A Hudson resident is among 16 individuals indicted in a mortgage fraud scheme involving 40 properties and losses of $12 million in Summit County.

Ohio Attorney General Richard Cordray and Summit County Prosecutor Sherri Bevan Walsh announced the indictments March 24.

The indictments were the culmination of a two-year investigation by the Summit County Mortgage Fraud Task Force, according to a press release from the county sheriff’s office, which operates the task force.

The individuals are alleged to have “committed mortgage fraud by inflating the values of the homes, falsifying mortgage loan applications and skimming money from mortgage proceeds at closing,” according to the press release.

Officials said the losses could be more than $12 million.

Shawn Anthony of Hudson was charged with three counts of engaging in a pattern of corrupt activity, first-degree felonies; two counts of theft, second-degree felonies; six counts of telecommunications fraud, fourth-degree felonies; six counts of falsification, fourth-degree felonies; six counts of money laundering, third-degree felonies; and two counts of securing writings by deception, fourth-degree felonies.

Contact information for Anthony or his attorney could not be found by press time.

Others indicted include: Todd Cerankowski, Tiffany Gibson, Paul Gosden, Nicki McManis, Anthony Ramsey, Frank Ruggiero, Leroy Steele and Hope Turner of Akron; Daniel Spahr and Sonora Turner of Cleveland; Andrea DeStefanis, Brian DeStefanis and Donna DeStefanis of Medina; John Scordos of Parma and Otelia Simmons of Uniontown.

Those individuals are facing a total of 138 charges, which include theft, telecommunications fraud, money laundering, engaging in a pattern of corrupt activity, securing writings by deception and falsification.

The individuals represented eight companies: Dynasty 500, Inet Mortgage/T&N Financial, LES Investments/E Style Holdings/Regal Investments, P&B Investments/Renovator’s Unlimited, American Homebuyers, O.E. Simmons Realty, Skys the Limit and T.C. Appraisers.

Inspector Bill Holland of the Summit County Sheriff’s Department said the 16 are suspected of allegedly being involved with more than 100 properties “throughout greater Summit County.”

Because of a variety of reasons, only 40 were used in the indictments. Holland said the individuals have not been arrested and are awaiting a future court date, which has not been scheduled.

The cases will be prosecuted by the Ohio Attorney General’s Special Prosecutions Unit and the Summit County Prosecutor’s Office.

“This type of fraud wreaks havoc on our communities,” Cordray said in a press release. “The players in these kinds of schemes are willing to lie, cheat and steal with no regard to the damage they leave in their wake. Neighborhoods are stuck with boarded-up homes and lower property values, and municipalities and school districts suffer from the community’s deflated tax base.”

The Summit County Mortgage Fraud Task Force, which operates in conjunction with the Ohio Organized Crime Investigations Commission, is made up of officers from various Summit County and Ohio law enforcement agencies, including the Summit County Sheriff’s Department, Summit County Fiscal office, Akron Police Department, Cuyahoga Falls Police Department and the Ohio Bureau of Criminal Identification and Investigation.

Officials said they conducted about 96 interviews and issued more than 120 subpoenas to lending institutions, title companies, real estate agencies as well as other sources of information as part of the investigation.

Preet Bharara, the United States Attorney for the Southern District of New York, announced that Marina Dubin, a real estate paralegal, was sentenced yesterday to two concurrent three-year prison sentences in connection with her involvement in a multimillion-dollar, sub-prime mortgage fraud scheme and another foreclosure rescue scheme. Dubin, 33, of Brooklyn, New York, pleaded guilty to two counts of conspiracy to commit mail, wire, and bank fraud on June 12, 2008, before United States District Judge Richard J. Holwell, who also imposed the sentence yesterday in Manhattan federal court.

The Mortgage Fraud Scheme

According to the Indictment, other documents filed in these cases and related cases and statements made in court:

From 2004 through January 2007, DUBIN was a paralegal who acted as the bank attorney and settlement agent for numerous loans obtained by the participants in a wide-ranging mortgage fraud scheme. The scheme was led by Aleksander Lipkin 31, of Brooklyn, New York, and other participants included mortgage brokers and loan processors who worked at the Brooklyn mortgage brokerage firm AGA Capital NY, Inc. (”AGA Capital”) and its successors, as well as real estate appraisers, loan account executives, a lawyer, straw buyers, and others. DUBIN and her co-defendants submitted loan applications containing false information and material omissions, as well as other false documentation such as bank statements, to obtain loans that otherwise would not have been funded.

During the course of the mortgage fraud scheme, AGA Capital and its successors brokered over 1,000 home mortgages and home equity loans with a total face value of at least $200 million dollars and earned at least $4 million in commission fees on those loans. The various lenders defrauded by the scheme have claimed actual losses of approximately $11.6 million on loans that have completed foreclosure.

Of the 27 defendants charged in this case (United States v. Aleksander Lipkin, et al.), 25 pleaded guilty; one of the defendants, attorney Alexander Kaplan, 35, of Brooklyn, New York, was found guilty following a jury trial and is scheduled to be sentenced on April 6, 2010.

Garri Zhigun, 33, of Brooklyn, New York, who supervised the operations of AGA Capital and was Likin’s business partner, was sentenced on May 28, 2009, by Judge Holwell to 100 months in prison, three years of supervised release, and was ordered to forfeit $2.5 million and pay approximately $11.6 million in restitution.

The Foreclosure Rescue Scheme

From November 2003 through April 2005, Maurice McDowall, 55, of Brooklyn, New York, Lipkin and Dubin engaged in a fraud scheme targeting homeowners whose homes, primarily in Brooklyn and Bronx, New York, were in foreclosure or facing foreclosure, by offering them a plan to “save” their homes. The proposed plan included the refinancing of the homeowners’ debt with new, larger mortgages. Because the distressed homeowners typically had poor credit and were not eligible to refinance their debt at favorable terms, the defendants induced them to “sell” their homes to straw buyers, who would apply for loans to be used to “save” the home. The defendants promised that once the straw buyer obtained the mortgage, the proceeds would be used to pay off the homeowners’ old debt and make one year’s worth of payments on the new loans. The homeowners were told that, during that year, they could continue to live in their homes and work on improving their finances and credit. Finally, the defendants explained to the homeowners that, at the end of the year, the title to their homes would be returned to them by the straw buyers, with their credit repaired and their homes saved. There were also cases in which the defendants did not explain to homeowners that the plan to “save” their home required them to deed their house to a third party and did not obtain permission to deed the homes to others. In such cases, the defendants effectively stole the property of the homeowners by forging the homeowners’ signatures on various documents that transferred the homes to straw buyers without the homeowners’ knowledge.

McDowall, who directed the daily operations of the scheme, and Lipkin, a mortgage broker who coordinated the submission of fraudulent information to lenders on behalf of straw buyers, obtained more than 80 home mortgages and/or equity loans valued at over $20 million. In some instances, the defendants failed to make even one payment on the loans, causing the loans to default immediately; in nearly every other case, they eventually failed to make the payments and defaulted on the loans, thereby “cashing out” on the properties. As a result, the distressed homeowners lost the titles to their homes and faced eviction, the straw buyers owed the lenders hundreds of thousands of dollars that they were unable to repay, and the lenders suffered losses from the defaulted loans.

Dubin served as the settlement agent for the vast majority of the fraudulent loans obtained in the course of the scheme. In that capacity, she organized closings, prepared documents, and disbursed the fraudulently obtained proceeds to various defendants.

McDowall was previously sentenced by United States District Judge Robert P. Patterson to 120 months in prison and three years of supervised release, with 100 hours of community service to be performed in the first year after release. In addition, Judge Patterson ordered McDowall to forfeit $2.5 million.

Of the three other defendants charged in this case, one pleaded guilty and the other two were found guilty on charges of conspiracy, wire fraud, and bank fraud, following a 12-day jury trial in Manhattan federal court.

Lipkin was sentenced by Judge Holwell for his role in both the mortgage fraud scheme and the foreclosure rescue scheme (United States v. Maurice McDowall, et al.) on June 4, 2009, to 110 months in prison, five years of supervised release, and was ordered to forfeit $7 million and pay approximately $11.6 million in restitution.

In addition to the 36-month prison term, Dubin was sentenced to three years of supervised release. Judge Holwell also ordered Dubin to forfeit $7 million and pay approximately $11.6 million in restitution.

Mr. Bharara praised the work of the Federal Bureau of Investigation, the New York City Police Department, and the Department of Homeland Security’s U.S. Immigration and Customs Enforcement. He also thanked the New York State Attorney General’s Office for its role in the investigation.

This case was brought in coordination with President Barack Obama’s Financial Fraud Enforcement Task Force, on which Mr. Bharara serves as a Co-Chair of the Securities and Commodities Fraud Working Group. President Obama established the interagency Financial Fraud Enforcement Task Force to wage an aggressive, coordinated, and proactive effort to investigate and prosecute financial crimes. The task force includes representatives from a broad range of federal agencies, regulatory authorities, inspectors general, and state and local law enforcement who, working together, bring to bear a powerful array of criminal and civil enforcement resources. The task force is working to improve efforts across the federal executive branch, and with state and local partners, to investigate and prosecute significant financial crimes, ensure just and effective punishment for those who perpetrate financial crimes, combat discrimination in the lending and financial markets, and recover proceeds for victims of financial crimes.

U.S. Attorney General Eric Holder delivered more resources to fight mortgage fraud in Arizona and across the nation Thursday, saying $8 million will be used to beef up investigation teams this spring.

Holder made the announcement during a break in a daylong meeting of the federal Financial Fraud Enforcement Task Force, which was created to coordinate efforts to battle fraud by local, state and federal law enforcement agencies. The money included $1.7 million for efforts in Arizona, one of the states hardest hit by mortgage crimes.

Task force members were in Phoenix to hear about emerging trends in mortgage fraud from professionals who work in the real estate and mortgage industry, and community organizers and lawyers who help homeowners struggling to keep their homes. Members include senior Justice Department prosecutors, FBI officials and officials with the Department of Housing and Urban Development.

Advanced technologies, new communication tools and top federal law enforcement officials are focused on preventing, prosecuting and punishing mortgage fraud, Holder said.

“We will use information gained here in Phoenix — and in other epicenters of mortgage fraud — to focus and strengthen our law enforcement activities,” Holder said. “Mortgage fraud schemes must be stopped in their tracks, and those willing to exploit our national financial crisis for personal gain will be brought to justice.”

Real estate professionals who briefed task force members outlined new and emerging fraud trends, including the “flopping” of short-sale properties.

That’s a technique where someone gets two price opinions from brokers, giving the low one to the bank arranging a short sale of a home nearing foreclosure and the high one to a potential buyer, said Holly Eslinger, president of the Arizona Association of Realtors.

Such techniques can net an unscrupulous buyer tens of thousands of dollars while shorting the bank and homeowner and taking advantage of the subsequent buyer, she said.

A real estate professional for more than 30 years, Eslinger said what’s happening now isn’t new or unique. She said similar scams cropped up in the late 1980s, the last time the nation saw a huge price collapse and wave of foreclosures.

“When people get in trouble there is always someone to take advantage of them,” Eslinger said.

Other professionals urged increased scrutiny of valuation reports done by non-appraisers and loan modification schemes that prey on the most vulnerable homeowners.

Ben Wagner, a task force member who is the U.S. attorney for central California, said different parts of the country are seeing different kinds of fraud.

“It’s kind of a moving target depending on the market,” he said. “Obviously this crisis is not something that we are going to be able to prosecute our way out of, but it is one part of the solution.”

Michael Chou was sentenced today to 21 months in prison and ordered to pay $360,800 in forfeiture as a result of his conviction for conspiring to commit wire fraud, United States Attorney Joseph P. Russoniello announced.

Mr. Chou pleaded guilty to the wire fraud conspiracy charge on October 30, 2009. In pleading guilty, Chou admitted that from in or before 2003 until approximately April 2009, he participated in a scheme to defraud mortgage lenders and financial institutions by providing false and fraudulent information in support of mortgage loan applications. Working for San Francisco, Calif., based company known as “United Investments,” Chou and his co-conspirators assisted individuals who wanted to obtain mortgages from mortgage lenders so they could purchase residential properties in the Northern District of California and elsewhere.

As a part of this scheme, Chou routinely transmitted fraudulent loan applications to mortgage lenders that contained false employment information and false and inflated income and bank account information. The information was intended to inflate the borrowers’ creditworthiness. In addition, the loan applications were supported by false and forged documents that purported to verify the borrowers’ employment, income, and assets. Chou and other members of the scheme used a network of co-conspirators who agreed to pose as the borrowers’ employers and to falsely verify to the mortgage lenders the accuracy of the employment and income information listed on the loan applications. As a result of Chou’s participation in this conspiracy, he illegally earned at least $360,800.

The sentence was handed down by U.S. District Court Judge Susan Illston. Judge Illston also sentenced the defendant to a five-year period of supervised release. The defendant will begin serving the sentence on July 30, 2010.

Twelve other defendants have been charged in connection with the mortgage fraud scheme related to United Investments. Jeffrey Rabkin and Jeffrey Finigan are the Assistant U.S. Attorneys who are prosecuting these cases with the assistance of Elizabeth Garcia and Rayneisha Booth. The prosecutions are the result of an investigation by the Federal Bureau of Investigation.

Between December 2005 and March 2007, Mario Bernadel and seven accomplices purchased nearly 40 properties in the Phoenix area. What appeared to be a legitimate real-estate venture was instead an illegal scheme that resulted in losses totaling $9.5 million.

Bernadel and his cohorts submitted false mortgage-loan applications, used fake “straw buyers,” and directed the proceeds of their illegal scheme into bank accounts they controlled. Bernadel used his share of the money to support a lavish lifestyle, buying luxury vehicles and nights on the town at local nightclubs. Last week, the U.S. Attorney’s Office in Phoenix obtained a 17-year prison term for Bernadel, putting him out of business.

Stories like Bernadel’s have become common in recent years. Although signs of economic recovery are starting to appear, we know many Americans are still coping with the fallout of the housing crisis. That is why President Barack Obama established the Financial Fraud Enforcement Task Force, a broad coalition of federal, state and local law-enforcement agencies focused on combating fraud and protecting American families. Officials will work together to investigate and prosecute the types of financial wrongdoing that helped create our current economic crisis and that continue to hurt working families.

A central focus of the task force is mortgage fraud. While this problem transcends city and state lines, Phoenix has been hit especially hard. According to a study conducted at Arizona State University, the Phoenix area set a new record for foreclosures in 2009. In February 2010, Phoenix suffered foreclosures on 3,300 homes, and foreclosure-related activity represented 65 percent of sales last month. That’s why those of us on the task force and its chairman, Attorney General Eric Holder, met in Phoenix recently. We listened to community members who have suffered at the hands of con artists, to leaders in real estate who are trying to rid their industry of the cancer of fraud, and to state and local law enforcement responsible for fighting schemes designed to take advantage of honest Americans. Not only did we listen, we shared strategies and considered several solutions.

Attorney General Holder also announced that new investments included in the FY 2010 budget will soon be distributed to combat mortgage fraud. This spring, nearly $8 million will be allocated for this work, including $1.7 million to Arizona.

This event was the second of several summits the task force is hosting this year. Next month, we will hold a similar event in Detroit. The task force will use the information we learn to bring justice to those who see today’s climate as something to exploit for personal gain.

The task force intends to send a message to all would-be fraudsters: If you commit mortgage fraud, you will be punished. It also has a message to Americans who face the effects of the housing crisis every day: We will stand by you to protect what you have worked so hard to build.

Tony West is the assistant attorney general for the Civil Division of the U.S. Justice Department.

The alleged mastermind of a mortgage fraud and money laundering scheme involving residential properties in Atlantic City had an initial appearance in connection with a two-count Indictment today, U.S. Attorney Paul J. Fishman announced.

The Indictment charges that Jong Shin conspired with others to obtain more than a million dollars of mortgage loans for unqualified borrowers during June 2006 through December 2006 to purchase seven houses in Atlantic City at inflated prices. The Indictment further alleges that Jong Shin and other members of the conspiracy extracted a portion of the proceeds from the fraudulently obtained mortgage funds paid at the real estate closings, which Shin used to, among other things, gamble, purchase a liquor store, and make payoffs to her coconspirators in furtherance of the scheme.

Shin, 50, of Bayside, New York, surrendered herself earlier today, and following a brief hearing before the Honorable Joel Schneider, U.S. Magistrate Judge, was released on $100,000 bail. The Indictment is the latest step in an ongoing investigation by the Federal Bureau of Investigation and the Internal Revenue Service - Criminal Investigation Division into fraudulent mortgage loans in southern New Jersey.

According to the Indictment, Jong Shin and her conspirators arranged to sell the Atlantic City properties to “straw purchasers,” that is, friends and acquaintances whom Shin knew had good credit scores, but lacked the financial resources to qualify for mortgage loans to purchase the properties.

According to the Indictment, in exchange for purchasing the properties in their names, Shin promised the straw purchasers that they would not have to pay deposits or closing costs to acquire the properties, would not have to make monthly mortgage payments, and would receive cash after the closing for allowing their names and credit information to be used to buy the properties. The Government maintains that, in completing the borrowers’ loan applications, Shin and her coconspirators claimed fake employers, inflated incomes, false bank account balances, and fictitious assets in order to induce the lenders to extend the mortgage loans.

It is further alleged that Shin and others took proceeds from the fraudulent mortgage loans by having funds wired into various accounts that they controlled. The Indictment further alleged that Shin used some of the proceeds from the mortgage fraud to further the scheme by: (1) making payoffs to her co-conspirators, including the straw purchasers, a title clerk and a real estate appraiser; and (2) making two to three payments on each property before allowing the mortgage loans to go into default. In addition, the Indictment alleges that Shin also used the proceeds for personal living expenses, gambling and to purchase a liquor store.

The Indictment charges Jong Shin with one count of conspiracy to commit wire fraud, which carries a statutory maximum prison sentence of 30 years and a statutory maximum fine of not more than $1,000,000. The Indictment also charges Shin with one count of conspiracy to commit money laundering, which carries a statutory maximum prison sentence of 10 years, and a statutory maximum fine equal to the greatest of $250,000, twice the gain from the offense, or twice the loss caused by the offense. Despite the Indictment, however, the defendant is presumed innocent unless and until proved guilty beyond a reasonable doubt.

A two-year investigation into an alleged $12 million mortgage fraud case has ended with indictments against 16 people.

The charges were announced Wednesday by the Summit County Sheriff’s Office and a mortgage fraud task force composed of local law enforcement.

Authorities said the defendants ”committed mortgage fraud by inflating the values of the homes, falsifying mortgage loan applications and skimming money from mortgage proceeds at closing.”

Investigators said they conducted about 96 interviews and obtained more than 120 subpoenas to lending institutions, title companies, real estate agencies and others.

The investigation also involved thousands of pages of documents, according to a news release.

The indictment includes 16 properties with six straw buyers in the ”Leroy Steele Conspiracy” and 24 properties with 19 straw buyers in the ”Brian Destefanis Conspiracy.”

Those indicted include Todd Cerankowski, Tiffany Gibson, Anthony Ramsey, Leroy Steele, Paul Gosden, Brian Destefanis, Shawn Anthony, Nicki McManis, Frank Ruggerio, Daniel Spahr, Hope Turner, Sonora Turner, Andrea Destefanis, Donna Destefanis, John Scordos and Otelia Simmons.

The ages and addresses of the defendants, along with the names of their attorneys, are not immediately available.

In addition, the following corporations were identified as part of the fraud cases: Dynasty 500, Inet Mortgage and T&N Financial, LES Investments and E Style Holdings and Regal Investments, P&B Investments and Renovator’s Unlimited, American Homebuyers, O.E. Simmons Realty, Skys the Limit and T.C. Appraisers.

On the evening of March 13, 2007, limousines lined up outside the Cipriani restaurant in Manhattan’s Chelsea neighborhood.
Inside, Hassan Nemazee, surrounded by New York’s deep- pocketed donors, was orchestrating one of the year’s major fundraisers for Hillary Clinton’s presidential bid. As guests dined on steak and beet salad, Nemazee introduced the senator and her husband, former President Bill Clinton.
Harvard-educated Nemazee, a scion of one of Iran’s wealthiest families, helped raise more than $500,000 that night.
Three years later, on March 18, Nemazee stood in a federal courthouse 2 miles (3 kilometers) away and confessed to a 12- year scheme to defraud banks of $292 million, Bloomberg Markets reports in its May issue. He faces up to 19 and a half years in prison after pleading guilty to three bank fraud charges and one wire fraud charge. He must report to jail on April 30 and will be sentenced on June 30.
“He certainly has had an extremely successful fraud up to now,” U.S. District Judge Sidney Stein said during the plea.
The man whom President Clinton had nominated to be U.S. ambassador to Argentina and who’d brought in at least $2.4 million over 15 years for Democratic luminaries, including President Barack Obama and Vice President Al Gore, was remorseful and somber.
“I’m deeply ashamed of my conduct,” Nemazee, 60, told the judge.
Complete Shock
Nemazee’s downfall stunned New York’s fundraising community.
“It was a complete shock,” says Alan Patricof, managing director at New York venture capital firm Greycroft Partners LLC. “Some of us still wish that we will wake up one day and it’ll all go away.”
For Nemazee, whose family last summer was relaxing on his estate in Katonah, New York, the reversal was swift.
On Aug. 23, as he checked in at Newark Liberty International Airport for a flight to Rome, Federal Bureau of Investigation agents intercepted him. They grilled him about collateral he’d used to secure a $75 million loan from the Citibank unit of Citigroup Inc.
The next day, he borrowed $75 million from HSBC Holdings Plc to pay off the Citibank loan. That only dug him in deeper.
On Aug. 25, Nemazee surrendered to the FBI and was charged with defrauding Citibank by offering as collateral $86 million of U.S. Treasuries that didn’t exist. He also claimed to have an additional $500 million in another account.
Millions Still Missing
Prosecutors added to the charges on Sept. 21, accusing him of stealing hundreds of millions from HSBC and Bank of America Corp. He used the purloined money to juggle the loans and to finance the political donations, charitable contributions and real estate purchases that made him a fixture in political circles.

The fraud escalated in 2004 when Nemazee became part owner of New York-based investment firm Carret Asset Management LLC with Alan Quasha, a friend from Harvard he’d known for 30 years and who says he became another victim of fraud and deception.
Nemazee was an icon of business success and political influence among Iranian-Americans, says Amir Farman-Farma, managing director at Connexion Capital in London, who says he met him at a party in Scarsdale, New York, in the mid-1980s. A member of the Council on Foreign Relations since 2004, Nemazee donated money to the Asia Society and the Brain Trauma Foundation.
“No one suspected anything,” Farman-Farma says.
Now, Farman-Farma, Patricof and others are left to wonder what signs they missed. Nemazee’s Harvard pedigree, his generosity and his political hobnobbing created a facade of legitimacy that led people to overlook the possibility of deception.
‘First-Rate Individual’
“Hassan certainly gave me and everybody who knew him the sense that he was absolutely a first-rate individual,” Quasha says.
Nemazee reinforced this masquerade by pretending to be a business success. He owned a Park Avenue duplex and a blue Maserati Quattroporte. He claimed in press releases that his privately held firm, Nemazee Capital Corp., had $3 billion under management — with investments in energy, media and technology.
There were hints that Nemazee wasn’t what he said he was.
“People have blinders on,” says Ken Springer, a former FBI agent and founder of Corporate Resolutions, a New York-based investigative firm. “They ignore the warning signs.” Business partners should have looked at Nemazee’s previous lawsuits and checked his resume, Springer says.
‘Failure of Diligence’
The banks Nemazee bilked should have known better, says Richard Carnell, a professor at Fordham University School of Law in New York. Even in an era of easy credit, the banks should have exercised normal controls.
“This is an enormous failure of diligence,” says Carnell, a former assistant secretary for financial institutions at the U.S. Treasury. “The banks had an enormous self-interest in verifying the collateral.”
Shirley Norton, a spokeswoman for Bank of America; Juanita Gutierrez, a spokeswoman for HSBC; and Shannon Bell, a spokeswoman for Citigroup, declined to comment.
Nemazee’s case is one of several scams that have rocked banks during the past 15 years.

A Florida man convicted in Collin County of scamming thousands of dollars from McKinney homeowners is now facing a federal indictment.

John Barry, the owner and operated of the TKI Group and JAB Consulting in Winter Garden, Fla. is one of 32 defendants named in an indictment in the U.S. Eastern District of Texas court that includes 16 counts of mail and wire fraud and money laundering. 366th District Judge Greg Brewer handed down a 25-year sentence to Barry last year on a first-degree felony charge of money laundering for his role in a mortgage fraud scheme involving homes in the Stonebridge subdivision.

Barry is accused of using 10 homes on Hills Creek Drive sometime before December 2006 to dupe homeowners into paying more than the home’s actual worth. Investigators believe he would purchase the property near the actual market value and use fraudulent appraisals to sell the home at an inflated price.

He would obtain the fraudulent prices from home appraisers who investigators believe were also in on the scam. Elizabeth Tava Altizer and Pamela Sue Ford have each been indicted for their alleged role in Barry’s deals.

They each received a first-degree felony indictment of using false statements to obtain property/credit last May, according to Collin County court records.

Once Barry had an interested buyer willing to give them the money for the false price, he would take the money under the agreement he would use the proceeds to repair the property and perform upkeep on the home.

Federal investigators also believed at the time that Barry has committed similar home scams across the city and the state that involve at least 50 other homes, but could not confirm or deny the existence of any additional investigations.

The new indictment consists of the same scam but on a statewide scale. The indictment identifies 114 homes located in Allen, Arlington, Cedar Hill, Coppell, Corinth, Cypress, Dallas, Flower Mound, Fort Worth, Frisco, Granbury, Heath, Highland Village, Houston, Keller, Lantana, Lewisville, Little Elm, Lubbock, Magnolia, McKinney, Plano, Roanoke, Southlake, Spring, The Woodlands, and Willis.

Barry again stands accused of defrauding lending institutions by convincing them to approve loans for mortgages for homes with inflated property values, according to the indictment.

If Barry and his fellow defendants are convicted of the federal charges, he could face up to two 20 year terms in a federal prison for the conspiracy and mail fraud charges and a possible additional 10 years for each money laundering charge.

U.S. Attorney John Bales said he hopes Barry’s case will prevent other mortgage and financial scams from increasing in scope.

“This indictment brings to light a criminal scheme that is quite breathtaking in its scope and beyond disturbing as far as the boldness of the fraud,” Bales said in a released statement. “The agents have done a remarkable job putting together this investigation and we look forward to presenting all of the evidence in court. Hopefully, others involved in mortgage fraud will be taking notice – we will be relentless in discovering, exposing and holding accountable those who have committed similar crimes.”

A former loan originator and licensed notary was convicted Wednesday in federal court on 30 felony counts of conspiracy, bank fraud, wire, fraud and money laundering offenses, following an investigation by U.S. Immigration and Customs Enforcement (ICE).

William S. Poff, 37, of Marshall, Mich., was living in Washington state when he and four other individuals were involved in a mortgage fraud scheme that cheated banks and property sellers in the Puget Sound region out of millions of dollars. ICE agents arrested Poff and four others in June 2009.

Court documents reveal that starting in 2005 through 2008, the co-conspirators fraudulently obtained financing from banks to purchase homes. They secured the loans by providing a series of false statement on employment, income, citizenship status, assets and liabilities.

They submitted bogus appraisals and hired fictitious home repair companies to do repair work on the properties. Proceeds from the home sales would go to the fake companies that had, in fact, done no work.

At the same time, they convinced innocent home sellers to extend private loans to the buyer of the home to cover a portion of the purchase price. The private loans, which were not disclosed to the banks, allowed the conspirators to obtain loan proceeds far beyond the value of the assets securing those loans.

The sellers did not know that the conspirators had already obtained financing from commercial lenders to cover the full cost of the home. When payments were not made, the properties fell into foreclosure. The homes were then sold for less than the total of all loans secured for the property. The sellers who had extended private loans to the buyers were ultimately left with nothing.

During Poff’s trial, prosecutors focused on the purchase of eight different properties using various deceptive methods including straw buyers, forged settlement documents, lies on loan applications, inflated sales prices, and undisclosed seller financing. Most of the properties are pending foreclosure.

ICE investigators learned that Poff and his co-conspirators pocketed $1.7 million. Evidence presented at trial showed that Poff used some of it for his living expenses, trips, and child support payments.

“This case illustrates how the desire to turn a quick profit can lead to financial crimes that defraud innocent citizens,” said Leigh Winchell, special agent in charge of ICE’s Office of Investigations in Seattle. “ICE will continue to use its unique investigative authority to expose other illegal financial transactions in an effort to deter this type of activity.”

The fraudulent mortgage transactions occurred in communities throughout Western Washington, including in Des Moines, Tacoma, Seattle, Puyallup, Spanaway, SeaTac, Auburn, Bellevue, Renton, Lakewood, Fircrest, Kent, Pacific and Issaquah. The other four defendants in the case have pleaded guilty.

Poff faces up to 30 years in prison. He is scheduled to be sentenced on June 14.

A $120,000 settlement has been reached with multiple Tucson defendants for their roles in what state Attorney General Terry Goddard called a fraudulent real estate scheme.

Those agreeing to the settlement included Andrew T. Silverstein, VinLan Ventures doing business as Re/Max All Executives, and Vincent Volpe. They must pay $84,000 toward restitution and $36,000 to the attorney general’s Consumer Fraud Revolving Fund.

The agreement follows a $60,000 settlement earlier this year in the same case against four other defendants: Tucson Mortgage Co., WGA Enterprises LLC and William and Jane Doe Anastopoulos.

According to the attorney general’s report, the scheme involved putting unqualified rent-to-own buyers into investment homes. Eventually many of these homes were foreclosed, causing harm to the investors, lenders and rent-to-own home buyers, according to the attorney general.

Among 40 defendants charged by a federal grand jury indictment (PDF) announced this week in a Texas case are Daniel Ayers and Anthony Flores, reports the Dallas Morning News.

The two, who reportedly served as title company attorneys or escrow officers in real estate transactions at issue in the case, are 1996 graduates of Southern Methodist University’s law school.

They allegedly were recruited by a Florida businessman, along with real estate agents, mortgage brokers, property appraisers, straw buyers and others, to participate in a Dallas-area mortgage scheme. “The purpose of the scheme was to defraud lending institutions by convincing them to approve mortgage loans for residential properties for which the property values had been fraudulently inflated,” states a U.S. Department of Justice press release about the Eastern District of Texas case.

The case concerns some 114 houses in the Dallas area, on which lenders lost about $20 million, although all of the defendants are not accused of participating in all of the transactions at issue. Half of the $20 million allegedly went to the scheme’s claimed ringleader, Florida businessman John Barry.

Attorney David Finn represents Ayers. He tells the ABA Journal that his client was cooperating with the government before the indictment was handed down in what Finn describes as a “massive” investigation and will continue to do so. He anticipates that a voluntary surrender date for Ayers will be arranged next week.

“I believe that the evidence will show that my client allowed himself to be sucked into the vortex of fraud and deceit perpetrated and orchestrated by Mr. Barry,” says Finn in an e-mail to the ABA Journal. “The evidence will show that, unlike Mr. Barry, who allegedly pocketed approximately $10 million, my client derived very little financial benefit from the transactions outlined in the Indictment.”

Barry could not be reached for comment by the Dallas Morning News, which apparently didn’t attempt to contact the other defendants. The phone number listed for the Ayers & Flores firm on its website is temporarily disconnected, according to a recorded message that responded to an ABA Journal call, and Flores did not immediately respond to an e-mailed request for comment by the ABA Journal.

The indictment includes charges of mail fraud, conspiracy to commit mail and wire fraud, and money laundering.

“We’re trying to capture and take on the entire apparatus that he had established,” said U.S. Attorney John Bales of Barry in an interview yesterday with the Dallas Morning News.

He tells the newspaper he expects to announce more mortgage fraud cases soon.

An East Norriton man accused of embezzling $6.3 million from his former employer pleaded guilty Thursday to wire fraud, bank fraud, filing a false tax return and making a false statement to the federal government.

Michael G. Spada, 50, was charged earlier this month with stealing from Scannapieco Development Corporation, in New Hope, and hiding the fraud from a bank and the Internal Revenue Service (IRS) that extended him a $3.2 million line of credit, according to the U.S. Attorney’s Office for the Eastern District of Pennsylvania.

Sentencing in the case is scheduled for June 21. Spada faces a maximum possible sentence of 60 years imprisonment, a $1.7 million fine, three years’ supervised release. He could also be ordered to pay $6.3 million in restitution and forfeit proceeds from his crimes, which includes his home in East Norriton and a New Jersey beach house.

Before his arrest, he was controller and chief financial officer of the Bucks County-based firm and the company’s other real estate and management companies.

Spada embezzled the funds by diverting company checks to his own account and took more than $400,000 in unauthorized salary between 2000 and 2009, according to authorities. He then failed to report most of the stolen money on tax returns and lied to IRS agents about this last June, reports indicate.

Scannapieco Development Corporation and its other companies had accounts at Bank of America, the successor to Summit Bank and Fleet Bank.

Spada had one individual, identified as “T.S.” in court papers, sign checks under false pretenses.

One SDC company, Headquarters Hotel Associates, owned the Sheraton Atlantic City Convention Center Hotel that had a mortgage with Bank of America. From 2000 to 2004, the East Norriton executive gave 56 checks to T.S. to sign, some in amounts as much as $100,000, purportedly to pay the hotel complex’s mortgage. Instead, Spada put the money in his own personal account at the bank.

The defendant used most of the embezzled money to fund a multi-million dollar brokerage account, and he spent $2.7 million on an ocean front home in Brigantine, N.J., according to federal prosecutors. The shore residence has an estimated value of $4.2 million.

Spada was employed with the company since the 1980s. He is married and has three adult daughters.

Assistant U.S. Attorney Mark B. Dubnoff prosecuted the case. The East Norriton man is being defended by Thomas Ostrander.

Prosecutors allege kickbacks, falsified loans

A federal judge will decide the fate of five people who have pleaded guilty in a mortgage fraud scheme that prosecutors say involved falsified loans and kickbacks to an upstate homebuilding business.

An indictment accused South East Real Estate Solutions of falsifying financial information to help investors qualify for mortgages larger than they could afford and then arranging for the investors to buy property from Tower Homes at inflated values.

Tower paid kickbacks to South East without the investor or bank knowing about it, the indictment alleged.

South East marketed itself as a business that helped “inexperienced investors achieve success in the real estate market,” according to the indictment.

Many of the 33 loans are now delinquent and the homes in foreclosure, prosecutors alleged. The Secret Service began investigating after several investors came forward in February 2009, prosecutors said.

Pleading guilty to conspiracy to commit bank fraud from South East were: Anthony B. Grant, 43, and his twin brother, Antonio B. Grant, both of Simpsonville, and their partner, 37-year-old Michael D. Holmes of Lawrenceville, Ga., according to court records.

Also pleading guilty to the same charge were Tower Homes, its president, Nathan Seppala, 50, and its vice president Sandra Kinnunen, 59, both of Greer, records show.

U.S. District Judge Henry F. Floyd will impose a sentence after reviewing reports from the U.S.

Shawn R. Tieskotter, age 36, of Greenwood Village, Colorado, and Craig D. Patterson, age 30, of Littleton, Colorado, were indicted by a federal grand jury in Denver on March 10, 2010, on charges of money laundering, wire and mail fraud. Patterson was arrested by federal agents without incident. He appeared in U.S. District Court in Denver on March 12, 2010, for an initial appearance where he was advised of the charges pending against him. He was arraigned today, March 17, 2010. Shawn Tieskotter received a summons to appear in U.S. District Court in Denver on March 25, 2010, where he will be advised of the charges pending against him.

According to the indictment, between March 26, 2005, and continuing through June 30, 2005, in Colorado and elsewhere, Shawn Tieskotter and Craig Patterson knowingly executed and attempted to execute a scheme to defraud various financial institutions as well as commercial mortgage lenders. The scheme was executed in connection with residential mortgage loan applications relating to 13 properties in the Denver, Colorado metropolitan area. The neighborhoods included Aurora, Centennial, Littleton, Parker and Castle Rock.

As part of the scheme, Tieskotter and Patterson prepared, submitted and caused to prepare and submit applications for residential mortgage loans and related documents in Tieskotter’s name. The applications included a first mortgage and second mortgage for each of the 13 properties. Each of these applications contained materially false and fraudulent representations that Tieskotter intended to use the property as his primary residence and most of the applications contained materially false and fraudulent representations about the extent of Tieskotter’s liabilities related to the other residential mortgage loans.

It was further part of the scheme for Tieskotter and Patterson to hide from lenders the extent of Tieskotter’s liabilities for the other mortgages, before such liabilities would appear on Tieskotter’s credit reports. At the time of closing, Tieskotter and Patterson caused additional disbursements of monies to PK Design Group, LLC, an entity controlled by Patterson, or Dream Design, a trade name for an entity controlled by Tieskotter. Tieskotter and Patterson concealed from the lenders and other parties associated with the transactions their control of these entities.

Upon conviction of the alleged offenses, Tieskotter and Patterson shall forfeit to the United States all property constituting or derived from proceeds traceable to the commission of the offense, including but not limited to a sum of money equal to $219,566 for money laundering and $4,710,666.86 for wire and mail fraud charges.

“Prosecuting those responsible for mortgage fraud is a priority of the Department of Justice,” said U.S. Attorney David Gaouette. “Those attempting to illegally take advantage of financial institutions will face prosecution.”

“Combating mortgage fraud is a priority because of its impact on the well being of our housing markets and national economy,” said Special Agent in Charge James H. Davis. “Law enforcement and the community at large must maintain their vigilance in identifying those who commit these types of fraud.”

“The use of the Postal system to carry out or further any fraud is a crime which is investigated thoroughly by the United States Postal Inspectors,” said U.S. Postal Inspector in Charge Shawn Tiller. “We were pleased to once again team up with our federal partners in the Denver area to bring these perpetrators to justice.”

“IRS Criminal Investigation will work diligently with our law enforcement counterparts to insure mortgage fraud is vigorously investigated and brought to justice. Mortgage fraud directly threatens the financial health of the communities in which we live, said Christopher M. Sigerson, Special Agent in Charge, IRS Criminal Investigation, Denver Field Office.”

Counts one through nine allege wire and mail fraud, which carries a penalty of not more than 20 years imprisonment, and up to a $250,000 fine, per count.

Counts ten through thirteen allege money laundering, which carries a penalty of not more than 10 years imprisonment, and a fine of up to $250,000.

This case was investigated by the Internal Revenue Service Criminal Investigation (IRS CI), the Federal Bureau of Investigation (FBI), and the United States Postal Inspection Service (USPIS).

Trent Edward Wright, 38, of Cumming, Ga., was sentenced today by U.S. District Judge Timothy C. Batten, Sr. to serve one year and nine months in federal prison on a mail fraud charge involving a mortgage fraud scheme which victimized lenders and title insurance companies.

Acting U.S. Attorney Sally Quillian Yates said of today’s sentencing, “Lenders and title companies relied on this defendant as their closing attorney and agent and he was in a position of trust. He was supposed to pay off all prior encumbrances on properties to secure loans, and pass clear title as warranted by the title insurance. He didn’t. Now he is going to federal prison.”

Wright was sentenced to one year, nine months in prison to be followed by three years of supervised release, and was ordered to pay $2,409,760 in restitution to the victims of the scheme. There is no parole in the federal system. Wright pleaded guilty to the mail fraud charge in a criminal information on Dec. 17, 2009.

According to Acting U.S. Attorney Yates and the information presented in court: In September, October and November 2006, Wright, then a real estate closing attorney operating from an office in Sugar Hill, Ga., closed approximately 17 loans in which lenders were falsely assured that all prior loans encumbering the properties securing their loans had been paid off. Those lenders then believed that they would be in first position to recoup their loan amounts from the sale of the properties should they go into foreclosure. Wright also wrote title insurance for these loans although he failed to pay off numerous prior recorded liens which encumbered the properties. Rather than ordering title searches and requesting pay off amounts from all prior lenders as required before the new loan closings, Wright either failed to order title searches or disregarded recorded prior encumbrances, causing over $2.4 million in losses. Wright closed his law practice in January 2007, and surrendered his license to practice law in December 2009.

A co-conspirator in a related case, Edward William Farley, 47, of Hoschton, Ga., operated through a company called Alliance Resource Management (ARM) located in Lawrenceville, Ga., as the borrower who received the proceeds from the 17 mortgage loans closed by Wright. In seeking funds for other loans, Farley told real estate investors, lenders, and banks, that they would get returns of 14 percent to 60 percent. Farley also promised them that they, too, would be first position to recoup their loan amounts from the sale of the properties should they go into foreclosure. Farley in fact used the same property to falsely “fully secure” multiple lenders on that same property. This fraud caused losses in excess of $25 million.

Farley pleaded guilty to bank fraud and conspiracy on Nov. 5, 2009, and is scheduled for sentencing before Judge Batten on April 14, 2010. Farley could receive a maximum sentence of 30 years in prison and a fine of up to $1,000,000 on each of the two counts, plus full restitution to all victims who have not been repaid. In determining the actual sentence, the court will consider the U.S. Sentencing Guidelines, which are not binding but provide appropriate sentencing ranges for most offenders.

These cases are part of President Barack Obama’s Financial Fraud Enforcement Task Force. President Obama established the interagency Financial Fraud Enforcement Task Force to wage an aggressive, coordinated and proactive effort to investigate and prosecute financial crimes. The task force includes representatives from a broad range of federal agencies, regulatory authorities, inspectors general, and state and local law enforcement who, working together, bring to bear a powerful array of criminal and civil enforcement resources. The task force is working to improve efforts across the federal executive branch, and with state and local partners, to investigate and prosecute significant financial crimes, ensure just and effective punishment for those who perpetrate financial crimes, combat discrimination in the lending and financial markets, and recover proceeds for victims of financial crimes.

Trent Edward Wright, 38, of Cumming, Ga., was sentenced today by U.S. District Judge Timothy C. Batten, Sr. to serve one year, nine months in federal prison on a mail fraud charge involving a mortgage fraud scheme which victimized lenders and title insurance companies.

Acting U.S. Attorney Sally Quillian Yates said of today’s sentencing, “Lenders and title companies relied on this defendant as their closing attorney and agent and he was in a position of trust. He was supposed to pay off all prior encumbrances on properties to secure loans, and pass clear title as warranted by the title insurance. He didn’t. Now he is going to federal prison.”

Wright was sentenced to one year, nine months in prison to be followed by 3 years of supervised release, and ordered to pay $2,409,760 in restitution to the victims of the scheme. There is no parole in the federal system. Wright pleaded guilty to the mail fraud charge in a criminal information on Dec. 17, 2009.

According to Acting U.S. Attorney Yates and the information presented in court: In September, October and November 2006, Wright, then a real estate closing attorney operating from an office in Sugar Hill, Ga., closed approximately 17 loans in which lenders were falsely assured that all prior loans encumbering the properties securing their loans had been paid off. Those lenders then believed that they would be in first position to recoup their loan amounts from the sale of the properties should they go into foreclosure. Wright also wrote title insurance for these loans although he failed to pay off numerous prior recorded liens which encumbered the properties. Rather than ordering title searches and requesting pay off amounts from all prior lenders as required before the new loan closings, Wright either failed to order title searches or disregarded recorded prior encumbrances, causing over $2.4 million in losses. Wright closed his law practice in January 2007, and surrendered his license to practice law in December 2009.

A co-conspirator in a related case, Edward William Farley, 47, of Hoschton, Ga., operated through a company called Alliance Resource Management (ARM) located in Lawrenceville, Ga., as the borrower who received the proceeds from the 17 mortgage loans closed by Wright. In seeking funds for other loans, Farley told real estate investors, lenders, and banks, that they would get returns of 14% to 60%. Farley also promised them that they, too, would be first position to recoup their loan amounts from the sale of the properties should they go into foreclosure. Farley in fact used the same property to falsely “fully secure” multiple lenders on that same property. This fraud caused losses in excess of $25 million.

Farley pleaded guilty to bank fraud and conspiracy on Nov. 5, 2009, and is scheduled for sentencing before Judge Batten on April 14, 2010. Farley could receive a maximum sentence of 30 years in prison and a fine of up to $1,000,000 on each of the two counts, plus full restitution to all victims who have not been repaid. In determining the actual sentence, the court will consider the U.S. Sentencing Guidelines, which are not binding but provide appropriate sentencing ranges for most offenders.

These cases are part of President Barack Obama’s Financial Fraud Enforcement Task Force. President Obama established the interagency Financial Fraud Enforcement Task Force to wage an aggressive, coordinated and proactive effort to investigate and prosecute financial crimes. The task force includes representatives from a broad range of federal agencies, regulatory authorities, inspectors general, and state and local law enforcement who, working together, bring to bear a powerful array of criminal and civil enforcement resources. The task force is working to improve efforts across the federal executive branch, and with state and local partners, to investigate and prosecute significant financial crimes, ensure just and effective punishment for those who perpetrate financial crimes, combat discrimination in the lending and financial markets, and recover proceeds for victims of financial crimes.

A former Bakersfield real estate agent and her father face 15 felony counts each of money laundering, conspiracy and grand theft in connection with an alleged multi-million dollar mortgage fraud scheme, newly filed court charges show.

Guadalupe Ramirez, 31, and Augustine Ramirez, 60, each are wanted on $1 million arrest warrants. The father and daughter were not in custody as of Thursday morning. They face more than 19 years in prison each if convicted on all charges.

The younger Ramirez was a Realtor with Bakersfield’s Touchstone Real Estate before the company merged with Watson Realty. Calls to several managers at Touchstone/Watson Realty Wednesday were not returned.

Augustine Ramirez purchased five homes in the span of six weeks near the end of 2006, according to county documents. In applying for loans, Ramirez indicated each house was to be his principal residence, mortgage fraud prosecutor Gordon Isen alleges in court documents.

In exchange for buying the homes at an inflated price, Ramirez received a kickback from the seller, in one case totaling $100,000, Isen writes.

Bakersfield Police Financial Crimes Detective Frank Wooldridge said Ramirez took out $4.1 million in fraudulent loans, and with his daughter, received about $385,000 in kickbacks. The homes went into default a few months after they were purchased, indicating Augustine Ramirez never made a single payment, Wooldridge said.

It’s one of the first cases handled by the new mortgage fraud division of the District Attorney’s Office but, Isen said, it’s just the beginning.

“I wouldn’t want to give you the impression this is the only real estate fraud case that we’re looking into, or the only one of this magnitude that we are looking into,” Isen said, declining to provide specifics.

“The victim is all of us, all of us who own homes and have to pay our mortgages,” Det. Wooldridge said. “We have to deal with these types of matters because it results in homes that are going to be foreclosed upon.”

Michael Milan, 49, of Bethesda, Md., was sentenced to 108 months in prison, followed by three years of supervised release, for his role in carrying out a multi-million-dollar mortgage fraud scheme. Milan was also ordered to pay restitution of $3,141,409 and to forfeit $1,061,890 in proceeds he obtained.

Neil H. MacBride, United States Attorney for the Eastern District of Virginia, and Shawn Henry, Assistant Director in Charge of the FBI Washington Field Office, made the announcement after sentencing by United States District Judge T.S. Ellis, III.

“Michael Milan manipulated banks to get illegal loans for his clients and large fees for himself,” said U.S. Attorney MacBride. “That greed and deception has caused much of the pain we’re feeling right now in the mortgage market, and we are aggressively pursuing mortgage fraud cases to hold those who engaged in this fraud accountable.”

“Homeowners and homebuyers must be able to rely on the ethics and integrity of their brokers,” said Assistant Director in Charge Henry. “Mr. Milan’s conduct unfairly taints the image of hard-working, honest people seeking to help families under stress because of the current real estate market.”

According to court records, Milan was a consultant to various mortgage brokerage companies and conspired with others to defraud mortgage lenders into lending funds for the purchase and refinance of residential properties. Milan caused his associates to prepare false mortgage applications which contained false information about the income and assets of the borrowers. Some of the mortgage applications falsely claimed that the borrowers earned hundreds of thousands of dollars from a company, Collid LLC, which Milan controlled. Milan’s conspiracy submitted fraudulent loan applications for the purchase or refinance of 11 different properties and caused losses of more than $2.5 million but less than $7 million.

Court records indicate that Milan fled from the United States after the execution of a search warrant at his office in June 2008 and did not return until April 2009. During a detention hearing held after his return, Milan attempted to explain his extended flight from the U.S. by providing fraudulent Iranian court documents, which falsely claimed that he had been incarcerated in Iran during the summer of 2008. As part of his plea on Dec. 1, 2009, Milan acknowledged that he attempted to obstruct justice with these false documents.

Milan is the sixth defendant convicted by the investigation, which remains ongoing. Others convicted include a settlement agent, a loan officer who worked with Milan, and Milan’s son, Dustin Milan.

This case was investigated by the FBI’s Washington Field Office. Assistant United States Attorneys Edmund P. Power and Stephen P. Learned prosecuted the case on behalf of the United States.

Jeffrey H. Sloman, United States Attorney for the Southern District of Florida; John V. Gillies, Special Agent in Charge, Federal Bureau of Investigation, Miami Field Office; and J. Thomas Cardwell, Commissioner, State of Florida’s Office of Financial Regulation, announce that defendants Daniel Stephen and Patricia De Pons pled guilty to conspiracy to commit mail fraud in connection with a vacant land sale scheme that defrauded more than 1,000 victims out of $10.6 million.

According to the indictment, this case arose out of the sale of land in various counties in North Florida and in Georgia by First Loan Solution (“FLS”), a company owned and operated by Daniel Stephen. Stephen advertised the sale of the land to the Haitian community in Miami Dade County, using First Loan Solution’s website, Stephen’s radio program on Haitian radio, and the distribution of flyers. Stephen organized bus trips for prospective buyers to view the land in North Florida. During these trips, Stephen falsely represented that First Loan Solution owned the land. Stephen made similar false representations in individual meetings with the buyers.

Based upon these false representations, the prospective buyers agreed to enter into land sale contracts with First Loan Solution to purchase the land in one-acre increments. Upon signing the land sale contracts, Daniel Stephen required buyers to make down-payment deposits. Stephen falsely assured the prospective buyers that First Loan Solution would maintain the deposits in escrow accounts to be released only when authorized by the parties to the contract. Contrary to his representations, Stephen fraudulently diverted a significant portion of these buyers’ deposits to pay business expenses of First Loan Solution and for his personal enrichment.

Daniel Stephen failed to purchase the land that he had agreed to sell, causing significant delays in closing the land sales to the buyers. Stephen sent letters to the buyers purporting to explain the reason for the delays, fraudulently representing that the delay resulted from the lengthy time required to survey the land without disclosing that First Loan Solution did not own the land. Stephen also falsely assured the buyers that their deposits were being held in escrow accounts. Stephen used these letters to conceal the fraud and lull the buyers into a false sense of security about the status of the land transactions and the safety of their deposits.

Daniel Stephen hired a law firm with initials of E.-T. to serve as the closing and escrow agent in the land sale transactions between the prospective buyers and First Loan Solution. Patricia De Pons was the public face of E.-T. in connection with these First Loan Solution transactions. Many buyers attempted to terminate the land sale contracts and obtain refunds of their deposits. Patricia De Pons, on behalf of E-.T, and Daniel Stephen, on behalf of First Loan Solution, refused requests to obtain refunds, offering repeated excuses for failing to refund the deposits and referring the increasingly frustrated buyers back and forth between First Loan Solution and E.-T. In some instances, De Pons and Stephen did provide refund checks, although several of the refund checks issued by Stephen were returned for lack of sufficient funds.

Without explanation, Patricia De Pons presented the buyers with limited liability company (“LLC”) agreements for signature. De Pons failed to disclose to the buyers that, through these LLC agreements, the buyers were agreeing to purchase an interest in a limited liability company—with the company as the title owner of the property—and that the buyers were not purchasing land in their own names as Stephen had represented to them at the time the buyers signed their land sale contracts.

Patricia De Pons conducted false and fraudulent closings purporting to transfer title of the land tracts from First Loan Solution to the buyers. As part of the closing, De Pons demanded payment from the buyers of the balance purportedly owed on the land purchases. De Pons then sought to establish the legitimacy of these transactions by sending fabricated, unrecorded warranty deeds to the buyers. De Pons sent letters to the buyers representing that closings on their land had taken place and that a recorded copy of the warranty deed would be returned to the buyers upon receipt from the county where the land was located.

Despite conducting hundreds of closings purportedly transferring the land to the victim buyers, the buyers were left without any land and without a refund of the monies they provided to First Loan Solution and E.T. In excess of 1,000 victim buyers fell prey to this scheme with losses to the victims of $10,600,000.

This case was investigated by agencies participating in the Federal-State Mortgage Fraud Strike Force. Mr. Sloman commended the investigative efforts of the Mortgage Fraud Strike Force with particular commendation to the Federal Bureau of Investigation and the State of Florida Office of Financial Regulation. The case was prosecuted by Assistant U.S. Attorneys Peter A. Forand and Michael Sherwin.