CALIFORNIA JURY CONVICTS MAN AND HIS MOTHER OF MORTGAGE FRAUD
FACTS
On March 25, jurors in a Riverside County, Calif., courtroom convicted Hendrix Montecastro and his mother, Helen Pedrino, on hundreds of felony charges in a case involving a $142 million Stonewood mortgage and securities investment scam.
Montecastro was convicted of 304 out of 317 felony charges, including a white-collar crime enhancement for theft or embezzlement of more than $100,000 from any of 26 victims named in the case.
Pedrino was found guilty of all 54 counts, including the white-collar crime enhancement, for her role as a "master recruiter" of five of those victims.
The prosecutor said Montecastro faces a maximum sentence of about 100 years and Pedrino 34 years in a state prison when they are sentenced April 22.
Charges against the co-defendants ranged from grand theft and illegally selling securities and commodities to providing false information and destruction of evidence amid a federal probe.
The scam cost the victims about $3.6 million in assets, including their homes and savings.
James Duncan, the mastermind of the scheme and Maurice McLeod, a chief lieutenant in it, struck plea bargains with prosecutors' in January 2011 to serve less prison time on fewer charges in exchange for testimony in the case.
Duncan faces 19 years and eight month in jail; McLeod is expected to get a 12-year state prison sentence cut in half.
Some of the other co-conspirators−Cindi Kelly, Charlie Sung Choi and Thuan Nhan Du−are serving probation through January 2014. (prstel32613)
MORAL
Cooperation is everything. The master mind may do six years and Pedrino and Montecastro are looking at 34 years to 100 years in prison for not cooperating. Well you know what they say. A person representing themselves, has a fool for a client and an idiot for a lawyer.
SEVEN MORE INDICTED IN SACRAMENTO FOR MORTGAGE FRAUD
FACTS
On March 28, seven people were charged with mail fraud, wire fraud, and making false statements in connection with a mortgage fraud scheme involving the purchase of at least 23 homes. A federal grand jury returned an indictment charging Aleksandr Kovalev, Arthur Chang Menefee, Adil Qayyum, Jannice Riddick (a/k/a Jannice Frazier, Florence Francisco, Elsie Pamela Fuller and Leona Yeargin. Fuller and Yeargin were also charged with aggravated identity theft for using stolen identification to purchase a home as part of the mortgage fraud scheme.
According to the indictment, Kovalev developed, built, and sold property in Sacramento. In a declining real estate market, Kovalev; Menefee, a licensed real estate salesperson; Riddick, a licensed real estate salesperson; and Francisco, a licensed mortgage broker, recruited others with sufficient credit scores to act as straw buyers for residential properties. Kovalev, through Menefee, Riddick, Francisco, and Qayyum, made cash incentive payments to the straw buyers. These payments were concealed from the lenders. In order to qualify for the mortgage loans, Menefee, Riddick, Francisco, and Fuller also allegedly prepared fraudulent loan applications to lenders, falsely stating the straw buyers’ incomes, assets, and intents to occupy the homes as their primary residences. Further, Yeargin and Fuller used the identification of another individual without that individual’s knowledge or authorization to purchase a property from Kovalev as part of the mortgage fraud scheme. Additionally, Menefee and Qayyum participated in a similar mortgage fraud scheme with respect to properties sold by individuals other than Kovalev.
If convicted of wire or mail fraud or of making false statements on a loan application, Kovalev, Menefee, Qayyum, Riddick, and Francisco face a maximum penalty of 30 years in prison and a $1 million fine. Fuller and Yeargin face a maximum penalty of 20 years in prison and a $250,000 fine for the charges of wire and mail fraud and a consecutive two-year sentence for the aggravated identity theft counts. (usattysacraedca)
MORAL
Same old story. These investigations take two to three years because of the amount of paper that needs to be subpoenaed. During that time one or more of these defendants would have found out about it. That is when they should have seen the attorney. Waiting until after the indictment is like getting shot and then seeking first aid. Better to have put on the bulletproof vest first. Don’t you think?
TWO COLORADO MEN GO TO FEDERAL PRISON FOR MORTGAGE FRAUD
FACTS
In March 2013 Michael Jacoby was sentenced to 108 months and Derek Zar to 63 months in a federal prison for a mortgage fraud scheme. In addition, Jacoby was ordered to spend five years on supervised release and pay $2,979,712 in restitution. Zar was ordered to spend three years on supervised release and pay $1,417,902 in restitution.
Susanne Zar, the third defendant in the case, is scheduled to be sentenced on July 2, 2013.
Between January 2005 and continuing through September 2006, the defendants knowingly devised and intended to devise a scheme to defraud various financial institutions and other commercial lenders that funded residential mortgages and to obtain moneys, funds, and other property owned by and under the custody and control of those financial institutions and commercial lenders by means of materially false and fraudulent pretenses and representations. In furtherance of the scheme, one or more of the defendants participated in real estate transactions involving 18 properties located in Colorado.
It was part of the scheme that Derek Zar and a co-defendant bought homes at purported discounted rates because they paid cash. Jacoby often lent them the cash for these initial purchases and was then was paid back with interest. Furthermore, Jacoby acted as the Realtor for the sales. Derek Zar and a co-defendant usually bought the homes through limited liability companies they owned and operated and then resold these homes within a very short time period to themselves as individuals at inflated prices financed by mortgage loans. Additionally, Susanne Zar often refinanced the homes with mortgage loans based on an inflated value. Sometimes, the inflated value was supported by false documentation showing a higher initial purchase price than the actual initial purchase price. The defendants also prepared and submitted and caused to be prepared and submitted applications for loans which contained various materially false and fraudulent representations.
The co-defendants caused to be submitted false appraisals for some of the properties. Jacoby usually recommended an appraiser to the mortgage broker for the loan approval. He supplied the appraiser with inflated values of comparable homes or omitted information concerning the home sales so the appraiser would overvalue the current home. At closing, through a grant program, the defendants funneled money back to the home buyer who was one of the defendants. They concealed from the lenders and other parties associated with the transactions that the home buyer was receiving a kickback for buying the home. (usattyco31913)
MORAL
It is more likely than not, that the third party to be sentence later cooperated with the authorities in hopes the prosecutor would get her a lighter sentence (which remains to be seen).
ONE MORTGAGE APPLICATION BY ONE BORROWER IN CONNECTICUT IS ONE FELONY CONVICTION
FACTS
On April 4, John J. Doran pleaded guilty before United States Magistrate Judge Donna F. Martinez in Hartford to one count of making false statements to influence a bank in connection with a mortgage application.
In May 2007, Doran applied to Bank of America for a mortgage to purchase a condominium in New Haven. In connection with the application, Doran submitted a false individual tax return that indicated that his adjusted gross income for 2004 was $464,197 when, in fact, the actual 2004 tax return Doran filed with the Internal Revenue Service showed an adjusted gross income of negative $69,298. Doran also submitted a fictitious sale contract for his personal residence in Deep River and a false bank statement.
In pleading guilty, Doran also admitted that, in March 2005, he submitted a false individual tax return in connection with a $500,000 refinance loan application with JP Morgan Chase. The tax return indicated that his adjusted gross income for 2003 was $296,735 when, in fact, his actual 2003 tax return showed an adjusted gross income of negative $81,911. Doran also admitted that, in March 2007, he submitted false individual 2003 and 2004 tax returns in connection with a loan application to Wachovia Dealer Services to finance the purchase of a yacht.
Doran is scheduled to be sentenced by United States District Judge Robert N. Chatigny on June 25, at which time Doran faces a maximum term of imprisonment of 30 years and a maximum fine of approximately $1.9 million. As part of his plea agreement, Doran has agreed to pay restitution of $991,883.65. (usattyct4413)
MORAL
Application for one mortgage loan equals one felony conviction.
SIX MORE SENTENCED FOR MORTGAGE FRAUD IN MICHIGAN
FACTS
On March 28, six defendants indicted in connection with the CDC Investments mortgage fraud scheme were sentenced to prison, as indicated below:
Eric Williams, a Realtor, was sentenced to 12 months in prison.
CDC co-founder Aaron Teachout was sentenced to 51 months in prison.
Isaac Modert, another founding member of CDC, was sentenced to 60 months in prison.
Rick Artibee, a mortgage loan officer, was sentenced to 15 months in prison.
Dennis Sare, a title and closing agent, was sentenced to 15 months in prison.
Nichole Buda, a mortgage borrower, was sentenced to 18 months in prison.
A seventh defendant, Mario Giannandrea, is scheduled to be sentenced on May 28.
In most cases, the defendants received a reduced sentence from Judge Jonker because they had provided information to federal investigators about mortgage fraud in the Lansing, Mich. area.
The fraud scheme alleged in the Aug. 2, 2012 indictment charged the defendants with engaging in an “equity stripping” scheme involving approximately 35 homes. In the scheme, banks would be asked to finance sham real estate purchases that were designed to extract funds from lenders, which would then be split up among the participants in the scheme to be used for their own benefit. The mortgages were not paid and went into foreclosure, resulting in losses of over $3 million since the lenders were only able to recover a fraction of the outstanding mortgage balances when they sold the properties after foreclosure. (ndmi32813)
MORAL
All fun and games until they get caught. Notice cooperation gave then a lesser sentence. But note how much time they still have to spend in a federal prison. A prison with no parole system.
NEW JERSEY WOMAN INDICTED FOR MORTGAGE FRAUD
FACTS
On April 3, Rashika J. Moon was charged by information with participating in a mortgage fraud conspiracy involving more than 100 Philadelphia properties and more than $20 million in fraudulent loan proceeds. Moon is charged with conspiracy to commit loan and wire fraud, false statement in connection with a Federal Housing Administration loan, and loan fraud. The information also seeks the criminal forfeiture of over $1.7 million from Moon.
The information alleges a massive mortgage fraud conspiracy that operated between May 2004 and February 2009, primarily in the West Philadelphia section of the city of Philadelphia. Moon is alleged to have been associated with Krew Settlement Services of Philadelphia, which is alleged to have been at the center of the conspiracy. Moon is alleged to have had the legal authority to sign checks from Krew’s bank account.
Moon is also alleged to have directly participated in numerous fraudulent loan applications by either purchasing properties in her name based on the submission of false loan applications and other false documents or by later selling many of those properties to straw buyers whose identities and fraudulent information were used to obtain other loans. Many of the fraudulent loan applications are alleged to have included falsely inflated sales prices and falsely inflated appraisals, causing the lenders to loan more money than the properties than they were truly worth. Most of the mortgages were unpaid and most of the properties fell into foreclosure.
According to the information, co-conspirator Eric Ponder, who was charged elsewhere, held himself out as a real estate developer and helped cause the submission of numerous fraudulent loan applications that resulted in mortgages being unwittingly issued by various banks by, making false statements on loan applications in his own name and helping secure mortgages in the names of others by recruiting straw buyers whose identity and fraudulent information was used to obtain the loans. Ponder is also alleged to have submitted false invoices for construction work never performed on the properties in order to justify payments to him from the settlement proceeds of loans in the names of the straw buyers.
The information also alleges Willie G. Manley, charged elsewhere, was an accountant who created false income documents, such as W-2 forms, paystubs, and Form 1040 income tax returns, which were submitted to lenders. The conspiracy also included grossly inflated appraisals, false title insurance policies, false receipts for home repairs that were never performed, and straw buyers who knowingly allowed their names and identities to be used to purchase the properties and defraud the banks.
If convicted, Moon faces a maximum possible sentence 37 years’ imprisonment, five years’ supervised release, a fine of $1,500,000 or twice the value of the property involved in the transactions, and a $300 special assessment. (usattyedpa4313)
MORAL
The filing of information instead of an indictment usually mean a “deal” has been cut with the United States Attorney’s office. The second item to note is that the federal prosecutors are prosecuting for loans funded in 2004, nine years ago. Did anyone reading this fund questionable loans nine years ago? If so you may want to call us to advise on your rights and defenses to protect yourself.
TWO IN VIRGINIA INDICTED FOR $20 MILLION MORTGAGE FRAUD
FACTS
A federal grand jury has charged Robert Mikail and Ging-Hwang “Felicia” Tsoa with conspiracy and bank fraud charges related to their alleged roles in a $20 million mortgage fraud scheme involving more than 35 homes.
If convicted, Mikail and Tsoa each face a maximum penalty of 30 years in prison on each count of the indictment.
According to the seven-count indictment Mikail owned a jewelry story, while Tsoa was a loan officer at First Empire Mortgage and at Lifetime Financial Service.
From 2005 to 2007, Mikail allegedly recruited straw buyers to serve as nominal purchasers in real estate transactions as part of a scheme to profit from fraudulently obtained mortgage loans and the purchase of residential real estate in northern Virginia. In order to get the straw buyers’ loan applications approved and the transactions closed, Mikail, working with Tsoa and other loan officers, allegedly falsified the straw buyers’ loan applications. In particular, all the fraudulent loan applications falsely designated Mikail’s Opus Jewelry as the borrowers’ employer, which Mikail would then falsely verify to the lenders as part of the loan approval process.
In total, Mikail allegedly engineered the purchase of approximately 36 homes in Ashburn, Va., and obtained from lenders approximately $19,866,150 in loan proceeds on the basis of fraudulent loan applications. While Mikail and Tsoa profited when these homes were purchased, all the loans ultimately defaulted, resulting in significant losses to the lenders.
Alleged co-conspirator Bing-Sing “Cindy” Wang” the owner of Lifetime Financial, pleaded guilty and has been sentence to 24 months in prison. (usattyedva4513)
MORAL
Federal prosecutors are still working on loans funded in 2005. If Wang was a co-conspirator, it is more likely than not, she is cooperating with authorities which does not bode well for the two indicted.
THE INFORMATION CONTAINED HEREIN IS NOT LEGAL ADVICE. AN ATTORNEY SHOULD BE CONSULTED IF YOU DESIRE LEGAL ADVICE.
