U.S. Attorney A. Brian Albritton has announced that Robert Policastro has been sentenced to five years and three months in federal prison for conspiracy to commit mail and wire fraud (mortgage fraud). The court also entered a monetary judgment in the amount of $9,082,394.20, the proceeds of the mortgage fraud conspiracy. Policastro had pleaded guilty on May 17, 2010.

According to court documents, Policastro, who was an architect, conspired with a Florida licensed title agent to commit mortgage fraud. Policastro took out primary loans to buy several million-dollar properties in Miami, and then, without the knowledge of the primary lender, obtained a “silent second” loan on each property. The “silent seconds” financed Policastro’s downpayments for the properties and allowed him secretly to take money out of the deals. To hide the “silent seconds,” the title agent prepared false, “dueling” HUD-1s to send to both the primary and the “silent second” lenders so that each was unaware that Policastro had obtained two loans on each property. The loans were closed in Pinellas County.

This case was investigated by Federal Bureau of Investigation. It was prosecuted by Assistant United States Attorney Thomas N. Palermo.

This case is a part of the Middle District of Florida’s Mortgage Fraud Initiative, a joint effort by the U.S. Attorney’s Office and federal, state, and local law enforcement agencies throughout the Middle District of Florida. It is a “Phase II” case, brought following the initial wave of Mortgage Fraud Initiative prosecutions, the Mortgage Fraud Surge, which occurred over ten months in 2009 and netted more than 100 defendants. Phase II of the Mortgage Fraud Initiative seeks to build upon the Surge, expanding upon surge leads and techniques to uncover and prosecute increasingly complex mortgage frauds.

Wifredo A. Ferrer, United States Attorney for the Southern District of Florida; Henry Gutierrez, Postal Inspector in Charge, U.S. Postal Inspection Service; John V. Gillies, Special Agent in Charge, Federal Bureau of Investigation, Miami Field Office; and J. Thomas Cardwell, Commissioner, State of Florida Office of Financial Regulation, announced that defendant John Fisher, 35, of Jupiter, Florida, pled guilty this morning in federal court to one count of conspiracy to commit mail and wire fraud and to one count of substantive mail fraud.

Also pleading guilty today were defendants Tracey Balli, 35, of Pembroke Pines, Florida, Justina Bryan, 35, of Hollywood, Florida, and Delano McLennon, 33, of North Lauderdale, Florida. These defendants pled guilty to one count of making false statements on a HUD-1 Real Estate Settlement Form in connection with a mortgage fraud scheme. Sentencing has been scheduled for November 19, 2010 before U.S. District Judge Ursula Ungaro.

According to records filed with the court and statements made during the plea hearing, the defendants and other conspirators engaged in a scheme to enrich themselves by fraudulently causing real property in Fort Lauderdale, Jupiter, Cape Coral, and Royal Palm Beach, Florida, to be bought and sold through straw buyers who obtained high value mortgages based upon fraudulent mortgage loan applications.

A co-conspirator orchestrated the scheme, in which defendant John Fisher, a licensed mortgage broker, Tracey Balli and Justina Bryan, both loan processors, joined. Balli and Bryan, along with other conspirators, recruited straw buyers, including Delano McLennon, to join the scheme.

In order to obtain mortgages on these properties, the defendants and other co-conspirators submitted and caused to be submitted fraudulent documents to various mortgage lenders across the United States. Based on these false documents, the mortgage lenders issued approximately $2,500,000 in loans to the defendants and their co-conspirators.

“South Florida continues to be a hot spot for mortgage fraud,” said Special Agent in Charge John V. Gillies of the FBI Miami Division. “It affects all of us, making homes artificially overpriced and then eventually losing value through neglect. The housing industry is a key component of our economy and combating mortgage fraud will remain a top priority for the FBI.”

Mr. Ferrer commended the investigative efforts of the U.S. Postal Inspection Service, the FBI, and the State of Florida Office of Financial Regulation. This case is being prosecuted by Assistant U.S. Attorneys Randy D. Katz and Jeffrey H. Kay.

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

Wifredo A. Ferrer, United States Attorney for the Southern District of Florida, Henry Gutierrez, Postal Inspector in Charge, U.S. Postal Inspection Service, Michael K. Fithen, Special Agent in Charge, U.S. Secret Service, and J. Thomas Cardwell, Commissioner, State of Florida Office of Financial Regulation announced that on Friday, August 6, 2010, a federal jury in Miami convicted Mayelin Salas, 36, of Miami Springs, and Lucy Segurola, 51, of Miami, for their participation in a mortgage fraud scheme that resulted in approximately $21 million in fraudulent loans. Salas and Segurola were found guilty of conspiracy to commit mail and wire fraud. Salas was also found guilty of mail fraud.

According to the evidence presented at trial, Salas was an employee of State Mortgage Lending, a mortgage lending company in Doral, which was owned and operated by Magile Cruz. Cruz previously pled guilty and was sentenced in January 2009 to 120 months’ imprisonment for her participation in this scheme. Cruz’s other companies included Star Lending Mortgage, Sherley Title Services, Doral Title Services, and Professional Title Express, all in Miami-Dade County.

According to the trial evidence, in 2005, Salas participated in a double HUD scheme through which the defendants created and submitted to Fremont Investment and Loan, a lending institution, false duplicate HUD-Settlement Statement Forms, which grossly inflated the true *purchase price of a property that Salas was purchasing. Salas received a $5,000 payment from Cruz for her participation in the scheme.

The evidence at trial established that Lucy Segurola acted as a straw borrower on at least three loans totaling more than one million dollars. Segurola allowed her credit information to be used to apply for these loans knowing that she was not the true borrower and that Cruz would be making the monthly mortgage payments. The loan applications also included false employment verifications, pay stubs, income and funds on deposit, and IRS Forms W-2. Segurola was paid a total of $15,000 for her participation in the scheme.

The defendants face a maximum term of imprisonment of twenty years as well as fines and mandatory restitution. Sentencing has been scheduled for October 22, 2010.

Mr. Ferrer commended the investigative efforts of the Federal-State Mortgage Fraud Strike Force, with special commendation to the U.S. Postal Inspection Service, U.S. Secret Service, and the State of Florida Office of Financial Regulation.

Wifredo A. Ferrer, United States Attorney for the Southern District of Florida; John V. Gillies, Special Agent in Charge, Federal Bureau of Investigation, Miami Field Office; Henry Gutierrez, Postal Inspector in Charge, U.S. Postal Inspection Service; J. Thomas Cardwell, Commissioner, State of Florida’s Office of Financial Regulations; Amos Rojas, Jr., Special Agent in Charge, Florida Department of Law Enforcement; and Alex Sink, Chief Financial Officer, Florida Department of Financial Services, announce the July 6, 2010 filing of a criminal information against defendant Stanley Gabart, 29, of Miami, FL. The defendant surrendered on Thursday, July 8, 2010, and made his initial appearance in West Palm Beach federal court.

The two-count information charges defendant Gabart with conspiracy to commit bank fraud and making false statements on loan applications to Bank of America and JP Morgan Chase Bank, N.A., in connection with the purchase of various properties. If convicted, the defendant faces a maximum statutory term of imprisonment of 30 years on each count.

Among the properties listed in the information are 3586 Royalle Terrace, Wellington, Florida; 10475 Trianon Place, Lake Worth, Florida, and 540 West Avenue, #1414, Miami Beach, Florida. According to the allegations in the information, Gabart conspired with others to submit loan applications for the properties that contained false information about the applicants’ employment, income, assets and intention to live in the homes. In addition, Gabart allegedly recruited straw purchasers and paid the straw purchasers a fee for participating in the scheme. The fraud scheme resulted in more than $7 million in losses to several banks.

This case is the result of the investigative efforts of the multi-agency Palm Beach Mortgage Fraud Task Force. Mr. Ferrer commended the investigative efforts of the FBI, U.S. Postal Service, State of Florida’s Office of Financial Regulation, FDLE, and State of Florida’s Department of Financial Services. The case is being prosecuted by Assistant U.S. Attorney Ellen Cohen.

An information is merely an accusation and a defendant is presumed innocent unless and until proven guilty.

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

Wifredo A. Ferrer, United States Attorney for the Southern District of Florida; John V. Gillies, Special Agent in Charge, Federal Bureau of Investigation, Miami Field Office; Henry Gutierrez, Postal Inspector in Charge, U.S. Postal Inspection Service; J. Thomas Cardwell, Commissioner, State of Florida’s Office of Financial Regulations; Amos Rojas, Jr., Special Agent in charge, Florida Department of Law Enforcement; and Alex Sink, Chief Financial Officer, State of Florida’s Office of Financial Services, announce fraud charges against a defendant Marie Decosta Quintana, 40, of North Miami, Florida, as a result of an investigation led by the Palm Beach County Mortgage Fraud Task Force. The defendant was arrested Tuesday, June 29, 2010, and made her initial appearance in West Palm Beach this morning.

The two-count indictment charges defendant Quintana with making false statements on loan applications to Bank of America and National City Bank, to purchase property in the Versailles Development at 10475 Trianon Place, Lake Worth, Florida, in 2007. According to the indictment, Quintana lied about her employment, income, assets and intention to live in the house to persuade the banks to provide money through two separate mortgages to buy the home. Quintana was recruited to be the straw purchaser of the home and received payment for allowing the use of her name, credit score and for signing documents containing false information. The fraud scheme resulted in more than $1.1 million in losses to two banks.

The charges announced today are the result of the investigative efforts of the multi-agency Palm Beach Mortgage Fraud Strike Force. Mr. Ferrer commended the investigative efforts of the FBI, the State of Florida’s Office of Financial Regulation, the U.S. Postal Inspection Service, FDLE and Florida’s Office of Financial Services. The case is being prosecuted by Assistant U.S. Attorney Ellen Cohen.

An indictment is merely an accusation and a defendant is presumed innocent unless and until proven guilty.

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

Wifredo A. Ferrer, United States Attorney for the Southern District of Florida; Amos Rojas, Special Agent in Charge, Florida Department of Law Enforcement; John V. Gillies, Special Agent in Charge, Federal Bureau of Investigation, Miami Field Office; Henry Gutierrez, Postal Inspector in Charge, U.S. Postal Inspection Service; and J. Thomas Cardwell, Commissioner, State of Florida’s Office of Financial Regulation, announced today that an Indictment was unsealed at the Fort Lauderdale Federal Courthouse against:

* Joseph Guaracino, 32, Plantation, Florida
* Steven Stoll, 43, Fort Lauderdale, Florida
* Stephen Orchard, 34, Boca Raton, Florida
* Matthew Gulla, 35, Davie, Florida
* Rene Rodriguez, Jr., 37, Plantation, Florida
* Dennis Guaracino, Jr., 34, Plantation, Florida
* Jacqueline Trumbore, 39, Margate, Florida
* John Velez, 37, Plantation, Florida
* Daryl Radziwon, 39, Plantation, Florida
* Casey Mittauer, 37, Cooper City, Florida
* Joseph DeRosa, 35, Coral Springs, Florida
* Robert DePriest, 41, Plantation, Florida
* Joseph LaGrasta, 31, Tamarac, Florida

The Indictment charges the defendants with one count of conspiracy, in violation of Title 18, United States Code, Section 1349; 11 counts of mail fraud, in violation of Title 18, United States Code, Section 1341; 13 counts of wire fraud, in violation of Title 18, United States Code, Section 1343; and eight counts of making a false statement to a government agency, in violation of Title 18, United States Code, Section 1001. Two defendants are charged with obstructing justice, in violation of Title 18, United States Code, Section 1512. Not all defendants are charged in all counts. The conspiracy, mail fraud, wire fraud, and obstruction of justice counts each carry a maximum penalty of up to 20 years’ imprisonment. The false statement counts each carry a maximum penalty of five years’ imprisonment.

According to the Indictment, the defendants engaged in a scheme to enrich themselves by fraudulently causing real property in Broward and Palm Beach Counties to be bought and sold by submitting, and causing to be submitted, false and fraudulent documents to mortgage lenders in order to obtain the loans. The title attorneys falsely represented to the mortgage lenders the source of the deposits/down payments and/or the cash from borrowers needed to close the transactions. The total dollar amount of the loans secured under the scheme was in excess of $16,000,000 dollars.

More specifically, at times relevant to the Indictment, Joseph Guaracino would locate properties to be purchased and negotiated sale contracts along with co-defendants. In order to qualify for mortgage loans, Guaracino and others caused false information to be submitted to lenders, including forged lease agreements, false bank account balances, and inflated income or salary levels. Dennis Guaracino, Jr., Jacqueline Trumbore, John Velez, Daryl Radziwon, Casey Mittauer, Joseph DeRosa, Robert DePriest, and Joseph Lagrasta were investors in the fraudulent real estate investment scheme, who along with others, purchased the properties that Guaracino controlled.

Steven Stoll, a licensed mortgage broker and a licensed attorney, and Stephen Orchard, also a licensed attorney, participated in the scheme by handling the closings of the fraudulently procured loans, along with licensed mortgage brokers Matthew Gulla and Rene Rodriguez, Jr.

U.S. Attorney Wifredo Ferrer stated, “This indictment charges a group of individuals who conspired to enrich themselves by committing mortgage fraud. It includes a number of professionals who betrayed their profession for greed, and in the process, undermined the integrity of the mortgage marketplace on which we all rely. Our office is determined to continue to bring to justice those who engage in such pervasive criminal schemes.”

Special Agent in Charge John V. Gillies of the FBI Miami Division stated, “The FBI will continue to work with our law enforcement partners to investigate allegations of fraud.”

“Once again, a complex mortgage fraud scheme in South Florida has resulted in additional arrests on serious charges,” said Amos Rojas, Jr., Special Agent in Charge of the Florida Department of Law Enforcement’s Miami Regional Operations Center. “Those accused of mortgage fraud—no matter what their role—have left a path of destruction with far too many victims in South Florida, and we will continue to aggressively target, arrest and prosecute those involved in this crime. Justice will be served.”

Commissioner Tom Cardwell of the Florida Office of Financial Regulation stated, “This is an example of how unlawful practices have blemished the mortgage industry and caused damage to Florida’s economy. The Office of Financial Regulation is implementing new rules and regulations regarding qualifications and enforcement that we believe will help protect consumers and create a more sound and stable industry for the benefit of our citizens and economy.”

Mr. Ferrer commended the investigators for their hard work and dedication in this long term investigation by the Florida Department of Law Enforcement, Federal Bureau of Investigation, U.S. Postal Inspection Service, and State of Florida’s Office of Financial Regulation. This case is being prosecuted by Assistant U.S. Attorneys Laurie E. Rucoba, Jeffrey Kay and Michael Patrick Sullivan.

An Indictment is merely an accusation and a defendant is presumed innocent unless and until proven guilty.

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

Wifredo A. Ferrer, United States Attorney for the Southern District of Florida, Henry Gutierrez, Postal Inspector in Charge, U.S. Postal Inspection Service, John V. Gillies, Special Agent in Charge, Federal Bureau of Investigation, Miami Field Office, and J. Thomas Cardwell, Commissioner, State of Florida’s Office of Financial Regulation, announced that defendants Monique Mitchell, 29, of Pembroke Pines, and Sheldon Martin, 34, of Plantation, pled guilty this morning in West Palm Beach federal court to one count of making false statements on a HUD-1 Real Estate Settlement Form in connection with a mortgage fraud scheme. Sentencing has been scheduled for July 21, 2010 before U.S. District Judge Donald Middlebrooks.

According to records filed with the court and statements made during the plea hearing, defendant Monique Mitchell was employed by Attorneys Title Center, in Pembroke Pines. Defendant Sheldon Martin was a self-employed licensed mortgage broker in Plantation. At the plea, Mitchell and Martin admitted that they knowingly prepared a false HUD-1 Settlement Statement Form in connection with the January 2008 sale of a $1,250,000 home in Fort Lauderdale. The HUD-1 Form included false information to Regions Bank, the lender, about the down payment, the cash on hand at closing, and the amount repaid to the previous lender. In addition, the defendants concealed from Regions Bank money paid to The Pines Law Center at the closing.

At sentencing, the defendants face a maximum statutory sentence of up to five years in prison. Co-defendant, attorney Michael Samuda, is scheduled for trial in June 2010.

“This is a wake-up call to those in the mortgage industry who think they can get away with mortgage fraud,” said Special Agent in Charge John V. Gillies of the FBI’s Miami Division. “Submitting false information on loan documents is a crime and the FBI and its partners will investigate and prosecute those that break the law.”

Mr. Ferrer commended the investigative efforts of the U.S. Postal Inspection Service, FBI, and State of Florida’s Office of Financial Regulation. This case is being prosecuted by Assistant U.S. Attorney Jeffrey Kay.

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

Wifredo A. Ferrer, United States Attorney for the Southern District of Florida, John V. Gillies, Special Agent in Charge, Federal Bureau of Investigation (“FBI”), Miami Field Office, Henry Gutierrez, Postal Inspector in Charge, U.S. Postal Inspection Service, Michael K. Fithen, Special Agent in Charge, U.S. Secret Service, and James K. Loftus, Director, Miami-Dade Police Department, announced today the unsealing of an indictment charging Gelasio Alberto Diaz, 63, of Miami, Claudia Glaser, 41, of North Bay Village, Nereida Ramos, 45, of Miami, Antonio Pinto, 39, of Miami Beach, Emilia Fortes, 63, of West Palm Beach, Pura Machado Aguila, 40, of Miami, and Carlos Orellana, 45, of Miami Gardens, with one count of conspiracy to commit wire and bank fraud, in violation of Title 18, United States Code, Section 1349, and ten counts of substantive wire fraud, in violation of Title 18, United States Code, Section 1343. The defendants are alleged to have engaged in a mortgage fraud scheme that defrauded three financial institutions of approximately $5 million in fraudulent loans.

According to the indictment, defendants Gelasio Alberto Diaz and Nereida Ramos were employed at in Miami, Florida. According to the indictment, the defendants were involved in the fraudulent financing of mortgages for at least eight residential properties in Miami-Dade County. More specifically, Diaz and Ramos would allegedly identify properties that could be used to defraud lenders and then recruited individuals to pose as purchasers of the properties. Throughout the duration of the conspiracy, Diaz used co-defendant Claudia Glaser’s mortgage brokerage license to operate Infinity Mortgage. During this time, defendant Claudia Glaser signed-off on the mortgage loans without performing the necessary verifications. As well, defendant Nereida Ramos acted as the main loan processor for Infinity Mortgage, and was the main contact for the financial institutions and the borrowers.

Among the individuals who were recruited as straw purchasers were co-defendants Antonio Pinto, an employee at Infinity Mortgage, Emilia Fortes, Pura Machado Aguila and Carlos Orellana. Once a property was purchased, Diaz and Ramos would make the mortgage payments until the property could be flipped at an inflated price. The defendants used the profits made from “flipping” the properties to other straw purchasers to buy additional properties and make payments on the mortgages. Eventually, the defendants stopped making the loan payments and the properties went into foreclosure, resulting in significant losses to Countrywide Home Loans, Fremont Investment & Loan, WMC Mortgage and other lenders.

Special Agent in Charge John V. Gillies stated, “The FBI views mortgage fraud as a significant crime problem. The mortgage lending and housing market have a considerable overall effect on the nation’s economy and combating mortgage fraud will remain a top priority for the FBI.”

If convicted, the defendants face a maximum statutory sentence of 20 years in prison on each count of conspiracy and substantive wire fraud.

Mr. Ferrer commended the efforts of the FBI, the U.S. Postal Service, the U.S. Secret Service and the Miami-Dade Police Department. This case is being prosecuted by Assistant U.S. Attorney Cristina Pérez Soto.

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

ORLANDO, FL—United States Attorney A. Brian Albritton announces that U.S. District Judge Anne C. Conway today sentenced Ramon Cendana (age 48, of Orlando) to more than six years in federal prison for his role in a mortgage fraud scheme. The court also ordered Cendana to pay in excess of $240,000 in restitution to his victims. Cendana had pleaded guilty on January 27, 2010.

According to court documents, Cendana owned and operated a title company, a mortgage company, and two investment companies. Through those companies, Cendana operated a Ponzi-type scheme soliciting investors (who were often refinancing their own homes to obtain investment proceeds), promising high rates of return on their investments, and then paying early investors with the investments of later investors. The proposed investments, however, never generated any revenue. When investor funds ran low, Cendana used the identification information of his investors to apply fraudulently for loans and lines of credit in the names of those investors. Further, near the end of his scheme, as both investor funds and the proceeds from the fraudulently-obtained loans and lines of credit ran low, Cendana used his mortgage and title companies to create fictitious mortgage closings, directing the customers who trusted him to refinance their homes to wire him funds to facilitate closings that never occurred.

The court sentenced the defendant based upon over $1.7 million in fraud loss.

This case was investigated by the United States Secret Service, the United States Postal Inspection Service, and the Federal Bureau of Investigation. It was prosecuted by Assistant United States Attorney Daniel C. Irick.

This case is part of the Middle District of Florida’s Mortgage Fraud Surge, a joint effort by the U.S. Attorney’s Office for the Middle District of Florida, the investigative agencies named above, and numerous other federal, state, and local law enforcement agencies. The surge focused intensive investigative and prosecutorial resources on the mortgage fraud crisis that plagues middle Florida and has contributed to the current economic situation nationwide. The surge accelerated mortgage fraud cases to bring perpetrators to justice quickly and provide maximum deterrence. It was the first step in the Middle District of Florida’s Mortgage Fraud Initiative, an ongoing effort to prosecute mortgage fraud of all types throughout the district. For more information on the Middle District of Florida’s mortgage fraud prosecutions, please contact Steve Cole, Public Affairs Officer for the United States Attorney’s Office.

Jeffrey H. Sloman, United States Attorney for the Southern District of Florida; John V. Gillies, Special Agent in Charge, Federal Bureau of Investigation, Miami Field Office; Henry Gutierrez, Postal Inspector in Charge, U.S. Postal Inspection Service; and J. Thomas Cardwell, Commissioner, State of Florida’s Office of Financial Regulation, announced the unsealing of an indictment against defendants Michael Samuda, 37, of Pembroke Pines and Weston, Monique Mitchell, 29, of Pembroke Pines, Florida, and Sheldon Martin, 34, of Plantation. Both Mitchell and Martin appeared at the Federal Courthouse in West Palm Beach this morning before U.S. Magistrate Judge Linnea Johnson. Samuda is scheduled to appear on April 21, 2010.

Michael Samuda, an attorney, was charged in one count of conspiracy to commit mail fraud and wire fraud, in violation of Title 18, United States Code, Section 371, one count of substantive mail fraud, in violation of Title 18, United States Code, Section 1341, four counts of substantive wire fraud, in violation of Title 18, United States Code, Section 1343. and one count of making false statements on a HUD-1 Form, in violation of Title 18, United States Code, Section 1001. If convicted, Samuda faces a maximum statutory sentence of five years in prison on each of the conspiracy and the false statement counts, up to 30 years on each count of mail fraud and wire fraud count, and up to five years in prison on the false statement count. Defendants Monique Mitchell and Sheldon Martin, a mortgage broker, are charged with one count of making false statements on a HUD-1 Form, in violation of Title 18, United States Code, Section 1001, and face up to five years in prison on that count.

According to the indictment, Samuda operated a title escrow company called Attorney Title Center, in Pembroke Pines. In January 2008, Samuda’s company closed on the purchase of real estate at 4010 Bayview Drive in Fort Lauderdale. The indictment alleges that Samuda, along with his employee Mitchell and the seller Sheldon Martin engaged in a scheme to defraud Regions Bank, the mortgage lender, by preparing and submitting false closing documents, including a HUD-1 Settlement Statement Form on the $1,250,000 property sale.

Special Agent in Charge John V. Gillies stated, “The FBI views mortgage fraud as a significant crime problem. The mortgage lending and housing market have a considerable overall effect on the nation’s economy and combating mortgage fraud will remain a top priority for the FBI.”

Mr. Sloman commended the investigative efforts of the Federal Bureau of Investigation, the State of Florida’s Office of Financial Regulation, and the U.S. Postal Inspection Service. This case is being prosecuted by Assistant U.S. Attorney Jeffrey Kay.

An indictment is merely an accusation and a defendant is presumed innocent unless and until proven.

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

Federal officials have charged 13 individuals in an alleged elaborate $16.9 million mortgage fraud scheme targeting sales of luxury condominium units in downtown Miami and single-family homes in Coral Gables, according to an unsealed superseding indictment.

According to court documents, the fraud ring – which included a real estate broker and a Wells Fargo Bank loan officer – recruited “straw” buyers to make fraudulent loan applications to Wells Fargo, inflating their salary and deposit figures so they could qualify for loans in excess of $1 million. At closing, those charged then diverted millions by skimming the difference between the inflated purchase price and what actually was paid to the seller, officials said.

The straw buyers ultimately defaulted on the loans, sending the properties into foreclosure and costing Wells Fargo $9.7 million, federal officials said. The case is being prosecuted by the U.S. Attorney’s Office in the Southern District of Florida.

Those charged include: Greta Medina, Ricardo Estrada, Dania Arguelles, Fernanda Abrea, Obed Hernandez, Martin Mere, Nestor Collantes, Alfonso Velasco, Adan Vasquez, Yohamel Caballero, Ana Aviles, Leismy Barcia and Christina Roberts. Real estate broker Margaret Roberts, who negotiated the sales, pleaded guilty earlier.

Jeffrey H. Sloman, United States Attorney for the Southern District of Florida; John V. Gillies, Special Agent in Charge, Federal Bureau of Investigation, Miami Field Office; Daniel W. Auer, Special Agent in Charge, Internal Revenue Service, Criminal Investigation; Miguel A. Exposito, Chief, City of Miami Police Department; and James K. Loftus, Director, Miami-Dade Police Department, announced the sentencing of defendants Garry Souffrant, 33, a licensed real estate broker in the State of Florida, and Yvonne Souffrant, 33, husband and wife, both of Davie, FL. Today, U.S. District Court Judge Paul C. Huck sentenced the defendants to 240 months and 54 months in prison, respectively.

In November 2009, Garry Souffrant was convicted after a five-week jury trial of 46 counts, including conspiracy to commit mortgage fraud, conspiracy to commit drug money laundering, mail fraud, making false statements to mortgage lenders, bank fraud, bank theft, and receipt of stolen bank funds. At the same trial, Yvonne Souffrant was convicted of count of fraud conspiracy and one count of making a false statement to mortgage lenders.

According to the Indictment and evidence presented during the trial, from 2002 to 2008, defendants Garry and Yvonne Souffrant used their family business, called Progressive Real Estate of Broward, Inc., to launder millions of dollars in drug proceeds through an extensive mortgage fraud scheme. The defendants assisted drug traffickers in purchasing homes and luxury automobiles, including a 2004 Rolls Royce Phantom. To execute the scheme, the defendants arranged for and/or acted as straw buyers on behalf of the drug traffickers. This allowed the traffickers to use their drug proceeds to purchase homes and lease automobiles, while concealing the source of the income. The defendants also diverted several million dollars of mortgage loan proceeds to continue to fund the scheme and for their personal use.

This investigation and prosecution was the culmination of a five-year Organized Crime Drug Enforcement Task Force (OCDETF) Operation, named Operation KOMPA, which focused on drug trafficking and violent crimes in north Miami-Dade County. As part of this Operation, numerous individuals were prosecuted, convicted, and sentenced to lengthy prison terms (Case No. 07-20577-CR-Huck). Among those prosecuted and sentenced were Ali Adam and Graylin Kelly. In March 2008, Adam and Kelly were both sentenced to 360 months’ imprisonment, after having pled guilty to drug conspiracy and money laundering conspiracy charges for their participation in a scheme to launder millions of dollars of drug proceeds through the purchase of real estate and luxury automobiles. The Souffrants were involved in this aspect of the conspiracy.

U.S. Attorney Jeffrey H. Sloman stated, “These defendants engaged in mortgage fraud as a means to launder drug proceeds. We will continue to use our expertise in financial cases to deprive drug dealers of their ill-gotten gains.”

“As we’ve seen in this case, drug trafficking organizations routinely commit so called white collar crimes such as mortgage fraud and bank fraud to launder their proceeds, said FBI Special Agent in Charge John V. Gillies.“These types of crimes should not be taken lightly given that they fuel violent, criminal activity. We will continue to work with our partners to disrupt and dismantle drug trafficking organizations.”

IRS Special Agent in Charge Daniel W. Auer stated, “These defendants used what appeared to be a legitimate real estate company as a method to launder the proceeds of illegal narcotics activities and to defraud financial institutions and mortgage lenders. In this case, IRS Special Agents were able to follow the money, track and document the flow of funds, and prove that the defendants laundered millions of dollars through an extensive mortgage fraud scheme.”

A Florida man convicted in Collin County of scamming thousands of dollars from McKinney homeowners is now facing a federal indictment.

John Barry, the owner and operated of the TKI Group and JAB Consulting in Winter Garden, Fla. is one of 32 defendants named in an indictment in the U.S. Eastern District of Texas court that includes 16 counts of mail and wire fraud and money laundering. 366th District Judge Greg Brewer handed down a 25-year sentence to Barry last year on a first-degree felony charge of money laundering for his role in a mortgage fraud scheme involving homes in the Stonebridge subdivision.

Barry is accused of using 10 homes on Hills Creek Drive sometime before December 2006 to dupe homeowners into paying more than the home’s actual worth. Investigators believe he would purchase the property near the actual market value and use fraudulent appraisals to sell the home at an inflated price.

He would obtain the fraudulent prices from home appraisers who investigators believe were also in on the scam. Elizabeth Tava Altizer and Pamela Sue Ford have each been indicted for their alleged role in Barry’s deals.

They each received a first-degree felony indictment of using false statements to obtain property/credit last May, according to Collin County court records.

Once Barry had an interested buyer willing to give them the money for the false price, he would take the money under the agreement he would use the proceeds to repair the property and perform upkeep on the home.

Federal investigators also believed at the time that Barry has committed similar home scams across the city and the state that involve at least 50 other homes, but could not confirm or deny the existence of any additional investigations.

The new indictment consists of the same scam but on a statewide scale. The indictment identifies 114 homes located in Allen, Arlington, Cedar Hill, Coppell, Corinth, Cypress, Dallas, Flower Mound, Fort Worth, Frisco, Granbury, Heath, Highland Village, Houston, Keller, Lantana, Lewisville, Little Elm, Lubbock, Magnolia, McKinney, Plano, Roanoke, Southlake, Spring, The Woodlands, and Willis.

Barry again stands accused of defrauding lending institutions by convincing them to approve loans for mortgages for homes with inflated property values, according to the indictment.

If Barry and his fellow defendants are convicted of the federal charges, he could face up to two 20 year terms in a federal prison for the conspiracy and mail fraud charges and a possible additional 10 years for each money laundering charge.

U.S. Attorney John Bales said he hopes Barry’s case will prevent other mortgage and financial scams from increasing in scope.

“This indictment brings to light a criminal scheme that is quite breathtaking in its scope and beyond disturbing as far as the boldness of the fraud,” Bales said in a released statement. “The agents have done a remarkable job putting together this investigation and we look forward to presenting all of the evidence in court. Hopefully, others involved in mortgage fraud will be taking notice – we will be relentless in discovering, exposing and holding accountable those who have committed similar crimes.”

Jeffrey H. Sloman, United States Attorney for the Southern District of Florida; John V. Gillies, Special Agent in Charge, Federal Bureau of Investigation, Miami Field Office; and J. Thomas Cardwell, Commissioner, State of Florida’s Office of Financial Regulation, announce that defendants Daniel Stephen and Patricia De Pons pled guilty to conspiracy to commit mail fraud in connection with a vacant land sale scheme that defrauded more than 1,000 victims out of $10.6 million.

According to the indictment, this case arose out of the sale of land in various counties in North Florida and in Georgia by First Loan Solution (“FLS”), a company owned and operated by Daniel Stephen. Stephen advertised the sale of the land to the Haitian community in Miami Dade County, using First Loan Solution’s website, Stephen’s radio program on Haitian radio, and the distribution of flyers. Stephen organized bus trips for prospective buyers to view the land in North Florida. During these trips, Stephen falsely represented that First Loan Solution owned the land. Stephen made similar false representations in individual meetings with the buyers.

Based upon these false representations, the prospective buyers agreed to enter into land sale contracts with First Loan Solution to purchase the land in one-acre increments. Upon signing the land sale contracts, Daniel Stephen required buyers to make down-payment deposits. Stephen falsely assured the prospective buyers that First Loan Solution would maintain the deposits in escrow accounts to be released only when authorized by the parties to the contract. Contrary to his representations, Stephen fraudulently diverted a significant portion of these buyers’ deposits to pay business expenses of First Loan Solution and for his personal enrichment.

Daniel Stephen failed to purchase the land that he had agreed to sell, causing significant delays in closing the land sales to the buyers. Stephen sent letters to the buyers purporting to explain the reason for the delays, fraudulently representing that the delay resulted from the lengthy time required to survey the land without disclosing that First Loan Solution did not own the land. Stephen also falsely assured the buyers that their deposits were being held in escrow accounts. Stephen used these letters to conceal the fraud and lull the buyers into a false sense of security about the status of the land transactions and the safety of their deposits.

Daniel Stephen hired a law firm with initials of E.-T. to serve as the closing and escrow agent in the land sale transactions between the prospective buyers and First Loan Solution. Patricia De Pons was the public face of E.-T. in connection with these First Loan Solution transactions. Many buyers attempted to terminate the land sale contracts and obtain refunds of their deposits. Patricia De Pons, on behalf of E-.T, and Daniel Stephen, on behalf of First Loan Solution, refused requests to obtain refunds, offering repeated excuses for failing to refund the deposits and referring the increasingly frustrated buyers back and forth between First Loan Solution and E.-T. In some instances, De Pons and Stephen did provide refund checks, although several of the refund checks issued by Stephen were returned for lack of sufficient funds.

Without explanation, Patricia De Pons presented the buyers with limited liability company (“LLC”) agreements for signature. De Pons failed to disclose to the buyers that, through these LLC agreements, the buyers were agreeing to purchase an interest in a limited liability company—with the company as the title owner of the property—and that the buyers were not purchasing land in their own names as Stephen had represented to them at the time the buyers signed their land sale contracts.

Patricia De Pons conducted false and fraudulent closings purporting to transfer title of the land tracts from First Loan Solution to the buyers. As part of the closing, De Pons demanded payment from the buyers of the balance purportedly owed on the land purchases. De Pons then sought to establish the legitimacy of these transactions by sending fabricated, unrecorded warranty deeds to the buyers. De Pons sent letters to the buyers representing that closings on their land had taken place and that a recorded copy of the warranty deed would be returned to the buyers upon receipt from the county where the land was located.

Despite conducting hundreds of closings purportedly transferring the land to the victim buyers, the buyers were left without any land and without a refund of the monies they provided to First Loan Solution and E.T. In excess of 1,000 victim buyers fell prey to this scheme with losses to the victims of $10,600,000.

This case was investigated by agencies participating in the Federal-State Mortgage Fraud Strike Force. Mr. Sloman commended the investigative efforts of the Mortgage Fraud Strike Force with particular commendation to the Federal Bureau of Investigation and the State of Florida Office of Financial Regulation. The case was prosecuted by Assistant U.S. Attorneys Peter A. Forand and Michael Sherwin.

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

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

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

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

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

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

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

A title company owner, who operated Homemaxx Title & Escrow, was arrested in Palm Beach, Florida. He had been a fugitive since March 26, 2009, when a federal grand jury in Maryland, returned an indictment charging him with wire fraud and money laundering in connection with a scheme to defraud lenders and homeowners.

The indictment states that from February 2003 to July 2004, the fugitive owner had caused Homemaxx to divert funds meant to pay outstanding first mortgages on real estate transactions or to officially record deeds. He had transferred substantial amounts of money from a Homemaxx escrow account into other Homemaxx accounts, as well as to accounts not associated with any transactions.

He then used the money intended to be disbursed per the HUD-1 settlement for personal use that had nothing to do with the real estate transaction. With one particular real estate refinancing by one of his customers, he diverted funds from the escrow account and then used the proceeds to purchase a new 2004 CLK Mercedes.

The indictment seeks the forfeiture of $593,228, and is alleged to have defrauded lenders and homeowners and to have used $93,228 of the criminal proceeds for money laundering. Although, an indictment is not a finding of guilt, an individual charged by indictment is presumed innocent unless and until proven guilty at some later criminal proceedings.

One of the most difficult aspects of dealing with real estate fraud is that it is hard to know the scope of the problem. The human element that is involved makes would-be fraudsters hard to spot, and those already committing fraud even harder to identify.

Because these people are white-collar criminals, they look, dress, act, and talk just like the rest of us. They won’t look like criminals; they’ll look like loan officers, title closing agents, real estate agents, members of management and loan processors or closers and, of course, the people next door.
Once a white-collar criminal gets away with it, the process quickly becomes addictive. Success breeds more success, and before long such crafters of fraudulent mortgage transactions clearly begin feeling that not only are they above the law but in fact, they are not doing anything wrong in the first place.

We should all congratulate the United States Attorney for the District of Maryland Rod J. Rosenstein and Special Agent in Charge Richard A. McFeely of the Federal Bureau of Investigation.

We must be vigilant against fraud, recognizing its signs and taking proactive, definite, and realistic steps to not only prevent it but also punish it.
It starts with me.
It starts with you.
It starts with us…

Michael S. Richardson
Author of “An American Epidemic, Mortgage Fraud a Serious Business”
www.mortgagefraudsolutions.com

Stephen Thomas Bybel had a business idea that would make him a landlord and line his pockets while sprucing up neighborhoods where homes in foreclosure were left to deteriorate and become targets of vandals.

Pasco County sheriff’s officials see it another way: He broke into vacant homes, changed the locks and rented out other people’s houses. Bybel was arrested at his house Wednesday and was charged with one count of scheming to defraud.

Reached by telephone after his release from jail, the 48-year-old Bybel maintained he didn’t defraud anyone.

“I think I’m doing a service to the community.”

In all, Sheriff Bob White said, Bybel took possession of 72 homes – in the Land O’ Lakes and Wesley Chapel areas — beginning in December and rented out 31 of them. White said Bybel collected nearly $17,000 for rent in January on the homes; Bybel said that’s not correct because some people didn’t pay their rent. He didn’t say how much he collected.

Ken Londo said he gave Bybel $650 for a three-bedroom house in Land O’ Lakes two weeks ago.

“I had no idea, actually,” he said when told of the allegations against Bybel.

“I’m freaking out. What are you going to do?” said his wife, Lisa Londo. “I don’t know.”

The Londos said they moved to the home on Aldus Drive with their four children because their previous apartment was filled with black mold.

“We really thought that we had found the right place,” Lisa Londo said.

The investigation into Bybel began when a real estate agent, also a part-time Pasco deputy, was recently trying to show a house that was for sale but discovered the locks had been changed. He saw a notice from Bybel’s company on the door and called him. Bybel told him he had “gotten the wrong house” and then provided a key to the Realtor, a sheriff’s office report states.

In September, Bybel started a company – Real T Solutions Investments, LLC — and hit the streets of central Pasco searching for vacant homes. He would select some and then by filing a one-paragraph “memorandum of adverse possession” legal notice with the Pasco Clerk of Courts office, he would take possession of such properties. Bybel would then change the homes’ locks, sometimes give them a fresh coat of interior paint and then rent them out.

Bybel, who lives at 22430 Stillwood Drive, said Wednesday that he went through hoops trying to locate owners of the homes. He sent them letters via the mail, tried to find them on Facebook and left notices on their properties’ front doors. Detectives say they don’t believe any of the homeowners were properly contacted.

One of the homes which Bybel has taken over, White said, is owned by another deputy who just started work this week.

Apparently, it’s a scheme that’s being done in Miami and Las Vegas, the sheriff said. In fact, White said, they are investigating another unrelated similar scheme in Pasco.

This comes at a time when tens of thousands of Florida homes are sitting empty, their owners too financially strapped to stay. Keeping track of so many homes is taxing on lenders, and many of the homes have been abandoned by owners waiting for foreclosure to be finalized.

It’s easy to see how foreclosed homes could slip through the cracks, said Anthony DiMarco, spokesman for the Florida Bankers Association. He said he hasn’t heard of such a scheme but isn’t surprised.

“There has been so much mortgage fraud, and there are lots of foreclosed homes,” he said. “It’s a matter of numbers.”

Bybel has maintained to authorities he was within his legal rights of adverse possession, said Detective Jeff Peake of the economic crimes unit.

The adverse possession statute’s intent, said White, is indeed to claim property but not in the way in which Bybel interpreted it. For example, he said, if someone mistakenly builds a structure that stretches over the property line of his neighbor’s and it goes uncontested for a certain amount of time, the land can be claimed as the person who built the building.

“That’s nowhere near this,” White said of what Bybel was doing. “This is closer to burglary and grand theft than adverse possession.”

Bybel said when he was setting up his business he ran the idea by a few lawyers.

“They all said this was a gray area,” he said. “They didn’t say not to do it.”

The way Bybel sees it, he cleaning up his community while helping others, kind of a modern day Robin Hood in times of an economy mired in recession. In fact, his company mission statement says as much.

“Help stabilize communities blighted by vacant homes. Clean up the properties and provide affordable housing to citizens in transition,” it states in part.

“I read the papers,” Bybel said. “I watch the news and the world is falling apart and nobody is doing nothing about it.”

Illegal or not, he said, he’s helping “save” Pasco.

“It’s a victimless crime,” he said.

Bybel said he wanted to make renting homes in this economy easier for people who have lost their homes, such as himself. His New Jersey home, he said, was foreclosed on about a year ago.

He advertised on Craigslist, didn’t collect deposits and didn’t charge outrageous monthly rents, Bybel said. All the while, he was making sure the homes were maintained and even did some repairs inside like patching walls, steam cleaning carpets and painting to make the homes nice for his renters – and the neighborhood.

Now those renters he says he helped – such as Londo — have to find new homes.

“They need to find a place to live and like they say, quick like a bunny,” White said.

The foreclosure crisis has resulted in a lot of work for lawyers hired to try to help struggling owners hang onto their homes.

But it has also resulted in a record number of complaints concerning claimed unscrupulous practices, some of which have already led to disciplinary action, according to a Daily Business Review article reprinted in New York Lawyer (reg. req.).

“There has definitely been a trend in the last six months or year where attorneys are having some involvement in loan modification scams,” says Arne Vanstrum of the Florida Bar.

He says the Florida Bar received 100 complaints in the last six months concerning lawyers involved in loan modifications, many of them in South Florida. Meanwhile, the state attorney general’s office got 756 complaints through August, a record. In all of 2008, the AG’s office got only 61 such complaints, the business publication recounts in a lengthy article.

Meanwhile, the California State Bar has taken the unusual step of making public the names of 16 attorneys accused of misconduct concerning loan modification matters.

Attorneys often get into trouble because of fee issues. Clients should be charged based on the amount of time it takes to handle their matter, not the size of the mortgage, says George Castrataro. He formerly worked for the Legal Aid Service of Broward County and is now in private practice. Clients also need to be clearly informed if representation will not begin until they have made a number of monthly payments to cover a required minimum retainer, he tells the Daily Business Review.

Another potential ethical pitfall is presented if a lawyer is too closely involved with a non-law-firm loan modification company, says Ryan Wiggins, who serves as deputy director of the state AG’s office.

Under a 2008 federal law that doesn’t apply to attorneys, loan modification companies can’t charge upfront fees, he explains to the business publication. This has led a number of firms to affiliate with attorneys, but unless the attorney is acting as a lawyer and actually representing company clients he or she is then in violation of the federal law, too, according to Wiggins.

Many complainants also contend that lawyers take their money and then do little or no work.

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Filed in Oklahoma City by two banks and a title insurance company, the suits claim that Kevin and Deborah Flessner bought three apartment complexes in Oklahoma and one in South Carolina at the height of the real estate boom for $9.1 million and sold the complexes — within five days or less — to companies they controlled for $13.5 million.

The couple then used the higher valuations to get $10.3 million in loans, or $1.2 million more than they first paid for the properties.

The Flessners’ intent was to “deceive federally insured mortgage lenders into overvaluing apartment properties to the tune of $900,000 or more per transaction,” says the suit filed by Imperial Capital Bank, a Glendale, Calif.-based lender that was shuttered in January by regulators. “The excess loan proceeds would then be pocketed by the defendants or invested as equity in further transactions under the scheme.”

The Flessners have denied the charges, saying in court documents that they did not conspire to defraud any bank.

The kind of flipping described in the lawsuits — in which buyers sell properties to themselves at inflated values to get more loan money than they would have otherwise have entitled to receive — is the same kind the Herald-Tribune wrote about in a series of stories published in July.

Filed in Oklahoma City by two banks and a title insurance company, the suits claim that Kevin and Deborah Flessner bought three apartment complexes in Oklahoma and one in South Carolina at the height of the real estate boom for $9.1 million and sold the complexes — within five days or less — to companies they controlled for $13.5 million.

The couple then used the higher valuations to get $10.3 million in loans, or $1.2 million more than they first paid for the properties.

The Flessners’ intent was to “deceive federally insured mortgage lenders into overvaluing apartment properties to the tune of $900,000 or more per transaction,” says the suit filed by Imperial Capital Bank, a Glendale, Calif.-based lender that was shuttered in January by regulators. “The excess loan proceeds would then be pocketed by the defendants or invested as equity in further transactions under the scheme.”

The Flessners have denied the charges, saying in court documents that they did not conspire to defraud any bank.

The kind of flipping described in the lawsuits — in which buyers sell properties to themselves at inflated values to get more loan money than they would have otherwise have entitled to receive — is the same kind the Herald-Tribune wrote about in a series of stories published in July.

In that series, the Herald-Tribune showed that groups of flippers in Southwest Florida and across the state contributed to defaults on more than $500 million in loans in Sarasota and Manatee counties and $10 billion or more statewide.

What makes the lawsuits involving the Flessners significant is that they go into detail about the couple’s alleged orchestration of the flips and the real estate professionals who are said to have helped them. Outside of criminal cases, detailed information is hard to find.

Only one of the lawsuits — the Imperial Capital Bank lawsuit — was filed directly against the Flessners.

The other two — one filed by Wells Fargo and another by First American Title — take the alleged fraud on the part of the Flessners as a given and blame bankers and real estate professionals for allowing the fraud to occur.

Though the Flessners have denied the charges, the documents they filed do not explain why they needed to sell the properties to themselves at higher values.

The Flessners did not return three calls from the Herald-Tribune for comment, and Kenneth Jones, a lawyer representing the couple in Oklahoma City, did not return four phone calls.

But Harry Haskins, an attorney who represents the Flessners in Sarasota, said his clients have been hit with allegations that are not true.

Haskins said he was told that Imperial Bank knew that there were two purchase contracts at two different prices when it made its loan on the Archway Apartments in Oklahoma City.

“Banks do their own appraisals and there was nothing wrong with that appraisal,” Haskins said. “They okayed that loan. This is not a situation in which the property was over-mortgaged or over-collateralized.”

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.