CALIFORNIA ROCK SINGER SENTENCED TO SEVEN YEARS IN FEDERAL PRISON FOR MORTGAGE FRAUD
FACTS
On Oct. 21, Robert Brandon Mawhinney, the singer in a Los Angeles-based rock band called Lights Over Paris was sentenced to seven years in federal prison for submitting false documents to banks to fraudulently obtain millions of dollars in loans, money that he used to fund his musical project and his lavish lifestyle.
Mawhinney had pleaded guilty to four counts of making false statements to federally insured banks and one count of money laundering. The very next day, after pleading guilty according to prosecutors, Mawhinney made additional false statements to another financial institution in an attempt to obtain more credit, conduct that resulted in Judge Carney revoking his bond and remanding him into custody.
“For approximately three and a half years [Mawhinney] obtained and assisted others to obtain substantial loans from multiple banks through fraud,” prosecutors wrote in a sentencing memorandum filed in court. “In order to obtain and maintain the loans, [the] defendant made myriad false statements to the victim banks and presented numerous false documents, including fabricated financial statements and tax returns bearing the forged signatures of identity-theft victims. Even [the] defendant’s family members’ documents weren’t safe; for instance, [Mawhinney] used his grandfather’s Schwab account statements to create some of the fraudulent statements showing inflated balances that he gave to the victim banks.”
Mawhinney, who used the stage name Robb “TaLLLLL” University, obtained more than $11 million in credit after applying for loans by submitting phony brokerage statements that falsely showed that he had almost $8 million in assets. The phony statements were altered versions of real statements from brokerage accounts that actually contained less than $10,000. Mawhinney told bank officials that he needed the money to fund his music business and to purchase recording equipment. According to investigators, Mawhinney used the money from the loans to pay for travel, entertainment and a luxury tour bus that cost well over $750,000. The victim banks were Comerica, JP Morgan Chase, Zions Bank and Bank of America.
In a related case, Mawhinney helped two associates fraudulently obtain more than $1.7 in loans for their music business.
When Mawhinney defaulted on his loans, the victim banks sustained actual losses of over $8.4 million. When his associates defaulted on their loans, lending institutions suffered losses of approximately $1.75 million. (usattycdca102113)
MORAL
Doing more fraud while you are out on bail guarantees you go to prison. And he still does not seem to have made it as a “rock star.”
FANNIE MAE AND FREDDIE MAC WILL NOW CHASE THE PEOPLE THAT DEFAULT ON THEIR SECOND MORTGAGES
FACTS
The two companies have issued a release stating they are going to do a better job of going after the strategic defaulters. Fannie and Freddie can pursue judgments against borrowers who walk away from their loans even though they have the ability to make the payments.
Many defaulters do not realize that on second mortgages they can still be held liable for the loss and in fact many are being sued. Freddie Mac has nearly 58,000 foreclosures with estimated deficiencies of $4.6 billion for collection by its debt collector vendors. As of December 2012 these two companies had about 50,000 foreclosures still on the books valued about $4.3 billion. As of March 31, 2013 there were 364,000 mortgages that were 60 or more days delinquent. This is just Freddie Mac!
Fannie Mae as of Dec. 31, 2012 had 105,000 foreclosed properties valued at $9.5 billion along with a “shadow inventory” of 576,000 seriously delinquent mortgages that were 90 or more days late and likely to end up in foreclosure.
As of September 2013 Fannie and Freddie are required to maintain formal procedures for managing the deficiencies and the collection process. (katb3101313)
MORAL
If you are one of those that had or have a second mortgage and have gone into foreclosure or are likely to, you may be chased. With certain exceptions, although the foreclosure is completed, the promissory note you signed remains and can be enforced as an unsecured debt. There are defenses. So if you are pursued or want to know the likelihood of being pursued see your attorney or consult with us.
FORMER B OF A EMPLOYEE ARRESTED FOR ACCEPTING BRIBES IN RIGGING SHORT SALES IN SOUTHERN CALIFORNIA
FACTS
Kevin Lauricella, a former Bank of America Corp. employee has been arrested on suspicion of accepting more than $1 million in bribes for rigging short sales. As an employee he handled delinquent mortgages, and is accused of taking money in exchange for approving the sale of distressed properties at far below their market value.
Lauricella, who worked at a BofA facility in Simi Valley, allegedly took money from the buyers of those homes, said Ariel Neuman, an assistant U.S. attorney in Los Angeles. Lauricella was charged in a 28-count grand jury indictment that listed 18 properties allegedly sold in late 2010 and early 2011 at prices below those the bank would have approved. Lauricella is accused of enabling the sales by improperly approving short sales and falsifying bank records.
Most of the homes were in the San Fernando Valley, but others were in Corona, Coto de Caza, Beverly Hills and Bel Air.
On Oct. 15, Lauricella entered a not guilty plea before a federal magistrate and was released on a $100,000 property bond.
Documents filed with the indictment indicated the government seized Lauricella's Chevrolet Suburban and intend to try to take away his home, on grounds they had been purchased with criminal proceeds.
Plea agreements filed by three other defendants indicated the arrest stemmed from a long-running probe into the manipulation of Southern California short sales for illicit profit. (lat 10171013)
MORAL
Anyone trying to “rig” a short sale has the same risk as Lauricella.
SOUTH FLORIDA MORTGAGE BROKER GETS OVER 16 YEARS IN FEDERAL PRISON
FACTS
On Oct. 15, Quelyory Rigal was sentenced to more than 16 1/2 years in federal prison for her role in a $39 million mortgage fraud that targeted properties in Fort Lauderdale, West Palm Beach and Orlando.
Rigal was a mortgage broker and Realtor from Homestead who lured unsophisticated buyers to buy condos, mostly in Fort Lauderdale in 2007 and 2008.
A jury found Rigal guilty of fraud conspiracy, wire fraud and mail fraud after a six-week trial earlier this year. The judge ruled Rigal was linked to some $8.8 million worth of the fraud. Rigal received kickbacks and "made an obscene amount of money" steering buyers to purchase properties she knew were losing value. She inflated appraisals and even gave personal loans to buyers to boost their reported income and trick mortgage lenders, according to court records. More than $760,000 moved through bank accounts she controlled in 2007.
Rigal, through a Spanish interpreter, apologized to the judge but was defiant under questioning and testified that she never intentionally did anything wrong. She blamed her co-defendants and said the justice system was punishing her more harshly because she rejected plea offers and went to trial.
"I did nothing wrong. At the time that I was working, I thought that everything I was doing was correct," Rigal told the judge.
Seven co-defendants all pleaded guilty to conspiracy to commit mail and wire fraud and received sentences ranging from 15 years imprisonment to five years of supervised release. (sunsent101613)
MORAL
She came; she saw seven others plead guilty and still decided to go to trial. Now she has 16 years to think about it since there is no parole in the federal system. She does have the right of appeal though, since she went to trial.
TITLE COMPANY MANAGER GUILTY TO
$4.8 MILLION MORTGAGE FRAUD
FACTS
On Oct. 17, Bonnie Kathleen Kreamer, a/k/a Bonnie Meehan, pleaded guilty to conspiring to commit wire fraud in connection with a mortgage fraud scheme which resulted in losses of more than $4.8 million.
In 2002, Kreamer’s Maryland license to issue title insurance policies was revoked after she was convicted of theft for fraudulently endorsing checks at a title attorney’s office where she worked. Despite her conviction, from 2007 to January 2010, she worked at Sanford Title Services, Columbia, Md., and had significant day-to-day responsibility for the operation of Sanford Title. From June 2008 to January 2010, Kreamer and her co-conspirators Niesha Williams, Rhonda Scott, Emeka Udeze and Demetrius Peete arranged various aspects of real estate transactions so they could siphon profits out of the transaction for themselves. They used many fraudulent techniques to further the conspiracy, including short sales in which the property was sold for a higher price than was represented to the lien holder and the seller; sales of properties not owned by the seller at the time of settlement; real estate transactions in which there were multiple sales of the same property at the same time; real estate transactions in which the buyer’s financial status was misrepresented to lenders; and transactions in which the seller and/or buyer were shown different settlement statements and the conspirators used the difference between the figures in the two statements to enrich themselves.
In addition, Kreamer admitted that she personally facilitated deals between her co-conspirators, prepared false settlement statements, improperly disbursed funds contrary to the settlement and lender approved disbursements sheets, failed to pay off mortgage loans in accordance with the settlement documents, directed funds to entities created by herself and her co-conspirators, received proceeds of fraudulent transactions, and improperly issued title insurance policies.
Kreamer admitted that the scheme involved at least 30 victims, including lenders, sellers, and buyers of real estate, a title insurance company and lien holders. She further agreed that her offense involved sophisticated means and her abuse of a position of trust at Sanford Title. The reasonably foreseeable loss associated with Kreamer’s conduct is at least $4.8 million.
Kreamer faces a maximum penalty of 30 years in prison and a $1 million fine for conspiring to commit wire fraud.
Williams, Scott, Udeze, Peete and Gregory Green each previously pleaded guilty to their roles in the fraud and are awaiting sentencing. (usattynm101713)
MORAL
She apparently did not learn a lesson from the 2002 conviction. I would say she is looking at a heavier sentence now.
NEW MEXICO PAIR SENTENCED FOR MORTGAGE FRAUD FACTS
Keith Michael Courtney received 24 months in a federal prison while Jason Johns got five months in prison, five months of home detention and three years of supervised release. (Sounds like he struck a deal to be a witness against Courtney is my best guess but I could be wrong.) As a real estate broker and a loan officer, both from Albuquerque, N.M., they will be serving federal prison sentences for their wire fraud convictions.
Courtney and Johns also were ordered jointly to pay $493,230.88 in restitution and a $1.6 million money judgment to the United States. (Where does the government expect them to get the money?)
Courtney and Johns were indicted in November 2011 on wire fraud charges. The three-count indictment alleged that between November 2006 and September 2007, Courtney and Johns schemed to defraud mortgage lenders by using straw buyers to apply for residential mortgage loans. At the time of the offenses charged, Courtney was part owner of Black Diamond Construction Co., Veritas Mortgage Co. and Polaris Realty. Johns was a loan officer with Veritas Mortgage.
In February 2012, Johns pled guilty to the indictment. Johns admitted participating in the unlawful scheme alleged in the indictment, which resulted in three wire transfers of funds in the aggregate amount of $1.6 million by mortgage lenders based on false and fraudulent representations made in connection with the sale of two residences built by Courtney’s business.
Courtney was found guilty by a jury on the three counts of the indictment on March 28, 2013, after a four-day trial. The evidence at trial showed that Courtney’s company, BDCC, built two houses, one in Albuquerque and the other in Santa Fe. After the houses were completed, Courtney and Johns solicited straw buyers to purchase the houses, using the names and credit histories of the straw buyers to obtain financing from Plaza Home Mortgage and Lehman Brothers Bank. The loan applications falsely stated that the borrowers were buying the houses as primary residences, when in fact they had no intention of ever living in the houses. The straw buyers put no money into the transactions, did not make the mortgage payments, and were to receive $5,000 once the houses were resold. They were told that Courtney would make the mortgage payments until the houses were resold.
As a result of the false loan applications, which did not inform the lenders that the borrowers were straw borrowers, Plaza Home Mortgage wired two loans for $660,772.50 and $99,250.00 in connection with the Albuquerque house. Lehman Brothers Bank wired $641,803.34 for a loan in connection with the Santa Fe house. Courtney obtained loans in the aggregate amount of $1,601,775.84 from the two mortgage lenders based on the fraudulent transactions. Courtney made mortgage payments on each property for a time after the transactions closed but ultimately stopped making payments on both, at which point the houses went into foreclosure. The mortgage companies suffered losses as a result. (usattynm101713)
MORAL
Go to trial, go to prison longer. Cut a deal, spend less time in prison. Do not follow your attorneys’ advice and spend even more time. Listen, digest, wait 72 hours if available and then make the call after the emotion dies down. This holds true even for civil cases.
THE INFORMATION CONTAINED HEREIN IS NOT LEGAL ADVICE. AN ATTORNEY SHOULD BE CONSULTED IF YOU DESIRE LEGAL ADVICE.
