in forfeiture as a result of his conviction for conspiring to commit wire fraud.
Chou pleaded guilty to the wire fraud conspiracy charge on October 30, 2009. Chou admitted that from in or before 2003 until approximately April 2009, he participated in a scheme to defraud mortgage lenders and financial institutions by providing false and fraudulent information in support of mortgage loan applications. Working for a San Francisco-based company known as "United Investments," Chou and his co-conspirators assisted individuals who wanted to obtain mortgages from mortgage lenders so they could purchase residential properties in the Northern District of California and elsewhere. Chou routinely transmitted fraudulent loan applications to mortgage lenders that contained false employment information and false and inflated income and bank account information. In addition, the loan applications were supported by false and forged documents that purported to verify the borrowers' employment, income, and assets. Chou and other members of the scheme used a network of co-conspirators who agreed to pose as the borrowers' employers and to falsely verify to the mortgage lenders the accuracy of the employment and income information listed on the loan applications. As a result of Chou's participation in this conspiracy, he illegally earned at least $360,800.
U.S. District Court Judge Susan Illston handed down the sentence. Judge Illston also sentenced the defendant to a five-year period of supervised release. The defendant will begin serving the sentence on July 30, 2010.
Twelve other defendants have been charged in connection with the mortgage fraud scheme related to United Investments. (case #: 09-977 SI, usatty31910ndca)
MORAL
Has anyone reading this "assisted a client" to get a home by being overly creative with the finances listed on the 1003? If so, you may want to see your attorney now before the FBI sees you later.
COLORADO AG INDICTS THREE PEOPLE IN THE DENVER AREA FOR MORTGAGE FRAUD
FACTS
On February 24, 2010, Colorado Attorney General John Suthers announced that the Statewide Grand Jury has indicted Marcus Williams, Kimberly Anderson and Scott Peters on suspicion of running an elaborate mortgage fraud scheme under the auspices of Blackhawk Property Management. According to the 23-count indictment, Williams, Anderson and Peters diverted money from home sellers or funding companies to Blackhawk Property Management, which functioned as a shell company. During the deals, the suspects allegedly falsified loan applications to deceive lenders; used false inspections to divert money into the company's coffers; and, manipulated closing documents to skim money off real estate purchases.
According to the indictment, Williams, Anderson and Peters' criminal enterprise engaged in mortgage fraud from April 2006 through September 2008. Each defendant faces at least three felony charges. Williams is suspected of violating the Colorado Organized Crime Control Act, a class-two felony. The Office of the Attorney General will prosecute Williams, Anderson and Peters in Denver County District Court. (agco22310)
TWO MORE COLORADO MEN INDICTED FOR MORTGAGE FRAUD
FACTS
On March 10, 2010, Shawn R. Tieskotter of Greenwood Village, and Craig D. Patterson of Littleton, were indicted by a federal grand jury in Denver on charges of money laundering, wire and mail fraud. Patterson was arrested by federal agents without incident. He appeared in U.S. District Court in Denver on March 12, 2010, for an initial appearance where he was advised of the charges pending against him. He was arraigned on March 17, 2010. Tieskotter received a summons to appear in U.S. District Court in Denver on March 25, 2010, where he will be advised of the charges pending against him.
According to the indictment, starting March 26, 2005, and continuing through June 30, 2005, in Colorado and elsewhere, Tieskotter and Patterson knowingly executed and attempted to execute a scheme to defraud various financial institutions as well as commercial mortgage lenders. The scheme was executed in connection with residential mortgage loan applications relating to 13 properties in the Denver metropolitan area. The neighborhoods included Aurora, Centennial, Littleton, Parker and Castle Rock.
As part of the scheme, Tieskotter and Patterson prepared, submitted and caused to prepare and submit applications for residential mortgage loans and related documents in Tieskotter's name. The applications included a first mortgage and second mortgage for each of the 13 properties. Each of the applications allegedly contained materially false and fraudulent representations that Tieskotter intended to use the property as his primary residence and most of the applications contained materially false and fraudulent representations about the extent of Tieskotter's liabilities related to the other residential mortgage loans.
It was further part of the scheme for Tieskotter and Patterson to hide from lenders the extent of Tieskotter's liabilities for the other mortgages, before such liabilities would appear on Tieskotter's credit reports. At the time of closing, Tieskotter and Patterson caused additional disbursements of monies to PK Design Group LLC, an entity controlled by Patterson, or Dream Design, a trade name for an entity controlled by Tieskotter. Tieskotter and Patterson concealed from the lenders and other parties associated with the transactions their control of these entities.
If convicted of the alleged offenses, Tieskotter and Patterson shall forfeit to the United States all property constituting or derived from proceeds traceable to the commission of the offense, including but not limited to a sum of money equal to $219,566 for money laundering and $4,710,666.86 for wire and mail fraud charges.
Counts one through nine allege wire and mail fraud, which carries a penalty of not more than 20 years imprisonment, and up to a $250,000 fine, per count.
Counts ten through thirteen allege money laundering, which carries a penalty of not more than 10 years imprisonment, and a fine of up to $250,000. (usattyco31710)
MORAL
Forfeiture of property creates a big problem on how they are going to pay for their respective defense. I trust you are all noticing the very, very large similarity of the various cases. The fraud has occurred within the last seven years.
FORMER GEORGIA ATTORNEY GOES TO PRISON FOR MORTGAGE FRAUD
FACTS
On March 12, 2010, Trent Edward Wright of Cumming, Ga., was sentenced by U.S. District Judge Timothy C. Batten Sr. to serve one year and nine months in federal prison on a mail fraud charge involving a mortgage fraud scheme which victimized lenders and title insurance companies.
Wright was sentenced to one year, nine months in prison to be followed by three years of supervised release, and was ordered to pay $2,409,760 in restitution to the victims of the scheme. There is no parole in the federal system.
In September, October and November 2006, Wright, then a real estate closing attorney operating from an office in Sugar Hill, Ga., closed approximately 17 loans in which lenders were falsely assured that all prior loans encumbering the properties securing their loans had been paid off. Those lenders then believed that they would be in first position to recoup their loan amounts from the sale of the properties should they go into foreclosure. Wright also wrote title insurance for these loans although he failed to pay off numerous prior recorded liens which encumbered the properties. Rather than ordering title searches and requesting pay off amounts from all prior lenders as required before the new loan closings, Wright either failed to order title searches or disregarded recorded prior encumbrances, causing over $2.4 million in losses. Wright closed his law practice in January 2007, and surrendered his license to practice law in December 2009.
A co-conspirator in a related case, Edward William Farley of Hoschton, Ga., operated through a company called Alliance Resource Management located in Lawrenceville, Ga., as the borrower who received the proceeds from the 17 mortgage loans closed by Wright. In seeking funds for other loans, Farley told real estate investors, lenders, and banks, that they would get returns of 14 percent to 60 percent. Farley also promised them that they, too, would be first position to recoup their loan amounts from the sale of the properties should they go into foreclosure. Farley in fact used the same property to falsely fully secure multiple lenders on that same property. This fraud caused losses in excess of $25 million.
Farley pleaded guilty to bank fraud and conspiracy on Nov. 5, 2009, and is scheduled for sentencing before Judge Batten on April 14, 2010. Farley could receive a maximum sentence of 30 years in prison and a fine of up to $1,000,000 on each of the two counts, plus full restitution to all victims who have not been repaid. (usattyndga31210)
MORAL
Attorney gets 1 year and nine months. I bet Farley gets over seven years due to the $25 million loss on his part. I always wonder why the attorney who spends four years in college, three years in law school and then three days taking a very difficult bar exam does this.
MAINE SETS SAFE ACT TO START ON JAN. 1, 2011
FACTS
The state of Maine enacts H1146 which amends the effective date for the state SAFE Act compliance from July 31, 2010 to Jan. 1, 2011. (alrgs21810)
MORAL
I guess Maine is as confused as everyone else on how to interpret it, especially about debts and bankruptcies as they relate to licensing.
MORE PEOPLE SENTENCED IN MINNEAPOLIS LEGACY LENDING MORTGAGE FRAUD FIASCO
FACTS
On March 5, 2010, Frederick Earle Deen was sentenced to 24 months in prison for his role in a $20 million mortgage fraud scheme that operated in the Twin Cities. U.S. District Court Judge Richard Kyle handed down the sentence, which was reduced because Deen cooperated with investigators and is expected to testify at future proceedings.
Sentencing guidelines called for Deen to spend 46 to 57 months in prison, Kyle said. Deen was a part owner of Legacy Lending, which obtained mortgage loans from unsuspecting lenders using straw buyers. From 2005 to 2007, Deen and business associates used inflated appraisals and received $2.2 million payments out of loan proceeds.
Deen had earlier pleaded guilty to wire fraud involving a transfer of more than $575,000 and evading taxes on $200,000 in income.
At one point Deen's sentencing turned into a debate over the role of Taylor Trump in the fraud scheme. Trump, who has a criminal record and served as a police informant, was sentenced to 20 years in prison back in 2008. Tim Rank, an assistant U.S. attorney prosecuting Deen, said that Trump worked with Deen for two years, and that Deen also carried out the scheme on his own with other colleagues after Trump was no longer involved. Earlier the week of March 5, 2010 Thomas John Hunter, another part owner of Legacy Lending, pleaded guilty to wire fraud and money laundering.
Deen was released after Friday's hearing and will surrender to federal authorities in six weeks to begin his sentence. Friedberg said he'd ask federal authorities that Deen serve his time at a federal prison in Duluth, Minn. (twncit.com3510)
MORAL
Notice that Deen received two years in federal prison after pleading guilty and after agreeing to cooperate and testify against others.
OHIO MAN CONVICTED OF MORTGAGE FRAUD
FACTS
On March 15, 2010, Gregory S. Chew, formerly of Waynesville, Ohio, was convicted by a federal jury following a 15-day trial for his role in a mortgage fraud scheme involving 57 property investors and 246 residential properties.
Chew was convicted of conspiring with a co-defendant, Richard C. Confer Jr., of West Carrollton, in a scheme to fraudulently obtain more than $17 million in mortgage loans from more than 39 victimized mortgage lending institutions. They obtained more than $7.9 million for their personal use from the fraudulent transactions.
The trial began on Feb. 22, where the jury was presented evidence that Chew, a real estate facilitator, approached Confer, a mortgage broker with Aleva Mortgage Co., in January 2003 and agreed to collaborate with him in extensive real estate investments. The pair continued a business relationship for another six years, preparing numerous false, fictitious and forged mortgage loan applications and HUD-1 settlement statements to secure fraudulent loans.
Chew deposited over $2.2 million of disbursement checks from various title agencies in his own personal accounts. Chew utilized these ill-gotten funds to pay his co-conspirators, fund fraudulent down payment checks, and for his own personal gain including the purchase of several vehicles.
The jury convicted Chew of one count of money laundering, one count of conspiracy to launder money, and three counts each of mail fraud and wire fraud. Chew's conviction carries possible prison sentences of up to 30 years for wire fraud and mail fraud, 20 years for conspiracy, and 10 years for money laundering.
Confer pleaded guilty on Feb. 19, 2010 to one count of conspiracy to commit money laundering for his role in the scheme. He faces a sentence of up to 20 years' imprisonment, a $500,000 fine or twice the value of the property involved, whichever is greater, and three years of supervised release. Confer is scheduled to be sentenced on May 20, 2010. (usattysdoh31510)
MORAL
Take notice. This started seven years ago. The trial was 15 days and Chew will probably spend over seven years in a federal prison.
OREGON MORTGAGE BROKER GOES TO PRISON FOR OVER
FIVE YEARS FOR MORTGAGE FRAUD
FACTS
On March 19, 2010, Julian James Ruiz III, a Salem mortgage broker has been sentenced to 61 months in prison for taking his clients for more than $450,000 in foreclosure rescue scams. Ruiz pleaded guilty to multiple counts of theft, identity theft, mortgage fraud and tax evasion. He also pleaded guilty to violating a new consumer-protection law passed by the Oregon Legislature in 2008 that requires straightforward dealing between foreclosure rescue consultants and clients. He's been stripped of his mortgage license and permanently barred from working in the industry. The manager and owner of Salem-based American Home Modifications also has been ordered to pay $469,500 in restitution to more than 100 victims. (demhrdl.com32010)
MORAL
As you can see, play by the rules or get nailed. If you need the rules contact us. But do not learn them the hard way as this broker did.
FORTY PEOPLE ARRESTED AND INDICTED IN TEXAS FOR MORTGAGE FRAUD
FACTS
Forty individuals have been arrested and charged in connection with a major mortgage fraud scheme in the Eastern District of Texas. The 16-count indictment was returned by a federal grand jury on March 10, 2010, and includes one count of conspiracy to commit mail and wire fraud, 12 counts of mail fraud, and three counts of money laundering. All 40 defendants, from Texas, Florida, Massachusetts, Tennessee, and Georgia, are charged with one count of conspiracy to commit mail and wire fraud. Many of the defendants are also charged with various counts of mail fraud and money laundering.
According to the indictment, beginning in 2004, John Barry of Windemere, Fla., owned and operated TKI Group, Inc. and JAB Consulting, businesses out of Florida through which he solicited real estate agents, property finders, mortgage brokers, title company attorneys or escrow officers, property appraisers, and straw buyers to facilitate this scheme. The purpose of the scheme was to defraud lending institutions by convincing them to approve mortgage loans for residential properties for which the property values had been fraudulently inflated. The indictment specifically lists 114 residential properties located in the Texas cities of Allen, Arlington, Cedar Hill, Coppell, Corinth, Cypress, Dallas, Flower Mound, Fort Worth, Frisco, Granbury, Heath, Highland Village, Houston, Keller, Lantana, Lewisville, Little Elm, Lubbock, Magnolia, McKinney, Plano, Roanoke, Southlake, Spring, The Woodlands, and Willis.
If convicted, the defendants face up to 20 years in federal prison for the conspiracy charge, up to 20 years in federal prison for each count of mail fraud charge, and up to 10 years in federal prison for each count of money laundering. (usattyedtx31610)
MORAL
The federal people are very busy and mortgage fraud is the focus.
FORMER WASHINGTON STATE RESIDENT REPRESENTS SELF IN MORTGAGE FRAUD TRIAL AND IS CONVICTED ON MULTIPLE COUNTS
FACTS
On March 17, 2010, William S. Poff of Marshall, Mich., a former resident of Washington State, was convicted in U.S. District Court in Seattle of 30 felony counts of conspiracy, bank fraud, wire fraud and money laundering offenses. Poff is one of five people arrested in June 2009, in connection with a mortgage fraud scheme that cheated banks and property sellers out of more than several million dollars. Poff was a licensed notary and worked as a loan originator.
Poff represented himself during the seven-day bench trial. Judge James L. Robart found Poff's arguments of his lack of involvement in the scheme were unpersuasive. Poff faces up to 30 years in jail.
The conspirators obtained financing from banks on the basis of false statements and applications and, in some cases, also from sellers who were convinced to extend private loans for a portion of the purchase price. These private loans, which were not disclosed to the banks, allowed the conspirators to obtain loan proceeds far beyond the value of the assets securing those loans, and beyond their ability to pay. In Poff's trial, prosecutors focused on the purchases of eight different properties using various different means of deception, including straw buyers, forged settlement documents, lies on loan applications, inflated sales prices, and undisclosed seller financing. Prosecutors showed how Poff and his criminal associates pocketed $1.7 million, and how Poff used some of it for his living expenses, trips, and child support payments. Most of the properties are pending foreclosure.
Four other defendants have already entered guilty pleas in the case: Humberto A. Reyes-Rodriguez, aka Tony Reyes; Alexis Ikilikyan, aka Haikanush Ikilikyan; Micki S. Thompson; and Mario A. Marroquinash. In all, between 2005 and 2008, the conspirators used straw buyers to purchase and resell properties, obtaining more than 80 loans totaling more than $18 million. The conspirators submitted a variety of false information to the banks such as employment, income, citizenship status, assets and liabilities. The conspirators also created fictitious companies that were allegedly doing repair work on the properties. Money at closing would go to these entities that, in reality, had done no work on the property. The scheme involved fraudulent mortgage transactions in communities across the Puget Sound region: Des Moines, Tacoma, Seattle, Puyallup, Spanaway, SeaTac, Auburn, Bellevue, Renton, Lakewood, Fircrest, Kent, Pacific and Issaquah.
The conspirators did not just damage banks and financial institutions. Innocent sellers were harmed when they agreed to loan the buyer a portion of the purchase price, to be paid back over time. The sellers did not know that the conspirators had already obtained 100 percent financing from commercial lenders. When payments were not made and properties fell into foreclosure, and then were sold for less than the total of all loans secured by the property, the sellers holding private notes were left with nothing. (prnewswre31710)
MORAL
You all know the old saying. The person that represents themselves has a fool for a client and an idiot for a lawyer.
WASHINGTON STATE BROKER SURRENDERS HIS LICENSE BY CONSENT
FACTS
On March 2, 2010, Charles Michael Czech d/b/a Czech mortgage and www.checkthedifference.com as owner and designated broker agreed to surrender his mortgage broker license, file a mortgage broker closure report, file an annual report for the year 2008, sign a declaration of activity for the period of Sept. 9, 2009 through Dec. 31, 2009, pay a fine of $1,400 and not apply for any license issued under the Mortgage Broker Practices Act, Consumer Loan Act, Check Cashers and Sellers Act, Escrow Agent Registration Act or Uniform Services Money Act for a period of five years after entry of the consent order. He can apply for a license as a loan originator or mortgage loan originator. (no.c-09-350-10-co0-3-2-10)
MORAL
File your forms and reports on time. Just do not close up shop and not file the close out forms required by the licensing agency.
THE INFORMATION CONTAINED HEREIN IS NOT LEGAL ADVICE.
AN ATTORNEY SHOULD BE CONSULTED IF YOU DESIRE LEGAL ADVICE
