IS YOUR MORTGAGE LOAN ORIGINATOR COMPENSATION CONTRACT UP TO DATE AND COMPLIANT FOR JAN. 1, 2014?
FACTS
Attorney Sean Thordsen writes: Mortgage Loan Originator compensation as you know
MORAL
Sean has been preparing MLO agreements for our many clients nationwide. If you are in need of an updated MLO contract for compliance by Jan. 1, 2014, call him at 714-662-4990 or 888-667-8529.
MASTERMIND OF A MORTGAGE FRAUD SCHEME SENTENCED TO EIGHT YEARS IN FEDERAL PRISON-FOUR OTHERS INVOLVED
FACTS
On Sept. 30, Mary Armstrong of Las Vegas, who was the mastermind of a mortgage fraud scheme that generated almost $15 million in illegal kickbacks, was sentenced in San Diego to more than eight years in prison. Armstrong pleaded guilty to working with co-conspirators to recruit real-estate investors through ads in the Los Angeles Times, Monster.com, and elsewhere, offering them an opportunity to buy homes using their good credit with no money down.
Armstrong promised to make mortgage payments on their behalf using rental income from the properties. In reality, these so-called investors were straw buyers who were promised $10,000 for each property purchased. Armstrong, who was not a licensed mortgage broker, secured the deals by falsifying loan applications for them. Among other things, the loan applications falsely claimed exorbitant income from fake employers and used sham companies that Armstrong’s then boyfriend, William Fountain, helped to create to verify the borrowers' fabricated employment and rental histories.
Armstrong and her co-conspirators used the loan applications to obtain mortgages with 100% financing and thus avoided having to make any down payments on the properties.
Armstrong earned millions of dollars in profits by convincing the sellers of the properties to inflate the purchase prices by $100,000 or more per property The inflated amounts were allegedly for construction to improve the properties, when in fact no construction work was performed and the funds were diverted to bank accounts controlled by Armstrong's co-conspirators.
Armstrong then had Fountain and other accomplices launder the funds back to her in cash payments or official checks, so that the money could not be traced. In this way, she pocketed nearly $15 million in kickbacks, made few if any mortgage payments and allowed nearly all of the properties to swiftly fall into foreclosure. Armstrong arranged the purchase of about $100 million in loans through the scheme, resulting in estimated losses between $7 million and $20 million to the mortgage lenders and secondary purchasers Fannie Mae and Freddie Mac.
Armstrong received a 100-month prison term, and Fountain were charged with participating in the scheme along with four others: John Allen, a mortgage processor; Justin Mensen, a straw buyer turned recruiter and launderer for funds; Teresa Rose, a real estate agent; and Audrey Yeboah, a tax preparer who generated fake paperwork to support the loans.
Allthe defendants have pleaded guilty to participating in the scheme. Fountain was sentenced to serve 42 months in prison. Allen was ordered to serve a year in custody. Mensen, Rose and Yeboah are scheduled to be sentenced in December. (cyynwsser93013)
MORAL
I guarantee you there are several more of these cases that I am aware of. You will be surprised since they are in San Diego County.
DELAWARE BANK HIT WITH $37,500,000 PENALTY FOR FAILURE TO FILE SARS
FACTS
The Office of the Comptroller of the Currency assessed a $37,500,000 penalty against TD Bank for violations of the Bank Secrecy Act. The OCC found that from April 2008 to September 2009, the bank failed to file suspicious activity reports on activity in accounts belonging to Rothstein, Rosenfeldt Adler PA, the law firm through which Scott Rothstein ran a $1.2 billion Ponzi scheme. These failures by the bank resulted in violations of the OCC’s SAR regulation, which requires banks to file SARs in 30 to 60 days, depending on the circumstances. The failures to file SARs were significant and egregious for a number of reasons, including the number of alerts generated by these accounts and the volume and velocity of funds that flowed through them. The bank ultimately provided more than $600 million in restitution to investors impacted by Rothstein’s Ponzi scheme. The $37,500,000 civil money penalty reflects a number of factors, including the scope and duration of the violations and the financial harm that resulted to the bank. The penalty will be paid to the U.S. Treasury.
The OCC is coordinating its action with the Financial Crimes Enforcement Network and the Securities and Exchange Commission. FinCEN is ordering the Bank to pay a $37,500,000 penalty. The SEC is ordering the bank to pay an additional $15,000,000 penalty and to cease and desist from violating sections 17(a)(2) and (3) of the Securities Act of 1933. (off of comp of curr 9-23-13 )
MORAL
So you think as a retail or wholesale lender or a mortgage broker this cannot happen to you? You are not a bank? Think again and read the repeat at what happened to the companies below. Do you have the Anti Money Laundering Manual? You can order one from Sean Thordsen by calling 888-667-8529
SO YOU DO NOT HAVE AN AML AS REQUIRED BY FEDERAL LAW-LOOK WHAT HAPPENED HERE
FACTS
The Financial Industry Regulatory Authority publicized penalties against three companies as well as four associated individuals that it found had failed to establish and implement adequate procedures for detecting money laundering and other suspicious transactions in violation of the Bank Secrecy Act. The enforcement actions and accompanying announcement demonstrate FINRA’s continued focus on anti-money laundering compliance programs, and why implementing effective procedures will help firms avoid regulatory actions or scrutiny.
FINRA’s announced settlements of three formal disciplinary proceedings that imposed a total of $900,000 in sanctions and suspensions on multiple securities industry professionals.
In each case there was a finding by FINRA that the firms had failed to identify red flags of money laundering activities, and therefore had failed to investigate suspicious activity and/or file a suspicious activity report. Broker-dealers and other financial institutions should consider the following examples of the red flags that went unnoticed by the firms, but that ultimately caught FINRA’s attention.
MORAL
Failure to have an AML in place can be a reason for BRE or DBO to discipline your license as well.
NORTH CAROLINA FUGITIVE IN MORTGAGE FRAUD CASE ARRESTED IN VIRGINIA
FACTS
Fabian David Sparrow, a fugitive in a federal mortgage fraud case was arrested Sept. 27, at an airport in Virginia. Sparrow is one of several charged with conspiracy to commit fraud and obstructing justice out of the U.S. District Court for the Western District of North Carolina. The scheme allegedly sold 1,100 homes in a five-year period through federally insured home loans. The loan applications contained false information about buyers’ ability to repay the loans and inflated the cost of the homes.
Mortgage insurance claims have mounted to more than $24 million net losses and the U.S. has lost more than $16 million in the scheme, according to court documents.
Sparrow was listed as a fugitive in August, after a co-defendant pleaded guilty in the case. A fugitive warrant for his arrest was issued Aug. 7. Sparrow was indicted Aug. 6. (tinesnws93013)
MORAL
Probably will be shipped back in shackles to North Carolina. No bail because flight risk and with the amount of fraud listed and the loss, if convicted, I would say he is looking at quite a bit of time.
THE INFORMATION CONTAINED HEREIN IS NOT LEGAL ADVICE. AN ATTORNEY SHOULD BE CONSULTED IF YOU DESIRE LEGAL ADVICE.
