Wifredo A. Ferrer, United States Attorney for the Southern District of Florida; John V. Gillies, Special Agent in Charge, Federal Bureau of Investigation, Miami Field Office; Henry Gutierrez, Postal Inspector in Charge, U.S. Postal Inspection Service; and Jason Moran, Special Agent in Charge, Federal Deposit Insurance Corporation, announced today the unsealing of an indictment charging Angel Puentes, a/k/a Salvatore D’ Angelo a/k/a D’Angelo Salvatore, 37, of West Palm Beach; Dania L. Aleman, 45, of Hialeah; Angela M. Frye, 47, of Miami; and David R. Burgos, 40, of Hialeah, with one count of conspiracy to commit wire and bank fraud, in violation of Title 18, United States Code, Section 1349; 14 counts of substantive wire fraud, in violation of Title 18, United States Code, Section 1343; and eight counts of substantive bank fraud, in violation of Title 18, United States Code, Section 1344. Through this scheme, the defendants allegedly defrauded three financial institutions of approximately $10.5 million in fraudulent mortgage loans. If convicted, the defendants face a maximum statutory sentence of 30 years’ imprisonment for the conspiracy and each of the bank fraud counts and 20 years’ imprisonment for each of the wire fraud counts.

According to the indictment, Angel Puentes was involved in the fraudulent financing of at least 11 residential properties in Miami-Dade and Broward Counties. Throughout the time of the conspiracy, Puentes recruited Angela Frye, a loan processor, to create false loan applications to obtain mortgage loans on behalf of other individuals who would not have otherwise qualified for the mortgage loans. Burgos acted as a recruiter of individuals who would sell their credit to Puentes to facilitate the fraudulent purchase of real estate. Burgos also posed as a straw buyer during the conspiracy.

According to the indictment, Puentes and Aleman would cause the creation of two different HUD-1 Statements, one given to the lender and the other to the seller. In one of the forms, they would falsely inflate the sales prices and amount of the loans that could be obtained from the lenders. Puentes, Aleman, and their co-conspirators also failed to record the necessary title and mortgage documents with the county authorities. This allowed Puentes, Aleman, and their co-conspirators to induce other lenders into issuing double first mortgages on particular properties. In this way, the conspirators illegally syphoned off additional profits from the mortgage proceeds for personal use.

Once the property was purchased, Puentes, Aleman, Frye, and their co-conspirators would arrange to make the payments until they could resell, or flip, the property at an inflated purchase price. With the profits made from flipping the properties to other straw purchasers, the defendants continued to buy properties and pay outstanding mortgage payments for properties bought during the scheme. Eventually, the defendants stopped making the loan payments and the properties fell into foreclosure. The foreclosures resulted in significant losses to WMC Mortgage, Countrywide Home Loans, JP Morgan Chase Bank, N.A. and other lenders.

Mr. Ferrer commended the efforts of the FBI, the U.S. Postal Inspection Service, and the FDIC. This case is being prosecuted by Assistant U.S. Attorney Cristina Pérez Soto.

An indictment is only an accusation, and the defendants are presumed innocent unless and until proven guilty.

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 www.usdoj.gov/usao/fls. Related court documents and information may be found on the website of the United States District Court for the Southern District of Florida at www.flsd.uscourts.gov or http://pacer.flsd.uscourts.gov.

WASHINGTON—Noah Black, 42, of Hyattsville, Maryland, pled guilty today to federal charges of wire fraud and aggravated identity theft in connection with a mortgage fraud scheme, announced U.S. Attorney Ronald C. Machen Jr.; James W. McJunkin, Assistant Director in Charge of the FBI’s Washington Field Office; and David Beach, Special Agent in Charge, Washington Field Office, U.S. Secret Service.

Black entered his guilty pleas in U.S. District Court for the District of Columbia. The Honorable Judge Richard W. Roberts scheduled sentencing for June 16, 2011.

According to the factual proffer presented to the court, during May 2006, Black arranged a fraudulent real estate sale of a home in Upper Marlboro, Maryland that at one time was owned in the name of one of his family members. Black pretended to be another individual, referred to in court as “D.S.,” in order to secure mortgage loans of approximately $700,000. He had obtained the identifying information of D.S. when Black, a realtor, attempted to sell a different home to the victim.

In order to corroborate his alleged identity, Black had a fraudulent Maryland driver’s license created. The license combined Black’s own photo with the identifying information of the victim. He continued using the fraudulent identification when he obtained two motor vehicles by fraud later that year.

On or about May 18, 2006, as part of the settlement process on the home in Upper Marlboro and relying upon the defendant’s fraudulent representations, New Century Mortgage Corp., which is located in Reston, Virginia, sent a fax to Settlement Solutions, which is located in Maryland. After the sale was completed, the mortgage eventually went into default while it was listed as owned by D.S.

In announcing the guilty plea, U.S. Attorney Machen, Assistant Director in Charge McJunkin, and Special Agent in Charge Beach praised the outstanding work of the special agents who worked on the case from the FBI’s Washington Field Office and Secret Service. They also acknowledged the assistance of Paralegal Specialist Mary Treanor and Assistant United States Attorney Thomas E. Zeno, who prosecuted this case.

ROCKFORD—PATRICK J. FITZGERALD, United States Attorney for the Northern District of Illinois, and ROBERT D. GRANT, Special Agent in Charge of the Chicago Division of the Federal Bureau of Investigation, today made the following announcement:

Today in federal court, ALGIRD NORKUS, 66, of Aurora, Illinois, formerly of Sugar Grove, pled guilty to mail fraud that involved his operation of a Ponzi scheme in which he fraudulently obtained money from a number of investors who were promised extraordinary returns from his company, Financial Update, Inc. (hereafter “Financial Update”). A Ponzi scheme is an investment fraud that involves the payment of purported returns to existing investors from funds contributed by new investors.

According to the plea agreement, Norkus offered and sold approximately $9,000,000 of investments in Financial Update, misrepresenting to investors and potential investors that the funds invested would be used by Financial Update to purchase lists of prospective customers. To evidence the investments, Norkus issued promissory agreements or other similar titled documents to investors. However, Norkus admitted that beginning in 1998 he did not intend to purchase lists of prospective customers with monies he sought and received from investors, but instead commingled the investment monies he received from investors and at times misappropriated them, in part to make Ponzi-type payments to investors and in part to benefit himself. In addition, Norkus admitted he made further misrepresentations to investors regarding the expected return on investments, the risks associated with investments, the status of investments, and the use of proceeds obtained from investments. For example, Norkus falsely represented to investors that Financial Update earned so much from the use of the lists that it could afford to pay interest on invested money at a rate much higher than could be obtained from many other types of investments.

In pleading guilty, Norkus further admitted that he provided checks to certain investors drawn on bank accounts that contained insufficient funds to lull them into the belief that their investments had been used as represented, were causing Financial Update to earn money, and that the money earned on the investments was used to pay interest on the investments. To further this belief by investors, Norkus admitted he also annually provided investors with Internal Revenue Service Form 1099-INT report of interest income. Norkus also admitted that in approximately January 2010, he mailed, or had another person mail, an Internal Revenue Service Form 1099-INT report of interest income to an investor for delivery to the investor’s home address in Rockton, Illinois.

Sentencing for Norkus will be conducted on June 23, 2011, at 2:30 p.m. Norkus faces a maximum potential penalty of 20 years in prison, up to three years of supervised release following imprisonment, a fine of up to $250,000, or twice the gross gain or gross loss resulting from that offense, whichever is greater, as well as any restitution ordered by the court. The actual sentence would be determined by the United States District Court, guided by the United States Sentencing Guidelines.

The case was investigated by the Rockford Resident Agency of the FBI, with the assistance of the United States Securities and Exchange Commission. The case is being prosecuted in federal court by Assistant United States Attorney MICHAEL D. LOVE.

CHICAGO—A Country Club Hills man was sentenced today to 20 years in federal prison in one of the largest federal mortgage fraud prosecutions ever in Chicago. The defendant, Bobbie L. Brown, Jr., 47, pled guilty last year to charges in two separate indictments, each alleging of mail, wire, and bank fraud. U.S. District Judge Virginia M. Kendall imposed the 20-year prison term and ordered Brown to pay restitution in excess of $32 million and to forfeit in excess of $24 million at a hearing today in federal court.

The sentence was announced by Patrick J. Fitzgerald, United States Attorney for the Northern District of Illinois; Thomas P. Brady, Inspector in Charge of the U.S. Postal Inspection Service; and Robert D. Grant, Special Agent in Charge of the Chicago Office of the Federal Bureau of Investigation.

According to the first indictment, Brown, who operated several businesses, including Chicago Global Investments, Inc., B&M Customs Homes, Inc., Brown Trucking, Inc., and World Wide Investments, Inc., and 20 co-defendants were charged with fraudulently obtaining more than $95 million in loan proceeds from lenders for themselves and others. The victim lenders incurred losses totally approximately $24 million on the defaulted loans. The residences that were the subject of the alleged fraud scheme were located in various Chicago suburbs, including Country Club Hills, Flossmoor, Frankfort, Mokena, Woodridge, Elmhurst, Lemont, Orland Park, Addison, Homewood, Naperville, and Aurora.

The second indictment alleged that between August 2006 and April 2007, Brown and 12 co-defendants fraudulently obtained approximately 32 home mortgage loans in this case on homes in Nevada and California, from which they obtained more than $16 million in loan proceeds. The victim lenders incurred losses totaling approximately $7 million on the defaulted loans.

In the Chicago scheme, 14 of the 21 defendants have been sentenced and the sentences ranged from probation to 66 months in custody in the Bureau of Prisons. The remaining seven defendants are scheduled for trial in June, 2011. Ten of the 13 defendants have been sentenced in the Nevada scheme, with sentences ranging from six to 45 months in custody in the Bureau of Prisons. The remaining three defendants in that case have pled guilty and are scheduled to be sentenced at a later date.

The government was represented by Assistant U.S. Attorneys Daniel May and Erika Csicsila.

LAS VEGAS—A former Lake Las Vegas resident who convinced persons in the United States and Japan to invest over $26 million in mining projects in South America, Nevada, and California and a real estate project in Arizona was sentenced today to six-and-a-half years in federal prison and ordered to pay $23.5 million in restitution to the victims, announced Daniel G. Bogden, United States Attorney for Nevada.

Alberto DoCouto, 68, a former resident of Lake Las Vegas in Henderson, Nevada, was sentenced by U.S. District Judge James C. Mahan. DoCouto pleaded guilty in June 2010 to securities fraud.

“The defendant willfully and knowingly made false promises and representations regarding mining and real estate projects and induced persons to provide him with money which he used for his personal enrichment,” said U.S. Attorney Bogden. The sentencing judge found today that Mr. DoCouto was delusional and not generally remorseful.

From about 2001 to 2007, DoCouto created numerous limited liability companies and corporations, and told investors that he and his companies were engaged in exploring and developing a series of lucrative mining claims in Peru, Guyana, California, and Nevada. DoCouto told investors that the mines held valuable precious metals such as gold and diamonds worth billions of dollars, and persuaded them to invest millions of dollars in the alleged projects in exchange for shares of stock, promissory notes and investment contracts in the companies. DoCouto repeatedly represented to the investors that their monies were needed to bring the projects to fruition. In fact, DoCouto’s companies and projects were a façade; the shares of stock that the investors thought they owned in DoCouto’s companies were worthless; and none of the mining projects were developed. DoCouto instead diverted and converted the investors’ funds for his own personal enrichment, including for the purchase of an opulent 6,000 square foot home at Lake Las Vegas and several luxury automobiles, all of which were seized and forfeited by authorities. After the purported mining projects failed, DoCouto solicited funds from investors in Canada, Kuwait, and elsewhere for a real estate development project in Arizona. DoCouto obtained hundreds of thousands of dollars from investors to run water to the property and to develop the project, but again, he converted much of the money for his own personal purposes, including to pay the mortgage on his home, to pay for lavish home improvements, to make payments to a riding stable, and for various cash expenditures.
The case was investigated by the FBI, with assistance from the United States Bureau of Land Management, and prosecuted by Assistant United States Attorneys Timothy S. Vasquez and Nicholas Dickinson.

SPRINGFIELD, IL—A Springfield, Illinois real estate agent, Darlene M. Adkins, 65, today entered pleas of guilty to concealing assets in a bankruptcy proceeding and making a false statement to a bank, as announced by Jim Lewis, U.S. Attorney for the Central District of Illinois. Sentencing is scheduled for July 18, 2011.

In court documents and during today’s hearing before U.S. Magistrate Judge Byron G. Cudmore, Adkins, of the 1700 block of Iles Ave., admitted that on May 15, 2006, she submitted false income information on a loan application to a local bank to increase her home equity line of credit. To influence the bank to approve a $40,000 loan extension, Adkins falsely stated that her gross monthly wages, salary, and commissions were $7,000, when Adkins had no income for February, March, April, or May of 2006, and her total income to date for 2006 was $1,610. In a Chapter 7 Bankruptcy Petition, filed on May 10, 2006, five days prior to the loan application, Adkins stated that her income to date was $1,610. Adkins further admitted that when she filed the Chapter 7 Bankruptcy Petition, she concealed her receipt of $166,884.51, the amount paid by an insurance company to replace the contents of her house which were damaged by fire in June 2005.

The charges resulted from a referral by the U.S. Trustee for Indiana and Central and Southern Illinois (Region 10) and an investigation by the Federal Bureau of Investigation in coordination with the Central Illinois Bankruptcy Fraud Working Group. The Bankruptcy Fraud Working Group includes representatives of the U.S. Attorney’s Office for the Central District of Illinois, U.S. Trustee’s Office for Region 10, Federal Bureau of Investigation, Secret Service, U.S. Postal Inspection Service, the Criminal Investigation Division of the Internal Revenue Service, the Department of Health and Human Services, and the Department of Housing and Urban Development. Assistant U.S. Attorney Gregory K. Harris is prosecuting the case.

The statutory penalty for making a false statement on a loan application is up to 30 years in prison and fines up to $1,000,000; for concealing assets, the maximum statutory penalty is five years in prison and fines of up to $250,000. Final sentences are determined by the court. In imposing sentence, the court may consider federal sentencing guidelines, which include a defendant’s criminal history, the amount of loss, and other applicable factors.

The U.S. Trustee Program is the component of the Justice Department that protects the integrity of the bankruptcy system by overseeing case administration and litigating to enforce the bankruptcy laws. Region 10 is headquartered in Indianapolis, with additional offices in South Bend, Ind., and Peoria, Ill.

David B. Fein, United States Attorney for the District of Connecticut, today announced that JO’MELL THOMAS, 29, of Sigwin Drive, Wallingford, waived his right to indictment and pleaded guilty yesterday, March 7, before Chief United States District Judge Alvin W. Thompson in Hartford to one count of conspiracy to commit wire fraud stemming from his participation in a mortgage fraud conspiracy.

According to court documents and statements made in court, this matter stems from an investigation into an extensive mortgage fraud scheme during which participants obtained residential real estate loans, including loans insured by the Federal Housing Administration, through the use of sham sales contracts, false loan applications and fraudulent property appraisals. THOMAS and others, including co-conspirator Syed Babar, engaged in a scheme to defraud lenders by using nominee, or “straw,” buyers that THOMAS, Babar, and others recruited, including Alicia Martineau, Wilson Nicolas, and Lisa Depa. Babar then used these straw buyers to apply for numerous residential real estate loans using false information that Babar and others had generated. The false information included information about the straw buyer’s employment, income, assets, and liabilities. After a closing on a house on which one of the individuals who had been recruited by THOMAS had served as the straw buyer, THOMAS was paid a fee.

In March 2007, THOMAS, at the direction of Babar, agreed to open a bank account at for a fictitious construction company called “Sheda Telle Construction, LLC.” Babar told THOMAS that Sheda Telle means “ring the bell and run.” The purpose of the fictitious construction company and its bank account was to divert fraud proceeds to it and, in some cases, to falsely justify the artificially inflated sales price of houses based on renovations purportedly made to the property that, in fact, did not occur.

Almost all the money deposited into the account of Sheda Telle Construction, LLC was derived from loan proceeds generated by real estate closings conducted as part of the underlying mortgage fraud scheme. In many instances, the money was withdrawn as cash soon after it was deposited as a result of a real estate closing. For instance, on March 19, 2008, approximately $64,995.94 was wired into the Sheda Telle account from a lawyer’s trust account in connection with the sale of a home at 75 Bradley Avenue in Meriden. Approximately one week later, $64,700 was withdrawn in cash from the account. As another example, on November 20, 2008, approximately $76,591.09 was wired into the Sheda Telle account from a lawyer’s trust account in connection with the sale of a home at 88 Hazel Street in New Haven. The next day, $74,000 was withdrawn in cash from the account.

Between approximately March 2007 and October 2009, approximately $977,979 was deposited into the account of the fictitious construction company, and approximately $977,648 was withdrawn from the account. The money was distributed among the co-conspirators at Babar’s direction.

Judge Thompson has scheduled sentencing for June 29, 2011, at which time THOMAS faces a maximum term of imprisonment of 20 years and a fine of up to $250,000.

On February 1, 2011, Babar pleaded guilty to multiple federal charges related to his leadership of this extensive mortgage fraud scheme, which has caused losses in excess of $3.2 million to lenders. He awaits sentencing.

Alicia Martineau, Wilson Nicolas, and Lisa Depa, also have pleaded guilty to charges stemming from this scheme and await sentencing.

This case is being investigated by the Federal Bureau of Investigation and the U.S. Department of Housing and Urban Development – Office of Inspector General, and is being prosecuted by Assistant United States Attorneys Eric J. Glover and Susan Wines and Trial Attorney Liam Brennan of the U.S. Department of Justice’s Criminal Division, Fraud Section.

In July 2009, the U.S. Attorney’s Office and the Federal Bureau of Investigation announced the formation of the Connecticut Mortgage Fraud Task Force to investigate and prosecute mortgage fraud cases and related financial crimes occurring in Connecticut. In addition to investigating past mortgage fraud schemes, the task force will focus on emerging crime trends that are associated with the growing tide of foreclosures, including foreclosure rescue schemes and short sale schemes. Citizens are encouraged to report any suspected mortgage fraud activity by calling 203-333-3512 and requesting the Connecticut Mortgage Fraud Task Force, or by sending an e-mail to ctmortgagefraud@ic.fbi.gov.

The Connecticut Mortgage Fraud Task Force includes representatives from the U.S. Attorney’s Office; Federal Bureau of Investigation; Internal Revenue Service – Criminal Investigation; U.S. Postal Inspection Service; U.S. Department of Housing and Urban Development, Office of Inspector General; Federal Deposit Insurance Corporation, Office of Inspector General; and State of Connecticut Department of Banking.

To report financial fraud crimes, and to learn more about the President’s Financial Fraud Enforcement Task Force, please visit www.stopfraud.gov.

Earlier today 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 January 31, 2011.

In their plea agreements, the defendants admitted that between December of 2003 and March of 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. Through their work, they recruited straw buyers to purchase 33 properties. They also completed false mortgage loan applications on behalf of those straw purchasers.

To prompt lenders to grant loans to the straw buyers, 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. As part of the scheme, 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. Judge Montgomery will determine their sentences at a future hearing, yet to be scheduled.

This case is the result of an investigation by the Federal Bureau of Investigation and the Internal Revenue Service-Criminal Investigation Division. It is being prosecuted by Assistant U.S. Attorney David J. MacLaughlin.

This law enforcement action is in part sponsored by the interagency Financial Fraud Enforcement Task Force. The task force was established to wage an aggressive, coordinated, and proactive effort to investigate and prosecute financial crimes. It 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, 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.

BALTIMORE—U.S. District Judge J. Frederick Motz sentenced James Dan, age 46, of Annapolis, Maryland, today to a year and a day in prison followed by three years of supervised release for conspiracy to commit wire fraud in connection with a mortgage fraud scheme which promised to help homeowners facing foreclosure keep their homes, but left them homeless and with no equity. Judge Motz also ordered that Dan pay restitution but withheld determination of the amount until receiving further submissions from counsel.

The sentence was announced by United States Attorney for the District of Maryland Rod J. Rosenstein; Special Agent in Charge Richard A. McFeely of the Federal Bureau of Investigation; and Special Agent in Charge Ken Taylor of the Housing and Urban Development Office of Inspector General – Office of Investigations.

James Dan met James Fox in Annapolis when both were loan officers for a mortgage lender. Although Dan left the mortgage company in 2005, Dan and Fox stayed in contact with each other.

According to their plea agreements, beginning in 2006, Fox began to identify prospective borrowers who owned and had equity in their homes, but who could not afford their mortgage payments and were at risk of losing their homes because they were either in foreclosure, bankruptcy or financial distress. Fox, and sometimes Fox and Dan, told potential victims that they could “rescue” them and save their houses. The promises involved transferring the home to Dan or Fox, who would obtain a new mortgage loan. Dan and Fox promised to make the payments on the new mortgage loan for six months or a year, during which time the individual would “repair” their credit, refinance the property and reacquire it. During this six month or one year period, the individual was to continue living in the house.

In order to obtain the mortgage loans in their names, Dan and Fox made materially false and fraudulent loan applications including falsification of their intent to occupy the property, annual income, savings, other properties owned, and source of the borrower’s funds for closing. Fox was typically the loan officer for Dan’s loans and was aware of Dan’s material misrepresentations.

>From April 20, 2006 through July 5, 2007, Dan and Fox transferred eight properties from financially distressed homeowners to themselves or straw purchasers they recruited. The properties were located in Waldorf, Capitol Heights, Baltimore, Silver Spring, Pasadena and Hagerstown, Maryland, as well as Glen Rock, Pennsylvania and Chesterfield, Virginia. The settlement statements (sometimes called HUD-1s) used at the settlements were false. In each instance, Dan, Fox, or the straw purchaser was supposed to produce the buyer’s funds to close at settlement from their own resources. These funds actually came from the seller’s proceeds, or from money borrowed from others, so that Fox invested no funds of his own in any transaction. Although Dan and Fox were the buyers of the properties, they obtained proceeds from the equity in the properties by making material false representations to financial institutions making the loans. In addition, the sellers paid over to Dan and Fox, or one of their companies, monies that were identified on the HUD-1 as the sellers’ proceeds of the property sales. Dan and Fox shared some of these proceeds with the sellers either directly or by paying off sellers’ debts, but put the remainder in their own bank accounts. Although Dan and Fox made some mortgage payments on each of the properties, they eventually defaulted on the mortgage loans, and all eight properties went into default. None of the victims is in title of their homes. Three victims are trying to regain title to their homes through civil law suits. Five victims have lost their homes.

Dan, as a mortgage loan officer, was aware of the implications of the sale: that the seller who deeded away his or her home lost control of their home; that the person who was facing foreclosure today would not likely be able to afford a mortgage loan at a higher amount a year from now; that the individual who could not qualify for re-financing today would not qualify for a mortgage loan in a year and could not re-purchase their home; that Dan and his associate could not likely afford to make the mortgage payments for more than six months or a year and might default on the new mortgage; and that the house had equity which Dan and his associate were taking out at settlement for their own uses.

Judge Motz sentenced James William Fox II, age 40, of Crofton, Maryland, to 27 months in prison on January 28, 2011 for his participation in the conspiracy and ordered that Fox pay restitution in an amount yet to be determined.

The Maryland Mortgage Fraud Task Force was established to unify the agencies that regulate and investigate mortgage fraud and promote the early detection, identification, prevention, and prosecution of mortgage fraud schemes. This case, as well as other cases brought by members of the Task Force, demonstrates the commitment of law enforcement agencies to protect consumers from fraud and promote the integrity of the credit markets. Information about mortgage fraud prosecutions is available http://www.justice.gov/usao/md/Mortgage-Fraud/index.html.

This law enforcement action is 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.

United States Attorney Rod J. Rosenstein thanked the FBI and HUD, Office of Inspector General for their work in this investigation and recognized the Maryland Crime Victims’ Resource Center, Inc. for their assistance to victims in this case.

United States Attorney Rod J. Rosenstein commended Assistant U.S. Attorney Joyce K. McDonald, who prosecuted the case.

PREET BHARARA, the United States Attorney for the Southern District of New York, announced that RICHARD A. HANSEN, a former chairman of The Keystone Equities Group (“Keystone Equities”), pled guilty yesterday in Manhattan federal court to conspiracy and securities fraud charges in connection with his participation in an insider trading scheme. HANSEN pled guilty before U.S. District Judge PAUL A. CROTTY.

According to the information previously filed and the statements made during the guilty plea proceeding:

From June 2006 through September 2006, while he was chairman of Keystone Equities, HANSEN made stock purchases based on material, non-public information (“Inside Information”). HANSEN received the Inside Information from an individual named DONNA MURDOCH, who in turn obtained the Inside Information from JAMES GANSMAN. GANSMAN had access to the Inside Information because of his employment as a partner at the accounting firm Ernst & Young.

On June 20, 2006, GANSMAN informed MURDOCH that he had learned that Advanced Microdevices, Inc. (“AMD”) and ATI Technologies (“ATI”) were in discussions concerning AMD’s potential acquisition of ATI. MURDOCH thereafter tipped HANSEN about the impending acquisition and informed HANSEN that GANSMAN was working on the transaction. On June 23, 2006, HANSEN purchased or caused to be purchased 1,000 shares of ATI in two brokerage firm accounts in his daughters’ names. On July 24, 2006, ATI and AMD jointly announced that an AMD subsidiary would acquire all of ATI’s outstanding common stock. On that same day, ATI’s stock price climbed to a 52-week high of $19.69 before closing at $19.67—up nearly 19 percent from its previous day’s close. HANSEN thereafter sold or caused to be sold the ATI stock in his daughters’ accounts, realizing profits of almost $10,000.

Additionally, on June 23, 2006, GANSMAN learned that Ernst & Young had been retained by the Blackstone Group in connection with a possible acquisition of Freescale Semiconductor Corporation. Between June 23, 2006, and July 18, 2006, GANSMAN gave information to MURDOCH concerning this impending transaction. MURDOCH then tipped HANSEN about the Freescale deal, including that GANSMAN was working on it. On July 18, 2006, HANSEN purchased Freescale stock through two brokerage firm accounts held in his daughters’ names. On September 11, 2006, a wire service reported that Freescale would be acquired by an investment consortium led by Ernst & Young client Blackstone, and Freescale publicly announced it was “in discussions with parties relating to a possible business transaction.” That day, Freescale’s stock price rose to a 52-week high of $37.18 before closing at $37.06, up 20.5 percent from its previous trading day’s close of $30.75. Approximately four days later, Freescale announced that it had entered into a definitive agreement to be acquired by a private equity consortium led by Blackstone. Shortly after the acquisition announcement, HANSEN sold or caused to be sold the Freescale shares he had purchased in his daughters’ accounts, realizing a profit of over $20,000.

* * *

HANSEN, 71, of Pennsylvania, faces a statutory maximum sentence of 25 years in prison.

MURDOCH previously pled guilty to securities fraud and other crimes pursuant. Her sentence is pending. GANSMAN was convicted by a jury of six counts of securities fraud and was sentenced to one year and one day in prison.

Mr. BHARARA praised the work of the Federal Bureau of Investigation and thanked the SEC for its assistance in the investigation of this case.

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.

Assistant U.S. Attorney VIRGINIA CHAVEZ ROMANO is in charge of the prosecution.

CHICAGO—A suburban Chicago man was charged with allegedly engaging in an investment fraud scheme, swindling more than $105 million from approximately 400 victims who invested in funds he purported to operate. Patrick J. Fitzgerald, United States Attorney for the Northern District of Illinois; Tom Brady, Inspector-in-Charge of the United States Postal Inspection Service, Chicago; and Robert D. Grant, Special Agent-in-Charge of the Chicago Office of the Federal Bureau of Investigation announced that Daniel Spitzer was charged with eight counts of mail fraud in a criminal indictment filed yesterday. Spitzer allegedly misused money he raised from investors for his own benefit, and to make Ponzi-type payments to investors.

Spitzer, 51, formerly of the U.S. Virgin Islands, currently resides in Barrington, Illinois, and will be arraigned at a later date in U.S. District Court. The indictment alleges that Spitzer was the principal officer and sole shareholder of Kenzie Financial Management, a U.S. Virgin Islands corporation; the sole manager and member of Kenzie Services, LLC (“Kenzie Services”), a corporation located in Charlestown, Nevis, West Indies; the president of Draseena Funds Group, Corp., an Illinois corporation; the manager of DN Management Company, LLC (“DN”), a Nevada limited liability company, and the manager of Nerium Management Company, an Illinois corporation.

According to the charges, through these corporate entities, defendant Spitzer controlled twelve investment funds collectively known as “the Kenzie Funds.” Spitzer offered and sold to the public investments in the various Kenzie Funds in the form of membership interests and limited partnership interests. Through sales agents and various marketing materials, he informed investors and potential investors in the Kenzie Funds that their investments would be used primarily in foreign currency trading, that the Kenzie Funds had never lost money, and had achieved profitable historical returns. The defendant had to continually raise funds through the solicitation of new investors in the Kenzie Funds to make payments on investments made by earlier investors, all of which the defendant concealed and intentionally failed to disclose to both new and earlier investors. Although Spitzer falsely represented to prospective investors and investors that different Kenzie Funds had different levels of risk and different investment strategies, the defendant commingled the money invested in all twelve of the Kenzie Funds, then misappropriated a significant portion, and only invested less than one third of the approximately $105 million raised from investors.

The indictment further alleges that Spitzer represented to investors that the Kenzie Funds had rates of returns ranging from 4.52 percent to 13.54 percent over the prior five years, although the bank accounts for the Kenzie Funds reflected that the total net return over the five year period on the approximately $105 million investors contributed to all of the Kenzie Funds was less than 1 percent. As of June 30, 2009, Spitzer represented that the Kenzie Funds were worth approximately $250 million, at a time when the Funds collectively had only approximately $4 million in its bank accounts. As a part of the alleged Ponzi scheme, the defendant fraudulently obtained over $105 million from approximately 400 investors. The information alleges that as a result of his Ponzi scheme, Spitzer fraudulently obtained over $105 million.

The government is being represented by Assistant U.S. Attorney Madeleine Murphy. The United States Attorney’s Office acknowledges the assistance of the Securities and Exchange Commission, Chicago Regional office. The investigation was conducted by the United States Postal Inspection Service and the FBI.

Each count of mail fraud carries a maximum penalty of 20 years in prison and a $250,000 fine, and restitution is mandatory. In addition to the charges, the government is also seeking forfeiture in the amount of approximately $34 million in funds, the approximate amount of loss to the victims. The court may also impose a fine totaling twice the loss to any victim or twice the gain to the defendant, whichever is greater. If convicted, however, the court must impose a reasonable sentence under the advisory United States Sentencing Guidelines.

An information contains only charges and is not evidence of guilt. The defendant is presumed innocent and is entitled to a fair trial at which the government has the burden of proving guilt beyond a reasonable doubt.

Defendant Faces Up to 20 Years in Federal Prison

DALLAS—David Boles, 52, of Colleyville, Texas, who owned Metro Buy Homes, LLC., pleaded guilty this afternoon before U.S. Magistrate Judge Irma C. Ramirez to one count of mail fraud, announced U.S. Attorney James T. Jacks of the Northern District of Texas. Boles faces a maximum statutory sentence of 20 years in prison and a $250,000 fine. In addition, as part of his plea agreement with the government, Boles agrees to pay restitution for losses resulting from all of his criminal conduct and not just limited to losses stemming from his conviction offense. Boles is scheduled to be sentenced by U.S. District Judge Jane J. Boyle on May 26, 2011.

According to documents filed in the case, from January 2008 through August 2010, Boles ran a scheme to defraud a number of investors by making materially false representations to them. For instance, he advised that invested money would be used to buy real estate and that investments would be secured by real estate. To further the scheme, Boles sent Deeds of Trust and Real Estate Liens that purportedly gave investors liens against specific properties in exchange for their investment. However, Boles did not own a number of the properties that were supposedly used to secure the investments, and some of the Deeds of Trust and Real Estate Lien Notes that he sent investors were fraudulent. Boles also sent checks to investors and advised them that the checks represented profits from their investments. However, in many cases the checks were simply drawn from the principal investments made by the investor. On other occasions, Boles funded checks written to one investor with money received from other investors. Boles believed that telling the investors that the checks represented earnings on their investments would encourage them to invest more money.

Boles also set up a website which he occasionally used to deceive investors by posting fictitious figures showing investments to be profitable when they were not, again to encourage investors to invest more money.

This law enforcement action is 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.

The case is being investigated by the FBI. Assistant U.S. Attorney Jay S. Weimer is in charge of the prosecution.

PREET BHARARA, the United States Attorney for the Southern District of New York, and JANICE K. FEDARCYK, the Assistant Director in Charge of the New York Office of the Federal Bureau of Investigation (“FBI”), announced the arrest of 14 men who participated in a criminal ring engaged in conspiracy to commit credit card fraud, bank fraud, mortgage fraud, and identity theft. The 14 defendants arrested yesterday are: EZAZ KABIR CHOUDHURY, a/k/a “Ezaz Kabir Chowdhury,” ZIA ALAM, RASHED AHMED, FIROZ MILON, MOHD ALTAF, MOHAMMED Z. ALAM, SHAJAHAN KABAL, MOHAMMED M. MIAH, SHAMSUL AFRIN, MANJUR ALAM, MOHAMMED KAWSHER, MAZHARUL KARIM MAMUN, AZM M. SARWAR, and MATIAR RAHMAN. The defendants were presented in Manhattan federal court yesterday before U.S. Magistrate Judge THEODORE H. KATZ. The case has been assigned to U.S. District Court Judge KIMBA M. WOOD.

According to the indictment filed in Manhattan federal court:

From approximately 1999 to 2011, the defendants engaged in a large-scale credit card and bank fraud conspiracy based in Manhattan and Queens, New York. The scheme involved using various collusive merchants to fraudulently charge credit cards for goods and services that were never actually provided.

The defendants also engaged in a conspiracy to defraud various financial institutions by obtaining mortgages, loans, lines of credit, and opening bank accounts using fictitious or stolen personal identifying information. For example, CHOUDHURY and ZIA ALAM obtained both a mortgage and a home equity loan, totaling over $500,000, using a fictitious name, fictitious social security number, and other fictitious personal identifying information. Also, in November 2010, defendants CHOUDHURY, ZIA ALAM, and RAHMAN, stole the identity of another individual and used that information to obtain a bank loan and various credit cards in that individual’s name.

Various banks were also defrauded through check kiting schemes. During the course of the scheme, AHMED discussed his ability to purchase bank routing numbers from a bank employee and MIAH discussed his ability to produce counterfeit bank checks to conduct a check kiting scheme.

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Mr. BHARARA praised the work of the FBI. He also noted that the investigation is continuing.

The case is being handled by the Office’s Organized Crime Unit. Assistant U.S. Attorney NATALIE LAMARQUE is in charge of the prosecution.

The charges contained in the indictment are merely accusations, and the defendants are presumed innocent unless and until proven guilty.

PREET BHARARA, the United States Attorney for the Southern District of New York, announced today that STEPHEN SHEA, the former chief operating officer at Sky Capital, LLC, has pled guilty in Manhattan federal court in connection with a scheme to defraud investors through two successive securities broker-dealers—The Thornwater Company, L.P. (“Thornwater”), and Sky Capital, LLC.

According to the superseding indictment to which SHEA pled guilty, and statements made during the guilty plea proceedings before U.S. District Judge PAUL A. CROTTY:

From 1998 through 2006, SHEA participated in a scheme with ROSS MANDELL, ADAM HARRINGTON, and others to defraud investors through material misrepresentations and omissions that induced people to invest in private placements and other purported securities investment opportunities. In fact, investor funds were substantially used to enrich the defendants and others; to pay excessive, undisclosed commissions to brokers; and to pay off victims who had lost money through prior purported investment opportunities. In connection with the scheme, brokers, acting primarily from the offices of Thornwater and Sky Capital, LLC, in New York, New York, raised a total of approximately $140 million from investors. MANDELL allegedly controlled the operations of both broker-dealers.

As part of the scheme, brokers at Sky Capital, LLC, manipulated the market price of the stock of two affiliated entities, Sky Capital Holdings Ltd., and Sky Capital Enterprises Inc. (collectively “Sky Capital”). SHEA and others directed the market manipulation of Sky Capital stocks by enforcing a “no-net sales” policy designed to inflate the price of Sky Capital stocks. SHEA, and allegedly MANDELL and HARRINGTON, made undisclosed payments to Sky Capital brokers in exchange for their assistance with this aspect of the scheme.

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SHEA, 38, of Brooklyn, New York, pled guilty to conspiracy and securities fraud charges. The conspiracy count carries a maximum sentence of five years in prison, and the securities fraud count carries a maximum sentence of 20 years in prison. SHEA faces a maximum fine of $250,000, or twice the gross gain or loss from the offense on the conspiracy count, and a maximum fine of $5 million on the securities fraud count. SHEA also faces mandatory restitution to the victims of his crimes. The charges against MANDELL and HARRINGTON remain pending and are merely accusations. They are presumed innocent unless and until proven guilty.

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Mr. BHARARA praised the investigative work of the Federal Bureau of Investigation. He thanked the U.S. Securities and Exchange Commission for its assistance in this matter.

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.

Assistant U.S. Attorneys PABLO QUIÑONES and KATHERINE GOLDSTEIN are in charge of the prosecution.

GRAND RAPIDS, MI—Joseph Carr, 56, of Lansing, Michigan, pled guilty to one count of bank fraud, U.S. Attorney Donald A. Davis announced today. Carr admitted as part of his plea before U.S. Magistrate Judge Hugh W. Brenneman Jr. that he defrauded Bank of America by recruiting “straw buyers” to apply for a mortgage loan for a home that he himself intended to occupy, and inflated the value of that home in order to increase the amount of the loan. In this manner, he was able to secure a loan of $175,000 for his own use. In his plea agreement, Carr also acknowledged that other related fraudulent activities resulted in losses of $1,147,250.

Bank fraud is punishable by 30 years in prison and other penalties. Carr’s sentence will be imposed by U.S. District Judge Janet T. Neff at a date to be announced.

The case is being investigated by the Federal Bureau of Investigation as part of the Western District of Michigan’s Mortgage Fraud Task Force. This group was created to investigate and prosecute the growing number of mortgage fraud cases that have recently come to light. U.S. Attorney Davis stated, “Mortgage fraud has played a significant role in the mortgage crisis that has brought so much misery to Michigan citizens. Federal law enforcement will vigorously pursue the perpetrators of these frauds to face the punishment they have earned.”

PHOENIX/TUCSON—U.S. Attorney Dennis Burke announced today two indictments charging 12 Arizonans for their involvement in multi-million-dollar mortgage fraud conspiracies. 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.

“These two prosecutions—and others we are pursuing—will demand accountability from a mortgage industry gone adrift, causing great stress to our economy,” said U.S. Attorney Dennis K. Burke. “We are focused like a laser beam on investigating and prosecuting those who commit mortgage fraud, particularly including the industry professionals who knowingly facilitated it.”

The investigations in these indictments were led by agents from the Internal Revenue Service and the FBI.

“Mortgage fraud has contributed to the collapse of our real estate market in Arizona,” said Dawn Mertz, Special Agent in Charge, Internal Revenue Service, Criminal Investigation. “IRS CI will continue to aggressively pursue those individuals who commit these types of crimes.”

Added FBI Special Agent in Charge Nathan Gray, Phoenix Division: “This indictment signifies the continued commitment by the FBI and the U.S. Attorney’s Office in combating mortgage fraud. Mortgage fraud is a top criminal priority for the FBI and we will continue to focus on those who conspire to profit from ill gotten gains in the mortgage fraud industry.”

Summary of Indictments

U.S. v. Sisneros et al.

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 Friday. The remaining defendants will be required to appear in federal court for their arraignment.

U.S. v. Rogers et al.

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 today, and Ernest Babbini and Drew Hull have been served with a summons to appear in federal court.

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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.

The investigation preceding the indictment in U.S. v. Sisneros et al. was conducted by the Internal Revenue Service – Criminal Investigations. The prosecution is being handled by Jonathan B. Granoff, Assistant U.S. Attorney, District of Arizona, Tucson.

The investigation preceding the indictment in U.S. v. Rogers et al. was conducted by the Internal Revenue Service – Criminal Investigations and the Federal Bureau of Investigation. The prosecution is being handled by James R. Knapp, Assistant U.S. Attorney, District of Arizona, Phoenix.

CASE NUMBER: (U.S. v. Sisneros et al.) CR 11-794-TUC-RCC; (U.S. v. Rogers et al.) CR 11-0364-PHX-PGR
RELEASE NUMBER: 2011-034 (Sisneros_Rogers_Combined)

David B. Fein, United States Attorney for the District of Connecticut, announced that MARY ELLEN DURSO, 54, of Milford, was sentenced today by U.S. District Court Judge Mark R. Kravitz in New Haven 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 December 14, 2010, DURSO pleaded guilty to one count of conspiracy stemming from the scheme, and five counts of filing false tax returns.

According to court documents and statements made in court, 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, Florida. DURSO served as the straw owner for the condo in order to obtain the fraudulent proceeds for the benefit of her co-conspirators.

On September 20, 2007, after the refinance loan had been approved and funded, $233,874.98 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. (“Freddie Mac”) 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.

Today, Judge Kravitz ordered DURSO to pay restitution to Freddie Mac, and back taxes, plus penalties and interest, to the government.

This case is being investigated by the Federal Bureau of Investigation and the Internal Revenue Service – Criminal Investigation. The case is being prosecuted by Assistant United States Attorney David T. Huang.

In July 2009, the U.S. Attorney’s Office and the Federal Bureau of Investigation announced the formation of the Connecticut Mortgage Fraud Task Force to investigate and prosecute mortgage fraud cases and related financial crimes occurring in Connecticut. In addition to investigating past mortgage fraud schemes, the task force will focus on emerging crime trends that are associated with the growing tide of foreclosures, including foreclosure rescue schemes and short sale schemes. Citizens are encouraged to report any suspected mortgage fraud activity by calling 203-333-3512 and requesting the Connecticut Mortgage Fraud Task Force, or by sending an e-mail to ctmortgagefraud@ic.fbi.gov.

The Connecticut Mortgage Fraud Task Force includes representatives from the U.S. Attorney’s Office; Federal Bureau of Investigation; Internal Revenue Service – Criminal Investigation; U.S. Postal Inspection Service; U.S. Department of Housing and Urban Development, Office of Inspector General; Federal Deposit Insurance Corporation, Office of Inspector General; and State of Connecticut Department of Banking.

To report financial fraud crimes, and to learn more about the President’s Financial Fraud Enforcement Task Force, please visit www.stopfraud.gov.

Juan Rangel Targeted Spanish-Speaking Victims in $30 Million Ponzi Scheme and in Second Scheme to Steal Savings and Properties from Distressed Homeowners

LOS ANGELES—A Downey man was sentenced today to 22 years in federal prison for running two fraud schemes—a Ponzi scheme that took in at least $30 million from more than 500 victims, and a mortgage fraud scheme that preyed on working-class homeowners by stealing the equity from their homes and secretly taking title to their properties.

Juan Rangel, 47, who has been in federal custody since August 2008, pleaded guilty on October 27 to one count of mail fraud and one count of money laundering. In the plea agreement the led to Rangel’s guilty pleas, federal prosecutors and Rangel agreed to a 15-year prison sentence, but United States District Judge S. James Otero said a 22-year sentence was needed based on the devastating impact Rangel’s actions had on his victims.

More than a dozen victims addressed the court during today’s five-hour hearing, including an investor who had been convinced to invest money she received after her son was killed while serving as a Marine in Iraq. Judge Otero said that Rangel had shown a “callous disregard in taking investment money from the mother of a fallen soldier.”

The mail fraud count to which Rangel pleaded guilty related to a $30 million Ponzi scheme in which Rangel and his company, the Commerce-based Financial Plus Investments, recruited investors through advertisements in Spanish-language newspapers, as well as in infomercials broadcast on television. Rangel and Financial Plus promised to pay investors annual returns as high as 60 percent, claiming Financial Plus’ real estate investments and lending business generated substantial profits. However, Rangel admitted in his plea agreement that Financial Plus did not realize any profits from real estate or lending. Rangel instead used victims’ money to make Ponzi payments to prior investors and for his own personal use, including the monthly mortgage payments on his $2.5 million mansion and monthly payments for his Lamborghini sports car.

The investment fraud scheme resulted in losses of approximately $20 million. Rangel also admitted that he and others operated a mortgage fraud scheme targeting Latino homeowners facing foreclosure. Rather than assisting the distressed homeowners, Rangel took titles to their homes and drained the equity out of the properties. As part of this scheme, Rangel arranged to sell the homeowners’ properties, usually without their knowledge, to straw buyers. He then applied for loans in the straw buyers’ names, and used a variety of falsified documents to ensure that the fraudulent loans were approved.

Rangel “targeted the most vulnerable members of his community—homeowners who had fallen behind on their mortgages. These families came to his company for help, and he took advantage of them for his own profit. These victims lost the equity they had built up in their properties, and many of the victim homeowners have lost their properties or are in foreclosure,” prosecutors said in court papers. Court documents filed by prosecutors noted a pre-sentence report prepared in this case called Rangel’s actions “depraved.”

Rangel admitted that the mortgage fraud scheme caused lenders to fund more than $10 million in fraudulent loans.

In documents filed in relation to today’s sentencing hearing, prosecutors argued that Rangel’s “investment fraud scheme and related mortgage fraud scheme involved a high degree of sophistication and went far beyond a typical fraud case.” Utilizing dozens of employees, Rangel had recruiters sign up new investors, he conducted monthly investment seminars and he sent Spanish-speaking “street teams” into neighborhoods to target homeowners who were behind on their mortgage payments. Rangel also bribed a manager at a Bank of America branch to provide false documents and to release holds on checks he deposited into his accounts—conduct for which he was convicted at trial in a separate case in May 2009.

Rangel’s “fraud had a devastating impact on the families who invested with Financial Plus,” according to the government’s sentencing position memorandum, which details the impacts felt by several victims, which include bankruptcies and losing homes. “The victim investors were mostly working-class families, and nearly all of them invested money that they could not afford to lose. [Rangel] encouraged them to invest as much as possible and advised people against putting their money in the bank.”

The government is asking Judge Otero to order Rangel to pay a substantial amount of restitution to his victims. Judge Otero has scheduled a hearing for May 6 to determine how much Rangel will be ordered to pay back to his victims.

In relation to the mortgage fraud scheme, a federal grand jury also indicted Javier Juanchi, 42, of Sherman Oaks, a vice president at Financial Plus; and Pablo Araque, 40, of Downey, who owns the Downey-based tax preparation and bookkeeping company A-One Tax Pros. Juanchi and Araque are currently scheduled to go to trial before Judge Otero on March 29.

Rangel’s son, Harold Rangel, was indicted along with his father in the case involving bribery of a bank officer. A warrant was issued for Harold Rangel’s arrest when he failed to appear at a pre-trial hearing in 2009. His photo and description can be found at: http://www.fbi.gov/wanted/wcc/harold-rangel.

The case involving Financial Plus is the result of an investigation by the Federal Bureau of Investigation, the United States Postal Inspection Service and IRS-Criminal Investigation.

MOBILE, AL—A 14-count mortgage fraud indictment, returned by the February 2011 federal grand jury, was recently unsealed, United States Attorney Kenyen R. Brown announced today. Joan C. Teeters and Jonathan Marc Nattier, residents of Foley, Alabama, were charged with conspiracy to commit wire fraud, mail fraud, and bank fraud and 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 of 2010, four defendants were charged in connection with the same investigation and will be tried in April. In January of 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, Alabama. 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.

The case will be prosecuted by United States Attorney Deborah Griffin.

GREENBELT, MD—Chief U.S. District Judge Deborah K. Chasanow sentenced former attorney Frank P. Jenkins II, age 45, of LaPlata, Maryland, today to 46 months in prison followed by three years of supervised release for wire fraud and mail fraud in connection with a scheme to defraud his clients and lenders in real estate transactions. Chief Judge Chasanow also entered an order that Jenkins pay restitution of $1,835,589.

The sentence was announced by United States Attorney for the District of Maryland Rod J. Rosenstein; Special Agent in Charge Richard A. McFeely of the Federal Bureau of Investigation; Charles County Sheriff Rex W. Coffey; and Charles County State’s Attorney Anthony B. Covington.

According to the plea agreement, prior to September 15, 2009, Jenkins was licensed to practice law in Maryland and did business as Frank P. Jenkins, PC; The Jenkins Group, Inc.; Jenkins Real Estate, Inc.; and Exit Prom Homes Realty. On September 15, 2009, Jenkins was disbarred.

Jenkins admitted that from about 2006 through 2009, he caused clients to transfer money into bank accounts that he controlled, then embezzled the funds for his own purposes, rather than fulfilling his fiduciary obligations to his clients. Jenkins admitted that he used the stolen money to pay his personal expenses, purchase tickets to the Washington Capitals hockey games and to repay other clients whom he had previously defrauded. According to the plea agreement, Jenkins also made false statements to his clients as to his handling of estates and civil litigation, and to lenders. Jenkins also provided his clients with fraudulent documents, including deeds and deeds of trust relating to property. Jenkins admitted that he forged the signatures of his clients, including on a consent decree requiring clients to pay $150,000 to settle a breach of contract suit.

In June 2009, Jenkins applied for a loan to refinance a property that he fraudulently told the lender he had purchased. In fact, Jenkins had entered into a contract to purchase the property, misrepresenting to the owners of the property that he would file a deed of trust and promissory note. Jenkins did record the deed showing he had purchased the property, but did not record the deed of trust. Jenkins received a check for $128,654.19 from the lender based on the fraudulent loan application. The deed Jenkins filed was subsequently rescinded and restored to the original owners, who were also awarded $150,000 each in compensatory and punitive damages, as well as attorney’s fees, by the Circuit Court for St. Mary’s County.

United States Attorney Rod J. Rosenstein commended the FBI, the Charles County Sheriff’s Office, and the Charles County State’s Attorney’s Office for their work in this investigation and prosecution. Mr. Rosenstein thanked Assistant United States Attorneys Stuart A. Berman and Deborah A. Johnston, who prosecuted the case.