FACTS
•Property flippers are reoccurring in Florida and Las Vegas.
•Flippers doing it illegally defraud banks by buying at short sales for prices below the true value and what legitimate buyers will pay. In these schemes, realty agents obtain FRAUDULENT APPRAISALS to persuade banks to sell houses at below-market prices. The investors then flip the houses at fair market prices to ordinary home buyers and split the quick profits.
•Creative "credit enhancement" companies are again "renting" investors the bank account balances they need to demonstrate to lenders that they have the financial wherewithal to qualify for a mortgage. The accounts are real. Account names are assigned to applicants who pay for the service but they are never allowed access to the money. When underwriters check to verify the deposits they are told the money is in the name of the loan applicant.
•Investors are misleading lenders into giving them low down payments and low interest rates by lying about their intentions to occupy the property they plan to buy as a principal residence. In reality this is bank fraud.
Interthinx, a mortgage fraud analytics company, has found that APPLICANTS' DISHONESTY ABOUT THEIR EMPLOYMENT AND INCOME WAS UP 9% FROM THE SAME PERIOD A YEAR EARLIER AND 50% FROM THE THIRD QUARTER OF 2009. The reason: Borrowers are falsifying W-2s and other records to meet the tougher debt-to-income thresholds. This seems rather foolish since the lenders always require a “4506.”
The states that Interthinx ranked riskiest for mortgage fraud are NEVADA, ARIZONA, CALIFORNIA and FLORIDA. California alone accounted for half of the 10 riskiest metropolitan areas in the most recent rankings. Miami-Fort Lauderdale and Cape Coral-Fort Myers, Fla., are high on the list as well. Metropolitan Washington, which had been ranked sixth in fraud risk earlier this year, dropped to 24th place in the most recent study. San Jose saw a 16% jump in "identity fraud" schemes, in which loan applicants get new identities and credit histories good enough to qualify them for mortgages. (lat121811kh)
MORAL
Welcome back to white collar crime.
ORANGE COUNTY MORTGAGE LENDER GETS 15 YEARS FOR STEALING $6.9 MILLION FROM INVESTORS
FACTS
On Dec. 16, MARK ALAN HELSING a Tustin, Calif. hard money lender was SENTENCED TO 15 YEARS IN STATE PRISON for stealing at least $6.9 million from investors. It is likely he will serve five years and has already spent more than two years in jail. He pleaded guilty to 68 felonies including 55 counts of grand theft. It is alleged his victims included friends and Foothill High School classmates.
It is alleged he charged borrowers interest rates of 30% or more and gave investors false mortgage assignments and then used their own money to pay them interest. (ocreg121711)p., 19).
MORAL
See if you can find one.
FIVE MORE INDICTED IN SACRAMENTO FOR BID RIGGING ATFORECLOSURE SALES
FACTS
On Dec. 13, the U.S. District Court in Sacramento unsealed an indictment against four real estate investors and an auctioneer for conspiracies to rig bids and commit mail fraud at public real estate foreclosure auctions held in San Joaquin County, Calif.,
The indictment, charges real estate investors WILEY C. CHANDLER, ANDREW B. KATAKIS, DONALD M. PARKER AND ANTHONY B. JOACHIM, AND AUCTIONEER W. THEODORE LONGLEY with conspiring with other unnamed co-conspirators to rig bids and commit mail fraud when purchasing selected properties at public real estate foreclosure auctions. The indictment also charges Longley with aiding and abetting the conspirators.
According to the indictment, Chandler, Katakis, Parker, Joachim, Longley and co-conspirators agreed to suppress and restrain competition by rigging bids to obtain selected properties offered at public auctions in San Joaquin County, Calif. The conspirators also devised a scheme to fraudulently acquire titles to selected properties sold at the public auctions and to divert money to co-conspirators that would have gone to the beneficiaries. The indictment alleges that the conspiracy lasted from at least September 2008 until at least October 2009.
“The indictment unsealed today alleges that the defendants engaged in conspiracy, deceit, and heavy-handed tactics to take advantage of a depressed housing market,” said U.S. Attorney Wagner. “This indictment follows a lengthy investigation and a series of guilty pleas by other participants in this activity. “
According to the court documents, after the conspirators' designated bidder bought a property at a public auction, they would hold a second, private auction, at which each participating conspirator would bid the amount above the public auction price he or she was willing to pay. The conspirator who bid the highest amount at the end of the private auction won the property. The difference between the price at the public auction and that at the second auction was the group's illicit profit, and it was divided among the conspirators in payoffs.
TO DATE, EIGHT INDIVIDUALS HAVE PLEADED GUILTY in U.S. District Court for the Eastern District of California in connection with the investigation: ANTHONY B. GHIO, JOHN R. VANZETTI, THEODORE B. HUTZ, RICHARD W. NORTHCUTT, YAMA MARIFAT, GREGORY L. JACKSON, WALTER DANIEL OLMSTEAD AND ROBERT ROSE. In addition to those who have pleaded guilty, on Nov. 22, KENNETH A. SWANGER was charged with participating in bid-rigging conspiracies at public real estate foreclosure auctions.
Chandler, Katakis, Parker, Joachim and Longley are charged with bid rigging, a violation of the Sherman Act, which carries a maximum penalty of 10 years in prison and a $1 million fine. The maximum fine may be increased to twice the gain derived from the crime or twice the loss suffered by the victims of the crime, if either of those amounts is greater than the statutory maximum fine. They are also charged with conspiracy to commit mail fraud, which carries a maximum sentence of 30 years in prison and a $1 million fine.
These charges arose from an ongoing federal antitrust investigation of fraud and bidding irregularities in certain real estate auctions in San Joaquin County. (usatty121311edca)
MORAL
Eight plus five equals 13 and counting. Anyone want to do bid rigging? All things considered, I would think not.
FOUR MEN PLEAD GUILTY TO MORTGAGE FRAUD IN SAN DIEGO
FACTS
On Dec, 16, FOUR PEOPLE INVOLVED IN AN OCEANSIDE LOAN MODIFICATION BUSINESS THAT RIPPED OFF HOMEOWNERS ACROSS THE COUNTRY FOR $11 MILLION pleaded guilty in federal court to a variety of charges, including conspiracy to commit wire fraud, money laundering and tax evasion.
The charges come from an FBI investigation into 1st AMERICAN LAW CENTER, which offered people struggling to hold on to their homes mortgage modification services. Prosecutors said the business preyed on distressed homeowners, and lied about its success rate in modifying mortgages.
GARY BOBEL PLEADED GUILTY to conspiracy to commit wire fraud and money laundering, and tax evasion. The Carlsbad resident was the firm's founder.
SCOTT SPENCER, MARK SPENCER AND TRAVIS IVERSON EACH PLEADED GUILTY to conspiracy to commit wire fraud. Iverson owned a business in Riverside that acted as a call center for 1st American Law Center, court records show.
Mark and Scott Spencer were identified in court papers as “closers” — salesmen who completed deals with clients.
A FIFTH MAN, ROGER JONES, PLEADED GUILTY TO CONSPIRACY IN DECEMBER AND WAS SENTENCED TO 21 MONTHS.
The company employed telemarketers who used high-pressure sales tactics and outright lies to bring in customers. They charged fees from about $2,000 to $5,000 per customer, and ended up with thousands of irate former customers whose mortgages were never modified. Between September 2008 and 2010, the business defrauded more than 4,000 consumers nationwide of $11 million, court records say.
The wire fraud conspiracy and tax evasion charges each carry a maximum sentence of five years in prison. Sentencing is set for March (sdnwtrib121611)
MORAL
Those of you that read this know what it means. Some of you more so than others.
DENVER WOMAN FOUND GUILTY OF MORTGAGE FRAUD IN LESS THAN FOUR HOURS
FACTS
On Dec. 16, after deliberating for less than four hours, a federal court jury found VICKI DILLARD CROWE, AKA VICKI R. DILLARD, guilty of mail and wire fraud in connection with a mortgage fraud scheme, Crowe allegedly pocketed close to $1,000,000 during the course of her fraudulent scheme. The jury trial, heard before U.S. District Court Judge Marcia S. Krieger, lasted approximately two weeks. During the course of the trial the government called over 50 witnesses. Crowe is scheduled to be sentenced by Judge Krieger on March 19, 2012.
Crowe was indicted by a federal grand jury in Denver on April 5, 2010. According to the indictment, beginning in June 2004, and continuing through December 2006, Crowe knowingly devised and intended to devise a scheme to defraud various financial institutions and commercial lenders and to obtain money and property from various financial institutions and commercial lenders by means of materially false and fraudulent pretenses, representations, and promises. The scheme was executed in connection with the residential mortgage loans related to 19 properties in Metro Denver.
As part of the scheme, Crowe worked with at least one mortgage broker to obtain mortgage loans in order to purchase the residential properties, at least two of which were purchased in the name of Crowe's husband because Crowe was concerned that she would not qualify for the required mortgage loans. In order to qualify, Crowe made and caused to be made at least one materially false representation, including: 1) inflating or fabricating employment or rental income and/or assets of the defendant or her husband; 2) falsely representing defendant Crowe's job title; 3) failing to disclose all the properties she had recently purchased; 4) failing to disclose all of her financial liabilities; and 5) falsely stating that the property would be a primary residence for the borrower.
As part of the transactions, Crowe persuaded, and caused someone else to persuade, the property seller to falsely inflate the sale price of the property so that Crowe could receive the inflated portion of the sale price as “up front” money, or shortly after, the closing purchase transaction. Sometimes the “up front” money was falsely characterized on a HUD settlement statement as a payment to the broker, although the broker would then pay Crowe the money. At other times, the “up front” money was falsely characterized as a payment to a remodeling company that was supposed to perform specified remodeling work, although the work was never performed, and Crowe actually received the money that was issued to these remodeling companies.
The indictment further alleges that Crowe used much of the “up front” money to make the mortgage payments on the numerous properties that she had purchased. She also refinanced mortgages on a couple of the properties so that she could obtain additional money as a result of the refinance transaction.
In order to qualify for the refinancing of the mortgages, Crowe made the same false statements about employment and income.
Crowe faces not more than 20 years imprisonment, and up to a $250,000 fine, for each of the 16 counts of mail fraud and wire fraud. (lawfuel.com121611)
MORAL
Note carefully that the indictment was issued in 2010 for loans that occurred in 2004 some six years earlier. The government has a 10 year statute of limitations in which to indict someone for mortgage fraud using mail and wire fraud statutes. That means they can take loans that go back to 2002! And indict for fraud where there is fraud. That covers the entire stated income period including NISA loans and SISA loans.
CONNECTICUT PARALEGAL PLEADS GUILTY TO FALSIFYING MORTGAGE LOAN DOCUMENTS
FACTS
On Dec. 14, LOUISE LAMPO-DIGLIO waived her right to indictment and pleaded guilty before Senior United States District Judge Alfred V. Covello in Hartford to one count of conspiracy to commit mail fraud and wire fraud stemming from her role in a mortgage fraud scheme.
In 2006 and 2007, LAMPO-DIGLIO, participated in a mortgage fraud conspiracy by serving as a paralegal in connection with fraudulent real estate transactions in New London County. As part of the scheme, LAMPO-DIGLIO prepared fraudulent paperwork and submitted, or caused to be submitted, materially false HUD-l settlement statements to lenders.
From approximately 2004 to 2007, in CONNECTION WITH NUMEROUS REAL ESTATE TRANSACTIONS FOR VARIOUS LICENSED ATTORNEYS, LAMPO-DIGLIO prepared and sent materially false closing documents to lenders. One or more of these mortgage loans were insured by the U.S. Department of Housing and Urban Development's insurance program.
Among the false statements made to the lenders were documents that FALSELY INDICATED THAT THE BUYERS OF CERTAIN PROPERTIES WERE PLANNING TO MAKE THE PROPERTIES THEIR PRIMARY RESIDENCES when, as LAMPO-DIGLIO knew, the buyers were straw purchasers who did not intend to make the properties their primary residences.
Judge Covello has scheduled sentencing for March 22, 2012, at which time LAMPO-DIGLIO faces a maximum term of imprisonment of 20 years.
A total of 16 individuals have been charged as a result of this mortgage fraud investigation, which has resulted in losses of several million dollars to lenders. All 16 defendants have pleaded guilty. (usattyct121411)
MORAL
Did you happen to notice that some of the loans go back seven years to 2004? Like I have been saying the federal prosecutors are not letting up. More and more brokers, loan officers and wholesale lenders are being investigated for loans done within the past 10 years.
STATE OF NEVADA SUES LENDER PROCESSING SERVICES INC, (LPS) ALLEGING WIDESPREAD CONSUMER FRAUD IN NEVADA FORECLOSURES
FACTS
The State of Nevada has sued Lender Processing Services, Inc of Jacksonville, Florida and several of its subsidiaries alleging the company falsified, forged or fraudulently filed countless documents in foreclosure cases in Nevada requiring individual employees to execute or notarize as many as 4,000 foreclosure documents a day.
LPS is used by many major banks to process foreclosures and the lawsuit alleges the company is responsible for more than 50% of foreclosures annually. The lawsuit further alleges the LPS fraudulently notarized documents and forged signatures and hid the scope of the problems by misrepresenting that the problems were clerical errors. (latb2)
MORAL
Here is an interesting question. If the foreclosure documents are forged and if any of the forged documents were recorded to go forward with the foreclosure, was the foreclosure valid? If not, does the old owner still own the property? Is the title company liable that issued a title insurance policy to the buyer at the foreclosure sale? Can the old owner quiet title to the property because of what is arguably a wrongful foreclosure? What would the old owner's damages be? Interesting list of questions are they not?
LAS VEGAS FEDERAL JUDGE RULES THAT MORTGAGE FRAUD EXPERT IS NOT AN EXPERT AND BANS HIM FROM TESTIFYING AS ONE IN HIS COURT AGAIN AND NOT TO USE THE FACT HE ALREADY TESTIFIED ON ANY RESUME
FACTS
The same day several jurors called an expert defense witness in a massive mortgage fraud trial incompetent, the federal judge in the case barred the man from ever testifying as an expert in his courtroom again.
"The court just concluded a jury trial in the above matter at which it permitted PURPORTED EXPERT TESTIMONY FROM ONE CURTIS NOVY, who proclaimed himself to be an expert on mortgage fraud," wrote Senior U.S. District Judge Roger Hunt in an order filed on Dec. 15. "This U.S. district judge finds him unqualified to testify as an expert on mortgage fraud and will not permit him to so testify as such in any future trial or hearing."
Hunt in his order also forbade Novy from using the fact that he was permitted to testify here "on any resume or website, or in testimony hereafter in support of his qualifications to testify as an expert."
The case INVOLVED FORMER MORTGAGE AND REAL ESTATE PROFESSIONALS STEVE GRIMM, EVE MOZZARELLA AND MELISSA BEECROFT. Jurors found them guilty of each charge they faced at trial.
From 2003 to 2008, scores of straw buyers were used to obtain $107 million in fraudulent home loans. The scheme was uncovered after two of Grimm's employees met with the FBI.
Grimm was convicted of 13 counts related to bank, mail and wire fraud. Mazzarella was found guilty of 11 counts of bank, mail and wire fraud and Beecroft of five mail and wire fraud charges. Each defendant also was found guilty of conspiracy. The charges are felonies, and the defendants might face federal prison time and heavy fines when Hunt sentences them March 23.
Novy said his counsel is filing an appeal of Hunt's order. “Judge Hunt has not considered all factors related to my expertise in mortgage fraud, real estate lending, and sub-prime lending, a career that exceeds 25 years," Novy said in a statement. "In the past four years, my firm has been retained on approximately 140 civil and criminal cases nationwide.”
Novy also said prosecutors had limited the scope of his testimony during the trial. "My firm is regularly contacted by government agencies, such as state and local prosecutors and the FBI who seek guidance in understanding complex mortgage fraud," Novy said. (lvrevjl121711)
MORAL
He has no choice but to appeal. If the ruling stands, it would dramatically affect his business. However, usually an expert witness credentials are reviewed by the prosecutor and then the prosecutor stipulates to the person being an expert or challenges the experts' qualifications. It would be interesting to find out how he was qualified before the start of his testimony. Did someone make a mistake? I for one would like to know the outcome of any appeal and in fact I would like to know if an appeal is filed.
THE INFORMATION CONTAINED HEREIN IS NOT LEGAL ADVICE.
AN ATTORNEY SHOULD BE CONSULTED IF YOU DESIRE LEGAL ADVICE
