A former mortgage broker was sentenced to 78 months in federal prison for a fraud scheme that involved buying houses in some of Southern California’s most ritzy neighborhoods and selling them to fake buyers at inflated prices.

Mark Alan Abrams of Los Angeles was also ordered Friday to pay more than $41 million in restitution to two federally insured banks.

Abrams, 49, had pleaded guilty to bank fraud, conspiracy to commit bank fraud and loan fraud, making a false statement on a tax return and obstruction of justice.

In issuing the sentence, U.S. District Court Judge Dean D. Pregerson noted that Abrams’ willingness to defraud banks, utilize credit information belonging to unknowing victims and compel employees to participate in the scheme was “particularly evil.”

Abrams and his business partner, Charles Elliott Fitzgerald, bought homes in neighborhoods like Beverly Hills, Bel Air, Malibu, La Jolla and Carmel, and then used fraudulent appraisal information to resell them for inflated amounts to fake buyers who purchased the properties with loans, prosecutors said.

Fitzgerald, a real estate developer, was sentenced last year to 14 years in federal prison. He had pleaded guilty to conspiracy to commit bank fraud and loan fraud, running a continuing financial crimes enterprise, money laundering, obstruction of justice and three counts of bank fraud.

The pair recruited the borrowers, repeatedly lied about the homes’ value and ran escrow companies to promote the scheme, according to prosecutors.

Over three years, Lehman Brothers Bank funded 80 loans worth $137 million — $50 million more than what was actually needed to pay for the homes, prosecutors said.

Fitzgerald and Abrams reaped millions of dollars from the inflated loans and passed kickbacks on to their associates through commissions.

When Lehman Brothers sued Fitzgerald and others involved in the scheme in April 2003, Fitzgerald hid his assets and fled the country.

He lived in Samoa until being extradited to Los Angeles in December 2006.

A total of 11 real estate professionals have been convicted of federal charges related to the scheme.

Defendant Used Stolen Identities for Short Sale “Buyers” When He Sought Forgiveness of $2.2 Million in Loans

ATLANTA, GA—BRENT MERRIELL, 38, of Atlanta, Georgia, was sentenced today by United States District Judge Jack T. Camp to federal prison on charges of making false statements to the Federal Deposit Insurance Corporation (FDIC) and aggravated identity theft.

“The FDIC serves a critical role by insuring the assets of hard-working Americans. Mr. Merriell used stolen identities, created fictitious buyers, and negotiated phony short sale deals for properties, all in an effort to defraud FDIC of millions of dollars he owed on mortgages,” said United States Attorney Sally Quillian Yates. “This double fraud has landed him in federal prison.”

MERRIELL was sentenced to three years and three months in prison to be followed by five years of supervised release. MERRIELL was convicted of these charges on March 23, 2010, upon his plea of guilty.

According to United States Attorney Yates, the charges and other information presented in court: MERRIELL obtained millions of dollars in loans from Omni National Bank as mortgages on numerous properties. Omni later failed and was taken over by the FDIC. Beginning in October 2009, MERRIELL faced foreclosure on 14 different properties subject to Omni mortgages. In response, MERRIELL asked the FDIC to forgive $2.2 million in loan payments and instead allow him to “short sell” the properties to seven new purchasers at significantly reduced amounts. The seven new purchasers, however, were phony: the seven names MERRIEL presented to the FDIC were, in fact, stolen identities whose names were forged on sales contracts and counterfeit loan commitment letters. Under this scheme, if law enforcement had not intervened, Merriell would have retained control of the properties, and could then rent them for amounts in excess of the substantially reduced mortgage payment, or resell them at a profit.

A “short sale” occurs when a lender such as Omni Bank agrees to the sale of property—on which the current owner has defaulted—to a third party for less than the full amount due on the loan. Lenders are willing to accept “short sales” as a means of mitigating their losses on troubled loans. The MERRIELL “short sale” fraud was discovered through a sting operation conducted by the Special Inspector General for the Troubled Asset Relief Program (SIGTARP) with the assistance of the FDIC.

Other Omni-related prosecutions to date include:

JEFFREY L. LEVINE, 68, of Atlanta, Georgia, who pleaded guilty on January 14, 2010, to causing materially false entries that overvalued bank assets to be made in the books, reports, and statements of Omni, is scheduled to be sentenced on September 14, 2010, at 2:00 p.m., before United States District Judge Jack T. Camp.

DELROY OLIVER DAVY, 37, of Lithonia, Georgia, who pleaded guilty on May 11, 2010, to bank fraud and conspiracy to commit bank fraud, mail and wire fraud in connection with a scheme to fraudulently obtain millions of dollars of mortgage loans from Omni and other lenders, is scheduled to be sentenced on September 14, 2010, before United States District Judge Jack T. Camp.

CHRISTOPHER BERNARD LOVING, 32, of McDonough, Georgia, who pleaded guilty on June 24, 2010, to making false statements to agents of the Office of the Special Inspector General for the Troubled Asset Relief Program and the FDIC in connection with an investigation regarding Omni construction contracts, is scheduled to be sentenced on August 24, 2010, before United States District Judge Jack T. Camp.

MARK ANTHONY MCBRIDE, 44, of East Point Georgia, was sentenced on April 1, 2010, to over 16 years in prison for obtaining fraudulent loans from many lenders, including Omni.

This investigation 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.

This case was investigated by special agents of a mortgage fraud task force formed for Omni-related cases, made up of the Special Inspector General for the Troubled Asset Relief Program (SIGTARP), Housing and Urban Development Office of Inspector General (HUD-OIG), the United States Postal Inspection Service, the Federal Deposit Insurance Corporation Office of Inspector General (FDIC-OIG), and the Federal Bureau of Investigation. The task force is continuing to investigate a number of Omni-related matters.

Assistant United States Attorneys Gale McKenzie and Christopher Bly prosecuted the case.

For further information please contact Sally Q. Yates, United States Attorney, or John Horn, First Assistant United States Attorney, through Linda Isaac, U.S. Attorney’s Office, at (404) 581-6056. The Internet address for the HomePage for the U.S. Attorney’s Office for the Northern District of Georgia is www.justice.gov/usao/gan.

Suspects may find themselves behind bars living rent free thanks to nationwide mortgage fraud arrests.

Members of the Financial Fraud Enforcement Task Force released the results of a nationwide dragnet, “Operation Stolen Dreams,” which targeted mortgage fraudsters throughout the country and is the largest collective enforcement effort ever brought to bear in confronting mortgage fraud. The White Collar Crime Committee of the National Association of Chiefs of Police obtained relevant documents describing this enormous operation.

The sweep was organized by President Barack Obama’s interagency Financial Fraud Enforcement Task Force, which was established “to lead an aggressive, coordinated, and proactive effort to investigate and prosecute financial crimes.”

Starting on March 1 through June 17, Operation Stolen Dreams has involved 1,215 criminal defendants nationwide, including 485 arrests, who are allegedly responsible for more than $2.3 billion in losses. Additionally, to date the operation has resulted in 191 civil enforcement actions, which have resulted in the recovery of more than $147 million, according to the Federal Bureau of Investigation.

“From home buyers to lenders, mortgage fraud has had a resounding impact on the nation’s economy,” said FBI Director Robert S. Mueller, III. “Those who prey on the housing market should know that hundreds of FBI agents on task forces and their law enforcement partners are tracking down your schemes and you will be brought to justice.”

Unlike previous mortgage fraud sweeps, Operation Stolen Dreams focused not only on federal criminal cases, but also on civil enforcement, recovering money for victims and increasing cooperation with state and local partners.

The operation was conducted in conjunction with the Department of Justice — including the FBI, U.S. Attorneys Offices, the U.S. Trustee Program, and other components — as well as the Department of Housing and Urban Development, the Department of the Treasury, the Federal Trade Commission, the Internal Revenue Service, the U.S. Postal Inspection Service, the U.S. Secret Service, the National Association of Attorneys General, and the National District Attorneys Association.

The President’s Financial Fraud Enforcement 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, according to officials.

MORTGAGE FRAUD REPORT

According to the Federal Bureau of Investigation’s 2009 Mortgage Fraud Report, released today, mortgage fraud suspicious activity reports referred to law enforcement increased 5 percent to 67,190 during fiscal year 2009.

It’s estimated that $14 billion in fraudulent loans originated in 2009. The total dollar loss attributed to mortgage fraud is unknown.

Other key findings presented in the report include:

There are more than 2.8 million properties with foreclosure filings, a 120 percent increase from 2007 to 2009. The Las Vegas area reported the most significant rate of foreclosures, with more than 12 percent of housing units there receiving a foreclosure notice.

The top 10 states ranked by the number of foreclosure filings per housing unit were California, Florida, Arizona, Michigan, Nevada, Georgia, Ohio, Texas, and New Jersey. In April 2010, one in every 386 housing units received a foreclosure filing.

Prevalent mortgage fraud schemes in fiscal year 2009 include loan origination, foreclosure rescue, builder bailout, equity skimming, short sale, illegal property flipping, reverse mortgage fraud and loan modifications. Emerging trends include fraud involving economic stimulus plans/programs, property theft/fraudulent leasing of foreclosed properties and tax-related fraud.

SALT LAKE CITY—A federal grand jury returned a 15-count indictment Wednesday afternoon charging Joshua Lee Butcher, age 28, of Salt Lake City, with bank fraud and false statements to a financial institution in what the indictment alleges was a scheme to get construction loans approved using false pretenses.

This week’s indictment follows an investigation by the FBI and the Utah Mortgage Fraud Task Force.

According to the indictment, Salt Lake Credit Union and Transwest Credit Union approved and funded construction loans relying on what they believed to be true and accurate borrower financial information which met their respective loan underwriting standards.

The indictment alleges Butcher worked with both credit unions to broker loans for new home construction ranging from approximately $384,000 to $637,000. Butcher met with potential borrowers to obtain necessary financial information for the completion of a loan application. In these meetings, borrowers provided Butcher with accurate information about their income and assets. At times, borrowers also provided supporting documentation. Based on this information, the indictment alleges Butcher knew borrowers would not qualify for construction loans in the range they were seeking.

The indictment alleges that Butcher prepared and submitted false loan applications on behalf of the borrowers to the credit unions to induce approval and funding of construction loans under false pretenses and to cause the payment of broker fees to him which he was not entitled to receive.

The indictment alleges that in order to qualify borrowers for the construction loans, Butcher falsified loan applications by overstating borrowers’ income and, at times, identifying assets which borrowers did not own. Additionally, construction loans offered by the financial institutions he was working with were intended to be used for homes occupied by borrowers as their primary residence as opposed to an investment intended to be resold at a profit shortly after the completion of construction, according to the indictment. Despite knowing some borrowers were not intending to use the home as a primary residence, Butcher falsified the application to show the property would be the borrower’s primary residence. The indictment also alleges he provided false employment information for borrowers.

The indictment alleges eight counts of bank fraud and seven counts of false statements to a financial institution. The potential maximum penalty for each bank fraud count is 20 years in prison and a fine of $250,000. The potential maximum penalty for each false statement count is 30 years in prison and a fine of $1 million. Butcher will be issued a summons for an initial appearance in federal court.

An indictment is not a finding of guilt. Individuals charged in indictments are presumed innocent unless or until proven guilty in court.

Press Releases | Salt Lake City Home

PHOENIX—April J. Lucero, 46, of Phoenix, Ariz. was sentenced on May 10, 2010 to two years in prison for her conviction in August 2009 for her involvement in a mortgage fraud scheme in Phoenix, Ariz. Lucero pleaded guilty to one count of Conspiracy to Commit Mail, Wire and Bank Fraud, a felony, related to her participation in a two year conspiracy involving the purchase of 37 properties using fraudulent loan documents. Seven other co-conspirators were also charged and have pleaded guilty for their involvement in the conspiracy.

“Lucero worked the system by conspiring with home loan straw buyers who had no intention of ever taking up residence,” said Dennis K. Burke. “This type of fraud scheme undermined the Valley housing market leading up to its collapse.”

The case against Lucero was based on an investigation by the FBI, which indicated that from 2005 through March 2007 she conspired to commit mortgage fraud in Phoenix. Lucero fraudulently submitted mortgage loan applications, on behalf of straw buyers, under false pretenses, obtaining and disbursing the proceeds of fraudulently obtained loans, including directing portions of the proceeds in the amount of $735,000 to a bank account in Lucero’s control. Lucero used her skill as a loan officer to prepare the mortgage loan applications for a borrower misrepresenting salary, assets and liabilities. Lucero used the proceeds from the fraud for personal expenses. Lucero received a lesser sentence due to her early guilty plea and cooperation. The entire conspiracy resulted in a loss to lending institutions of approximately $9.5 million.

The investigation in this case was conducted by the FBI. The prosecution is being handled by Kevin M. Rapp and Charles W. Galbraith Assistant U.S. Attorneys, District of Arizona, Phoenix.

Press Releases | Phoenix Home

New York - The news of Goldman Sachs’ fraud accusation by SEC pored cold showers over the stock markets world wide showing the first signs of economic recovery.
Goldman Sachs (NYSE: GS) has spoiled the party. While most stock exchanges had achieved new records this week, the trend has reversed Friday, April 16, when the U.S. stock market watchdog, the Securities Exchange Commission (SEC) announced it was suing the bank for “fraud”. This fraud involves the sale of investment securities linked to subprime mortgages.
The SEC fraud announcement caused Goldman Sachs (NYSE: GS) to lose nearly 13 percent of its value in one day yesterday. GS closed at 160.70, which is down 23.57 (-12.79%) from its previous day’s close. The distrust was spread on all markets around the world.
Goldman Sachs Fraud Effect on Global Stocks
In Paris, SAC 40 lost 79.02 points down 1.94 percent. In Frankfurt DAX was down 110.55 points. It lost 1.76 percent. London’s FSE 100 lost 1.39 percent of its value ending the day down 81.05 points.
In New York City Dow Jones Industrial Average lost 125.91 point, ending the day down 1.13%. Dow closed at 11,018.66 points. At least Dow ended the week above the threshold 11,000 level. NASDAQ ended the day at 2481 points. it lost 34 points and 1.37 percent of its value.
Prior to Goldman Sachs subprime mortgage fraud announcement the markets had experienced a period of stable growth. The indexes have been lifted by the recent statistics confirming the economic recovery globally. Another factor lifting the stocks was the very encouraging quarterly reports that the U.S. companies announced last week. Intel’s earnings particularly stood up.
In Europe the worries about the airline delays also added to the concerns about the future recovery. The ash clouds have grounded thousands of flights across Europe. Airline industry is partially paralysed and the prices of airline stocks were down yesterday. Yesterday the airline industry stocks were listed among the largest declines in European Stock Markets.
Goldman Sachs lost $12bn off the market value in one day yesterday.
Written by Armen Hareyan

Federal Agents Apprehend 18 Defendants from Throughout Bay Area

SAN FRANCISCO—Today 18 individuals were apprehended on mortgage fraud-related charges, United States Attorney Joseph P. Russoniello announced. Over the last few months, a federal grand jury in San Francisco indicted these individuals on charges relating to alleged mortgage fraud schemes perpetrated between 2005 and 2009. The indictments were unsealed this afternoon after the defendants were arrested and made their initial court appearances before United States Magistrate Judge Bernard Zimmerman.

Of the 18 individuals charged, seven are charged with bank fraud, 10 are charged with conspiracy to commit mail fraud, and one is charged with conspiracy to commit wire fraud. According to the indictments, each defendant charged with bank fraud is alleged to have participated in a scheme to defraud financial institutions and lenders to obtain money from those entities by making materially false and fraudulent misrepresentations. The defendants charged with conspiring to commit mail fraud are charged with participating in a scheme to defraud financial institutions and other lenders by knowingly and intentionally submitting false and fraudulent information to those lenders to obtain loans for various borrowers.

Those charged and arrested include at least three current or former bank employees, eight real estate agents licensed by the California Department of Real Estate (DRE), and one mortgage broker licensed by the DRE. (The DRE’s website, which lists current and former licensees, can be found at www.dre.ca.gov.) The current or former bank employees include: Ciu (“Carrie”) Du (employed at Washington Mutual during the pertinent time frame, now employed elsewhere); Marilyn Infante (employed at Washington Mutual during the pertinent time frame, now retired); and Joseph John Pugliese (employed at Countrywide Home Loans during the pertinent time frame, now employed elsewhere).

The following is the list of defendants arrested today, as well as each defendant’s age, residence, whether and what type of license they have been issued by the DRE, and what charge each defendant is facing:

Norberto (“Noli”) AGUSTIN Conspiracy to Commit Mail Fraud

John Randolph Errazo BERNABE Bank Fraud

Sam BOWLEY Bank Fraud

Vangeline S. BROYLES Conspiracy to Commit Mail Fraud

Roy CERVANTES Conspiracy to Commit Mail Fraud

Maria COMFORT Bank Fraud

Jeanie S. CUSING Bank Fraud

Ginger DANIELS Bank Fraud

Ciu DU Bank Fraud

Marilyn INFANTE Bank Fraud

Cleofe Soledad NOGAVICH Conspiracy to Commit Mail Fraud

Wilfredo C. PASCUAL Conspiracy to Commit Mail Fraud

Leonora POMAR Conspiracy to Commit Mail Fraud

Joseph John PUGLIESE Conspiracy to Commit Mail Fraud

Wazhma (“Nilo”) RAHIMI Conspiracy to Commit Mail Fraud

Clarin TAMBOT-QUERIMIT Conspiracy to Commit Mail Fraud

Ricardo TANG Conspiracy to Commit Mail Fraud

Gina TCHIKOVANI Conspiracy to Commit Wire Fraud

The maximum statutory penalty for bank fraud, in violation of Title 18, United States Code, Section 1344, is 30 years of imprisonment, a $1,000,000 fine, five years of supervised release, and restitution. The maximum statutory penalties for conspiracy to commit mail/wire fraud are the same as those for bank fraud. 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, Title 18, United States Code, Section 3553.

The prosecution is the result of a seven-month investigation by the Federal Bureau of Investigation, the United States Postal Service, and the United States Department of Housing and Urban Development, Office of Inspector General. Several Assistant United States Attorneys are prosecuting these cases.

These mortgage fraud cases are being prosecuted federally as 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.

According to U.S. Attorney Russoniello, the criminal conduct these defendants are accused of engaging in, i.e. obtaining or using false documents to submit to lenders, exaggerating income and assets, understating liabilities, providing false employment records, and/or false banking information, was all too common during the years 2005-2009. Agents of the Financial Fraud Enforcement Task Force are pursuing a substantial number of leads in other similar matters that are expected to result in the filing of criminal charges against other individuals in the near future.

If you have information relating to potential mortgage fraud or other financial fraud, please call 415-553-7400.

Please note, indictments contain only allegations against individuals and, as with all defendants, these defendants must be presumed innocent unless and until proven guilty.

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

The Mortgage Fraud Scheme

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

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

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

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

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

The Foreclosure Rescue Scheme

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

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

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

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

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

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

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

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

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

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

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

A 56-year-old Rainbow City woman pleaded guilty Wednesday in federal court to charges of bank and mortgage fraud that totaled more than $500,000, U.S. Attorney Joyce White Vance and FBI Special Agent in Charge Patrick Maley announced.

ROXANNE SAUNDERS GILLILAND entered guilty pleas before U.S. District Judge C. Lynwood Smith, Jr., to one count of making false statements on a mortgage loan application and three counts of bank fraud. She agreed to forfeit $577,796 to the government as proceeds of illegal activity.

According to GILLILAND’s plea agreement and other court documents, GILLILAND was an employee of Dawson Construction Company in Gadsden and, between March 2005 and October 2008, fraudulently withdrew the $577,796 from personal and business accounts connected to the company. Also, in April 2007, GILLILAND submitted a personal home mortgage application in which she claimed a business account of Dawson Construction as a personal asset in order to obtain a mortgage loan she would have been otherwise ineligible to receive.

“Any individual who commits both bank and mortgage fraud becomes a serious threat to our community. This defendant’s criminal fraud struck at both our local businesses and financial community. It is our mission to deal with these individuals swiftly and decisively in order to deter others from committing similar crimes,” Vance said.

The maximum sentence for counts one through four is 30 years in prison and a $1 million fine.

Special agents of the FBI investigated the case, which Assistant U.S. Attorney Patrick Carney is prosecuting for the government.

At 5 p.m. Friday, federal regulators filed into the 10 branches of La Jolla Bank FSB and closed it down.

A victim of the exploded commercial real estate bubble and possibly the perpetrator of loan fraud, the bank had 5,000 percent more capital in its outstanding commercial building and development loans than it had on hand to cover the debt, officials from the Federal Deposit Insurance Corp. said.

“To put it mildly, that’s overextended,” said Greg Hernandez, a spokesman for the FDIC in Washington, D.C.

On Friday, OneWest Bank FSB entered into a deal with the FDIC to manage the loans and share the losses. It also took over La Jolla Bank’s $2.8 billion in deposits and its 10 branches in Southern California and Texas. On Monday, La Jolla Bank’s branches will open as OneWest, and depositors should see no difference in service, said Edith Gray, a spokeswoman for the FDIC, who was in Rancho Santa Fe Friday.

Founded in 1985 as La Jolla Village Bank, La Jolla Bank grew aggressively during the construction boom of the 2000s. From 2004 to 2007, the company doubled its assets by investing heavily in land, development and apartment construction.

But as the housing market fell precipitously starting in 2006, the bank began to have problems, the Office of Thrift Supervision said in a prepared statement. Of the $3.6 billion it lent, 21.6 percent was considered “non-performing” by the agency.

Gray said the bank may also have also been making fraudulent loans, but she said she couldn’t elaborate further. A spokesman for the Office of Thrift Supervision, which would oversee a fraud investigation, declined to comment.

The closure itself went smoothly, Gray said. Many of the bank’s employees have stayed on to work with regulators through the weekend. Officials have to wrap up any outstanding transactions in all branches to ensure an easy transition to OneWest. Even at the start, employees took the entrance of regulators calmly.

“There was no drama,” Gray said. “It’s been a very smooth transition.”

According to the indictment, Michael Ohayon, 41, and David Papera, 47, allegedly recruited thirteen straw buyers who used their good credit scores to nab $19.6 million in fraudulent mortgage loans from Washington Mutual Bank, with no intention of making either down payments or mortgage payments on the properties.

A mortgage broker and real estate developer on Friday were charged in San Francisco, California with conspiracy to commit a $19.6 million bank fraud, fraud, and money laundering, prosecutors said.

The indictment further alleges that Ohayon, with Papera’s knowledge, told the straw buyers that an entity controlled by Ohayon and Papera would use the loan proceeds to make the down payments and mortgage payments. Ohayon and Papera created and submitted to Washington Mutual Bank loan applications with numerous misstatements as to the straw buyers’ income and assets.

The maximum penalty for each count of conspiracy to commit bank fraud and bank fraud is 30 years in prison, a $1,000,000.00 fine, and restitution. The maximum penalty for each count of money laundering is 10 years in prison, a $250,000 fine, and restitution.

This case is the result of an investigation by the Federal Bureau of Investigation.

F. Jeffrey Miller, the primary defendant in an alleged $25 million mortgage fraud scheme, has been acquitted by a federal jury.

A jury in U.S. District Court in Kansas City, Kan., on Friday said Miller was not guilty of 56 criminal counts of money laundering and bank fraud.

Miller was one of the top Kansas City-area home builders in 1999 and 2000. He and several others were charged in 2006 with falsifying loan documents to lenders on behalf of customers with credit problems who lacked enough money for down payments on homes. The scheme also involved fraudulently inflated appraisals on homes in the Kansas City area.

Some defendants had been dismissed from the original indictment; several others have pleaded guilty.

Jeffrey Morris, a Berkowitz Oliver Williams Shaw & Eisenbrandt LLP lawyer representing Miller, was not immediately available for comment.

This case is separate from another 2006 indictment against Miller. In 2008, he was convicted along with two others of conspiracy, bank fraud and money laundering for trying to continue to perpetrate his alleged fraud while under his original indictment for the $25 million fraud. A jury ordered Miller to forfeit $2.6 million in that case.

PROVIDENCE — A woman who has been sentenced to 46 months in federal prison will not, for now, have to pay restitution to the institutions that gave her financing that she then used in a $674,000 mortgage-fraud scheme.

Lisa Torres, formerly of Johnston, was sentenced in U.S. District Court, Providence, in December for conspiring to commit bank fraud. That sentence added 18 months to a prison term for a different case in which Torres, who had been a legal assistant, conspired with two former lawyers, John M. Cicilline and Joseph A. Bevilacqua Jr., to shake down people accused of drug crimes in 2007. The three pleaded guilty in 2008.

The fraud scheme, in which Torres bought foreclosed properties at low prices and got others to take out mortgages to buy the homes from her at higher prices, happened while she was under indictment in the case involving Cicilline and Bevilacqua. Prosecutors have said Torres targeted friends and other people in the Dominican community.

At a restitution hearing Friday, Assistant U.S. Attorney Lee Vilker told U.S. Chief District Judge Mary M. Lisi that two financial institutions, MetLife and Bank of America, representing five of the nine properties, reported that none has been sold so there are no dollar figures to work with to try to calculate restitution.

“They are unable, at this time, to say what their losses will be,” Vilker told the judge, leaving no option for restitution at this time.

Financial institutions Wachovia, IndyMac Bank and CitiMortgage did not respond, Vilker said.

Lisi said she had to order no restitution but that, by federal law, if relevant financial institutions do come up with figures showing losses, they would have 60 days from that time to petition the court for restitution.

SAN FRANCISCO—Yesterday a federal grand jury in San Francisco indicted Michael Ohayon and David Papera with conspiracy to commit bank fraud, bank fraud, and money laundering, United States Attorney Joseph P. Russoniello announced.

According to the indictment, Ohayon, 41, and Papera, 47, are alleged to have recruited thirteen straw buyers who used their good credit scores to obtain more than $19.6 million in fraudulent residential mortgage loans from Washington Mutual Bank, with no intention of making either down payments or mortgage payments on the properties. The indictment further alleges that Ohayon, with Papera’s knowledge, told the straw buyers that an entity controlled by Ohayon and Papera would use the loan proceeds to make the down payments and mortgage payments. Ohayon and Papera created and submitted to Washington Mutual Bank loan applications with numerous misstatements as to the straw buyers’ income and assets.

Ohayon and Papera are currently out of custody. They are scheduled to make their initial appearances on the indictment at 9:30 a.m. on Feb. 16, and Feb. 22, respectively, before the Honorable Maria-Elena James.

The maximum statutory penalty for each count of conspiracy to commit bank fraud, in violation of 18 U.S.C. § 1349, and bank fraud, in violation of 18 U.S.C. § 1344, is 30 years’ imprisonment, a fine of $1,000,000, and restitution. The maximum statutory penalty for each count of money laundering, in violation of 18 U.S.C. § 1957, is 10 years’ imprisonment, a fine of $250,000, and restitution. 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.

Tracie L. Brown is the Assistant U.S. Attorney who is prosecuting the case with the assistance of Rayneisha Booth. The prosecution is the result of a three-year investigation by IRS-CI and the Federal Bureau of Investigation.

Please note, an indictment contains only allegations against an individual and, as with all defendants, Messrs. Ohayon and Papera must be presumed innocent unless and until proven guilty.

Solomon Dwek’s credibility is key in Beldini corruption trial Defense lawyer puts focus on deal failed mogul made

NEWARK - A federal jury’s answer to that question is likely to decide the fate of the government’s extortion and bribery case against suspended Jersey City deputy mayor Leona Beldini. Beldini, 74, is the first of the 44 people arrested in a July 2009 FBI public corruption and money-laundering sting to go to trial.

Dwek, 37, admitted career criminal, is the government’s witness. He spent almost five full days on the witness stand. At times stoic and subdued, at others angry and annoyed, and once moved nearly to tears, the disgraced land mogul who had ruled over a $400 million empire, testified before spectators that often included defense attorneys for others arrested in the FBI operation.

They heard him admit to bilking his uncle of $100 million in a real estate scheme and stealing millions more from a close family friend. They watched him choke up as he admitted under questioning that his mother and father are no longer his friends. They heard him admit to breaking several of the Ten Commandments.

But they also listened as he repeatedly contended that Beldini had only continued to meet with him because her motives were corrupt: she wanted the cash he was offering for Mayor Jerramiah T. Healy’s election campaign, and she wanted to be the exclusive real estate agent for the fictitious condominium complex Dwek claimed he was going to build.

“If she didn’t want to talk about it, she could have got up and left . . .,” Dwek responded testily to one series of questions from Beldini’s attorney, Brian J. Neary.

Neary implied that Beldini was simply too courteous to walk away from the meeting.

“She is courteous enough to simply talk to you. . .,” Neary said.

“And accept the money, yes,” Dwek shot back. “She was courteous for her own good, not for my own good.”

The government called only three other witnesses in the Beldini trial, while the defense presented no testimony at all. Should Beldini be acquitted, it is likely to encourage other defendants to take their chances at trial instead of agreeing to a plea deal.

The jury is expected to begin deliberations as early as Monday.

Posing as corrupt developer David Esenbach, Dwek wore a wire and secretly videotaped several meetings with Beldini, Healy, former Housing Commissioner Edward Cheatam and political consultant Jack Shaw. The black-and-white videotapes, along with wiretapped conversations from Shaw’s telephone, were the government’s key evidence at the trial.

Beldini is charged with funneling $20,000 in cash that Dwek gave to Cheatam and Shaw, into Healy’s 2009 mayoral campaign. Beldini served as campaign treasurer for Healy, who has not been charged with any wrongdoing.

Under cross examination by Neary, Dwek admitted that he never gave Beldini any cash directly. But on one videotape, Dwek can be heard asking the deputy mayor if Mayor Healy knows that Dwek had given Cheatam and Shaw $10,000 in cash to secretly purchase tickets for a Healy fundraiser.

“The mayor knows, you know, where the tickets came from?” Dwek asks, adding “. . .He appreciates the way I do business, right?’ ” Dwek asks.

“Absolutely,” Beldini answers.

Shaw died of an overdose of Valium on July 28, five days after his July 23 arrest. Two more people have since been arrested in the case, 12 have so far pleaded guilty, including Cheatam, who admitted to taking about $70,000 from Dwek.

Dwek admitted under questioning by Neary that he did not initially know that Beldini’s $66,000-a-year job as deputy mayor was an appointed position, and that she had no vote and did not sit on the city’s planning or zoning boards.

He had been told by Cheatam and Shaw, he said, that Beldini was the mayor’s “right-hand man,” and Jersey City’s second-most powerful public official.

Dwek began cooperating with the FBI only months after he was arrested on $50 million in bank fraud charges in May 2006. During more than two years working undercover as a government informant, Dwek drove all over New Jersey and into New York City in a Lexus, meeting with public officials and Sephardic rabbis.

The $1,753 monthly rental and insurance fee for his car was paid for by the federal government, which also reimbursed him for tens of thousands of dollars he spent on mileage, meals, tolls and parking

The jury is expected to begin deliberations as early as Monday.

Posing as corrupt developer David Esenbach, Dwek wore a wire and secretly videotaped several meetings with Beldini, Healy, former Housing Commissioner Edward Cheatam and political consultant Jack Shaw. The black-and-white videotapes, along with wiretapped conversations from Shaw’s telephone, were the government’s key evidence at the trial.

Beldini is charged with funneling $20,000 in cash that Dwek gave to Cheatam and Shaw, into Healy’s 2009 mayoral campaign. Beldini served as campaign treasurer for Healy, who has not been charged with any wrongdoing.

Under cross examination by Neary, Dwek admitted that he never gave Beldini any cash directly. But on one videotape, Dwek can be heard asking the deputy mayor if Mayor Healy knows that Dwek had given Cheatam and Shaw $10,000 in cash to secretly purchase tickets for a Healy fundraiser.

“The mayor knows, you know, where the tickets came from?” Dwek asks, adding “. . .He appreciates the way I do business, right?’ ” Dwek asks.

“Absolutely,” Beldini answers.

Shaw died of an overdose of Valium on July 28, five days after his July 23 arrest. Two more people have since been arrested in the case, 12 have so far pleaded guilty, including Cheatam, who admitted to taking about $70,000 from Dwek.

Dwek admitted under questioning by Neary that he did not initially know that Beldini’s $66,000-a-year job as deputy mayor was an appointed position, and that she had no vote and did not sit on the city’s planning or zoning boards.

He had been told by Cheatam and Shaw, he said, that Beldini was the mayor’s “right-hand man,” and Jersey City’s second-most powerful public official.

Dwek began cooperating with the FBI only months after he was arrested on $50 million in bank fraud charges in May 2006. During more than two years working undercover as a government informant, Dwek drove all over New Jersey and into New York City in a Lexus, meeting with public officials and Sephardic rabbis.

The $1,753 monthly rental and insurance fee for his car was paid for by the federal government, which also reimbursed him for tens of thousands of dollars he spent on mileage, meals, tolls and parking.

Atlanta’s downtrodden neighborhoods proved a gold mine for Omni National Bank and its founders, who amassed tens of millions of dollars’ worth of mansions, company stock and a private jet after launching an unusual bank that financed renovations of inner-city houses.

Four men in total were arrested of bank fraud in which they routinely doctored their records to hide losses, and a loan officer took kickbacks in return for doling out loans. Omni allowed people to “flip” houses three, four and even five times, artificially inflating their value, Georgia prosecutors said.

“This is just the tip of the iceberg,” said Ralph Roberts, a Macomb real estate broker and author of a book on mortgage fraud who tipped off authorities about the Omni National Bank case. “You’re going to be seeing more cases. When the economy suffers, people start to do bad things.”

Ralph Roberts, said people across the country told him they were victims of the scheme. “Everyone I talked to lost everything they put in,” said Roberts. “It wasn’t set up to make [them] money. It was set up to make inner-city real estate broker, Delroy Davy money.” Some related to Roberts that they were chauffeured around Atlanta on a tour bus that included a stop at Davy’s sprawling mansion.

Davy recruited “straw buyers” to obtain fraudulent loans. For years, Omni was a magnet for these so-called property flippers, some of whom made superficial repairs and then resold the homes at inflated prices.

Roberts, a Realtor from Macomb daily researches these cases involving mortgage fraud throughout North America, is aware of the rising frequency of fraud in the nation. His daily blog, FlippingFrenzy.com, from Macomb exposes hundreds of fraud cases. “I want families to understand one thing,” alerts Roberts. “Real estate fraud is not a victimless crime. The bank loses money. The seller loses money on the house. But, even more significantly, the entire community loses value, and ultimately, the tax base erodes.

“When people are trying to sell their homes and they have foreclosures on their street, it lowers their value and makes it harder to sell their home,” Roberts continued. “Some folks won’t buy into a neighborhood with foreclosed homes. This is the spreading ripple effect.”

Macomb County’s foreclosure expert was instrumental in exposing a mortgage fraud ring in 2008 and 2009 when four Michigan men were accused of mortgage fraud in which they illegally made more than $300,000 by selling two upscale homes at inflated values to a “straw buyer.”

The case, involved homes in Washington and Shelby townships that went into foreclosure, was part of a rising frequency of real estate fraud in Michigan and the nation, according to Roberts.

The growing problem prompted the Michigan Attorney General, Michael Cox and the Michigan State Police two years ago to form a mortgage fraud task force, which investigates these cases in our state.

Formally charged in 41B District Court in Clinton Township with racketeering, which carries a penalty of up to 20 years, and two counts each of false pretenses, a 10-year felony, were Dequincy Hyatt, 27, of Detroit, a managing partner in J.B.Homes and Construction; Seaesther Thompson-Hayes, 50, of Flat Rock, a mortgage broker; and Aaron Brooks Jr., 26, of Southgate, a former service representative for the People’s Trust Credit Union.

A fourth man, builder Pietro Biundo, 35, who built the Washington Township house and lived in the same subdivision, was charged in a warrant with a lesser degree of false pretenses but has not been formally charged.

In the Washington Township case, the Adams Drive home in Washington Pointe subdivision near 28 Mile and Mound roads initially listed for $679,000 but eventually dropped to $530,000.

The straw buyer obtained a mortgage for $785,000, $225,000 more than the asking price, according to Roberts. Investigators never determined amount taken or how the defendants used the additional $225,000.

Biundo reported on the deed that the home sold for $140,000, which drastically decreased the assessed value and surrounding property taxes.

In the Shelby Township case, defendants skimmed about $163,000 from the transaction in which a $510,000 home was sold for $710,000 to the same straw buyer, according to Cox.

Gina Patrona, who lives across the street from the Washington Township home, said the home was in “terrible shape” with no grass, window treatments or furniture. Together with a second foreclosed home nearby, her home’s property value was negatively affected.

“I don’t think we could sell our home for half of what we put into it,” she said Wednesday.

Cox in a prepared statement echoed the words of Ralph Roberts by pointing out the negative impact on the economy as a whole.

“The housing market, consumers and mortgage lenders suffer when scam artists limit the ability of law-abiding citizens to obtain loans,” Cox said. “With those loans, consumers would be buying a home or a car, something our economy desperately needs for recovery.”

The Atlanta Case Mirrors Detroit

“Such schemes have worsened the damage in some of Atlanta’s struggling neighborhoods,” said Brent Brewer, a civil engineer turned neighborhood activist.

Several houses flipped with Omni National Bank financing have driven up property taxes in his West End neighborhood, he said. Yet the homes mostly sit vacant, attracting criminals and squatters.

The most explosive charge in the Atlanta case alleges Delroy Davy paid kickbacks to an unnamed loan officer at Omni who gave approval for funding to investors who wanted to buy his inner-city properties.

In a flipping case with Michigan connections, an East Point man, Mark Anthony McBride, pleaded guilty to falsifying his identity and using straw borrowers to obtain millions in loans from Omni only days after his release from prison.

Omni is “the most egregious of the lenders because they’re local. They know if the appraisals are correct,” said Brewer

Brewer said Omni repossessed, sold and financed one house near him three separate times, even though for much of that time it sat vacant and windowless, with huge sections of its exterior walls torn away.

Property records confirm Omni took possession and resold the house three times in two years at rising values, following a pattern that allowed the bank to hide its growing number of foreclosures.

Patricia Morgen, 62, of Oakland, California pleaded guilty in federal court in San Francisco yesterday to wire fraud, mail fraud and money laundering, United States Attorney Joseph P. Russoniello announced December 17, 2009.

In his announcement, U.S. Attorney Russoniello restated the Department of Justice’s top priority to vigorously prosecute individuals who commit mortgage fraud and other financial crimes.

In pleading guilty, Morgen admitted that the company she founded and controlled, Chicago Development and Planning (CDP) engaged in two fraudulent schemes: (1) a Ponzi scheme that defrauded more than 400 individual investors by falsely promising that their investment funds would be used to acquire, renovate, and re-sell real estate; and (2) a mortgage fraud scheme that defrauded a mortgage broker and various mortgage lenders by use of loan applications with fraudulent income and asset statements. Morgen admitted that the loss for the two schemes exceeded $8 million. In the plea agreement, Morgen agreed to make restitution in the amount of no less than $8,439,086.

The Securities and Exchange Commission (SEC) began investigating Chicago Development and Planning in 2004, and ultimately obtained a default judgment against Morgen when she failed to appear in any of the civil proceedings. In pleading guilty, Morgen admitted that when she learned of the SEC’s investigation, she instructed employees to destroy documents and then fled to Mexico to avoid federal authorities. Morgen also admitted that she instructed an employee to contact a mortgage broker who had worked on CDP real estate acquisitions in an attempt to convince the mortgage broker not to provide documents to the SEC.

On Sept. 2, 2009, Morgen’s co-defendant, Michael Ware, pled guilty to similar charges involving Chicago Development and Planning’s mortgage fraud scheme.

“This case shows that the appearance of success can be a mask for a tangled financial web of lies,” said Scott O’Brian, Special Agent in Charge, IRS-Criminal Investigation, and Oakland Field office. “Ponzi schemes can thrive for a time on false claims about how the money is being invested and where the returns are coming from. But that time is gone, and as this case shows, it’s time for those responsible to face judgment.”

Morgen was indicted by a federal Grand Jury on Nov. 20, 2008. She was charged with 11 counts of mail and wire fraud, as well as a single count of money laundering. Under the plea agreement, Morgen pled guilty to two counts of mail fraud, two counts of wire fraud, and one count of money laundering.

Morgen is currently in the custody of the Bureau of Prisons. Her sentencing is scheduled for April 7, 2010, before Judge Charles R. Breyer in San Francisco. The maximum statutory penalty for mail and wire fraud is 30 years. The maximum statutory penalty for money laundering is 10 years.

MTSU Professor Sentenced to 12 Months and a Day for Mortgage Fraud Scheme

NASHVILLE, TN—Edward M. Yarbrough, United States Attorney for the Middle District of Tennessee, and My Harrison, Special Agent in Charge, Memphis Division, Federal Bureau of Investigation, announced that, on November 13, 2009, U.S. District Judge Aleta Trauger sentenced Pamela Gail Holder to 12 months and one day in prison for her role in a mortgage fraud scheme. Dr. Holder had been found guilty of bank fraud and wire fraud offenses related to that scheme following a one-week jury trial in April 2009.

Dr. Holder, a professor of nursing at Middle Tennessee State University and the former coordinator of the statewide Tennessee Board of Regents On-Line Degree Program, was originally charged in a four-count indictment in June 2008. At trial, the jury heard evidence that Dr. Holder and others helped orchestrate a multi-million dollar mortgage-fraud scheme that involved a “straw buyer” with a good credit score, who was deceived by Dr. Holder into borrowing $2.4 million for the purpose of purchasing a $1.5 million dollar home in Hendersonville, Tennessee. In the months leading up to the purchase, Dr. Holder helped prepare or send false documents that, among other things, falsely claimed that the straw buyer was president of “Team Fat Man,” an automotive-sales business owned by Dr. Holder’s deceased husband, and greatly inflated the straw buyer’s income. Through those documents and other fraudulent misrepresentations, Dr. Holder was able to qualify the straw buyer for large loans well beyond what the straw buyer could afford. The scheme involved loans obtained at Bank of Nashville, Countrywide Home Loans, and First Tennessee Bank. After the straw buyer purchased the lavish home, Dr. Holder and her husband moved in and spent the excess loan funds on various purchases, including several pieces of diamond jewelry. When the straw buyer was unable to make the monthly mortgage payments of approximately $10,000, the mortgage defaulted and the property was foreclosed upon.

At the sentencing hearing, the government focused on the profound damage that Dr. Holder’s crime caused an innocent victim and the negative effect of mortgage fraud on the banking industry and the lending process. After the sentencing, United States Attorney Edward Yarbrough remarked, “Mortgage fraud is a serious crime, and we are pleased that the Court has imposed an appropriately serious sentence in this case. The United States Attorney’s Office and our law-enforcement partners will continue to investigate such frauds and bring those who commit them to justice.” In addition, My Harrison, Special Agent in Charge of the FBI’s Memphis Division, stated, “The FBI will continue to target those who criminally manipulate our financial system for personal gain and keep working to bring criminals like this to justice to ensure that they pay for their crimes.”

The investigation of the case was conducted by the Federal Bureau of Investigation. Assistant U.S. Attorney Ty E. Howard of the Middle District of Tennessee and Trial Attorney Peter A. Frandsen of the U.S. Department of Justice Fraud Section represented the United States.