FTC AGAIN DELAYS ENFORCEMENT OF THE "RED FLAGS" IDENTITY THEFT MANUAL UNTIL DEC. 31, 2010
FACTS
The Federal Trade Commission is further extending its deferral of enforcement of the Identity Theft Red Flags Rule through Dec. 31, 2010, while Congress continues to consider legislation that would impact the scope of entities covered by the rule.
The rule was promulgated pursuant to the Fair and Accurate Credit Transactions Act, in which Congress directed the Commission and other agencies to develop regulations requiring creditors and financial institutions to address the risk of identity theft. The resulting Red Flags Rule requires all such entities that have covered accounts to develop and implement written identity theft prevention programs. The identity theft prevention programs must be designed to help identify, detect, and respond to patterns, practices, or specific activities--known as "red flags"--that could indicate identity theft.
Creditors under the ECOA include professionals, merchants, or service providers that regularly provide a product or service for which the consumer pays after delivery. The final Red Flags Rule became effective on Jan. 1, 2008, with full compliance for all covered entities originally required by Nov. 1, 2008. The Commission has issued several Enforcement Policies delaying the enforcement of the Rule. Most recently, the FTC announced in October 2009 that at the request of certain members of Congress, it was delaying enforcement of the Rule until June 1, 2010. (ftacprsrel52810)
MORAL
If you have ours, good, use it. If you do not have one, you now have until Dec. 31, 2010 to get one or create one for yourself.
HUD IS AGAIN CONSIDERING ADOPTING A RULE RESTRICTING THE REQUIRED USE OF AFFILIATED BUSINESSES
FACTS
The Department of Housing and Urban Development is again addressing both incentivized affiliate referrals and penalties that could adversely affect not only individual borrowers, but also competition in the provision of settlement services. In advance of proposing a new rule on this subject, HUD is publishing this ANPR to request information on the practices to be addressed by this rulemaking.
HUD requests information from all interested members of the public, including individual consumers, consumer advocacy organizations, housing counseling agencies, the real estate and mortgage industry, and federal, state, and local consumer protection and enforcement agencies. HUD requests information that includes empirical data, studies, and analyses regarding affiliated business arrangement practices. HUD would like to know if economic incentives to use affiliated lenders facilitated inflated appraisals or lowered underwriting standards in the lending market. (75fr31334-5/10/10)
MORAL
If you as a lender or broker do not want "tie-ins" between the builder and the broker or lender, then you should comment.
CALIFORNIA STATE CRIMINAL CONVICTIONS CAN BE EXPUNGED
FACTS
In California, anyone convicted of a crime but did not serve any prison time and has remained out of trouble can expunge his or her record. Studies suggest that one in ten Californians has a criminal conviction. (That is one heck of a statistic! Think about it. 10% of the California population has a criminal conviction! Count 10 people at random and it may be that one of that 10 has a criminal conviction.)
In California, section 432.7 of the Labor Code, states "No employer...shall ask an applicant for employment to disclose...information concerning an arrest or detention that did not result in conviction, or information concerning a referral to, and participation in, any...diversion program, nor shall any employer seek from any source whatsoever, or utilize, as a factor in determining any condition of employment including hiring, promotion, termination...any record of arrest or detention that did not result in conviction. Nothing in this section shall prevent an employer from asking an employee or applicant for employment about an arrest for which the employee or applicant is out on bail or on his or her own recognizance pending trial."
If you were convicted of a misdemeanor or a felony and were not sentenced to state prison or under the authority of the Department of Corrections and Rehabilitation you can petition for a dismissal. This means you were given county jail time, probation, a fine, or a combination of those three. If you are petitioning for a dismissal, the court upon proper motion, may withdraw your guilty or nolo contendere (no contest) plea, or verdict of guilty if you went to trial, and enter a not guilty plea. Then the court will set aside and dismiss the conviction. From that point forward, you are considered no longer convicted of the offense. Your record will be changed to show a dismissal rather than a conviction. (Calif. Pen. C. §§1203.1203.3)
MORAL
There are exceptions even if the convictions is dismissed or expunged. For example, government employment, licenses such as Department of Real Estate broker or sales licenses, and government clearances. You should read the code and the job application under the arrests and convictions section to see what the requirements are. However, private employers cannot ask about the expungments or dismissals once granted Check with your attorney.
PAIR DRAW 12 YEARS IN STATE PRISON FOR MORTGAGE FRAUD
FACTS
On June 2, 2010, Ruben Hernandez of Downey, Calif., was sentenced to 12 years in state prison for a multi-million dollar mortgage fraud. He was accused in a series of house purchases using fake social security numbers and fake ban statements and defrauded banks of about $4 million. His co-defendant Joel Rodriguez, owner of Coast to Coast Mortgage was found guilty of six counts of filing a false application and five counts of grand theft and sentenced to 12 years, 8 months in prison. Both men were sentenced by Judge Lance Ito. Coast to Coast is still active according to the Department of Real Estate licensing website. Mr. Rodriguez is also the designated officer of SABINAJOELLE ENTERPRISES INCORPORATED WITH A DBA OF GOLDEN REALTY NETWORK. The Secretary of State website notes SABINAJOELLE ENTERPRISES is suspended and yet it is listed as an active real estate licensee with two sales people. (lataa2-6-3-10)
CONNECTICUT MAN CHARGE WITH MORTGAGE FRAUD
FACTS
On June 2, 2010, Rab Nawaz was arrested and charged by federal criminal complaint with conspiracy to commit wire fraud and with obstruction of justice. Nawaz was arrested at his residence. He subsequently appeared before Senior United States District Judge Ellen Bree Burns in New Haven and was released on a $100,000 bond secured by property.
According to statements made in court, Nawaz is alleged to have conspired with Syed A. Babar and others in a mortgage fraud scheme involving real estate throughout Connecticut. As part of the scheme, it is alleged that Nawaz purchased homes in New London and sold them to straw buyers at artificially inflated prices that, typically, were supported by fraudulent appraisals. Although the straw buyers would represent that they intended to occupy the homes as their primary residence, they had no intention of doing so, defaulted on the loans and allowed the homes to go into foreclosure. The co-conspirators are alleged to have profited from the proceeds of the fraudulently inflated loans.
According to statements previously made in court, it is alleged that members of the conspiracy conducted this scheme on more than 25 properties in New London, New Haven, and other locations in Connecticut. As a result, it is alleged that various lenders suffered a loss of at least $2.5 million.
Babar was indicted on related charges on April 27, 2010, and was arrested on May 14. On May 20, it is alleged that Nawaz met with a co-conspirator in the case and advised him about certain evidence that the government had presented during Babar's detention hearing. During their meeting, it is alleged that Nawaz instructed the co-conspirator as to what he should and should not admit knowing to government investigators.
The charge of conspiracy to commit wire fraud carries a maximum term of imprisonment of 20 years and the charge of obstruction of justice carries a maximum term of imprisonment of 10 years.
A criminal complaint is only a charge and is not evidence of guilt. The defendant is entitled to have this matter presented to a grand jury and, in the event an indictment is returned, he is entitled to a trial at which it will be the government's burden to prove guilt beyond a reasonable doubt.
U.S. Attorney Fein stated that the investigation is ongoing. This case is being investigated by the Federal Bureau of Investigation and the U.S. Department of Housing and Urban Development, Office of Inspector General. (usattyct6210)
MORAL
Indicate property is to be primary residence on 1003 and is not true at time made equals a felony. Investigation still ongoing means more are expected to join the party. Have fun, but I hope you can afford the "E" ticket.
FIVE GUILTY OF MORTGAGE FRAUD IN BOSTON
FACTS
On June 2, 3010 after a seven-week trial, a federal jury found five defendants guilty of mortgage fraud (including one suspended attorney and one practicing attorney) stemming from a scheme that involved 21 properties in the Greater Boston area, 10 mortgage lenders, and more than $10.6 million in loan proceeds.
ERIC L. LEVINE, J. DANIEL LINDLEY, ERNST APPOLON, DANIEL APPOLON AND LATOYA HALTIWANGER were convicted of wire fraud and conspiring to commit wire fraud. LEVINE and LINDLEY were also convicted of money laundering.
Between May 2005 and June 2006, the defendants and others participated in a conspiracy to obtain $10.6 million in mortgage loan proceeds by fraud. The scheme involved the use of inflated purchase prices and documents containing false statements about purchase price, borrower income, employment, or intent to reside in the property. The difference between purchase prices negotiated with sellers and inflated purchase prices submitted to lenders ranged from as little as $15,000 to as much as $255,000 on individual properties aggregating to more than $1.9 million. From this $1.9 million, the defendants and other coconspirators pocketed more than $1.7 million in illegal proceeds. The mortgages on all of the properties were defaulted upon and nearly all went into foreclosure.
LEVINE, a suspended attorney, and LINDLEY, a practicing attorney, participated in the loan closing process and handled the money. ERNST APPOLON, a REAL ESTATE BROKER, identified properties for the conspirators, negotiated purchase prices with sellers, and recruited people to lend their names and credit information to obtain mortgage loans for property purchases. HALTIWANGER, a mortgage broker, was the loan originator for three of the properties in the conspiracy and was the straw borrower for a separate property purchase. DANIEL APPOLON recruited two straw borrowers whose name and credit information were used to purchase three properties.
The defendants face up to 20 years' imprisonment to be followed by three years of supervised release and a $1 million fine on each count of wire fraud. For the conspiracy, they face up to five years' imprisonment to be followed by three years of supervised release and a $250,000 fine. On the money laundering counts, LEVINE and LINDLEY face up to 10 years' imprisonment to be followed by three years of supervised release and a $250,000 fine.
Co-defendants ANDRE JUNIOR LAMERIQUE, WIDNER LAMARRE, JERMAINE BLAKE, SAMUEL JEAN-LOUIS and JEAN NORISCAT pled guilty to conspiracy to commit wire fraud and several counts of wire fraud. They each face a maximum of 20 years' imprisonment to be followed by three years of supervised release and a $1 million fine on each count of wire fraud. For the conspiracy, they face up to five years' imprisonment to be followed by three years of supervised release. NORISCAT also pled guilty to several counts of aggravated identity theft and faces a mandatory two years' imprisonment for each of the identity theft counts in addition to any other sentence imposed.
Co-defendant RALPH APPOLON is scheduled for trial in February 2011. (usattyma6210)
MORAL
Attorneys, real estate brokers, mortgage brokers. There is no prejudice. The government chases anyone involved in mortgage fraud.
MINNESOTA MORTGAGE BROKER GETS 2-1/2 YEARS IN FEDERAL PRISON FOR MORTGAGE FRAUD
FACTS
JEFFREY MICHAEL TAYLOR, after pleading guilty, was sentenced to 30 months in prison for defrauding CitiMortgage out of $588,200.51.
Taylor, the owner of FIRST SOLUTION LENDING, a mortgage lending company in Maple Grove, Minn., admitted conspiring with an unnamed person to obtain money from CitiMortgage by securing a second mortgage through them on an Arizona property. Taylor acquired the Arizona property, a vacation get-away, in April of 2005 for $1.5 million, and in March of 2006, he attempted to sell it for $1.85 million. When the property failed to sell, Taylor initiated his fraud scheme by falsifying loan documents.
Those documents were drafted for the unindicted co-conspirator's signature. They claimed that the co-conspirator had purchased the property in 2005 for $2.26 million and now held approximately $825,000 in equity in it. The truth, however, was that the unindicted coconspirator had never bought the property, and the property itself had little, if any, equity. The fraudulent documents were submitted to CitiMortgage. CitiMortgage loaned the unindicted co-conspirator $592,500, based on the fraudulent application supplied by Taylor. CitiMortgage secured the loan with what it later learned was a worthless second mortgage.
Taylor admitted that the loan proceeds were transferred from CitiMortgage to his lending company by wire transfer. He also admitted he caused the unindicted co-conspirator to sign the loan proceeds over to him. Moreover, he admitted that neither he nor his co-conspirator made any loan payments to CitiMortgage. (usattymn51010)
MORAL
Guess who cooperated with the government in the prosecution.
LUCZAK SENTENCED TO 121 MONTHS IN FEDERAL PRISON FOR OPERATING AN "ADVANCE FEE" LOAN FRAUD SCHEME
FACTS
On May 26, 2010 CASEY LUCZAK, formerly of Las Vegas and now living in Atlanta, was sentenced on by U.S. District Judge Philip M. Pro to 121 months in prison, five years' supervised release, and ordered to pay approximately $4.2 million restitution for operating an "ADVANCE FEE" LOAN FRAUD SCHEME.
Luczak, 72, defrauded more than 50 victims between 2002 and 2005 through his Nevada-based business entities THE INTERCHANGE GROUP AND GEMINI CAPITAL FUND, Luczak pleaded guilty on Jan. 19, 2010, prior to completion of his jury trial, to 23 counts of wire fraud and one count of making a false statement.
On TIG's website and in various marketing materials, Luczak falsely promised victims that in exchange for substantial advanced fees, TIG and Gemini would provide funding for business loans or collateral which could be used to obtain traditional bank loans. Luczak fabricated or grossly exaggerated TIG's and Gemini's staff and experience, financial portfolio, and history of investing in and funding companies seeking business loans. Luczak provided victims phony references, fabricated "certificates of achievement" with the Better Business Bureau, listed staff and domestic and foreign offices that did not exist, and falsely represented that TIG and Gemini owned and managed funds available for investment in excess of $180 million.
Relying on the false representations, individuals entered into contracts with Luczak and wired or mailed to him over $1 million in fees for the purpose of securing business loans, direct equity investments, and collateral. Rather than using the fees to provide funding or genuine collateral as promised, Luczak used the monies to purchase luxury automobiles, including a Ferrari, Dodge Viper, and a Corvette, and for other items, such as a Steinway piano, personal residences, personal travel, fine dining and entertainment, and extensive gambling. When victims failed to receive loans or the collateral promised, Luczak refused to refund their money, fraudulently claiming that victims were not entitled to refunds, or stringing victims along with false promises that their loans were forthcoming when he knew that the loans or collateral would never materialize. When victims eventually complained to the Better Business Bureau or law enforcement, Luczak attempted to intimidate them into retracting complaints by threatening to place their loan projects "on hold" and using other coercive tactics. As a result of being financially victimized by Luczak, many victims were forced into personal and business bankruptcy, while other victims were unable to implement their business plans because their only available loan funds had been exhausted by Luczak.
On April 26, 2005, an FBI Special Agent investigating complaints of the victims questioned Luczak regarding his business practices with TIG and Gemini Capital. Luczak falsely told the Special Agent that he had used the fees he received from victims to help find loans, for collateral, to pay project directors, and to conduct due diligence examinations of victims' companies when he knew that he had not used their money for such purposes but had in fact converted the vast majority of victims' fees to his own personal use in order to support a luxury lifestyle.
Luczak is currently released on bond with conditions of home confinement, and must self-report to federal prison on June 29, 2010. (usattynv52810)
MORAL
At 72, he will be 82 when he gets out. It never pays to lie to a federal agent of any kind, let alone the FBI. If you are questioned by a federal agent it is always best to request that your attorney be present. The lie is just another charge that can be brought against you separate and distinct from the crime under investigation.
VIRGINIA LOAN OFFICER AND REAL ESTATE AGENT SENTENCED TO FEDERAL PRISON FOR MORTGAGE FRAUD
FACTS
On June 4, 2010 LOURDES ROJAS ALMANZA of Falls Church, Va., was sentenced to 77 months in prison, followed by five years of supervised release, for her role in a multi-million-dollar mortgage fraud conspiracy. Almanza was also ordered to pay restitution in the amount of $9,718,749.
Almanza, a loan officer, was part of a wide-ranging mortgage fraud conspiracy, in which she and others recruited straw buyers with good credit to purchase properties for other individuals. Almanza prepared fraudulent mortgage loan applications in the straw buyers' names. The straw buyers signed the fraudulent loan applications in order to obtain much larger loans than they were qualified to receive; the loan applications misstated, among other things, the straw buyers' income, assets, employment, citizenship status, and intent to live in the property. Almanza also obtained fake bank statements, pay stubs, and W-2's to corroborate the false statements in the loan applications.
During the course of the conspiracy, Almanza and her co-conspirators engaged in more than 30 fraudulent property transactions and obtained over $24 million in mortgage loans to purchase the properties. The straw buyers defaulted on the bulk of the fraudulent loans and the properties either went into foreclosure or were short-sold for sizeable losses. More than 20 banks and lenders suffered losses in excess of $9 million. Almanza was directly involved in fraudulent transactions that yielded over $2.5 million in loss.
Almanza was initially scheduled to be sentenced on April 30, 2010, but the sentencing was continued after she attempted to flee the country on April 27, 2010. Almanza used her sister's passport and booked a flight from Reagan National Airport to Bolivia, with a layover in Miami. The FBI, with the assistance of the Fairfax County Police Department, located and arrested Almanza when her flight landed in Miami.
On the same date, LITCIA LINARES of Falls Church, was also sentenced to 27 months in prison, followed by three years of supervised release, for her role as a real estate agent in the conspiracy. Linares was also ordered to pay restitution in the amount of $7,509,849. Linares pled guilty on Jan. 8, 2010. Linares was married to co-defendant GROVERT ROJAS during the time she was involved in the conspiracy. Linares collected several commission checks for work that she and her then-husband did as real estate agents on the fraudulent straw buyer transactions.
Almanza's brother, RUBEN ROJAS, pled guilty on Dec. 22, 2009, for his role as a realtor in the conspiracy. Rojas was sentenced on May 7, 2010 to 60 months in prison. Ten straw buyers have also been charged for their involvement in the conspiracy. One of the straw buyers, Juan De La Cruz Aguayo, pled guilty on March 18, 2010. Aguayo is scheduled for sentencing on June 11, 2010. (usattyedva6410)
MORAL
I want you to again take notice that the prosecution is in fact prosecuting the straw buyers. In this case 10 of them. Before the straw buyers were not prosecuted. Additionally, look at the fact they prosecution are for stating that the purchase is for a primary residence when in fact the borrowers did not intend to live there. This statement of residency in the loan application is a federal felony. Lastly, look at the time they get in federal prison. So far we have been pretty good at representing our clients such that not many of them draw prison time and at that not in this length of time. The government does listen to reason if you have cogent arguments in favor of your clients. So does the judge. Most of the time anyway.
VIRGINIA MAN DRAWS 46 MONTHS IN FEDERAL PRISON FOR MORTGAGE FRAUD
FACTS
On June 4, 2010 Ahmad Z. Abbasi of Woodbridge, Va., was sentenced to 46 months in prison, followed by three years of supervised release, and ordered to pay $1,637,412 in restitution. Abbasi pled guilty to conspiracy to commit mail fraud for recruiting unqualified buyers who provided false information to obtain multiple mortgage loans, which were ultimately foreclosed.
From April 2006 to February 2008, Abbasi recruited relatives or associates to fraudulently obtain over $4.5 million in refinanced or new home loans for the purchase of six properties. In furtherance of the scheme, Abbasi and his coconspirators submitted fraudulent loan applications through the U.S. Mail and other means that contained false information regarding the purchasers' income, employment, and INTENT TO OCCUPY THE HOMES AS PRIMARY RESIDENCES. The purchasers fraudulently represented that they worked at the defendant's auto dealership, submitting false pay stubs and W-2s in order to obtain the loans. After these initial purchases were completed, the co-conspirators typically would flip the properties to unqualified buyers at inflated prices, again submitting false information as to the purchasers' income, employment, and occupancy status.
The real estate agent and mortgage broker involved in the transactions received commission payments from the initial sales, and the participants likewise received undisclosed kickback payments from the sales proceeds generated by the fraudulently inflated secondary sales. After the purchasers subsequently defaulted on the mortgage loans, the lenders initiated foreclosure proceedings, selling the properties for substantial losses.
As a result of these fraudulent loans, Abbasi received kickbacks and proceeds from the loans, refinances, or inflated flips totaling approximately $746,324. The borrowers for each of the properties subsequently defaulted on their loans, resulting in approximately $1,637,412 in losses to the lenders. (usattyedva6410)
MORAL
Again note that listing the purchase on the 1003 to be your primary residence is criminal fraud.
THE INFORMATION CONTAINED HEREIN IS NOT LEGAL ADVICE.
AN ATTORNEY SHOULD BE CONSULTED IF YOU DESIRE LEGAL ADVICE
