FACTS
THE NUMBER OF NEWLY DELINQUENT HOME LOANS HAS RISEN FOR TWO STRAIGHT QUARTERS in what could foreshadow another surge in unemployment-related foreclosures.
MORAL
Consult your attorney if you are in arrears and learn the foreclosure process, the tax consequences if any and the possibility of the mortgage holders suing you for the deficiencies after foreclosure. This can assist you in making well-reasoned decisions and should not take more than one hour. It can relieve your anxiety as well.
UPDATE ON FEDERAL REGISTERING UNDER THE SAFE ACT FOR FEDERALLY REGULATED AGENCIES
FACTS
The OCC, Federal Reserve Board, FDIC, OTS, FCA and NCUA (collectively, the agencies) are adopting final rules to implement the Secure and Fair Enforcement for Mortgage Licensing Act (the SAFE Act). The SAFE Act requires an employee of a bank, savings association, credit union or Farm Credit System institution and certain of their subsidiaries that are regulated by a federal banking agency or the FCA (collectively, agency-regulated institutions) who acts as a residential mortgage loan originator to register with the Nationwide Mortgage Licensing System and Registry, obtain a unique identifier, and maintain this registration. The final rule further provides that agency-regulated institutions must require their employees who act as residential mortgage loan originators to comply with the SAFE Act's requirements to register and obtain a unique identifier, and adopt and follow written policies and procedures designed to assure compliance with these requirements.
MORAL
Meaning if you are funding loans to those regulated by these agencies then you as loan originators should know the rules and you as a matter of self protection should have the unique identifier of who you are brokering or funding the loan to at the OCC, FRB, FDIC, OTS, FCA and NCUA regulated financial institutions.
FAIR CREDIT REPORTING ACT TO REQUIRE CREDIT SCORES WHEN ADVERSE ACTION IS TAKEN AGAINST A CONSUMER
FACTS
The Fair Credit Reporting Act has been amended to require that the consumer receive the credit score that assisted the creditor in deciding to take the adverse action.
MORAL
This is one bill you must be well aware of as a lender or a broker. The bill is over 1,200 pages and the regulations to enforce it will be coming out over the next six to 18 months.
THIS IS WHAT HAPPENS WHEN YOU ARE NOT CANDID WITH YOUR BANKRUPTCY ATTORNEY
FACTS
Keith Gary and his ex-wife Stacie Gary divorced in 2002, but both remained in the same house taking care of their two children. In March 2007, they filed a joint Chapter 13 bankruptcy petition. Stacie had received a substantial monetary settlement for a workers’ compensation claim just days before filing for bankruptcy. The Garys failed to disclose the award in their bankruptcy petition and lied about it while testifying under oath at a later creditors’ meeting. After the fraud came to light, both of the Garys were indicted on multiple counts of bankruptcy fraud. Keith pled guilty to three counts for making false statements and taking a false oath. See 18 U.S.C. § 152(2) & (3). Stacie pled guilty to five counts.
In a joint sentencing hearing, the district court sentenced Keith at the bottom of his guideline range to a total of 12 months and one day in prison. Stacie had a significant criminal history, and the court sentenced her at the top of her higher guideline range to 21 months in prison. Out of concern for the Garys’ two children, who faced separation from both parents, the district court tried to ensure that the two defendants would serve their prison terms in sequence. The sentencing was upheld on appeal.
MORAL
A competent attorney can protect you many ways but not against a lie. There are ways the money may have been kept legally by putting it into exempt property such as a home and homestead among others if they were eligible. Now they have felony convictions, lose the right to vote, hold public office, government jobs. Remember, what you tell your attorney is privileged. However, he cannot participate in a fraud. Therefore, be truthful and he may be able to find a legal way for you to keep the proceeds including the avoidance of filing bankruptcy which we have done on several occasions.
PHOENIX MAN CONVICTED ON TEN COUNTS FOR MORTGAGE FORECLOSURE RESCUE SCAM
FACTS
On Aug. 26, attorney general Terry Goddard announced that EDWARD L. CARPENTER, 52, OF PHOENIX, A MINISTER AND FORMER MORTGAGE BROKER, has been found guilty by a Maricopa County Superior Court jury of 10 charges related to his operation of a fraudulent mortgage "rescue" business. Carpenter was convicted on five counts of fraudulent schemes and artifices, all Class 2 Felonies, and five counts of fraudulent schemes and practices, all Class 5 Felonies.
The defendant contacted local homeowners, falsely stating he ran a "mortgage elimination" business that could legally remove the homeowners' names from their mortgages, giving them ownership of the properties free and clear. He charged upfront fees of $1,000 or more.
Utilizing his knowledge of the mortgage system and his religious influence, Carpenter used the homeowners to file fraudulent foreclosure paperwork with the Maricopa County Recorder's Office. These filings were designed to cloud the title, confuse title companies, and cause mortgage companies to fund loans, portions of which were obtained by Carpenter. He received more than $257,398 in illegal proceeds from this scheme.
Carpenter has been taken into custody and faces sentencing on Oct. 7 before Judge Janet Barton. For sentencing purposes, the jury also found the state had proven two aggravating factors for each of the 10 counts.
MORAL
I would say he is looking at a lot of hard time come Oct. 7.
CALIFORNIA COMMISSIONER OF DRE STATES WILL NOT NECESSARILY AUDIT BROKER IF BROKER TURNS IN ROGUE SALESPERSON
FACTS
“Benefit of the Doubt Program.” Establish clear protocols that allow the broker who fires an employee for cause to notify the DRE without fear that the DRE will automatically investigate the broker for lack of supervision. Existing law requires that a broker notify the DRE when the broker discharges an employee for a violation of the real estate law. The law also requires the broker provide the DRE a detailed written description of the reasons the employee was fired. The Benefit of the Doubt Program will make certain that the reporting broker will not automatically be named as a suspect. All cases involving brokers who notify the DRE of the termination of a licensed employee for cause will be centralized from Sacramento reviewing evidence and facts through a single lens. This will ensure consistency and promises that statewide investigative and compliance standards will be employed.
The program also provides for an isolated investigation focusing on alleged salesperson misconduct UNLESS THE FACTS WARRANT INVESTIGATION EXPANSION. The Benefit of the Doubt process guarantees that investigators will review the agent’s history with prior brokers and look at any new current broker as well.
If the reporting broker is found to be without gross negligence or fault, no DRE action would be taken against him or her. A reporting broker may receive a corrective action letter, which is not a public record, if technical compliance issues are uncovered despite the fact that the broker properly supervised agents either directly or through office manager designations, took actions to remedy problems, has office procedures and controls in place, and personally or through the designated office manager reviewed business activities and management reports.
Formal disciplinary action against the reporting broker would be considered when circumstances exist, such as active broker participation in unlawful acts, or when guilty knowledge is substantiated, if the reporting broker is routinely absent from the office without designating an office manager, the broker fails to oversee the office manager, no office procedures are established, or there is a demonstrated lack of oversight. Additional factors include ignoring prior corrective action letters, or if a rent-a-broker situation exists.
Prior brokers, or in some cases, new current employing brokers, will be included in the investigation process to determine if a pattern exists which can lead to a maximum penalty against the agent. New employing brokers may also be contacted to establish the applicable disciplinary action proceedings against the previous broker, to substantiate and support reporting broker findings, to promote broker reporting, and to deter agent misconduct.
Prior brokers, or in some cases, new current employing brokers, will be included in the investigation process to determine if a pattern exists which can lead to a maximum penalty against the agent. New employing brokers may also be contacted to establish the applicable disciplinary action proceedings against the previous broker, to substantiate and support reporting broker findings, to promote broker reporting, and to deter agent misconduct.
The specific governing laws and regulations for this program are Business and Professions Code Sections 10178, 10179 and 10177(h), and Section 2725 of the Regulations of the Real Estate Commissioner.
MORAL
This is straight from the commissioner’s website. Please read it very carefully and if you are one of our clients or a CAMP member and have questions give me a call.
CALIFORNIA FORECLOSURE LAW CHANGED TO ALLOW NOTICE OF SALE TO BE SERVED AND PUBLISHED SOONER
FACTS
SB 1221, Calderon. Mortgages: notice of sale.
Existing law requires that, upon a breach of the obligation of a mortgage or transfer of an interest in property, the trustee, mortgagee, or beneficiary record a notice of default in the office of the county recorder where the mortgaged or trust property is situated and mail the notice of default to the mortgagor or trustor. After the lapse of not less than three months from the filing of the notice of default, the mortgagee, trustee, or other person authorized to take the sale is required to give notice of sale, stating the time and place, as specified.
This bill permits a mortgagee, trustee, or other person authorized to take sale to file a notice of sale up to five days before the lapse of the three-month period provided that the date of sale is no earlier than three months and 20 days after the filing of the notice of default. The bill would make a conforming change.
MORAL
It does not let the lender foreclose any sooner BUT it lets the lender scare the heck out of you sooner so you the homeowner can make mistakes faster. See your attorney first, it will be worth the expense and in the long run the money you save will be less than the fee you pay the attorney.
FORMER CALIFORNIA ATTORNEY HIT WITH $1 MILLION SETTLEMENT FOR PHONY FORECLOSURE RELIEF LAWSUITS
FACTS
Former Los Angeles attorney MITCHELL ROTH has agreed to settle charges that he allegedly collected fees from 2,000 debt-entrenched homeowners with promises of foreclosure relief but only filed "frivolous and phony" lawsuits, according to the California attorney general's office. Roth resigned from the state bar in April 2009 and now lives in Florida.
On Aug. 24, ROTH HAS AGREED TO PAY $1 MILLION IN RESTITUTION TO HOMEOWNERS PLUS $125,000 IN PENALTIES, according to the settlement. He did not admit to any wrongdoing as part of the settlement. Roth's suits did not result in foreclosure relief, but instead "left 2,000 desperate homeowners in even greater debt," attorney general Jerry Brown said in a statement.
The settlement brings to a close the state's charges against Roth. But his former business partner, Paul Noe, is still in litigation on the charges, said Evan Westrup, a spokesman for the attorney general's office.
The complaint was filed in 2009 against Roth, Noe and Noe's company, UNITED FIRST INC., based in Nevada. Noe had previously been convicted of wire fraud, Westrup said.
According to the complaint, Roth and Noe told homeowners that if they worked with United First and hired Roth to file suits on their behalf, they could lower or eliminate their mortgage debt and save their homes. Homeowners paid $1,800 in upfront fees and at least $1,250 more each month, according to court documents. The homeowners also agreed to pay 50% of the cash value of any settlement Roth was able to reach, the documents said. After collecting upfront fees, Roth filed lawsuits on behalf of the homeowners, arguing that the borrowers' loans could be deemed invalid.
The mortgages had been bought and sold so many times on Wall Street, the suits said, that the true ownership of the loan could not be determined, according to court documents. Once the lawsuits were filed, Roth often failed to appear at court hearings or file other required paperwork on time, but he and Noe continued to collect monthly fees from homeowners, the complaint said.
NONE OF THE SUITS ROTH FILED ENDED IN VICTORY JUDGMENTS FOR THE HOMEOWNERS, ACCORDING TO THE COMPLAINT.
MORAL
If it sounds too good to be true, then it generally is not true. I wonder if Roth has the million dollars to pay.
ON ANOTHER NOTE, SIMILAR TO THE ROTH CASE ABOVE, THE FDIC IS ONGOING WITH ITS’ INVESTIGATIONS AND LAWSUITS AGAINST BROKERS AND WHOLESALE LENDERS
FACTS
We are aware of at least two more subpoenas in Southern California alone asking for the moon in records from brokers and lenders that are administrative in nature as a prelude to a lawsuit. These subpoenas are served before a lawsuit is even filed. They go to determine wealth and ability to respond in damages as well as asking for records. If you have been served do not ignore it but see your legal counsel immediately. Some are out of Washington, D.C., and require response there, some are out of Minnesota and require response there and some are out of Georgia and require response there. Remember do not ignore but do see your attorney. These are all federal subpoenas and my best guess is they primarily go to the “stated income” loans that were funded and now are defaulted.
MORAL
Good luck if you have one because they are a lot of work for us to assist the client and keeping the matter civil. The word “civil” is a double entendre in case you did not notice.
FEDERAL AGENTS SEIZE OVER ONE HALF MILLION DOLLARS FROM OCEANSIDE, CALIFORNIA, LOAN MODIFICATION COMPANY
FACTS
The government seized about a half-million dollars in assets from the bank accounts of two Oceanside businesses dealing in loan modifications for struggling homeowners.
DEAN CHANDLER, a lawyer who owns the 1ST AMERICAN LAW CENTER IN DOWNTOWN OCEANSIDE, and GARY BOBEL, WHO OWNS THE LEAD SOURCE, a marketing business on El Camino Real that runs a call center and performs other services for 1st American, recently filed a joint motion for the return of the assets, which were seized on June 2, 2010 when the FBI raided the offices.
Chandler has stated that 1st American has been unable to pay employees, buy new national television ad time or process client paperwork since the raid. Assistant U.S. attorney Valerie Chu, a prosecutor with the major fraud unit of the U.S. attorney's office in San Diego, said she will oppose the motions. There have been no indictments, and the federal search warrants in the case remain sealed, but Chandler allegedly said the government suspects him of mail fraud, wire fraud, money laundering and conspiracy, crimes he vehemently denies.
Before the business was raided, numerous Internet consumer review sites contained allegations from unhappy customers that the business was a "scam," pocketing an advance fee, then failing to return calls or help with loan modifications.
Chandler said those allegations were false. He said the company has a money-back guarantee on its $3,495 loan modification and has returned about $750,000 since opening in April 2009. He said he has provided the government with documents proving that customers were given refunds.
Chandler said the company had achieved a satisfactory loan modification for 50% to 60% of its approximately 3,000 clients. However, the Better Business Bureau has given the 1st American Law Center an "F" rating, with 80 complaints filed against the business in the last year.
According to motions by Bobel and Chandler, the FBI seized about $142,736 from a joint account owned by Bobel's Lead Source and Chandler's law center. According to Chandler's motion, agents seized almost $20,000 from a Citibank account in 1st American's name and about $10,800 in a Bank of America account held by the Chandler Law Center. Agents also seized about $320,000 from separate accounts belonging to Bobel, documents state.
MORAL
The motion was heard on Aug. 26 in San Diego. The ruling as of Aug. 26 has not been issued. If you know the people or want to know more about this case let me know. It is very active in San Diego.
LOS ANGELES MORTGAGE BROKER GETS 6.5 YEARS IN FEDERAL PRISON FOR MORTGAGE FRAUD
FACTS
After pleading guilty, MARK ALAN ABRAMS, 49, of downtown Los Angeles, a former mortgage broker who helped orchestrate a massive mortgage fraud scheme that caused well over $40 million in losses was sentenced to 78 months in federal prison. In addition to the prison term, Judge Pregerson ordered Abrams to pay more than $41 million in restitution to two federally insured banks.
Abrams’ sentencing followed his guilty pleas to conspiracy to commit bank fraud and loan fraud, bank fraud, making a false statement on a tax return and obstruction of justice. Abrams was one of two men who led a massive mortgage fraud that involved properties across California. In addition to being a leader of the scheme, Abrams engaged in active efforts to cover up his role and destroy evidence when the fraud started to come to light. Abrams’ obstruction in a related civil case was so serious that a Judge Pregerson found him in contempt of court and put him in jail for 30 days.
A real estate developer, CHARLES ELLIOTT FITZGERALD, who along with Abrams ran the fraud scheme, was previously sentenced to 14 years in federal prison.
Abrams and Fitzgerald ran a scheme that obtained inflated mortgage loans on homes in Beverly Hills, Bel Air, Holmby Hills, Malibu, Carmel, Mill Valley, Pebble Beach and La Jolla. Members of the conspiracy—real estate brokers, appraisers and mortgage bankers, who all shared in the profits from the fraudulent sales—sent false documentation, including bogus purchase contracts and appraisals, to the victim banks to deceive them into funding mortgage loans that were hundreds of thousands of dollars more than the homes actually cost. Lehman Brothers Bank alone was deceived into funding more than 80 such inflated loans from 2000 into 2003, resulting in tens of millions of dollars in losses. A total of 11 real estate professionals have been convicted of federal charges related to the scheme.
MORAL
Note that Abrams received 6.5 years and Fitzgerald received 14 years in federal prison. Note the loans went back to 2000. The government is chasing loans from the year 2000 to present. I suggest if you were involved in any creative loans from 2000 you consult with your attorneys now before the federal authorities consult with you later. Read the cases in this e-alert carefully and note how many government agencies are chasing wholesale lenders, brokers and borrowers. We have cases where the FDIC is chasing people with subpoenas BEFORE a lawsuit is even filed going back ten and twelve years.
MONTEBELLO, CALIFORNIA, BROKER GETS FOUR YEARS IN STATE PRISON FOR FRAUD
FACTS
On Aug. 6, RAUL ALTAMIRANO, 53, a convicted con man who operated a Montebello realty company was sentenced o four years in state prison. He had pleaded guilty on June 14, 2010 to one count of grant theft and admitted an allegation that the taking was more than $150,000.
Los Angeles Superior Court Judge James Bianco ordered Altamirano to pay $301,470 in restitution. Bianco dismissed three counts—grand theft, loan application fraud and filing a false document—under the terms of the plea agreement.
Altamirano was charged on May 13 for defrauding a victim in 2007 who had sought the defendant’s assistance for the purpose of taking $100,000 out of the equity of her home. Without the victim’s knowledge, Altamirano went on to take out two loans worth $429,000, stripping the home of all its equity. The victim never received any money, prosecutors said.
Altamirano, owner of WINGS REALTY INC., was the one-time subject of investigative news reports for allegedly baiting victims through foreclosure and loan modification seminars. Altamirano began holding seminars shortly after pleading no contest to one count of grand theft and being placed on five years probation in a 2004 real estate fraud case.
MORAL
He surrendered his sales license in June 2004. License for Wings Realty revoked January 2008.
TRACY, CALIFORNIA, PAIR INDICTED BY GRAND JURY FOR FRAUD
FACTS
An indictment issued the week of Aug. 9 charged CHIEF EXECUTIVE OFFICER LEESA MARIE WARD and colleague Alison Ann Jensen, whose Ward Real Estate Brokerage and Foreclosure Services located on Central Avenue, with tax evasion, fraud and grand theft causing a loss to investors of $4.5 million.
Ward and Jensen allegedly promised to provide large returns to people who loaned the real estate business money to refurbish foreclosed homes. When investors stopped receiving interest payments in late 2006, several began to file lawsuits against the firm. Ward Real Estate closed up a year later after action by the state of California. Ward, a resident of Lodi, was arrested while Pleasanton resident Jensen turned herself in. Both were being held on $3 million bail.
MORAL
The rule is that generally the first to sue gets some if not all their money back. Those that come in second and later get nothing. I wonder who sued first. Remember, they are innocent until proven guilty.
VISTA, CALIFORNIA, BOOKKEEPING SERVICE ALLEGEDLY CREATES TAX RETURNS FOR MORTGAGE LOANS
FACTS
AGUILERA’S BOOKKEEPING & INCOME TAX was in Vista, Calif. Federal prosecutors say the business was the center of a mortgage fraud scheme that churned out scores of bogus W-2 forms, fake pay stubs and false tax records for a network of almost two dozen real estate agents and loan officers. The documents helped secure about $55 million in fraudulent loans from banks and mortgage companies between 2002 and 2008 to purchase homes in San Diego County and the San Francisco Bay Area, court records show.
The Aguilera case centers on owner ROBERTO AGUILERA, an enrolled tax agent with the Internal Revenue Service and licensed real estate agent with the state. The complaint filed against him says he would prepare letters falsely stating buyers were self-employed and that he had prepared tax returns for them. He allegedly did this for as little as $75 per letter. The documents were used to support applications for mortgages that also included inflated income and other bogus data.
In one instance, it is alleged a real estate agent faxed a letter to Aguilera on May 12, 2005, asking him to fabricate two years of tax returns for a prospective borrower, showing a net income of $8,500 per month. “OK Robert, use your imagination,” wrote the agent, MYLENE FUNK of Oceanside, court documents recount.
Aguilera pleaded guilty to wire and bank fraud in June and is awaiting sentencing. Funk has pleaded not guilty to an indictment unsealed in June that charges her and 18 others, including Aguilera’s brother Benjamin, with mail and wire fraud.
MORAL
I trust Funk has good legal counsel because since Aguilera pleaded guilty it is almost certain he is cooperating with authorities.
IN CALIFORNIA IF YOU DO NOT PURCHASE TITLE INSURANCE OR ABSTRACT OF TITLE DO NOT EXPECT THE TITLE COMPANY TO PAY YOU ON THE BASIS OF A PRELIMINARY TITLE REPORT
FACTS
In this case the plaintiff had lost $1,000,000 due to his bid on the property believing the foreclosure sale was on a first deed of trust when in fact it was a second deed of trust. He bid the $1,00,000. It was accepted and thereafter he discovered a first deed of trust for about $1.6 million. He ultimately sold the property and suffered a one million dollar loss.
The plaintiff and appellant, Ben Soifer, then sued the title company for the loss and lost at the trial level. He appealed the judgment entered after the trial court sustained a demurrer to his first amended complaint without leave to amend. In Southland Title Corp. v. Superior Court (1991)
We hold that a plaintiff cannot recover for errors in a title company's statements regarding the condition of title to a property in the absence of a policy of title insurance or the purchase of an abstract of title. We therefore will affirm the judgment.
MORAL
What is amazing here is one million dollars is spent to buy the property and yet the buyer does not spend a few hundred dollars to get an abstract of title. Seems to be pennywise and pound foolish as the old proverb goes.
MASSACHUSETTS DEVELOPER BUSTED FOR MORTGAGE FRAUD
FACTS
On Aug. 26, MICHAEL DAVID SCOTT, 44, of Mansfield, a Roxbury developer, was charged in federal court with 62 counts of wire fraud, bank fraud, and money laundering in connection with a multiyear, multiproperty mortgage fraud scheme.
The indictment alleges that from September 2006 to April 2008, SCOTT committed fraud in connection with the purported sale of some 36 condominium units in Boston. SCOTT and his associates bought multifamily dwellings promising to convert them into condominiums, and then resold the individual units to various straw buyers. SCOTT arranged for the buyers to obtain mortgage financing by falsifying key information, such as the buyers’ income, assets, downpayment and residence. In most instances the buyers obtained residential mortgage loans for properties that they never intended to live in. While the lenders (mortgage companies and one bank) were led to believe they were lending to residential purchasers, SCOTT recruited buyers by representing the purchases to them as a no-money-down “investment” opportunity. The “investors” were assured that they would not have to make any downpayments, pay any closing costs, or pay expenses relating to the maintenance of the units, but would share in profits when the units were sold.
If SCOTT is convicted on these charges, each count of bank fraud carries a sentence of up to 30 YEARS IN PRISON to be followed by five years of supervised release and a fine of $1 million. Each wire fraud count carries imprisonment up to 20 years followed by three years of supervised release, and a $250,000 fine. The money laundering counts each carry a maximum punishment of 10 years in prison, followed by three years of supervised release and a fine of $250,000.
The details contained in the indictment are allegations. The defendant is presumed to be innocent unless and until proven guilty beyond a reasonable doubt in a court of law.
MORTGAGE FRAUD IS A KEY FOCUS OF THE DEPARTMENT OF JUSTICE.
MORAL
I have predicted this for the last three years. It is becoming more and more true. The federal people in the East are now working on the 2006 mortgages. The civil cases being pursued by FDIC against brokers are actually going back to 1999. Yes that is 1999. Twelve years back in time to sue brokers over fraud loans. This is no joke and we are defending them.
NEVADA SENTENCES MICHAEL SINCLAIR TO PRISON FOR MORTGAGE FORECLOSURE RESCUE SCAM
FACTS
On Aug. 24, MICHAEL SINCLAIR was sentenced in Las Vegas in connection with his involvement with a mortgage foreclosure rescue company, FEDERAL HOUSING AID, whose operation included a call center in the Philippines. District Court Judge Michael Villani imposed a sentence of 30 to 90 months in the Nevada State Prison, but suspended the sentence and placed Sinclair on probation for a period not to exceed five years. Sinclair entered a plea to one count of Mortgage Lending Fraud and is required to pay half of the restitution owed prior to sentencing. He is required to pay restitution in the amount of $29,853 to the victims of his crime as well as another $300 for the cost of his extradition from the Philippines.
Through Federal Housing Aid, Sinclair would contact homeowners facing foreclosure and offer to stop the foreclosure proceeding and save their credit. The victims entered into an agreement to pay an upfront fee ranging from $700 to $1,500 as compensation for affecting a solution to the foreclosure. Once the victims forwarded these fees to Federal Housing Aid, no further action was taken. The homeowners, some of whom were over the age of 60, were never provided with assistance in resolving their problems and, in fact, ended up losing their homes.
MORAL
Felony conviction. Seems like only $29,843 involved which is a low amount. State prosecution instead of federal. I would say he did pretty well considering the amount of prosecutions pending.
NEW YORK REAL ESTATE ATTORNEY AND FORMER LOAN OFFICER GUILTY OF MORTGAGE FRAUD
FACTS
On Aug. 26, RAVI PERSAUD, a real estate attorney, and GEORGE ESSO, a former loan officer, were found guilty yesterday of participating in a multimillion-dollar mortgage fraud scheme through GUYAMERICAN FUNDING Corp., a mortgage brokerage located in Queens, N.Y. The scheme involved the use of numerous fraudulent loan applications designed to trick banks into lending money to unqualified borrowers for the purchase of residential properties in the New York City area. In total, ESSO AND RAVI PERSAUD WERE CHARGED ALONG WITH EIGHT OTHER DEFENDANTS IN A SCHEME THAT DEFRAUDED BANKS OUT OF MORE THAN $23 MILLION IN HOME MORTGAGE LOANS.
According to the Superseding Indictment and the evidence introduced at trial before U.S. District Judge SHIRA A. SCHEINDLIN:
RAVI PERSAUD and ESSO participated in a massive mortgage fraud scheme operated through a branch office of GuyAmerican Funding located on Liberty Avenue, in Jamaica, N.Y. ESSO was a loan officer at GuyAmerican and a licensed real estate broker who received thousands of dollars in commissions based on fraudulent loan applications submitted to lenders. In particular, ESSO was personally involved in submitting loan applications on behalf of borrowers that contained numerous false statements relating to the borrowers’ income, employment and residence. For example, ESSO and another loan officer, PEGGY PERSAUD, agreed to list fake jobs on the borrowers’ loan applications in order to convince banks that the borrowers made more money than they actually did and were therefore a good credit risk. ESSO directly participated in obtaining over $1 million in fraudulent mortgages through false statements.
Several of the co-conspirators charged as part of the scheme worked with GuyAmerican loan officers to recruit homeowners in financial distress who were willing to sell their homes. These co-conspirators used “straw buyers”—persons who posed as home buyers in exchange for a fee, but who had no intention of living in the mortgaged properties—to perpetrate the scheme. The co-conspirators then arranged home sales between the distressed sellers and the straw buyers, frequently using the same straw buyer to obtain multiple mortgage loans, and all using fraudulent representations about the supposed purchasers’ net worth, employment and income.
RAVI PERSAUD acted as the closing attorney in connection with many of these fraudulent transactions, including on loans in which the same straw buyer was used to purchase multiple properties within a short period of time. As the closing attorney, RAVI PERSAUD was supposed to represent the interests of the bank in connection with the real estate transaction and distribute the loan proceeds according to a schedule that he provided to the bank. RAVI PERSAUD acted at the behest of his coconspirators in the scheme, receiving the loan proceeds into his attorney account and subsequently making illicit payments from the loan proceeds to his co-conspirators. RAVI PERSAUD also assisted the scheme by writing checks to co-conspirators in order to set aside six months worth of mortgage payments from the closing proceeds, so that the lenders would not discover the scheme. He further concealed these payments by sending false documents to the banks regarding how the loan proceeds were being distributed.
ESSO, 38, of Saint Albans, N.Y., was convicted of one count of conspiracy to commit bank and wire fraud and one count of bank fraud, and faces a maximum PENALTY OF 60 YEARS IN PRISON.
RAVI PERSAUD, 44, of Glen Head, N.Y., was convicted of one count of bank and wire fraud and three counts of bank fraud. He faces a maximum sentence of 120 years in prison.
Both defendants will be required to pay restitution to the victims of their offenses, and to forfeit the proceeds of their crimes.
PEGGY PERSAUD, ORETTE KILLIKELLY and ELTON LORD previously pled guilty.
The case against CHEDDI GOBERDHAN is still pending.
MORAL
As I have been saying (it seems like forever) the federal government is not giving up. In fact, it is getting more intensive and in the case of WaMu loans, the independent examiner in the Washington Mutual Delaware bankruptcy has requested and apparently received subpoena power. This means the examiner has the power to subpoena anyone who has brokered or sold mortgage loans to WaMu SINCE THE INCEPTION OF THE BROKER AND BORROWER RELATIONSHIP WITH WaMu.
VIRGINIA LOAN BROKER PLEADS GUILTY TO MORTGAGE FRAUD
FACTS
On Aug. 26, MATTHEW A. KIM, 39, of Alexandria, Va., pleaded guilty to engaging in mortgage fraud as a loan broker for two local mortgage companies. Kim pled guilty to one count of bank fraud and faces a maximum penalty of 30 years in prison and full restitution when he is sentenced on Nov. 22, 2010.
Kim was a loan processor and mortgage broker with ALDA HOME MORTGAGE in Annandale, Va., from 2002 until 2006. While at Alda Home Mortgage, Kim falsified loan applications for under-qualified borrowers, using phony W-2s and phony bank statements to support the borrowers’ inflated income and bank account figures. In 2007, using the same deceptive practices, Kim began originating fraudulent loans at ONYX FINANCIAL SERVICES, also in Annandale. In total, at both Alda Home Mortgage and Onyx Financial Services, Kim’s fraudulent practices brought about mortgage losses of approximately $1.9 million to a number of financial institutions.
MORAL
Remember I have been telling you that the government has 10 years to bring charges for criminal mortgage fraud. Did you notice the government went back to 2002? That is eight years ago.
