Search


About

Flipping Frenzy.com is your source for news, information, and commentary on Real Estate and Mortgage Fraud. Click here to learn more.


Suspect Fraud?

If you believe you have been a victim of real estate or mortgage fraud, start here! Select your state from the pulldown menu below:

Articles

Our founder, Ralph Roberts, has written many eye-opening articles about Real Estate and Mortgage Fraud. Click here for more information.

Contact Ralph

If you would like to talk with us about a Real Estate or Mortgage Fraud-related matter, please click here.


Click Above for Info

Categories

Ralph's Latest Book: Click Above for Info

October 2014
S M T W T F S
« Aug    
 1234
567891011
12131415161718
19202122232425
262728293031  

Click Above for Info

Recent comments

The FBI Investigates Mortgage Fraud!

Recent posts

Archives

May 28, 2011

Mortgage Fraud Defendant Sentenced to Prison

TAMPA, FL—U.S. Attorney Robert E. O’Neill announces that U.S. District Judge Susan C. Bucklew today sentenced Sang Min Kim, a/k/a Sonny Kim (37, Tampa) to 41 months in federal prison for conspiracy to commit wire, mail, and bank fraud and money laundering in connection with a mortgage fraud scheme. As part of his sentence, the court entered a money judgment in the amount of $5,826,778.65, the proceeds of the charged criminal conduct.

Kim pleaded guilty on June 29, 2010. According to court documents, from about January 2005 through October 2008, Kim engaged in numerous residential real estate transactions in the Middle District of Florida, primarily in Hillsborough County, at least 48 of which involved fraud and resulted in losses of approximately $5,826,778.65.

Kim purchased residential properties as an “investor” with the intention of “flipping” the properties in subsequent sales. Kim’s co-conspirators identified the properties he purchased, usually at market value, by accepting quit claim deeds from the sellers. Frequently, Kim’s co-conspirators also identified the “buyers” to whom he flipped the properties. Kim’s buyers’ mortgage loan applications typically included the false claim that they intended to occupy the properties they were purchasing, when in fact they never intended to purchase Kim’s properties as places to live. Moreover, Kim’s buyers made no genuine financial commitment of funds to their purchase transactions. The buyers’ stated down payments were fictitious because the funds used to make the down payments were either provided by Kim or another, or the buyer used his or her own money and was subsequently reimbursed by Kim who used loan proceeds to do so. The “buyers” were motivated to participate in these transactions by the fact that they were being paid to assume the role of “purchaser.”

As a part of the fraud scheme, Kim used appraisers whom he knew would “come in higher” on appraised values. He also regularly provided a title agent with additional compensation in the form of “side commissions” in exchange for expediting closings. Kim was aware that at least one mortgage broker created false W-2 forms to document a prospective borrower’s stated income. Kim was also aware that his company, SK Investment Group, LLC, was used to provide false employment verifications for other fraudulent transactions from which he did not directly benefit. Kim was also aware that one or more mortgage brokers, through whom he conducted his purchase/sales transactions, made up fictitious income and false assets that were inserted on prospective buyers’ loan applications. Kim was assisted in his fraudulent purchase/sales transactions by persons employed by federally insured financial institutions. Those persons were aware that Kim, as the seller, received a portion of funds derived from equity lines of credit acquired by his buyers.

This case was investigated by the Federal Bureau of Investigation and the Internal Revenue Service – Criminal Investigation. It was prosecuted by Assistant United States Attorney Rachelle DesVaux Bedke.

Central Coast Man Sentenced Two Years in Federal Prison in Mortgage Fraud Scheme

LOS ANGELES—A Buellton man was sentenced today to 21 months in federal prison for defrauding banks by nearly simultaneously seeking home equity lines of credit from four different federally insured financial institutions.

Larry P. Corbi Jr., 36, who resided in Marina del Rey during the course of the scheme and has since relocated to the Central Coast, was sentenced by United States District Judge Dale S. Fischer. In addition to the prison term, Judge Fischer ordered Corbi to pay $356,644 in restitution.

Corbi pleaded guilty in November to one count of bank fraud, admitting that he fraudulently filed four applications for home equity lines of credit (HELOCs) over a two-week period in 2008. According to a plea agreement filed in this case, Corbi bought a $620,000 home in the Granada Hills district of Los Angeles in November 2007. In March 2008, Corbi applied for four HELOCs in amounts ranging from $122,000 to $191,000 from Washington Mutual Bank, GMAC ResCap, Countrywide Bank F.S.B., and Metlife Bank/PHH Mortgage Corporation. Corbi concealed from each financial institution that he was concurrently applying for other HELOCs that would also be secured by the Granada Hills home. Three of the four HELOCs were approved and funded.

In total, Corbi obtained $672,144 in loan proceeds, which included $200,000 he borrowed to purchase the Granada Hills home. When the home went into foreclosure, the banks that had loaned money to Corbi suffered losses totaling $356,644.

The case against Corbi was investigated by the Federal Bureau of Investigation.

May 25, 2011

Central Coast Man Sentenced to Nearly Two Years in Federal Prison in Mortgage Fraud Scheme

LOS ANGELES—A Buellton man was sentenced today to 21 months in federal prison for defrauding banks by nearly simultaneously seeking home equity lines of credit from four different federally insured financial institutions.

Larry P. Corbi Jr., 36, who resided in Marina del Rey during the course of the scheme and has since relocated to the Central Coast, was sentenced by United States District Judge Dale S. Fischer. In addition to the prison term, Judge Fischer ordered Corbi to pay $356,644 in restitution.

Corbi pleaded guilty in November to one count of bank fraud, admitting that he fraudulently filed four applications for home equity lines of credit (HELOCs) over a two-week period in 2008. According to a plea agreement filed in this case, Corbi bought a $620,000 home in the Granada Hills district of Los Angeles in November 2007. In March 2008, Corbi applied for four HELOCs in amounts ranging from $122,000 to $191,000 from Washington Mutual Bank, GMAC ResCap, Countrywide Bank F.S.B., and Metlife Bank/PHH Mortgage Corporation. Corbi concealed from each financial institution that he was concurrently applying for other HELOCs that would also be secured by the Granada Hills home. Three of the four HELOCs were approved and funded.

In total, Corbi obtained $672,144 in loan proceeds, which included $200,000 he borrowed to purchase the Granada Hills home. When the home went into foreclosure, the banks that had loaned money to Corbi suffered losses totaling $356,644.

The case against Corbi was investigated by the Federal Bureau of Investigation.

May 24, 2011

Former Title and Escrow Agent Pleads Guilty to Mortgage Fraud 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, pled guilty today to the lead count in a recently filed indictment, bank fraud, announced 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, Virginia, entered his guilty plea today before the Honorable Alan Kay in the U.S. District Court for the District of Columbia. He also agreed to forfeiture of $1,256,000. He is to be sentenced later this summer or fall by the Honorable Emmet G. Sullivan. Sneijder faces a probable sentence under the sentencing guidelines of 30 to 37 months of incarceration, restitution in the amount of $1,256,000, a fine, and other conditions.

The indictment against Sneijder was returned by a grand jury on May 13, 2011 and unsealed last week.

According to the statement of offense, signed by the defendant, 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.

In May 2006, Red Box Settlements handled a real estate closing for a client identified in these proceedings as R.K. As part of the settlement, Red Box received approximately $396,000 as the sales proceeds into its escrow exchange account held in trust for R.K. However, from May 2006 to November 2006, the defendant took approximately $216,000 from the escrow exchange account to pay his personal and business expenses without permission and authority of R.K. Then, in November 2006, R.K. purchased another home and asked for the release of his money from the escrow exchange account; however, Red Box Settlements did not have sufficient funds in its escrow exchange account to honor the full demand and was unable to remit R.K.’s portion, that is, about $313,000, directly to him.

Later 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.

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.

In announcing the plea, 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.

May 22, 2011

Six Indicted as Part of a Multi-Million-Dollar Mortgage Fraud Scheme

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.

May 19, 2011

Six Indicted as Part of a Multi-Million-Dollar Mortgage Fraud Scheme

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.

May 18, 2011

Chico Couple Pleads Guilty to Mortgage Fraud Charges

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.

Former Title and Escrow Agent Indicted for Mortgage Fraud

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.

May 17, 2011

Seven Northland Residents Indicted in Parkville Mortgage Fraud Scheme

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.

May 14, 2011

Two Men Charged in Mortgage Fraud Scheme

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.

May 12, 2011

Former Davenport Mortgage Broker Arrested for Mortgage Fraud

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.

May 11, 2011

Kentuckiana Men Charged with Mortgage Fraud 19 Properties Totaling Nearly $5 Million

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.

May 10, 2011

Second Indiana Defendant Sentenced in Mortgage Fraud Scheme

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

April 25, 2011

Former Las Vegas Resident Charged with Committing Mortgage Fraud in Nevada

LAS VEGAS—A former Las Vegas resident has been charged with federal conspiracy and fraud charges for his involvement in a Nevada mortgage fraud scheme involving straw buyers and falsified mortgage loan documents, announced Daniel G. Bogden, United States Attorney for the District of Nevada.

Brian K. Jackson, 38, currently of Anaheim, California, was indicted by the Federal Grand Jury in Las Vegas on October 21, 2009, and charged with Conspiracy to Commit Bank Fraud, Mail Fraud, and Wire Fraud. On Tuesday, November 10, 2009, Jackson was arrested in the Los Angeles area, and appeared before a U.S. Magistrate Judge there and was released on a $50,000 surety bond. Jackson is scheduled to be arraigned by U.S. Magistrate Judge George W. Foley in Las Vegas on Friday, November 20, 2009, at 8:30 a.m.

The Indictment alleges that from about 2002 to May 14, 2008, Jackson, owner of Unlimited Properties, a now-revoked Nevada limited liability corporation, participated in a conspiracy to defraud financial institutions by causing money from mortgage loans to be diverted to his own use and benefit. Jackson solicited and paid persons (straw buyers) to apply for mortgage loans in their name. The loans were processed through Sapphire Mortgage, located in Henderson, Nevada. Jackson caused false and fraudulent information to be placed in the straw buyers’ mortgage loan applications concerning their employment, income, assets, intent to occupy property, etc. Jackson caused the same home to be purchased multiple times by different straw buyers at ever increasing prices. Jackson caused the “equity” to be diverted to himself personally or his company, Unlimited Properties. Jackson also placed renters in the properties, and caused the mortgages to default.

The Indictment specifically discusses several transactions involving a home located at 2061 Scenic Sunrise Drive in Las Vegas. Between March 2002 and late 2004, Jackson twice orchestrated the sale of the property using two straw buyers and the placement of false information in their loan applications. In June 2004, Jackson also orchestrated the sale of the Scenic Sunrise property to himself and falsely stated in his loan application that he intended to reside in the property when he knew he did not. During this period, Jackson also leased the Scenic Sunrise property to another individual and accepted money from the individual as guarantee that he would purchase it in the future, even though Jackson knew that the property at the time was owned by the first straw buyer and was in the process of being sold to the second straw buyer. The indictment alleges that Jackson or his company received about $179,000 from these fraudulent transactions.

In May 2008, the owner of Sapphire Mortgage, Cindy Birkland, was arrested and charged in state court in Las Vegas with mortgage fraud related offenses. If convicted, Jackson faces up to 30 years in prison and a $1,000,000 fine.

This investigation is being led by IRS Criminal Investigation and the FBI, and other agencies of the Southern Nevada Mortgage Fraud Task Force, including the Las Vegas Metropolitan Police Department, the Nevada Attorney General’s Office, Office of the Inspector General for the Social Security Administration, Office of the Inspector General for the Department of Housing and Urban Development, the U.S. Postal Inspection Service, and the U.S. Secret Service. The case is being prosecuted by Assistant United States Attorney Brian Pugh. Persons who have information concerning potential mortgage fraud may contact the Southern Nevada Mortgage Fraud Hotline at (702) 584-5555.

The public is reminded that an indictment contains only charges and is not evidence of guilt. The defendant is presumed innocent and are entitled to a fair trial at which the government has the burden of proving guilt beyond a reasonable doubt.

April 23, 2011

Five Indicted on Mortgage Fraud Charges

Bay Area Mortgage Broker and Real Estate Agent Among Those Charged with Conspiring to Defraud Four Different Banks of More Than One Million Dollars

SACRAMENTO, Calif.—Acting United States Attorney Lawrence G. Brown announced today that a federal grand jury has returned an eight-count indictment charging DENNIS AARON MOORE, 50, of Hillsborough, Calif., VERONIKA WRIGHT, 33, of San Ramon, Calif., MITCHELL WRIGHT, 36, of San Ramon, Calif., HAIYING FAN, 42, of Millbrae, Calif., and GARY LORENZO GEORGE, 50, of Olivehurst, Calif., with various crimes in connection with their participation in a mortgage fraud scheme with respect to the purchase of a series of homes in South Lake Tahoe and Nevada City, Calif. Each defendant is charged with one count of conspiring to commit bank fraud and mail fraud; defendants MOORE, VERONIKA WRIGHT, MITCHELL WRIGHT, and FAN are further charged with two counts of bank fraud; and MOORE, VERONIKA WRIGHT and GEORGE are each charged with making false statements on loan applications. MOORE and FAN are also charged with two counts of money laundering. The indictment alleges that the victim lending institutions suffered over $1,000,000 in losses as a result of the defendants’ conduct.

This case is the product of a joint investigation by the Federal Bureau of Investigation and the Internal Revenue Service, Criminal Investigation.

“Aggressive pursuit of those who engaged in mortgage fraud during the boom and bust of the region’s housing market remains a top priority for federal law enforcement. These scams hurt not just the lending institutions, but area homeowners and taxpayers alike,” said acting U.S. Attorney Brown.

According to Assistant United States Attorney Sean C. Flynn, who is prosecuting the case, the indictment alleges that between June 2005 and April 2007, the defendants conspired to defraud Washington Mutual Bank, doing business as Long Beach Mortgage, Countrywide Bank, FSB, and other lenders through a “cash-back-to-buyer” mortgage fraud scheme. MOORE purchased five separate properties in South Lake Tahoe and Nevada City, each of which was funded with large primary loans or first mortgages from various lending institutions. It is alleged that as part of each purchase agreement, MOORE insisted that each seller agree that a substantial “commission” – sometimes in excess of 20 percent of the purchase price – be paid from the sale proceeds to MOORE’s real estate agent, defendant FAN. In order to induce the seller to agree to such a commission, MOORE often offered to purchase the properties at prices above the respective list prices.

MOORE further collaborated with his mortgage broker, VERONIKA WRIGHT, and his other co-conspirators to submit to the lending institutions home mortgage loan applications that contained various false statements with respect to MOORE’s income, employment, liquid assets, and compliance with tax obligations. MITCHELL WRIGHT is alleged to have created a bogus Web site to substantiate MOORE’s false employment claims, and GEORGE, a tax professional, created false letters to support MOORE’s false financial claims. The banks relied on these false statements in disbursing funds pursuant to the loans. It is further alleged that once the funds were disbursed, FAN kicked back the majority of her “commission” to MOORE, completing the cashback-to-buyer mortgage fraud scheme.

The maximum statutory penalty on the conspiracy charge is five years in prison, while the bank fraud and false statement charges carry a 30-year maximum sentence. The maximum sentence that can be imposed with respect to the money laundering charges against MOORE and FAN is 10 years in prison. However, the actual sentence will be dictated by the Federal Sentencing Guidelines, which take into account a number of factors, and will be imposed at the discretion of the court.

The charges are only allegations and the defendants are presumed innocent until and unless proven guilty beyond a reasonable doubt.

Michigan Investment Adviser Pleads Guilty to Bank and Wire Fraud Ponzi Charges

Dante DeMiro, 43, of Milford, pled guilty today to five counts of bank and wire fraud, United States Attorney Barbara McQuade announced. Joining in the announcement was Special Agent in Charge Andrew Arena, Federal Bureau of Investigation (FBI).

According to court documents, DeMiro was an investment adviser to various municipalities, credit unions, school districts, and trade unions through his Southfield-based companies MuniVest Financial Group and MuniVest Services LLC. From August 2007 to September 2010, DeMiro used the MuniVest entities to operate a bank and wire fraud Ponzi scheme. DeMiro falsely promised investor clients that he would invest their funds in various certificates of deposit. He did not invest their funds as promised, but instead, used their funds to purchase personal items and real property, to gamble, to make payments to other investors in the same scheme, and to make loans to several individuals and a local jewelry store. DeMiro stipulated that the loss caused by his fraud exceeds $7 million, and that he abused a position of trust in his fiduciary capacity as an investment adviser.

“We have seen more and more of these investment schemes, which prey upon school districts, municipalities, and unions,” McQuade said. “Our hope is that cases like this one will deter other investment advisors from stealing from these vulnerable investors.”

Special Agent in Charge Arena stated, “Today’s swindlers artfully conceal their greed with sophisticated marketing and numerous misrepresentations. Investors and pension plan participants must remain diligent in following their money.”

Sentencing is scheduled for July 12, 2011 at 10:00 am before the Honorable Lawrence P. Zatkoff in Port Huron.

The case is being prosecuted by Assistant United States Attorney Erin Shaw.

Posted By: Ralph Roberts @ 10:54 am | | Comments (0) | Trackback |
Filed under: Bank Fraud,Investment Fraud,Ponzi Scheme,Wire Fraud

April 22, 2011

Weston Man Admits Participating in Mortgage Fraud Conspiracies

David B. Fein, United States Attorney for the District of Connecticut, announced that STEVEN J. KOTTAGE, 45, of Weston, pleaded guilty today before United States District Judge Mark R. Kravitz in New Haven to two counts of conspiracy stemming from mortgage fraud schemes in which KOTTAGE participated.

According to court documents and statements made in court, KOTTAGE conspired with others to commit wire fraud by making materially false statements to H&R Block Home Mortgage, Inc., including a false loan application, W-2, employment verification, and pay stub, in connection with a mortgage on a home on Fire Island, New York. In addition, KOTTAGE admitted that he conspired with others to commit bank fraud by submitting a materially false loan application to Washington Mutual to refinance a condominium in Hillsboro Beach, Florida. A co-defendant, Mary Ellen Durso, served as the straw owner for the condo in order to obtain the fraudulent loan proceeds for the benefit of KOTTAGE and another co-conspirator. Through both schemes, KOTTAGE and others defrauded Wells Fargo and Freddie Mac of more than $600,000.

Judge Kravitz has scheduled sentencing for July 11, 2011, at which time KOTTAGE faces a maximum term of imprisonment of 30 years on each count. He also will be ordered to pay restitution in the amount of at least $616,547.93.

KOTTAGE is currently detained.

On December 14, 2010, Durso pleaded guilty to one count of conspiracy and five counts of filing false tax returns. On March 9, 2011, she was sentenced to three years of probation, the first six months of which she must serve in home confinement.

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

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. 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.

April 20, 2011

Former TBW CEO Pleads Guilty in $1.5 Billion Fraud Scheme

WASHINGTON—Paul Allen, the former chief executive officer (CEO) at Taylor, Bean & Whitaker (TBW), pleaded guilty today to making false statements and conspiring to commit bank and wire fraud for his role in a $1.5 billion fraud scheme that contributed to the failure of TBW.

The guilty plea was announced today by Assistant Attorney General Lanny A. Breuer of the Criminal Division; U.S. Attorney Neil H. MacBride for the Eastern District of Virginia; Acting Special Inspector General Christy Romero for the Troubled Asset Relief Program (SIGTARP); Assistant Director in Charge James W. McJunkin of the FBI’s Washington Field Office; Michael P. Stephens, Inspector General of the Department of Housing and Urban Development (HUD-OIG); Jon T. Rymer, Inspector General of the Federal Deposit Insurance Corporation (FDIC-OIG); Steve A. Linick, Inspector General of the Federal Housing Finance Agency (FHFA-OIG); and Victor F.O. Song, Chief of the Internal Revenue Service (IRS) Criminal Investigation.

Allen, 55, of Oakton, Va., pleaded guilty to a two-count criminal information before U.S. District Judge Leonie M. Brinkema in the Eastern District of Virginia. Allen faces a maximum penalty of five years in prison for each count when he is sentenced on June 21, 2011.

According to a statement of facts submitted with his plea agreement, Allen joined TBW in 2003 as its CEO and reported directly to its chairman. He admitted in court that from 2005 through August 2009, he and other co-conspirators engaged in a scheme to defraud financial institutions that had invested in a wholly owned lending facility called Ocala Funding. Ocala Funding raised money by selling asset-backed commercial paper to financial institutions, including Deutsche Bank and BNP Paribas, and used the money to purchase TBW mortgages. The facility was managed by TBW and had no employees of its own.

According to court records, shortly after Ocala Funding was established, Allen learned there were inadequate assets backing its commercial paper, a deficiency referred to internally at TBW as a “hole” in Ocala Funding. Allen admitted that in an effort to cover up the hole and to mislead investors, he told a co-conspirator to produce reports that concealed the hole. He also admitted that he knew that these misleading reports were sent to Ocala Funding investors and other third parties.

Allen also admitted in court that he kept the chairman of TBW informed of the collateral shortfall, and that in the fall of 2008, Allen was told that the hole had been moved from Ocala Funding to Colonial Bank. At the time that TBW ceased operations, the hole was approximately $1.5 billion. According to court documents, as a result of the Ocala Funding fraud scheme, Freddie Mac, Colonial Bank, and Ocala Funding investors believed they had an undivided ownership interest in thousands of the same mortgage loans.

Court records state that in March 2009, Allen was directed to approach a private equity investor to secure capital to meet a $300 million private capital requirement the U.S. Department of Treasury set for Colonial Bank to receive $553 million from the Troubled Assets Relief Program (TARP). Although Allen failed to secure the funding from the investor, he admitted in court that the TBW chairman represented to others that the investor was a $50 million participant and that the chairman diverted $5 million from Ocala Funding to an escrow account in the investor’s name. This deception caused Colonial Bank to falsely announce publicly it had met its $300 million capital raise contingency and to send a letter to the FDIC that all investors had met a 10 percent escrow deposit requirement. Colonial Bank never received any TARP funds.

In court today, Allen also admitted to making false statements in a letter he sent to the U.S. Department of Housing and Urban Development, through Ginnie Mae, regarding TBW’s audited financial statements for the fiscal year ending on March 31, 2009. In this letter, Allen omitted that the delay in submitting the financial data was attributed to concerns its independent auditor had raised about the financing relationship between TBW and Colonial Bank. Instead, Allen falsely attributed the delay to a new acquisition and TBW’s switch to a compressed 11-month fiscal year.

To date, five other individuals have pleaded guilty for their roles in this and related fraud schemes.

The case is being prosecuted by Deputy Chief Patrick Stokes and Trial Attorney Robert Zink of the Criminal Division’s Fraud Section and Assistant U.S. Attorneys Charles Connolly and Paul Nathanson of the Eastern District of Virginia. This case was investigated by SIGTARP, the FBI’s Washington Field Office, FDIC-OIG, HUD-OIG, FHFA-OIG, and the IRS Criminal Investigation. The Financial Crimes Enforcement Network (FinCEN) of the Department of the Treasury also provided support in the investigation.

This prosecution 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.

Posted By: Ralph Roberts @ 9:10 pm | | Comments (0) | Trackback |
Filed under: Bank Fraud,Mortgage Fraud,Mortgage Loan Fraud,Wire Fraud

Former Chairman of Taylor, Bean & Whitaker Convicted for $2.9 Billion Fraud Scheme

WASHINGTON—Lee Bentley Farkas, the former chairman of a private mortgage lending company, Taylor, Bean & Whitaker (TBW), was convicted today for his role in a more than $2.9 billion fraud scheme that contributed to the failures of Colonial Bank, one of the 25 largest banks in the United States in 2009, and TBW, one of the largest privately held mortgage lending companies in the United States in 2009.

The conviction was announced today by Assistant Attorney General Lanny A. Breuer of the Criminal Division; U.S. Attorney Neil H. MacBride for the Eastern District of Virginia; Acting Special Inspector General Christy Romero for the Troubled Asset Relief Program (SIGTARP); Assistant Director in Charge James W. McJunkin of the FBI’s Washington Field Office; Michael P. Stephens, Acting Inspector General of the Department of Housing and Urban Development (HUD-OIG); Jon T. Rymer, Inspector General of the Federal Deposit Insurance Corporation (FDIC-OIG); Steve A. Linick, Inspector General of the Federal Housing Finance Agency (FHFA-OIG); and Victor F.O. Song, Chief of the Internal Revenue Service Criminal Investigation (IRS-CI).

After a 10-day trial, a federal jury in the Eastern District of Virginia found Farkas guilty of one count of conspiracy to commit bank, wire and securities fraud; six counts of bank fraud; four counts of wire fraud; and three counts of securities fraud. At sentencing, scheduled for July 1, 2011, Farkas faces a maximum prison term of 30 years for the conspiracy charge and for each count of bank fraud, 20 years for each count of wire fraud related to TARP, 30 years for each count of wire fraud affecting a financial institution and 25 years for each securities fraud count. Farkas was remanded into custody.

According to court documents and evidence presented at trial, Farkas and his co-conspirators engaged in a scheme that misappropriated more than $1.4 billion from Colonial Bank’s Mortgage Warehouse Lending Division in Orlando, Fla., and approximately $1.5 billion from Ocala Funding, a mortgage lending facility controlled by TBW. Farkas and his co-conspirators misappropriated this money to, among other things, cover TBW’s operating expenses. The fraud scheme contributed to the failures of Colonial Bank and TBW.

Six individuals have pleaded guilty for their roles in the fraud scheme, including: Paul Allen, former chief executive officer of TBW; Raymond Bowman, former president of TBW; Desiree Brown, former treasurer of TBW; Catherine Kissick, former senior vice president of Colonial Bank and head of its Mortgage Warehouse Lending Division (MWLD); Teresa Kelly, former operations supervisor for Colonial Bank’s MWLD; and Sean Ragland, a former senior financial analyst at TBW.

“Lee Farkas, the former chairman of TBW, masterminded one of the largest bank fraud schemes in history,” said Assistant Attorney General Breuer. “His shockingly brazen scheme poured fuel on the fire of the financial crisis. It not only led to the downfall of TBW, one of the largest private mortgage lending companies in the United States, but also contributed to the failure of one of the country’s largest commercial banks. Mr. Farkas may have thought he could steal nearly $3 billion from investors and taxpayers and sail into the sunset. But now a jury has told him otherwise, and he must face the severe consequences.”

“Today a jury convicted Lee Farkas of orchestrating one of the longest and largest bank fraud schemes in the country,” said U.S. Attorney Neil H. MacBride. “In 2008, Lee Farkas boasted that he ‘could rob a bank with a pencil.’ And he did just that. His staggering greed led him to steal nearly $3 billion from Colonial Bank and other investors. Farkas’s mammoth fraud contributed to the toppling of a financial institution and the ripple effects were felt from Wall Street to Main Street. Now he’s being held responsible for the financial ruin he left in his wake.”

“This investigation required thousands of hours of work by investigators, forensic accountants and analysts to sort through complex mortgage and lending documents,” said Assistant Director in Charge McJunkin. “I’d like to thank the many other agencies who worked with FBI personnel to build a strong investigative team; a team still out there working today to protect federal funds and innocent victims.”

“Today’s verdict ensures that Farkas will pay for his crime—an unprecedented scheme to defraud regulators during the height of the financial crisis and to steal over $550 million from the American taxpayers through TARP,” said Acting Special Inspector General Romero for SIGTARP. “SIGTARP and its partners in the Financial Fraud Enforcement Task Force stopped the scheme dead in its tracks and will continue to bring to justice those criminals who seek to profit by exploiting TARP through fraud.”

According to court documents and evidence presented at trial, the fraud scheme began in 2002, when Farkas and his co-conspirators ran overdrafts in TBW bank accounts at Colonial Bank in order to cover TBW’s cash shortfalls. Farkas and his co-conspirators at TBW and Colonial Bank transferred money between accounts at Colonial Bank to hide the overdrafts. Evidence presented at trial showed that after the overdrafts grew to more than $100 million, Farkas and his co-conspirators covered up the overdrafts and operating losses by causing Colonial Bank to purchase from TBW over time more than $1.5 billion in what amounted to worthless mortgage loan assets, including loans that TBW had already sold to other investors and fake pools of loans supposedly being formed into mortgage-backed securities. Farkas and his co-conspirators caused Colonial Bank to report these assets on its books at face value when in fact the mortgage loan assets were worthless. By August 2009, approximately $500 million in fake pools of loans remained on Colonial Bank’s books.

According to court documents and evidence presented at trial, Farkas and his co-conspirators at TBW also misappropriated more than $1.5 billion from Ocala Funding. Ocala Funding sold asset-backed commercial paper to financial institution investors, including Deutsche Bank and BNP Paribas Bank. Ocala Funding, in turn, was required to maintain collateral in the form of cash and/or mortgage loans at least equal to the value of outstanding commercial paper.

Evidence presented at trial established that Farkas and his co-conspirators diverted cash from Ocala Funding to TBW to cover its operating losses, and as a result, created significant deficits in the amount of collateral Ocala Funding possessed to back the outstanding commercial paper. To cover up the diversions, the conspirators sent false information to Deutsche Bank, BNP Paribas Bank and other financial institution investors and led them to falsely believe that they had sufficient collateral backing the commercial paper they had purchased. When TBW failed in August 2009, the banks were unable to redeem their commercial paper for full value. Farkas and his co-conspirators also caused approximately $900 million in loans to be held on Colonial Bank’s books when in fact the loans had already been sold to Freddie Mac and other investors.

According to court documents and evidence at trial, in the fall of 2008, Colonial Bank’s holding company, Colonial BancGroup Inc., applied for $570 million in taxpayer funding through the Capital Purchase Program (CPP), a sub-program of the U.S. Treasury Department’s Troubled Asset Relief Program (TARP). In connection with the application, Colonial BancGroup submitted financial data and filings that included materially false information related to mortgage loans and securities held by Colonial Bank as a result of the fraudulent scheme perpetrated by Farkas and his co-conspirators. Colonial BancGroup’s TARP application was conditionally approved for $553 million contingent on the bank raising $300 million in private capital.

Evidence at trial established that Farkas and his co-conspirators falsely informed Colonial BancGroup that they had identified sufficient investors to satisfy the TARP capital contingency. Farkas and his TBW co-conspirators diverted $25 million from Ocala Funding into an escrow account and falsely represented that the money was on behalf of capital raise investors. Farkas and his TBW co-conspirators caused Colonial BancGroup to issue a false and misleading financial statement to the Securities and Exchange Commission (SEC) and press release announcing the success of the capital raise. Ultimately, Colonial BancGroup did not receive any TARP funds.

Evidence at trial also established that Farkas and his co-conspirators caused Colonial BancGroup to file materially false financial data with the SEC regarding its assets in annual reports contained in Forms 10-K and quarterly filings contained in Forms 10-Q. Colonial BancGroup’s materially false financial data included overstated assets for mortgage loans that had little to no value that Farkas and his co-conspirators caused Colonial Bank to purchase. Farkas and his co-conspirators also caused TBW to submit materially false financial data to the Government National Mortgage Association (Ginnie Mae) in order to extend TBW’s authority to issue Ginnie Mae mortgage-backed securities.

According to court documents and evidence presented at trial, Farkas also personally misappropriated more than $20 million from TBW and Colonial Bank to finance his lifestyle, including purchasing multiple homes, scores of cars, a jet and sea plane, and restaurants and bars.

In August 2009, the Alabama State Banking Department, Colonial Bank’s regulator, seized the bank and appointed the FDIC as receiver. Colonial BancGroup also filed for bankruptcy in August 2009.

“The successful prosecution of Farkas and his associates highlights the commitment and combined efforts of DOJ and federal law enforcement to hold those responsible from all levels of a mortgage company,” said Acting Inspector General Stephens for HUD-OIG. “Efforts to protect FHA and Ginnie Mae are strengthened by this verdict.”

“Today’s verdict confirms that the former chairman of one of the leading mortgage lending firms in the Southeast engaged in criminal conduct during the mid-2000s,” said Inspector General Rymer of FDIC-OIG. “We are proud to work with our partners at the Justice Department’s Criminal Division and in the U.S. Attorney’s Office for the Eastern District of Virginia to bring to justice individuals whose fraud contributed significantly to the financial crisis and the failure of a major financial institution.”

“This conviction represents a victory for Freddie Mac and American taxpayers, who have invested $64.2 billion in Freddie Mac to date,” said Inspector General Linick of the FHFA-OIG. “ The fraud that Farkas perpetrated on Freddie Mac directly affected its bottom line and, in turn, American taxpayers. FHFA-OIG looks forward to future cooperative efforts with law enforcement partners to combat fraud against Freddie Mac, Fannie Mae, and the Federal Home Loan Banks.”

The case was prosecuted by Deputy Chief Patrick Stokes and Trial Attorney Robert Zink of the Criminal Division’s Fraud Section and Assistant U.S. Attorneys Charles Connolly and Paul Nathanson of the Eastern District of Virginia. This case was investigated by the FBI’s Washington Field Office, SIGTARP, FDIC-OIG, HUD-OIG, FHFA-OIG, and the IRS Criminal Investigation. The Financial Crimes Enforcement Network (FinCEN) of the Department of the Treasury also provided support in the investigation. The Department of Justice would like to thank the SEC for their assistance.

This conviction is part of efforts underway by President Barack Obama’s Financial Fraud Enforcement Task Force. President Obama established the interagency 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. For more information about the task force visit: www.stopfraud.gov.

April 19, 2011

Federal Mortgage Fraud Charges Filed Against Owner and Employees of Former Nevada Investment Companies

LAS VEGAS—A man who owned and operated numerous now-defunct Nevada investment companies, and two of his former employees, were indicted by the federal grand jury today on mortgage fraud charges, announced Daniel G. Bogden, United States Attorney for the District of Nevada.

Brett Depue, 36, a former resident of Las Vegas, but currently a resident of Gilbert, Arizona, Brian Barney, 36, of Fairfield, California, and Maria Ornelas, 32, of Las Vegas, are charged with conspiracy to commit bank fraud, mail fraud, and wire fraud, 11 counts of wire fraud, and criminal forfeiture.

Warrants have been issued for the arrests of Depue and Barney. Ornelas was summoned, and is scheduled for an initial appearance before a United States Magistrate Judge in Las Vegas on Friday, March 26, 2010, at 8:30 a.m.

The Indictment alleges that from about February 1, 2005, to May 31, 2007, in Nevada and elsewhere, the defendants participated in a mortgage fraud conspiracy in which they used “third party disbursements” and “double escrow” methods to fraudulently obtain monies from the financial institutions. A third party disbursement is the issuance of money at the closing of a mortgage loan to a person or entity that is not typically entitled to the money. A double escrow is where two sales of the same property are conducted at the same time. Typically, the property is sold to a middleman, who then sells the property to a straw buyer at a substantially inflated price. The difference between the first sale price and second price is distributed to a conspirator as seller proceeds. The paperwork on the second sale is concealed from the seller, and the paperwork on the first sale is concealed from the lender.

Brett Depue operated a number of Nevada businesses including, ABS Investments Group, LLC, Liberty Group Investments, LLC, and a number of other companies registered with the Nevada Secretary of State. Depue employed Brian Barney, Maria Ornelas, and a number of others who allegedly assisted in the mortgage fraud conspiracy. The defendants recruited home owners in the Las Vegas area and elsewhere who agreed to sell their property at a price substantially above the asking price. The home owners were told that the difference would go to Depue for improvements. The defendants then recruited straw buyers to apply for mortgage loans to purchase the homes using false and fraudulent information concerning the straw buyers’ income, assets, employment, and intent to occupy the homes. In some instances, the defendants had the straw buyers apply for mortgages for more than one house at a time and concealed from the lenders that they were purchasing more than one property.

The Indictment specifically discusses 17 homes in Las Vegas and Henderson which were purchased fraudulently between April 2005 and April 2007 at the direction of and for the benefit of the defendants.

If convicted, the defendants face up to 30 years in prison and a $1,000,000 fine on each count, and may be required to forfeit up to $8.5 million in properties or proceeds from the crimes.

This investigation is being led by the FBI, IRS Criminal Investigation, and other agencies of the Southern Nevada Mortgage Fraud Task Force, including the U.S. Postal Inspection Service, Office of the Inspector General for the Department of Housing and Urban Development, the U.S. Secret Service, the Las Vegas Metropolitan Police Department, the Nevada Attorney General’s Office, and Office of the Inspector General for the Social Security Administration. The case is being prosecuted by Assistant United States Attorney Brian Pugh.

Persons who have information concerning potential mortgage fraud may contact the Southern Nevada Mortgage Fraud Hotline at (702) 584-5555.

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

The public is reminded that an indictment contains only charges and is not evidence of guilt. The defendants are presumed innocent and are entitled to a fair trial at which the government has the burden of proving guilt beyond a reasonable doubt.

« Previous PageNext Page »