FACTS
On March 9, 2011 a 14-count mortgage fraud indictment was unsealed accusing JOAN C. TEETERS AND JONATHAN MARC NATTIER, RESIDENTS OF FOLEY, ALA., with conspiracy to commit wire fraud, mail fraud and bank fraud, and they both face a maximum sentence of 20 years as to that count. Teeters was charged in all 14 counts of the indictment. Nattier was also charged with bank fraud and a false loan application.
The indictment is the third round of indictments in a mortgage fraud investigation conducted by the Mobile Field Office of the FBI. In November 2010, four defendants were charged in connection with the same investigation and will be tried in April. In January 2011, three defendants were charged in connection with the same investigation and will also be tried in April. Teeters and Nattier will be tried in May.
The conspiracy count alleges that members of the conspiracy solicited straw buyers to submit offers to purchase real property located in Baldwin County, Ala. The count also alleges that to secure funding for the purchase and refinancing of the properties, loan applications containing false information, misrepresentations and omissions were submitted to lending institutions by members of the conspiracy to induce the lenders to make mortgage loans they otherwise would not have funded.
MORAL
2+4+3 = 9 and counting.
NATIONAL ASSOCIATION OF MORTGAGE BROKERS AND THE NATIONAL ASSOCIATION OF INDEPENDENT HOUSING PROFESSIONALS SUE THE BOARD OF GOVERNORS OF THE FEDERAL RESERVE SYSTEM TO STOP IMPLEMENTATION OF THE REGULATIONS GOVERNING LOAN ORIGINATION FEES
FACTS
On March 9, 2011 the National Association of Mortgage Brokers filed its lawsuit against the Federal Reserve System in Washington to stop implementation of the new regulations governing loans and loan originator compensation. The case number is 1:11-cv-00489-BAH. The National Association of Independent Mortgage Professionals, case number No. 1:11-cv-0489-BAH, filed March 7, 2011 was joined with the NAMB case since they both related to the same issues. There is a motion set to stop the April 1 regulations from going into effect.
MORAL
We will see what happens by March 31.
TWELVE ARIZONANS INDICTED IN ARIZONA FOR $19 MILLION IN FRAUDULENTLY OBTAINED MORTGAGE LOANS
FACTS
On March 9, 2011 two indictments charging 12 Arizonans for their involvement in multimillion-dollar mortgage fraud conspiracies were announced. Between the two cases, the defendants fraudulently obtained more than $19 million in loans and more than $5 million in “cash back” loan proceeds. The defendants are charged with various counts of conspiracy, conspiracy to commit wire fraud, wire fraud, aggravated identity theft, money laundering and conspiracy to commit transactional money laundering.
The 16-count indictment alleges that the defendants conspired to commit mortgage fraud in Tucson to obtain loans totaling almost $13.5 million between 2003 and 2007. As alleged, the defendants knowingly submitted or knowingly caused to be submitted materially false loan applications or other false documents to banks and lending institutions relating to the purchase, refinance, or home equity financing of 18 residential properties. After the fraudulently obtained loan proceeds were received from the lenders, portions of the loan proceeds were diverted into bank accounts under the control of some of the co-conspirators. The total cash back received by the co-conspirators relating to these transactions was approximately $2.9 million. Most of the properties went into foreclosure.
The defendants charged in various counts of the indictment are: DINO SISNEROS, 39; MELISSA SISNEROS, 40; MICHAEL QUIROZ, 49; CHAD AYERS, 37; CATHERINE TARIN, 41; THERESA COYNE, 47; AND TIMOTHY COYNE, 49, ALL RESIDENTS OF TUCSON. Dino Sisneros, Melissa Sisneros and Michael Quiroz were arrested March 4. The remaining defendants will be required to appear in federal court for their arraignment.
The 13-count indictment alleges that the defendants submitted false loan applications to banks and other lending institutions to buy numerous residential properties in a short period of time, lying about the borrowers’ income and liabilities in order to get financing of more than $5.5 million. Most of the homes referenced in the indictment are in Scottsdale. The indictment also alleges that the defendants profited from the scheme by artificially increasing the sale prices of the properties and then directing portions of the loan proceeds back to themselves for their own personal use, while concealing this information from the lenders. The indictment alleges over $2.5 million in loan proceeds were directed back to the defendants during a single five-month period.
The defendants charged in various counts of the indictment are: CLINT ROGERS, 37, OF SCOTTSDALE; ANGELA ROGERS, 31, OF SCOTTSDALE; SHANNON KATO, 40, OF SEDONA; ERNEST BABBINI, 55, OF SCOTTSDALE; AND DREW HULL, 30, OF PRESCOTT. Clint Rogers, Angela Rogers and Shannon Kato were arrested March 9, and Ernest Babbini and Drew Hull have been served with a summons to appear in federal court.
A conviction for conspiracy carries a maximum penalty of five years of imprisonment, a $250,000 fine, or both. A conviction for conspiracy to commit wire fraud and wire fraud carries a maximum penalty of 20 years in prison, a $250,000 fine, or both. A conviction for money laundering has a maximum penalty of 20 years of imprisonment, a $500,000 fine, or both. A conviction for conspiracy to commit transactional money laundering carries a maximum penalty of 10 years in prison and a $250,000 fine. A conviction for AGGRAVATED IDENTITY THEFT CARRIES A MINIMUM SENTENCE OF TWO YEARS THAT MUST BE SERVED CONSECUTIVE TO THE ULTIMATE SENTENCE IMPOSED RELATING TO THE WIRE FRAUD OR CONSPIRACY TO COMMIT WIRE FRAUD CHARGES.
An indictment is simply the method by which a person is charged with criminal activity and raises no inference of guilt. An individual is presumed innocent until competent evidence is presented to a jury that establishes guilt beyond a reasonable doubt.
MORAL
I trust they have good legal counsel.
CALIFORNIA COUPLE GUILTY OF MORTGAGE FRAUD
FACTS
On March 8, 2011 a federal jury convicted DORIS ANYANWU, 35, and HYACINTH UDEN, 37, a San Ramon couple of wire fraud and of falsely claiming U.S. citizenship in a mortgage fraud scheme. Federal prosecutors said the married couple fraudulently secured about $3.7 million in loan money to purchase residential properties in Hayward, Oakland and San Ramon and to refinance property in Hayward. The jury found that Anyanwu and Udeh conspired with Anyanwu's sister LINDA ASHIEGBU AND HER HUSBAND, ANDREW ASHIEGBU, and family friend URSULA OGAMBA to obtain loans by overestimating income, overstating asset balances and making false claims of U.S. citizenship.
All five have backgrounds in real estate. Andrew and Linda Ashiegbu operated New ERA MORTGAGE AND REALTY IN UNION CITY, where Anyanwu also worked. Udeh was a licensed salesperson under ANDREW ASHIEGBU, who was a licensed broker. Ogamba was the co-owner of EZ MORTGAGE REALTY IN TRACY.
Anyanwu and Udeh were convicted of conspiracy to commit wire fraud, four counts each of wire fraud and four counts each of false citizenship claims. Anyanwu was also convicted of one count of money laundering.
The Ashiegbus and Ogamba have pleaded guilty to their roles in the scheme.
Anyanwu, Udeh and the Ashiegbus are scheduled to be sentenced May 18. Ogamba will be sentenced May 25, 2011.
MORAL
Anybody in East Bay know these people? Anyone do any loans with or for them? If so I venture to say you have been visited by people that carry gold badges maybe?
FEDERAL TRADE COMMISSION OBTAINS $6 MILLION JUDGMENT AGAINST SOUTHERN CALIFORNIA ATTORNEY AND OTHERS FOR FALSE ADVERTISING ABOUT LOAN MODIFICATIONS AND FORECLOSURE AVOIDANCE SERVICES
FACTS
In 2009 the FTC received complaints regarding LUCAS LAW CENTER, a law firm that advertised mortgage loan modification and foreclosure avoidance services. The FTC filed a lawsuit against LUCAS LAW CENTER and FUTURE FINANCIAL SERVICES alleging it was a joint enterprise. The FTC also filed suit against PAUL LUCAS, owner of LUCAS LAW, CHRISTOPHER BETTS, owner of FFS, and FRANK SULLIVAN, the manager of FFS, alleging violations of the Federal Trade Commission Act.
Plaintiff FTC contended the law firm told clients they would contact lenders on their behalf to modify mortgages and prevent foreclosures and would refund the client money if they failed to obtain a modification. The FTC claimed the law firm made minimal or no efforts to contact lenders and failed to engage in any negotiations. Further the FTC alleged no refunds were issued by the law firm until clients sought legal assistance.
Defendants denied all allegations and contended that all clients received full or nearly full refunds when requested.
The United States District Court in Los Angeles said...
$6,120,000 AWARDED TO THE FTC finding that the firm falsely represented it would provide refunds. The judgment is joint and several against all defendants. Mr. Lucas has filed a notice of appeal to the 9th Circuit Court of Appeals that has defects to be cured. This is as of February 2011.
MORAL
In December 2010, the State Bar recommended disbarment of Lucas in a proceeding where it was alleged Lucas walked out on the State Bar trial when the first witness was being sworn. Anyone out there still doing loan modifications or foreclosure preventions?
HOW A CALIFORNIA LENDER BECOMES A BROKER AND OWES A FIDUCIARY DUTY TO THE BORROWER COSTING IT OVER $98,000 TO THE BORROWER
FACTS
Home Loan Funding Inc. provided lending services for residential mortgage loans. In March 2006, Tonya Smith contacted Anthony Baden, and HLF loan officer, in response to an advertisement. Smith wanted a Home Equity Line of Credit. Baden told her he would “shop the loan.” Believing Baden was a mortgage broker, Smith signed a loan application. Later, Baden told Smith that she did not qualify for a HELOC, stating he had “shopped it” with other lenders. Baden then provided Smith with a $700,000 first trust deed, assuring Smith there was not prepayment penalty. However, one was introduced by way of a “rider.” Smith sued Baden and HLF claiming misrepresentations and breach of fiduciary duty. HLF contended it was only a lender and not the mortgage broker of Smith. The trial court held both Baden and HLF acted as loan brokers and breached their fiduciary duty to Smith. It found Baden misrepresented both the terms and the ultimate advisability of the loan and awarded Smith damages of $21,908 for the prepayment penalty, damages because of the excessive margin on the loan based on Smith’s qualifications for a better loan. These damages were $252,500 over the life of the 30-year loan discounted to present value of $72,182 plus attorney fees of $25,342. HLF appealed.
The 4th District Court of Appeals said...
Affirmed as to everything except it reversed the prepayment penalty damages because this was calculated in the damages over the life of the loan and thus damages for the life of the loan includes the fact there is no prepayment penalty when it is presumed the loan will remain for the full 30 years in calculating damages.
Further in the appellate opinion the court reiterated that a mortgage broker owes a fiduciary duty to the borrower. Additionally although HLF was a lender and Baden did not have a real estate license, the court held both were acting as brokers when the loan was shopped. A real estate broker is a person who, for compensation or in expectation of compensation regardless of the form or time of payment, solicits lenders for or negotiates loans for borrowers in connection with loans secured by liens on real property. The mortgage broker acts as the borrower’s agent. A mortgage lender is one who directly makes residential mortgage loans and makes the credit decision in the loan transactions. When Baden “shopped the loan” with other lenders he was acting as a mortgage broker even though he did not have a real estate license.
MORAL
Even though a lender is not a fiduciary to the borrower as stated in this opinion, it may become a broker if it allows its loan officers to “shop the loan” with other lenders. So do not allow your loan officers to shop loans for borrowers with other lenders, unless you want to become a fiduciary to the borrower. Remember, HLF is a lender. The loan officer shopped the loan and then HLF did the loan as a lender.
HOW ONE BORROWER IN CALIFORNIA TEMPORARILY AT LEAST HAS STOPPED WELLS FARGO FROM FORECLOSING
FACTS
In 2005, Ron Ward and his family obtained an $837,900 mortgage at 6% interest from Wells Fargo. Three years later when the housing market crashed, the Wards stopped making payments at the banks suggestion in order to qualify for a loan modification. THE WARDS MADE THREE PAYMENTS TO MEET THE TERMS OF THEIR LOAN MODIFICATION AGREEMENT WITH WELLS FARGO WHEN THE BANK SOLD THEIR HOME AT A FORECLOSURE AUCTION. The Wards then sued Wells Fargo alleging wrongful foreclosure and breach of contract.
The Wards contended they submitted detailed information to the bank in order to receive a loan modification, but the bank repeatedly lost the documents and confused the Ward file with another borrower’s.
Wells Fargo contended the Wards did not qualify for a loan modification because their monthly income was less than their expense.
The Santa Cruz Superior Court said...
Preliminary injunction granted preventing Wells Fargo from evicting the Wards and selling the home.
MORAL
This is just the start of a long battle. But, the court apparently found enough evidence to convince it that there was a likelihood that the Wards would prevail. Check it again in September of this year to see how it is going.
STRAW BUYER IN CONNECTICUT SENTENCED IN FEDERAL COURT
FACTS
On March 9, 2011 MARY ELLEN DURSO, 54, of Milford, Conn., was sentenced to three years of probation, the first six months of which Durso must spend in home confinement, for her involvement in mortgage fraud scheme. On Dec. 14, 2010, Durso pleaded guilty to one count of conspiracy stemming from the scheme and five counts of filing false tax returns.
Durso conspired with others to commit bank fraud by filing a materially false loan application to Washington Mutual to refinance a condominium in Hillsboro Beach, Fla. Durso served as the straw owner for the condo in order to obtain the fraudulent proceeds for the benefit of her co-conspirators.
On Sept. 20, 2007, after the refinance loan had been approved and funded, $233,875 was wired into Durso’s bank account. The next day, Durso obtained two cashier’s checks totaling $155,544 for the benefit of her co-conspirators. Durso also gave her co-conspirators signed and unsigned blank checks to her bank account to allow them to write checks payable to themselves or to entities they controlled. As part of the scheme, one of her co-conspirators paid the mortgage by writing checks to Durso. The checks were deposited in Durso’s bank account, and then mortgage payments were automatically withdrawn from the account, making it appear that the funds for the payment came from Durso.
By the summer of 2008, the mortgage payments had stopped, and the condo subsequently went into foreclosure. The home was then deeded to Federal Home Loan Mortgage Corp. before being resold for approximately $35,000 less than the outstanding principal balance on the original refinance loan.
Durso also filed false tax returns for tax years 2004 to 2008 by inflating her itemized deductions, including her mortgage interest and medical expenses, resulting in a tax loss of approximately $46,000 to the government.
Judge Kravitz ordered Durso to pay restitution to Freddie Mac, and back taxes, plus penalties and interest, to the government.
MORAL
One straw buyer, one property, one felony conviction and all its infirmities. Was it worth it? Run the numbers above. Note the loan was in the stated income era.
THREE CHARGED WITH MORTGAGE FRAUD IN TAMPA
FACTS
On March 8, 2011 an indictment was unsealed charging WILLIAM "ONDRA" JOEL (31, WESLEY CHAPEL), MAURICE VERNON (32, TAMPA), AND ELTON LASSITER (44, ODESSA) with conspiracy, wire fraud and making false statements to a financial institution. If convicted on all counts, each defendant faces a maximum penalty of 30 years in federal prison.
According to the indictment, in 2006, the three defendants conspired and executed a scheme to commit wire and mail fraud arising from a mortgage fraud scheme operated out of Joel's Tampa business—INVESTOR'S OUTLET INC. Investor's Outlet was a Florida corporation purportedly in the business of investing in residential real estate and assisting clients with investing in residential real estate. The indictment alleges that as part of the scheme, among other things, the defendants induced lenders to fund mortgage loans by making false and fraudulent representations on loan applications, provided funds to a coconspirator borrower to create the illusion that the borrower had sufficient funds in the bank, and created false invoices for construction and renovation services, causing the lenders to disburse additional funds at closings.
The indictment specifies two mailings and eight interstate wire transfers that were carried out as part of the scheme. In addition, the indictment alleges that the defendants made false statements on loan applications submitted to two financial institutions, the deposits of which were insured by the Federal Deposit Insurance Corp.
Please remember an indictment is merely a formal charge that a defendant has committed a violation of the federal criminal laws, and every defendant is presumed innocent unless, and until, proven guilty.
MORAL
I have noticed lately the Florida fraud cases seem to cover the fraudsters by having them get paid on false invoices for construction and repairs never done. That method of getting the money I have rarely seen in other fraud prosecutions in other states. Oh well. The FBI I believe has a saying. “If you want to find the person, follow the money.”
TWO BROTHERS PLEAD GUILTY TO $4 MILLION MORTGAGE FRAUD IN MINNEAPOLIS
FACTS
On March 9, 2011 in federal court in Minneapolis, two brothers pleaded guilty to orchestrating a $4 million mortgage fraud scheme that defrauded 24 area lenders. BARETTA DEAN BORK, AGE 35, OF MOUND, AND XAVIER WILLIS BORK, AGE 32, OF EDEN PRAIRIE, pleaded guilty to one count of conspiracy to commit mortgage fraud through the use of wires and income tax refund fraud. The pleas were entered before United States District Court Judge Ann. D. Montgomery. The defendants were charged on Jan. 31, 2011.
The defendants admitted that between December 2003 and March 2008, they engaged in a scheme that resulted in more than $4 million in losses to mortgage lenders. The brothers worked as loan officers through several mortgage brokerage companies. They recruited straw buyers to purchase 33 properties. They also completed false mortgage loan applications on behalf of those straw purchasers. The Borks exaggerated the incomes and lied about the employment status of those straw buyers. They also omitted from the loan applications information regarding other loan obligations the straw buyers already had incurred. The properties were purchased at inflated prices, and upon receipt of the mortgage loans, the loan proceeds were distributed to the straw buyers and the defendants.
In addition, the Borks admittedly recruited 26 people to file false U.S. Individual Income Tax Returns, claiming refunds totaling more than $154,000. The defendants provided those filers with false W-2 forms that indicated they worked for the Borks. To facilitate their tax scheme, the Borks also established two shell companies.
For their crimes, the defendants face a potential maximum penalty of five years in prison.
MORAL
Did you notice the U.S. attorney went back eight years? The loans occur in 2003 indicted on Jan. 31, 2011 and 37 days later plead guilty. I would say they are looking at about 7 years at least to 15 years in a federal prison without any possibility of parole.
THE INFORMATION CONTAINED HEREIN IS NOT LEGAL ADVICE.
AN ATTORNEY SHOULD BE CONSULTED IF YOU DESIRE LEGAL ADVICE
