A Shaker Heights man was sentenced to 18 months in prison for his role in a mortgage fraud scheme that involved more than two dozen properties, Steven M. Dettelbach, United States Attorney for the Northern District of Ohio, announced today.

Beyond Wynn, age 37, pleaded guilty last year to conspiracy to commit wire fraud.

Wynn admitted selling properties, and profiting from those sales, to people he knew to be straw buyers, according to court documents.

This case was prosecuted by Assistant U.S. Attorney Mark S. Bennett following an investigation by the Cleveland Division of the Federal Bureau of Investigation.

GRAND RAPIDS, MI—Roger Lee Clark, 66, formerly of Wyoming, Michigan, received a sentence of 6 ½ years in prison for committing a multi-million-dollar Ponzi scheme and filing false income tax returns, U.S. Attorney Donald A. Davis announced today. U.S. Attorney Davis was joined in the announcement by FBI Special Agent in Charge Andrew Arena and IRS Criminal Investigation Special Agent in Charge Erick Martinez. Special agents of the FBI and of the IRS Criminal Investigation Division had investigated the case.

The Honorable Janet T. Neff, U.S. District Judge, presided over the sentencing. Judge Neff expressed her concern regarding the seriousness of the “knowing and willing theft” by Clark and the trail of financial ruin he left behind. “The pain of that financial ruin for older people is particularly reprehensible.” In a terse attempt to explain the $9.3 million fraud, Clark said, “things happened.” Judge Neff replied, “Wow, that takes the cake.” Judge Neff also ordered Clark to pay restitution to the victims and serve a combined total of four years of supervised release. Clark also agreed to a money judgment of $9,162,380.99 and the forfeiture of undeveloped real property in Byron Center as well as numerous vehicles.

Clark claimed that he owned and operated CRM Investors Corporation for the past 16 years, despite never having any training in financial planning or any related financial fields. Clark used CRM, along with other fictitious businesses that he created, to hide money and assets from victims and evade his income taxes.

In 2007, Clark instructed a California investor to wire transfer $1,001,500 into a bank account controlled by him. Clark explained to the investor that she was investing in the T-Bill trading program and that her investment was 100 percent secure. Clark admitted that in September and October of 2007, he sent the victim two wire transfers of $180,000 each and lied to her that the payments represented earnings from her investment, when in fact, the first payment came from her own principle and the second payment was from the principle of another investor. On January 29, 2009, Clark e-mailed the California investor indicating that all of her money was lost, but never stated where the money actually went.

Clark filed a 2007 tax return that reported his total income to be slightly over $11,000 when he knew that his actual total income was significantly higher. As part of his sentence, Clark was also ordered to pay total of $163,646.00 in back taxes.

“Investment fraudsters prey on trusting investors by enticing them with a ‘can’t miss’ deal and then stealing their hard earned money,” said Special Agent in Charge Erick Martinez.

“IRS Criminal Investigation is committed to investigating investment schemes in an effort to protect the financial well being of the American investor.”

FBI Special Agent in Charge Andrew G. Arena added, “The public should be aware that even though the FBI continues to vigilantly pursue these types of criminal violations, we live in a buyer-beware investment environment. Investors should vigorously investigate the background information of all investments and the individuals handling them.”

CAMDEN, NJ—A New Jersey man admitted today to devising a mortgage fraud scheme causing lenders to release more than $1.2 million based on fraudulent mortgage loan applications, U.S. Attorney Paul J. Fishman announced.

John Fabey, 47, of Cinnaminson, N.J., pleaded guilty to an information charging him with wire fraud. He entered his guilty plea before U.S. District Judge Noel L. Hillman in Camden federal court.

According to documents filed in this case and statements made during Fabey’s guilty plea proceeding:

Fabey recruited a “straw buyer” to purchase numerous properties in New Jersey, including condominiums in coastal areas such as North Wildwood and Wildwood, as well as single-family residences throughout other parts of New Jersey. The straw buyer was an unsophisticated individual whom Fabey knew lacked financial resources to qualify for mortgage loans to purchase the properties. Fabey induced the straw buyer to purchase the properties by claiming that the properties would be good investments for the straw buyer and by promising that in exchange for purchasing them, the straw buyer would neither pay deposits or closing costs to acquire the properties, nor incur any personal expense for monthly mortgage payments after the straw buyer owned the properties.

Fabey caused fraudulent mortgage loan applications in the name of the straw buyer and supporting documents to be submitted to mortgage lenders. The mortgage loan applications were false in that they attributed to the straw buyer inflated income and assets in order to induce the mortgage lenders to approve the loans. Once the loans were approved and the mortgage lenders sent the loan proceeds in connection with real estate closings on the properties, Fabey took the proceeds from the fraudulent mortgage loans by having funds wired into various accounts that he controlled. Fabey caused the mortgage lenders to release more than $1.2 million based on fraudulent mortgage loan applications.

The charge to which Fabey pleaded guilty carries a maximum potential penalty of 30 years in prison and a $1 million fine. Sentencing is scheduled for August 26, 2011.

U.S. Attorney Fishman credited special agents from the FBI’s Atlantic City Resident Agency, under the direction of Special Agent in Charge Michael B. Ward in Newark, with the investigation leading to the guilty plea.

The government is represented by Assistant U.S. Attorney R. Stephen Stigall of the United States Attorney’s Office Criminal Division in Camden.

Defense Counsel: Rocco C. Cipparone, Jr., Haddon Heights, N.J.

Defendants Targeted Low-Income Buyers, Falsely Inflated Buyer Assets In Loan Applications

SAN JOSE—A federal grand jury in San Jose indicted Norma Valdovinos, Claudia Valdovinos, Linda Dung Tran, Elaine “Queenie” Ly, and Pablo Curiel, of San Jose, California, and Jesus Chavez, of Gilroy, California on May 11, 2011, with conspiracy to commit bank fraud, bank fraud, and making a false statement to a bank, United States Attorney Melinda Haag announced yesterday. Norma Valdovinos and Linda Tran were also charged with conspiracy to commit money laundering and money laundering. According to the indictment, the defendants ran a multi-million-dollar mortgage fraud scheme, fraudulently inducing banks to extend millions of dollars in loans to unqualified buyers, while the defendants pocketed over one million dollars in real-estate and mortgage commissions for themselves.

According to the 32-count indictment, from 2004 through August 2007, Ms. Norma Valdovinos, age 45, and Chavez, age 52, were real estate agents with Century 21 Golden Hills Real Estate and solicited primarily low-income home buyers to purchase homes, typically single-family residences, usually priced in excess of $500,000. They knew that the borrowers they solicited had insufficient incomes and assets to qualify for the mortgages they needed in order to buy the properties.

The indictment further alleges that Norma Valdovinos and Chavez referred their clients to Palacio Mortgage, owned by Linda Tran, age 33, knowing that Palacio Mortgage would falsely inflate and misrepresent the borrowers’ income, assets, and employment information so as to enable the borrowers to qualify for the loan or loans needed to buy a property. Linda Tran and “Queenie” Ly, age 32, with the assistance of Claudia Valdovinos, age 27, falsified the borrowers’ income, assets, employment, and the source of the borrowers’ down payments in the Uniform Residential Loan Applications (“URLAs”) they submitted to the banks. Tran and Ly also submitted false documents such as fake bank statements and letters from tax preparers falsely stating that the buyer owned his or her own business. The Palacio Mortgage defendants also made many of the same misrepresentations on behalf of borrowers seeking to refinance existing mortgages.

According to the indictment, Linda Tran also arranged for Pablo Curiel, age 71, to secretly provide funds for the down payment required on the borrowers’ loans, without the banks’ knowledge. This scheme resulted in upwards of $40 million in loans being provided to buyers that, but for the defendants’ fraud, would not have been loaned.

This indictment is the fifth indictment brought in this investigation, resulting in a total of 10 defendants that have been charged to date. In late 2010, the United States separately charged Lita Delara, 10-00465 JF, Guadalupe Perez Nieto, 10-00842 JF, John Nguyen, 10-00467 JF, and Zosimo Reyes, 10-00468 JF, for conspiracy to commit bank fraud, in violation of 18 U.S.C. § 849.

Norma Valdovinos, Claudia Valdovinos, and “Queenie” Ly were arrested on May 18, 2011, in San Jose, California, and made their initial appearances in federal court in San Jose that same day. Each was released on bond. Norma Valdovinos’ bond was set at $125,000, Claudia Valdovinos’ bond at $50,000, and Ly’s bond at $75,000. Chavez, Tran, and Curiel are expected to make their initial appearances before The Honorable Howard Lloyd, United States Magistrate Judge, on May 26, 2011, at 1:30 a.m.

The maximum statutory penalty for count one, conspiracy to commit bank fraud, in violation of 18 U.S.C. § 1349, and counts two through 11, bank fraud, in violation of 18 U.S.C. § 1344, is 30 years’ imprisonment, a $1 million fine, and restitution; for counts 12 through 21, making a false statement to a bank, in violation of 18 U.S.C. § 1014, is 30 years’ imprisonment, a $1 million fine, and restitution; count 22, conspiracy to commit money laundering, in violation of 18 U.S.C. § 1956(h), is 20 years’ imprisonment, a fine of $500,000 fine (or twice the gross gain or gross loss), and restitution; counts 23 through 28, engaging in monetary transactions using criminally derived property, in violation of 18 U.S.C. § 1957, is 10 years’ imprisonment, a $250,000 fine (or twice the amount of the criminally derived property involved in the transaction), and restitution; and counts 29 through 32, money laundering, in violation of 18 U.S.C. §§ 1956(a)(1)(A)(i) and (B)(i), is 20 years’ imprisonment, $500,000 fine (or twice the gross gain or gross loss), and restitution. The United States is also seeking the forfeiture of defendants’ real property and other assets derived from their fraudulent scheme. However, any sentence following conviction would be imposed by the court after consideration of the U.S. Sentencing Guidelines and the federal statute governing the imposition of a sentence, 18 U.S.C. § 3553.

Grant Fondo and David Callaway are the Assistant U.S. Attorneys who are prosecuting the case with the assistance of Kamille Singh and Jeanne Carstensen. The prosecution is the result of a three-year investigation by the Federal Bureau of Investigation and the Internal Revenue Service-Criminal Investigation.

Please note, an indictment contains only allegations against an individual and, as with all defendants, Norma Valdovinos, Claudia Valdovinos, Jesus Chavez, Linda Dung Tran, Elaine “Queenie” Ly, and Pablo Curiel must be presumed innocent unless and until proven guilty.

SACRAMENTO, CA—United States Attorney Benjamin B. Wagner announced today that Garret Griffith Gililland III, 29, and Nicole Magpusao, 31, both formerly of Chico and now in federal custody, pleaded guilty this afternoon before Senior United States District Judge Edward J. Garcia. Gililland pleaded guilty to one count of mail fraud and one count of money laundering. Magpusao pleaded guilty to one count of mail fraud.

According to court documents, Gililland and Magpusao were originally charged in 2008 on mail fraud and other charges relating to a multi-million-dollar “builder bailout” mortgage fraud scheme in Chico. They were successfully extradited back to the United States following their flight to Spain. Sentencing for Gililland is scheduled for October 28, 2011. Sentencing for Magpusao is scheduled for July 22, 2011. Both remain in federal custody pending sentencing.

This case is the product of a joint investigation by the Federal Bureau of Investigation, the Internal Revenue Service-Criminal Investigation, and the Butte County District Attorney’s Office. Assistant United States Attorney Russell L. Carlberg is prosecuting the case.

In his plea hearing today in district court, Gililland admitted that he and others originated approximately $21 million in fraudulent loans, causing losses to lenders of more than $4 million. Gililland also admitted that he recruited buyers to buy homes at artificially inflated prices. He admitted to falsifying documents to qualify the buyers for the loans. Gililland admitted to scheming with Chico builders Tony Symmes, William Baker, and others, to execute the fraud scheme. He also admitted to coordinating loan application fraud with employees of a mortgage brokerage in Sylmar and with co-defendant Leonard Williams, a licensed real estate agent. The loan application fraud included falsifying employment history, inflating income, and providing false verifications of income and employment to lenders.

“This is a very significant plea in an ongoing investigation of mortgage fraud involving subjects located throughout California and other states,” said U.S. Attorney Wagner. “We are very pleased with the dedication and skillful work of the FBI and IRS-CI case agents as well as the investigators from Butte County. Cases of this magnitude require a team effort, and that is what we have seen here.”

Butte County District Attorney Michael Ramsey said, “We are very pleased to hear that Gililland has finally admitted his guilt in this long, complex, and torturous investigation. It was a model of state-federal cooperation in investigating fraud and bringing this man to justice. The U.S. Attorney, FBI, IRS-CI, and my investigators worked shoulder-to-shoulder on all aspects of this case for several years.” Ramsey added, “Gililland and others in his organization did incalculable damage to the mortgage industry and the housing market. He and others like him contributed to the largest downturn in our country’s economy since the Great Depression.”

Other significant pleas in this investigation include those of Anthony G. Symmes, 60, of Paradise; Shane Burreson, 38, of Orland, the president of Nor Cal Innovative Investments Inc.; Carlos Chamorro, 39, of Southern California, an unlicensed mortgage broker; and Christopher Chiavola, 32, of Chico. Remaining defendants include William Baker, 65 of Chico; Leonard Williams, 49, of Sacramento; Brandon Resendez, 32, of Chico; Kesha Haynie, 39, of Chico, a licensed real estate professional; and Remy Heng, 31, of Elk Grove. Trial of the remaining defendants is scheduled for September 12, 2011. The remaining defendants are presumed innocent until and unless proven guilty beyond a reasonable doubt.

The maximum statutory penalty for mail fraud is 20 years in prison, a $250,000 fine, and three years of supervised release. The maximum statutory penalty for money laundering is 10 years in prison, a $250,000 fine, and three years of supervised release. The actual sentence, however, will be determined at the discretion of the court after consideration of any applicable statutory factors and the Federal Sentencing Guidelines, which take into account a number of variables.

This case is part of the work being done by President Barack Obama’s Financial Fraud Enforcement Task Force (FFETF). 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. One component of the FFETF is the national Mortgage Fraud Working Group, co-chaired by U.S. Attorney Wagner. For more information on the task force, visit StopFraud.gov.

Case Involves More Than $1.8 Million in Loans

WASHINGTON—Ronald Johannes Sneijder, 48, a former owner of a title and escrow company based in the District of Columbia, has been indicted on federal charges relating to mortgage fraud. The total amount of loans was approximately $1,829,000.

The indictment, which was unsealed today, was returned May 13, 2011 in the U.S. District Court for the District of Columbia. It was announced by U.S. Attorney Ronald C. Machen Jr. and James W. McJunkin, Assistant Director in Charge of the FBI’s Washington Field Office.

Sneijder, of Herndon, Va., was indicted on charges of bank fraud, wire fraud, first degree fraud, and theft. The indictment also includes a forfeiture count seeking all proceeds from the defendant’s crimes. If convicted, under the federal sentencing guidelines, he faces a potential sentence of between 46 and 57 months of incarceration.

According to the indictment, Sneijder was the manager and majority owner of a title and escrow company known as Red Box Settlements, located in the 1600 block of U Street NW, Washington, D.C.

On about January 13, 2004, Sneijder purchased a residence at 1325 Independence Avenue SE. About a month later, he refinanced the loan through Wells Fargo Bank, obtaining a home equity line of credit with a maximum credit limit of up to $575,000.

In February 2005, the defendant sought a $581,000 refinance loan from First Savings Mortgage Corporation, using as collateral his house at 1325 Independence Avenue SE, which was already encumbered with the home equity line of credit from Wells Fargo. First Savings Mortgage Corporation approved the loan on the condition that the Wells Fargo line of credit would be paid off and closed and the lien in the public record be “released” so that no additional money could be borrowed on the Wells Fargo line of credit, and so that there would be no other loans that would take precedence over the First Savings Mortgage Corporation loan.

After settlement, Sneijder paid off the Wells Fargo line of credit but did not close it. Thereafter, from March 2005 to November 2006, he again borrowed money against the Wells Fargo line of credit. He obtained cash advances up to approximately $558,000 by the end of November 2006.

The indictment further alleges that in November 2006, Sneijder sought a $675,000 loan from Wachovia Bank using as collateral 1325 Independence Avenue SE, which was already encumbered with the Wells Fargo home equity line of credit and the First Savings Mortgage Corporation loan. Wachovia approved the loan on the condition that the Wells Fargo line of credit would be paid, closed, and the Recorder of Deeds be notified of the closure so that no additional money could be borrowed on the Wells Fargo line of credit. The defendant paid down less than half of the line of credit, and again failed to close the Wells Fargo account. From January to August 2007, Sneijder again continued to borrow money against the Wells Fargo line of credit for a total amount due and owing of approximately $573,000.

According to the indictment, Sneijder failed to repay the approximate $573,000 Wells Fargo line of credit, the $581,000 First Savings Mortgage Corporation loan, and the $675,000 Wachovia loan, resulting in foreclosure of 1325 Independence Avenue SE, the proceeds of which were insufficient in value to repay the approximate $1,829,000 loaned to the defendant.

The indictment further alleges that the defendant took about $216,000 from client escrowed money from May to November 2006.

An indictment is merely a formal charge that a defendant has committed a violation of criminal laws and is not evidence of guilt. Every defendant is presumed innocent until, and unless, proven guilty.

In announcing the indictment, U.S. Attorney Machen and Assistant Director in Charge McJunkin commended the work of those who investigated the matter for the FBI’s Washington Field Office, including special agents and forensic accountants. They also cited the efforts of those who worked on the case from the U.S. Attorney’s Office, including Paralegal Specialists Diane Hayes and Sarah Reis, and Assistant U.S. Attorney Daniel Friedman. Finally they acknowledged the work of Assistant U.S. Attorney Virginia Cheatham, who is prosecuting the case along with the office’s Asset Forfeiture and Money Laundering Section.

KANSAS CITY, MO—Matt J. Whitworth, United States Attorney for the Western District of Missouri, announced today that seven Kansas City, Mo., residents have been indicted by a federal grand jury for their roles in a mortgage fraud scheme that involved the purchase of a $605,000 house in Parkville, Mo.

Lloyd Claerhout, 26, Scott J. Schirmer, 32, William R. Wonder III, 31, David E. Twitty, 27, Cameron D. Bennett, 34, Jennifer R. Hernandez, 37, and Katherine S. Sartain, 53, all of Kansas City-North, were charged in a two-count indictment returned by a federal grand jury in Kansas City.

The federal indictment alleges that each of the defendants participated in a conspiracy to commit bank fraud from July to October 2007. In addition to the conspiracy, each defendant is charged with one count of bank fraud. According to the indictment, the defendants planned to purchase the property for $605,000 then immediately re-sell it at a profit.

Schirmer allegedly located a residential property at 8118 Clearwater Pointe in Parkville, with the understanding that it would be purchased and then resold at a profit to everyone involved. Schirmer paid Wonder $3,000, the indictment says, in order to use his name for the initial purchase of the property.

Wonder completed a loan application, with the assistance of Bennett and Twitty, which contained false financial information. Wonder allegedly signed two loan applications for Bank of America, totaling $605,000, which each contained false information regarding his monthly income, employment and bank account balances.

Schirmer then arranged to have Claerhout purchase the property from Wonder at a profit. Schirmer allegedly arranged the collection of the necessary down payment from Bennett, Wonder, Twitty and ot! hers to assist Claerhout in the purchase of the property. Co-defendants allegedly submitted loan applications and supporting documentation containing material false representations to North American Savings Bank, the mortgage lender.

Claerhout allegedly signed a Uniform Residential Loan Application for $637,600, which contained false and fraudulent information regarding his monthly income, employment, and bank account balances, in order to obtain a loan for a portion of the purchase.

Hernandez, who was employed as a teller at Mazuma, allegedly signed a “Request for Verification of Deposit” which stated that Claerhout had a current balance of $127,131 in his savings account, and an average balance for the previous two months of $127,882. Hernandez allegedly manipulated the records by transferring funds from other Mazuma accounts into Claerhout’s account to falsely reflect a substantial savings account balance, then later voiding the transfers.

Sartain, a real estate agent, allegedly signed a “Request for Verification of Rent or Mortgage Account” which falsely indicated that Claerhout was paying $4,300 rent.

Whitworth cautioned that the charges contained in this indictment are simply accusations, and not evidence of guilt. Evidence supporting the charges must be presented to a federal trial jury, whose duty is to determine guilt or innocence.

This case is being prosecuted by Assistant U.S. Attorney David M. Ketchmark. It was investigated by the FBI.

NEWARK, NJ—A West Orange, NJ ., man who owned and operated multiple foreclosure rescue companies admitted today to his role in a mortgage fraud scheme that defrauded numerous mortgage lenders of over $10 million, United States Attorney Paul J Fishman announced. Ronald Harris Jr, 41, of Piscataway, NJ ., pleaded guilty before United States Magistrate Judge Patty Shwartz to an information charging him with one count each of conspiracy to commit wire fraud and conspiracy to commit money laundering. Judge Shwartz recommended to United States District Judge Faith S Hochberg that his plea of guilty be accepted and entered. According to documents filed in this case and statements made during Harris’ guilty plea proceeding: Harris owned and operated Harris Capital and Skyline Capital Group, both of which held themselves out as foreclosure rescue companies and operated out of offices in Newark and later, Maplewood, NJ.

Harris admitted that he and other individuals, including Harris Capital employee Sterling Bruce, 37, of Newark, fraudulently promised to help homeowners avoid foreclosure, keep their homes, and repair their damaged credit by directing the homeowners to allow title to their homes to be put in the names of third party purchasers, or straw buyers, for approximately six month to one year. Harris told the homeowners that during that time period, he and others would help them obtain more favorable mortgages and improve their credit ratings. The homeowners were told that the titles to their homes would be returned to them. After the homeowners were signed up, Harris, Bruce, and others recruited individuals with good credit scores to act as straw buyers of the distressed properties.

The straw buyers were told that they were helping someone save his or her home and that they would make money when they sold the property back to the current owner after approximately one year. Once the distressed homeowners and straw buyers were in place, Harris, Bruce, Pia Perkinson, 39, of Parlin, NJ.—a mortgage loan officer at a number of different mortgage loan companies—and others caused loan applications to be sent in the straw buyers’ names to mortgage lenders. To increase the credit-worthiness of the straw buyers and to ensure that they would be approved for the loans, Harris, Bruce, Perkinson, and others submitted loan applications containing material false personal and financial information about the straw buyers, such as misstating their employment, income, and assets. For example, many of the straw buyers’ loan applications falsely stated that they worked for one of Harris’ companies making a substantial salary.

Harris would also regularly submit fraudulent supporting documents with the loan applications to support the false statements, such as fake employment records and fake investment account statements. Prior to the closings of these fraudulent transactions, Harris and Bruce regularly filed fraudulent liens for tens of thousands of dollars on the properties. At the closings of the transactions, the liens would be paid off with the proceeds of the fraudulently obtained loans and Harris and Bruce would enrich themselves. Harris admitted that he regularly laundered these loan proceeds through various bank accounts he controlled.

In total, Harris and his co-conspirators caused lenders to fund dozens of fraudulent loans that totaled more than $10 million. Of that amount, Harris received approximately $1,145,993. The wire fraud conspiracy count to which Harris pleaded guilty carries a maximum potential penalty of 30 years in prison and a fine of up to $1 million. The money laundering conspiracy count carries a maximum potential penalty of 20 years in prison and a fine of up to $250,000.

Sentencing is currently scheduled for September 13, 2011. Bruce previously pleaded guilty before Judge Shwartz to one count of wire fraud conspiracy relating to his role in the mortgage foreclosure rescue scheme. He is currently scheduled to be sentenced by Judge Hochberg on September 12, 2011. Perkinson also previously pleaded guilty before Judge Shwartz to one count of wire fraud conspiracy.

During her guilty plea, Perkinson admitted to submitting fraudulent loan applications to various lenders, as well as taking out at least two fraudulent loans herself. A sentencing date has not yet been determined. Sabir Muhammad, 47, of South Plainfield, NJ ., was charged along with Harris in the initial complaint, and the charges against him remain pending. United States Attorney Fishman credited postal inspectors of the United States Postal Inspection Service, under the direction of Inspector in Charge Thomas E Boyle; special agents of the FBI, under the direction of Special Agent in Charge Michael B Ward; and special agents of the IRS, under the direction of Special Agent in Charge Victor W Lessoff, with the investigation leading to today’s guilty plea.

The government is represented by Assistant United States Attorneys Matthew E Beck and Aaron Mendelsohn of the United States Attorney’s Office Economic Crimes Unit in Newark. The charges contained in the complaint against Muhammad are merely accusations, and the defendant is considered innocent unless and until proven guilty. This case was brought in coordination with 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. Defense counsel: Alan D Bowman Esq ., Newark

Reported by: FBI

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.”

Myron L. Hooker, Jr., 43, of Detroit, Peter Garland, 40, formerly of Southfield, Nicole Jackson, 38, formerly of Detroit and Antwan Mcrea, 35 of Detroit, were sentenced yesterday for obtaining fraudulent mortgage loans on numerous properties and splitting illegal proceeds in varying proportions among themselves announced United States Attorney Terrence Berg.

Berg was joined in the announcement by Andrew G. Arena, Special Agent in Charge of the Detroit Field Office of the Federal Bureau of Investigation. United States Attorney Terrence Berg said, “We’re catching up with a lot of these mortgage fraudsters, and now they are starting to see the price to be paid for turning mortgage lending into a criminal enterprise. Mortgage fraud poses a significant threat to our economy. In prosecuting mortgage fraud we demonstrate the United States Attorney’s office and the FBI’s commitment and determination in holding perpetrators accountable for these crimes.”

Myron Hooker, the lead defendant in the case, was sentenced by the Honorable Julian Abele Cook, United States District Judge, to serve 63 months in federal prison on wire fraud charges, and 40 months for conspiracy to commit wire and mail fraud, the terms to be served concurrently.

The remaining defendants were convicted of conspiracy to commit wire and mail fraud and received the following sentences:

Peter Garland, was sentenced to serve 27 months in federal prison;
Antwan Mcrea, was sentenced to serve 24 months in federal prison;
Nicole Jackson, was sentenced to serve one day in federal prison, to be followed by three years supervised release and five months home confinement

In addition to their custodial sentences, Hooker, Garland, Jackson and Mcrea were ordered to pay, in various amounts, more than $1.2 million in restitution, $100 in special assessments per count of conviction and must serve two or three years of supervised release upon the completion of their custodial terms.

Information presented to the Court at the time of their pleas showed that Hooker conspired and agreed with the other defendants, to defraud and obtain money and funds from lending institutions, banks and individuals by obtaining fraudulent mortgage loans. Hooker orchestrated the fraud by coordinating and directing the activities of loan officers, straw buyers, collusive sellers, real estate appraisers, and closing agents, some of whom are also charged in the indictment. For instance, Hooker obtained falsely inflated appraisals on real estate and paid straw buyers to act as purchasers of the property. To bolster the straw buyer’s credit-worthiness, false income and asset documentation was provided by Hooker. Relying on the falsely inflated appraisals and fraudulent documentation, lending institutions approved and disbursed loans. These loans often subsequently went into default leaving the lending institutions with insufficient collateral and substantial losses, well in excess of $1,000,000.

U.S. Attorney Berg thanked the FBI for the successful investigation of the case.

Nora R. Dannehy, United States Attorney for the District of Connecticut, today announced a federal jury in Hartford has found GARY T. JOHNSON, 60, of Groton, guilty of four counts of wire fraud and two counts of engaging in illegal monetary transactions while operating his former mortgage lending business. A trial in this matter began on Thursday, March 18, and the jury returned the verdicts this afternoon.

According to the evidence presented during the trial, JOHNSON owned and operated a business known as Matrix Investment Corp. (“Matrix”), which was based in Groton, Connecticut. Matrix provided mortgage loans to interested borrowers either as a broker for other lenders or as a loan originator itself. JOHNSON was the Chairman of Matrix and oversaw lending activity at the Company.

During 2004 and 2005, Matrix and JOHNSON began to use monies disbursed for the benefit of borrowers for purposes other than the payoffs set forth in the relevant HUD settlement statements, including to pay Matrix’s ongoing payroll and other expenses, or to make payoffs to other lenders on unrelated refinancings. In the summer of 2004, JOHNSON informed some of his employees that he was seeking to refinance certain of his personal properties to put money into the business to fund Matrix. As part of that process, a Matrix employee began to explore refinancing options for JOHNSON from various lenders, including Greenpoint Mortgage Funding Inc., for approximately $640,000 and a line of credit for $80,000, both to be secured by JOHNSON’s personal residence in Groton. Several months later, JOHNSON sought refinancing for $575,000 with Flagstar Bank, to be secured by another house he owned in New London.

During the refinancing process, JOHNSON caused fraudulent personal mortgage loan applications to be submitted to Greenpoint, Flagstar Bank, and other lenders. On the applications, JOHNSON misrepresented to Greenpoint that he owned his primary residence in Groton, when the residence was actually held in his wife’s name. JOHNSON also overstated his monthly employment income, listing it as much as $29,000, when his tax returns listed no employment income. Although JOHNSON also told Greenpoint and Flagstar that he would use the proceeds of the refinancings to pay off preexisting liens on the properties, he instead used the monies for other purposes.

The $640,000 and the $80,000 loans with Greenpoint closed on August 9, 2004. The Flagstar loan for $575,000 closed on October 8, 2004. In the fall of 2005, JOHNSON ceased making payments on both the Greenpoint and Flagstar loans. The loans went into default, and the lenders have suffered losses in excess of $1.3 million.

JOHNSON is scheduled to be sentenced by United States District Judge Christopher F. Droney on June 11, 2010, at which time JOHNSON faces a maximum term of imprisonment of 120 years.

This matter was investigated by Internal Revenue Service – Criminal Investigation. The Federal Bureau of Investigation assisted in the investigation. The case is being prosecuted by Senior Litigation Counsel Christopher W. Schmeisser and Assistant U.S. Attorney David J. Sheldon.

David B. Fein, United States Attorney for the District of Connecticut, today announced that a federal grand jury sitting in New Haven has returned an indictment charging SYED A. BABAR, also known as “Ali,” 28, of Ledyard Street, New London, with one count of conspiracy to commit wire fraud and two counts of wire fraud. The charges stem from a mortgage fraud conspiracy that BABAR is alleged to have headed.

The indictment alleges that, between February 2007 and April 2010, BABAR, along with a mortgage broker, a real estate appraiser, two attorneys, and others, engaged in a scheme to obtain millions of dollars in 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.

The indictment alleges that BABAR recruited and paid straw purchasers to nominally purchase homes. BABAR and his co-conspirators then directed the straw purchasers to enter into sales contracts with the sellers of homes for a price higher than the actual price that the seller would receive. Members of the conspiracy submitted false documentation in connection with loan applications that were submitted, including fraudulent appraisals of the properties being purchased in order to justify the inflated sales price and the loan amount being sought to fund each purchase. The indictment further alleges that BABAR and others created a fictitious construction company called “Sheda Telle Construction, LLC,” in order 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. BABAR and his co-conspirators then split the fraud proceeds.

Contrary to the representations made on the loan applications, it is alleged that the straw purchasers never occupied the houses as their primary residences. They defaulted on the loans they obtained and let the houses go into foreclosure.

According to statements made in court, it is alleged that BABAR and his co-conspirators conducted this scheme on more than 25 properties in New London, New Haven, and other locations in Connecticut. As a result, it is alleged that various lenders suffered a loss of at least $2.5 million.

The indictment was returned on April 27, 2010, and unsealed today. BABAR was arrested on May 12. Today, United States Magistrate Judge Donna F. Martinez in Hartford ordered BABAR detained while the case is pending.

The charges of conspiracy to commit wire fraud and wire fraud carry a maximum term of imprisonment of 20 years on each count.

U.S. Attorney Fein stressed that an indictment is only a charge and is not evidence of guilt. The defendant is entitled to a fair trial at which it is the government’s burden to prove guilt beyond a reasonable doubt.

U.S. Attorney Fein stated that the investigation is ongoing.

This case is being investigated by the Federal Bureau of Investigation and is being prosecuted by Assistant United States Attorney Eric J. Glover.

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.

David B. Fein, United States Attorney for the District of Connecticut, today announced that a federal grand jury in Bridgeport has returned an indictment charging DOMINGOS DIAS, 41, of Trumbull, and HECTOR NATERA, 39, formerly of Bridgeport, with conspiracy, wire fraud, and bank fraud offenses stemming from their alleged involvement in a mortgage fraud scheme that has caused more than $3 million in losses to lenders. The indictment was returned on November 18, 2010, and was unsealed on May 11, 2011.

The indictment alleges that from approximately January 2006 to April 2008, DIAS, NATERA, and others conspired to obtain millions of dollars of fraudulent real estate loans from banks and real estate lenders for properties that were purchased in Bridgeport and New Haven. Working from offices located at 1944 Boston Avenue in Bridgeport, DIAS and NATERA held themselves out as real estate agents and mortgage brokers and recruited “straw buyers,” found sellers, and orchestrated and directed the creation and flow of fictitious documentation and information that were needed to obtain the fraudulent loans from lenders. After a loan for a property had been fraudulently obtained and a closing had occurred, DIAS and NATERA kept some of the fraud proceeds and distributed proceeds to other members of the conspiracy.

It is alleged that losses to mortgage lenders from this scheme total in excess of $3 million.

The indictment charges DIAS and NATERA with one count of conspiracy to commit wire fraud and bank fraud and one count of bank fraud. The indictment also charges DIAS with six counts and NATERA with four counts of wire fraud. Each of the charges carries a maximum term of imprisonment of 30 years and a fine of up to $1 million

DIAS was arrested on November 23, 2010. He had been released on bond until May 11 when U.S. Magistrate Judge Holly B. Fitzsimmons found that DIAS had violated the terms and conditions of his release and ordered the bond revoked and DIAS detained. The indictment was unsealed on that date.

NATERA is currently being sought by law enforcement. Citizens with information about this case, or any other suspected mortgage fraud activity, are encouraged to contact the Connecticut Mortgage Fraud Task Force at 203-333-3512, or by e-mail to ctmortgagefraud@ic.fbi.gov.

U.S. Attorney Fein stressed that an indictment is not evidence of guilt. Charges are only allegations, and each defendant is presumed innocent unless and until proven guilty beyond a reasonable doubt.

This matter is being investigated by the Federal Bureau of Investigation and the United States Postal Inspection Service. The case is being prosecuted by Assistant United States Attorney Ann M. Nevins.

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 is focusing on emerging crime trends that are associated with the growing tide of foreclosures, including foreclosure rescue schemes and short sale schemes.

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.

Lien Scheme Involved Amounts Totaling Trillions of Dollars

SALT LAKE CITY—An indictment unsealed Thursday in federal court in Salt Lake City charges Harvey Douglas Goff, age 53, of Ogden, with violations of federal law in connection with alleged schemes to obstruct justice, impede internal revenue laws, pass fictitious documents purporting to be actual financial instruments, assert diplomatic immunity, and defraud others through the use of a fraudulent lien scheme.

Goff was arrested Thursday morning in Ogden. He had an initial appearance Thursday before Magistrate Judge Samuel Alba. Goff refused to stand when ordered to, which led to U.S. Marshal intervention; refused the appointment of counsel; would not state his name or acknowledge his identity; and claimed he had been kidnapped from his home even though the court made findings in his presence that federal agents had served a duly authorized search warrant. A mental health evaluation was ordered. The case is being investigated by the FBI’s Joint Terrorism Task Force and IRS Criminal Investigation.

The 14-count indictment charges Goff with obstruction of justice, impeding internal revenue laws, fictitious obligations, attempt to commit mail fraud, and mailings in furtherance of a scheme and artifice to defraud.

Ten counts of the indictment, which allege attempted mail fraud or mailings in furtherance of a scheme and artifice to defraud, relate to conduct that started with traffic stops in Ogden and continued through subsequent court proceedings in Weber County related to the traffic stops. Goff claimed diplomatic immunity during one of the traffic stops and challenged the jurisdiction of the state court judge, the indictment alleges. Goff, who represented himself in the proceedings, filed several pleadings in his state felony prosecution. His requests were denied by the court and he was bound over for trial. In December 2010, Goff failed to appear for a pretrial conference and a bench warrant was issued for his arrest.

The indictment alleges that in November 2010, Goff mailed documents to the attention of various employees or entities of the State of Utah, Weber County, Ogden City, and the Ogden Police Department entitled “Notice of International Commercial Claim Within the Admiralty ab initio Administrative Remedy of Harvey Douglas Goff, Jr., Creditor Secured Party.” The documents claimed the agencies contracted to pay more than $53 trillion in damages to Goff. The documents purported to be part of a “self-help administrative process” and asserted that the recipients had 10 days to respond before a “default” resulted.

In an apparent effort to create an appearance of indebtedness, Goff followed up by filing a lien against various employees and entities of the State of Utah, Weber County, Ogden City, and the Ogden Police Department falsely asserting that the employees and entities each owed Goff, jointly and severally, more than $53 trillion. The lien was filed on 77 parcels located within Weber County, including municipal property and private residences associated with the employees and entities.

The indictment also charges Goff with obstructing justice in an effort to impede a matter in the U.S. Tax Court by repeatedly filing false and frivolous documents involving the judge in an IRS case and impeding internal revenue laws. Two counts of the indictment also allege Goff passed fictitious documents to the U.S. Department of Treasury.

The potential penalty for each count of obstruction of justice, attempt to commit mail fraud, and mailings in furtherance of a scheme and artifice to defraud is up to 20 years in federal prison. The two fictitious obligation counts each carry potential penalties of up to 25 years. The penalty for impeding internal revenue laws is up to three years in prison. The potential fine for each count of the indictment is $250,000.
Indictments are not findings of guilt. Individuals charged in indictments are presumed innocent unless or until proven guilty in court.

David B. Fein, United States Attorney for the District of Connecticut, announced that NATHAN RUSSO, 34, of Johnston, Rhode Island, pled guilty today 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, RUSSO and others engaged in a scheme to obtain millions of dollars in 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.

RUSSO was a mortgage broker employed by Action Mortgage Corp., a licensed mortgage broker in Cranston, Rhode Island. In pleading guilty, RUSSO admitted that he acted as a mortgage broker for five residential property sales that closed in between April and September 2007. All but one of these properties were in Connecticut. RUSSO prepared loan packages for these transactions, including loan applications for the buyer, which he knew to include false information about the buyer’s employment, assets and liabilities and the buyer’s intention to occupy the property as his principal residence. The loan applications also were supported by false documentation, including earning statements and fraudulent bank records.

Judge Thompson has scheduled sentencing for April 4, 2011, at which time RUSSO faces a maximum term of imprisonment of five years and a fine of up to $250,000.

The investigation is ongoing.

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.

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 email 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.

INDIANAPOLIS—Amanda Burroughs, 35, Spring Hill, Fla., was charged late yesterday with wire fraud, announced Timothy M. Morrison, U.S. Attorney, Southern District of Indiana, following an investigation by the Federal Bureau of Investigation.

The charge alleges that Amanda Burroughs controlled a company called WLL & Co., LLC (“WLL”), which purchased distressed homes, improved them, and then sold them for a profit. WLL had a revolving line of credit with a financial institution in Howard County which it used to purchase, refurbish and re-sell properties.

In an effort to continue to acquire and sell additional properties, Burroughs, from May, 2005 through February, 2008, allegedly concealed the source of her buyers’ down payment money in order to induce the lenders to loan to buyers who otherwise would not qualify for loans.

WLL purportedly provided part or all of the down payments, by means of false gift affidavits, false bills of sale for other property, or cash deposits in buyers’ accounts. Burroughs and WLL would then receive money at closing from the sale of each one these properties, many of which ultimately went into foreclosure. As a result of this scheme, the underwriters sustained $385,741 in losses.

According to Assistant U.S. Attorney Bradley P. Shepard, who is prosecuting the case for the government, Burroughs faces a maximum of 20 years in prison and a $250,000 fine. Burroughs will make an initial appearance before a United States Magistrate Judge in Indianapolis.

This case 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.

DAVENPORT, IOWA—On November 22, 2010, following her arrest by agents of the Federal Bureau of Investigation, Winnifer Elvidge, age 56, of LeClaire, Iowa, appeared in United States District Court to answer an indictment charging three counts of mail fraud, four counts of bank fraud, 15 counts of wire fraud, and one count of conspiracy. The indictment alleges that Elvidge, a former mortgage broker, participated in a scheme to defraud banks and mortgage lenders during 2005 and 2006 in connection with the purchase of over 20 real properties in Davenport.

Chief United States Magistrate Judge Thomas J. Shields ordered Elvidge released on bond pending arraignment on November 30, 2010.

Each count of wire fraud and mail fraud is punishable by up to 20 years of imprisonment, a fine of up to $250,000, up to three years of supervised release, and a $100 special assessment to the Crime Victim’s Fund. Each count of bank fraud is punishable by up to 30 years of imprisonment, a fine of up to $1,000,000, up to five years of supervised release, and a $100 special assessment. The single count of conspiracy is punishable by up to five years of imprisonment, a fine of up to $250,000, up to three years of supervised release, and a $100 special assessment.

As in any criminal case, a charge is merely an accusation, and a defendant is presumed innocent unless and until proven guilty.

LOUISVILLE, KY—David J. Hale, United States Attorney for the Western District of Kentucky, announced today that a federal grand jury in Louisville returned a superseding indictment against six Kentuckiana men charging them with one count of engaging in a conspiracy to commit bank and wire fraud by intentionally devising a scheme to defraud various banks and mortgage lenders by submitting fraudulent mortgage loan information in the purchase of 19 properties in Louisville, Kentucky and Jeffersonville, Indiana totaling nearly $5 million dollars.

The Indictment alleges that between November 1, 2006 and August 30, 2008, Shawn Bramlett, Billy D. McDaniels, Dane Little, Kyle Kark, and Mark Hack, all of Jeffersonville, Indiana, and Stephen C. Netherton of Louisville, Kentucky, perpetrated a fraudulent scheme against various banks and commercial lending companies, including Wells Fargo Bank, Bank of America (formerly Countrywide Home Loans), Accredited Home Lenders, Primary Residential Mortgage Company, and First Franklin Financial Company by submitting applications and other documents for loans which contained false and fraudulent information, including false employment information, false and fraudulent bank account balances, and false representations that down payments were being made toward purchases of properties.

According to court records, after loan applications were approved for funding, the loan proceeds were wire transferred in interstate commerce to designated accounts with various banks in Louisville, Kentucky, whereby the defendants and other unnamed co-conspirators appropriated, for their personal benefit and gain, portions of the fraudulently obtained loan proceeds.

The Louisville grand jury returned a second count in the superseding indictment against Little and Netherton charging them with conspiracy to commit bank fraud in a separate but similar fraudulent scheme against various banks and commercial lending companies, by submitting applications and other documents for automobile loans which contained false and fraudulent information, including borrower’s employment, income and assets, and identity of the seller of the vehicle.

According to court records, between October 22, 2010 and December 31, 2010, the defendants caused fraudulent loans to be funded in the amount of $118,000, purportedly to purchase four vehicles, and in at least one instance, no car was purchased. After obtaining the loans, the defendants and other unnamed co-conspirators appropriated for their personal benefit and gain portions of fraudulently obtained loan proceeds.

In the event of a conviction, the maximum potential penalties are 40 years’ imprisonment, a $500,000 fine, and supervised release for a period of three years.

The case is being prosecuted by Assistant United States Attorney Jim Lesousky, and it was investigated by the Federal Bureau of Investigation and the Kentucky Department of Financial Institutions.

PITTSBURGH—A resident of Allegheny County has been sentenced in federal court to 21 months of incarceration followed by two years of supervised release on his conviction of wire fraud conspiracy, United States Attorney David J. Hickton announced today.

United States District Judge Joy Flowers Conti imposed the sentence yesterday on Constantino Papastergous, 40, of Allison Park, Pa. Judge Conti’s sentencing order also requires Papastergous to repay more than $1,000,000 in restitution.

According to information presented to the court, Papastergous was a loan officer for Steel City Mortgage, which was a mortgage broker company. Papastergous and other individuals associated with Steel City Mortgage used Kenneth Cowden, an unlicensed appraiser who submitted fraudulent appraisals using the names of licensed appraisers, to prepare more than $85 million of fraudulent appraisals for Steel City Mortgage. The appraisals were fraudulent in that they falsely represented that they were prepared by a licensed appraiser and because they overstated the value of the property serving as collateral for the loans. Papastergous and other individuals associated with Steel City also submitted loan applications and supporting documents that misrepresented the financial status of the borrowers, including their income and assets.

Assistant United States Attorney Brendan T. Conway prosecuted this case on behalf of the government.

U.S. Attorney Hickton commended the Mortgage Fraud Task Force for the investigation leading to the successful prosecution of Papastergous. The Mortgage Fraud Task Force is comprised of investigators from federal, state, and local law enforcement agencies and others involved in the mortgage industry. Federal law enforcement agencies participating in the Mortgage Task Force include the Federal Bureau of Investigation; the Internal Revenue Service – Criminal Investigation; the United States Department of Housing and Urban Development, Office of Inspector General; the United States Postal Inspection Service; and the United States Secret Service. Other Mortgage Fraud Task Force members include the Allegheny County Sheriff’s Office; the Pennsylvania Attorney General’s Office, Bureau of Consumer Protection; the Pennsylvania Department of Banking; the Pennsylvania Department of State, Bureau of Enforcement and Investigation; and the United States Trustee’s Office.

Mortgage industry members with knowledge of fraudulent activity are encouraged to call the Mortgage Fraud Task Force at (412) 894-7550. Consumers are encouraged to report suspected mortgage fraud by calling the Pennsylvania Attorney General’s Consumer Protection Hotline at (800) 441-2555.

INDIANAPOLIS—Beverly A. Ross, 51, Noblesville, Indiana, was sentenced to 63 months in prison today by U.S. District Judge Larry J. McKinney following her guilty plea to wire fraud and bankruptcy fraud. This case was the result of a several month investigation by the Hamilton County Sheriff’s Office, Hamilton County Prosecutor’s Office, Indiana Attorney General’s Office – Homeowner Protection Unit, United States Trustee, Region 10, and the Federal Bureau of Investigation. Donella Locke, a co-defendant charged with Ross, was sentenced to 71 months in prison on January 27, 2010, following her conviction for wire fraud by a jury guilty verdict in September, 2009.

Ross engaged in a mortgage fraud scheme involving 34 properties ranging in value from $300,000 to $1.4 million. The homes were located in Noblesville, McCordsville, Carmel, Indianapolis, Brownsburg, Zionsville, Westfield, Fishers, Nineveh, and Fortville. Numerous lenders suffered a loss of about $5.6 million dollars as a result of the fraud.

The investigation began in 2005 after a relative of Ross reported that she had used his credit information without his permission. This relative’s credit report showed that properties and vehicles had been purchased and leased using his credit information. The scheme used a false social security number to the lender, and generated false verifications of employment, false verifications of rent, used false business names, and submitted false income amounts. For other properties, Ross represented that repair and rehabilitation work would be done to the properties. No such work was ever done. The false statements to the lenders resulted in them lending money they would not have otherwise loaned. Few payments were made on any of the mortgages obtained on the 34 properties.

Ross also filed five bankruptcy petitions between 2005-2006, the same time period she was engaging in her mortgage fraud scheme. The bankruptcy petitions were designed to immediately stop the foreclosure proceedings on the properties she purchased without permission. Ross never followed up by filing supporting paperwork for the petitions. Victim lenders trying to foreclose had to expend extra time and resources working through the foreclosure proceedings and the bankruptcy filings.

“It is essential that the citizens of this country have confidence that our bankruptcy system works fairly,” stated Nancy J. Gargula, the United States Trustee for Indiana and the Central and Southern District of Illinois (Region 10), “and I am gratified by the actions taken by United States Attorney Morrison and the members of the Bankruptcy Fraud Working Group for Southern Indiana to prosecute those who engage in fraudulent conduct. Today’s sentence sends a strong message that abusing the bankruptcy system will not be tolerated.” Members of the Southern Indiana Bankruptcy Fraud Working Group include representatives of the United States Attorney’s Office for the Southern District of Indiana; Office of the United States Trustee for Indiana and Southern and Central Illinois (Region 10); Federal Bureau of Investigation; Internal Revenue Service; United States Postal Inspection Service; Social Security Administration; and Department of Health and Human Services, among others. The United States 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.

“This individual engaged in a brazen pattern of deceit to mislead victims out of millions of dollars, and now she is being held accountable for her actions. Protecting the home-buying public from mortgage fraudsters is a high priority for the Indiana Attorney General’s Office, and so we are pleased that the close collaboration with our federal and state colleagues produced a successful outcome in this case,” said Deputy Attorney General Gabrielle Owens, section chief of the Homeowner Protection Unit (HPU) of the Attorney General’s Office.

According to Assistant U.S. Attorney Gayle L. Helart and Bradley P. Shepard , who prosecuted the case for the government, Judge McKinney also imposed three years supervised release following Ross’s release from prison. Ross was ordered to make restitution in the amount of $5.6 million dollars to 21 different victim