R. Alexander Acosta, United States Attorney for the Southern District of Florida, and Jonathan I. Solomon, Special Agent in Charge, Federal Bureau of Investigation, announced that defendant Jose G. Martin was sentenced today by U.S. District Court Judge Marcia Cooke to sixty five months in federal prison, to be followed by three years of supervised release. Judge Cooke also ordered a restitution hearing to determine the identity of the victims to be paid by Martin in connection with the $3,198,278 in restitution for losses that resulted from Martin’s participation in a mortgage fraud scheme.

Defendant Jose G. Martin was arrested in January 2009 for facilitating the fraudulent sale of seven residential properties through straw buyers. The scheme resulted in more than $6.6 million in fraudulent loans. Defendant Martin personally received more than $1 million in gross proceeds from this scheme. The defendant pled guilty on April 1, 2009, to one count of conspiracy to commit wire fraud, in violation of 18 U.S.C. §1349, and one count of wire fraud, in violation of 18 U.S.C. §1343.

To effectuate the scheme, at the closings, defendant Martin submitted fraudulent invoices for construction work on these residential properties, and received hundreds of thousands of dollars as payment for construction work that was never performed. Defendant Martin then used these proceeds to pay the straw buyers and other co-conspirators, and kept a portion of the money for himself. After the closings, defendant Martin and the straw buyers failed to make payments on the mortgages to the victim lenders, and the properties went into foreclosure.

In one example of this scheme, defendant Martin repeatedly flipped a property on Alesio Avenue in Coral Gables, FL. The Coral Gables property was flipped three times within approximately two years, more than doubling the price of the property from $550,000 to $1,200,000. In the course of these flips of the Coral Gables property, Martin diverted to himself approximately $450,000 for construction work purportedly performed on this property. In addition, Martin paid off three straw buyers of this property, none of whom ever intended to live in the property or make payments on the mortgages. Ultimately, the Coral Gables property went into foreclosure, resulting in significant losses to the lender.

This case was investigated by agencies participating in the Federal-State Mortgage Fraud Strike Force. Mr. Acosta commends the investigative efforts of the Mortgage Fraud Strike Force, with particular commendation to the Federal Bureau of Investigation. The case was prosecuted by Assistant U.S. Attorney Peter A. Forand.

A copy of this press release may be found on the website of the United States Attorney’s Office for the Southern District of Florida at http://www.usdoj.gov/usao/fls. Related court documents and information may be found on the website of the District Court for the Southern District of Florida at http://www.flsd.uscourts.gov or on http://pacer.flsd.uscourts.gov.

JACKSONVILLE, FL—United States Attorney A. Brian Albritton announces that U.S. District Judge Henry Lee Adams, Jr. yesterday sentenced Barry C. Westergom (age 60, of Jacksonville) to four years in federal prison for conspiracy to commit wire and bank fraud. The court also ordered restitution in the amount of $866,141.62 and entered a money judgment for $100,000, the amount that Westergom had obtained from the fraud. Westergom had pleaded guilty on October 8, 2009.

According to court documents, during 2004 and 2005, Westergom’s co-conspirator, Juan Carlos Gonzalez, contracted to purchase about 55 houses. Gonzalez retained Westergom, who was a licensed real estate appraiser, to appraise most of the properties. Westergom then fraudulently inflated the appraisals, valuing each property at a significantly higher price than the negotiated purchase price. Westergom knew that Gonzalez intended to submit the appraisals to lenders in support of mortgage loan applications in which the inflated appraisal value was listed as the purchase price. The lender was not informed that the price listed in the transaction documents was higher than the actual price negotiated with the seller. Gonzalez also submitted fraudulent financial documents and information, including altered bank statements and payroll records, to the lenders in support of the loan applications.

At each closing, Gonzalez received the difference between the loan amount, which was based on the inflated appraisal, and the actual purchase price, and Westergom received commissions and fees.

Westergom’s plea agreement details one transaction in which Westergom, acting as a buyer’s agent for Gonzalez, negotiated with a seller to purchase a house for $490,000. Westergom then fraudulently appraised the house for $625,000. Gonzalez submitted first and second mortgage loan applications for the house reflecting a sales price of $625,000. Gonzalez also submitted altered bank account statements showing significantly larger cash balances in the account than actually existed. The lender approved the loans and, at the closing, Gonzalez received $134,000, which was listed on closing documents as an “Assignment of Contract Fee.” Westergom received $12,250 as a broker’s fee and $550 as an appraisal fee.

The conspirators’ fraudulent acts resulted in lenders extending more than $29,272,000 in first and second mortgage loans. Westergom received a total of about $100,000 in commissions and fees. Gonzalez received $6,296,303.65 from the scheme.

Gonzalez pleaded guilty to a conspiracy charge and was sentenced to seven years in federal prison on November 5, 2009.

The case was investigated by the Federal Bureau of Investigation and was prosecuted by Assistant United States Attorney Arnold B. Corsmeier. It was brought as part of the Middle District of Florida’s Mortgage Fraud Surge, a joint effort by the U.S. Attorney’s Office for the Middle District of Florida, the Federal Bureau of Investigation, Tampa and Jacksonville Divisions, and numerous other federal, state, and local law enforcement agencies. The Surge focused intensive investigative and prosecutorial resources on the mortgage fraud crisis that plagues middle Florida and has contributed to the current economic situation nationwide. The Surge accelerated mortgage fraud cases to bring perpetrators to justice quickly and provide maximum deterrence, and it was the first step in an ongoing effort to prosecute mortgage fraud of all types throughout the Middle District. For more information on the Middle District of Florida’s Mortgage Fraud Surge, please contact Steve Cole, Public Affairs Officer for the United States Attorney’s Office.