On June 20, Brett Matheson pleaded guilty in federal court to conspiracy to commit wire fraud in a $50 million mortgage fraud scheme based in Phoenix. Two others have also entered guilty pleas and are awaiting sentencing.
Matheson acknowledged in his guilty plea that as president and CEO of Maricopa Property Investment Solutions Inc., he recruited straw buyers in real estate seminars. From about January 2005 through September 2006, he facilitated the submission of mortgage loan applications for these unqualified straw buyers containing false information regarding employment, income, assets and their intent to occupy the homes as their primary residence. In some cases, the loan application packages contained altered pay stubs, false bank statements, and bogus verifications of employment and deposit. Matheson personally obtained financing for the purchase of two properties using altered pay stubs and bogus verifications of employment. At closing, a portion of the seller's proceeds was kicked back to an entity controlled by Matheson and his co-conspirators. The arrangement between Matheson’s company and the straw buyers was concealed from the lenders. The kickbacks were often used on Matheson’s personal expenses or to make down payments to qualify additional straw buyers for financing on other properties. In total, 52 properties were involved in the scheme with nearly $50 million in fraudulent loans. The losses to lenders approached $20 million.
A conviction for a single count of conspiracy to commit wire fraud is punishable by a maximum fine of $1 million, a maximum jail term of 30 years or both, and a term of supervised release of five years. To date, 27 of those indicted have been convicted through guilty pleas. (usattyaz621110)
MORAL
Notice the FBI went back to loans that occurred seven years ago. The government has the right to go back ten years on mortgage fraud and file criminal charges if it occurred within 10 years of the date of indictment. Notice the 27 out of 27 guilty pleas.
MICHIGAN AG HAS ISSUED SUBPOENAS AGAINST THREE COMPANIES AS PART OF A CRIMINAL INVESTIGATION OVER DOCUMENTS USED IN FORECLOSURES
FACTS
Michigan Attorney General Bill Schuette issued subpoenas against three mortgage service providers as part of a criminal investigation related to questionable mortgage documentation filings during the current foreclosure crisis.
Schuette filed the subpoenas against Lender Processing Services, Fidelity National Financial and CT Corporation System. DocX, which provides mortgage support services by creating, processing or recording mortgage documents, has also been issued a subpoena by the AG. Schuette requested documents regarding how the three firms process paperwork pertaining to foreclosures and bankruptcies. The information must be submitted to the AG’s office by June 30.
"Allegations of forged mortgage documents are very serious and require a thorough investigation," said Schuette. "I will continue to work closely with federal and local authorities to find answers on behalf of Michigan homeowners."
The AG launched an investigation in April after county officials throughout the state suspected that the assignment of mortgage documents may have been forged with the Register of Deeds offices.
The investigation looks into whether these mortgage processing companies permitted robo-signing of false mortgage documents for Michigan foreclosed properties.
LPS said it is “fully cooperating with the Michigan Attorney General to ensure that the requested information is provided.” Neither of the other two firms could be reached for comment about receiving this subpoena. (nmn62711)
MORAL
Another way borrowers can protect themselves against foreclosures. They can file a lawsuit to question the foreclosures against their homes. There have been several investigations going on now in several states over the “robo-signing” and if true the foreclosures can arguably be stopped while in progress. If the borrower can pull the default notices and then investigate the signatures and title of the person signing the foreclosure documents against the know officers of the companies and these people do not exist, then a lawsuit can be filed to stop the foreclosures.
KICKBACK GETS TEXAS HOMEBUILDER KICKED INTO PRISON?
FACTS
On June 21, Yunis Mandli, also known as Jonah Mandli, a Dallas/Fort Worth homebuilder pleaded guilty to a mortgage fraud scheme in the Eastern District of Texas. He pleaded guilty to conspiracy to commit wire fraud.
Mandli was the owner of Oxford Fine Homes, a company that built custom homes. As part of the mortgage fraud scheme, he and others caused material misrepresentations, including an inflated purchase price and fraudulent employment and income information, to be submitted to a mortgage lender. Mandli would then permit the excess funds distributed at closing to be paid out as kickbacks.
Mandli faces up to five years in federal prison, a $250,000 fine, and restitution for the victim. (usatty62311edtx)
MORAL
On and on it goes and where it will stop nobody knows. But with all the mortgage fraud out there I would say all the FBI agents just joining the agency will retire before they can get to all of the mortgage fraud cases that have been committed in the last ten years.
FIVE MORE INDICTED IN DALLAS FOR $9 MILLION MORTGAGE FRAUD
FACTS
During the week of June 23, a federal grand jury returned an eight-count indictment charging five individuals—Fredrick Lee Moore, Fredrick Barnard Lynch, Randell Dean Miller, Halid Amer and Theresa Fey Barsema—with various offenses related to their operation of a mortgage fraud conspiracy in the Dallas-Fort Worth area.
Moore is charged with two counts of bank fraud, four counts of wire fraud and one count of engaging in a monetary transaction with criminally derived property. Barsema is charged with one count of bank fraud, four counts of wire fraud and one count of engaging in a monetary transaction with criminally derived property. Lynch is charged with four counts of wire fraud. Miller is charged with one count of wire fraud and one count of bank fraud. Amer is charged with three counts of wire fraud.
The indictment alleges that from April 2005 to April 2007, the defendants ran a scheme in which they located single-family residences for sale in the DFW area, including excess inventory, distressed and pre-foreclosure properties, and negotiated a sales price with the seller. They fraudulently received loan proceeds when they submitted various fraudulent invoices to the title companies that falsely represented that the defendants had performed various work related to the property, such as various consulting or legal services. The defendants deceived lenders when they caused the sellers to sign an “Authorization for Disbursement of Proceeds” to provide a means for the conspirators to receive part of the loan proceeds without disclosing the disbursement on the HUD-1 Settlement Statement.
The defendants recruited individuals to act as straw borrowers, promising to pay them a bonus or commission of between $3,500 and $25,000 for their participation in a particular real estate transaction. The conspirators caused the loan applications for each straw borrower to include false financial information, often including inflated false income figures to conceal the borrower’s true financial condition so that the lender would more likely approve the loan. The conspirators concealed from the lenders the true status, financial condition and intentions of the named borrowers, knowing that loans would not likely be approved if the lender knew the true role, credit worthiness, and risk of each straw borrower. The conspirators falsely represented in loan documents that the straw purchaser intended to use the property as their primary residence, intentionally concealing from lender that each straw borrower, viewed himself as an “investor,” who never intended to occupy the home.
The scope of the conspiracy involved approximately 23 fraudulent residential property loan closings resulting in the funding of approximately $8.8 million in fraudulent loans.
If convicted, the conspiracy and each bank fraud counts carries a maximum statutory sentence of 30 years in prison and a $1 million fine. Each of the wire fraud counts, upon conviction, carries a maximum statutory sentence of 20 years in prison and a $250,000 fine. The money laundering count carries, upon conviction, up to 10 years in prison and a $250,000 fine, or twice the amount of the criminally derived property received. In addition, restitution could be ordered. The indictment also includes a forfeiture allegation which would require the defendants, upon conviction, to forfeit the total amount of proceeds obtained, directly, or indirectly, as a result of the offense. (usattyndtx62311)
MORAL
Pay particular attention that the greatest majority of these fraud cases are from 2005 forward, the era of the “stated income” loans. If anyone has done stated income loans and believes the income may have been questionable, I would suggest that person consult with their attorney now
VIRGINIA WOMAN SENTENCED TO 12 YEARS IN PRISON FOR “MORTGAGE ELIMINATION” SCHEME THAT CAUSED OVER $11 MILLION IN LOSSES
FACTS
On June 17, Linda Sadr of Manassas, Va., was sentenced to 12 years in prison following her January 2011 conviction for promising to eliminate mortgages for her clients. Sadr was indicted by a federal grand jury on Nov. 23, 2010, on two counts of mail fraud, four counts of wire fraud and two counts of money laundering. Sadr pled guilty to all eight counts of the indictment on Jan. 6.
From 2004 through 2008, Sadr marketed a scheme known as a “Mortgage Elimination Program.” Sadr represented to the homeowners that lenders making refinance loans were operating illegally by, among other things, bundling the loans for resale and selling them to investment banks, which then used the loans as collateral to borrow additional funds. Sadr fraudulently represented to homeowners that she and her companies could arrange for the satisfaction of the homeowners’ mortgages on their residences. Sadr represented that she would challenge the lenders, on behalf of the homeowners, for their purported illegal actions, would prevail in the challenges, and would thereby eliminate the mortgages.
In general, those homeowner clients with sufficient equity in their homes who participated in the Mortgage Elimination Program were required to refinance their mortgages with maximum cash-out refinance loans. Subsequent to settlement, individual homeowner clients were required to pay 10% to 15% of the proceeds of the cash-out refinance loan as a fee to Sadr or to one of the entities she controlled. Clients were also required to give Sadr the equivalent of 12 to 18 months of advance mortgage payments to be held in “escrow,” an amount that Sadr claimed she would use to pay the refinanced mortgages for the homeowner clients until their mortgages were eliminated.
In addition to participation in the Mortgage Elimination Program, Sadr offered some clients the option of investing equity from their refinance or other monies in exchange for a guaranteed rate of return of 12% to 18%. Sadr guaranteed that the principal on those investments would be refunded at the end of the investment period.
Sadr recruited her mortgage elimination services to new clients via word of mouth through satisfied past homeowner clients, who thought their mortgages had been eliminated through monetary settlements received from Mortgage Elimination Program challenges. In reality, the mortgages were eliminated because Sadr repaid the refinance lenders in full. In so doing, Sadr used the monies she obtained from other unsuspecting homeowner clients without their knowledge or consent.
None of the more than 150 participants in the program received reconveyances on their homes and none received refunds from Sadr for the fees that were paid to her. The known homeowner client victim loss from Sadr’s mortgage elimination scheme and related high-yield investment scheme exceeds $11 million. (usattyedva61711)
MORAL
You may forestall a mortgage but it is unlikely you will eliminate it unless it is paid. One form of forestalling is by showing “robo-signing” and that no such person existed that purported to sign the foreclosure documents.
THE INFORMATION CONTAINED HEREIN IS NOT LEGAL ADVICE.
AN ATTORNEY SHOULD BE CONSULTED IF YOU DESIRE LEGAL ADVICE
