The two owners of a Roseville, Minnesota, real estate company have been sentenced in federal court for mortgage fraud in connection with a scheme involving 162 properties, principally in north Minneapolis, and mortgage proceeds of approximately $35 million. Last week in Minneapolis, MN, U.S. District Court Judge Joan Ericksen sentenced Jonathan Helgason, 46, of Chisago City, and Thomas Balko, 38, of Rogers, MN, to to eight years in prison and seven years in prison respectively.

According to their plea agreements, Jonathan Helgason (a licensed real estate agent) and Thomas Balko were the owners of numerous companies, including TJ Waconia, Total Title LLC, Complete Real Estate Services, Inc. and CityWide Management, LLC and Investor’s Warehouse LLC (the TJ Group).

From approximately 2005 to 2007, Helgason and Balko executed a scheme to defraud and to obtain money by means of false and fraudulent pretenses. Using the TJ Group, Helgason and Balko purchased approximately 162 properties throughout the Twin Cities metropolitan area. They would then resell the property within a few weeks to an investor who would purchase the property, sight unseen, at a price set by Helgason and Balko without negotiation, oftentimes $20,000 to $60,000 more than TJ Group had paid.

According to the plea agreements, people were told by Helgason and Balko that the investors were simply lending their credit to TJ Waconia. In exchange for lending their credit, the investors would receive a kickback payment of about $2,500 and a promise of an additional payment after two years when the TJ Group was to repurchase the property from the investor.

Through the scheme, the defendants perpetrated a fraud on the lenders who were led to believe that the investors were the actual owners of the properties, when, in fact, the investors’ ownership was in name only. During the two-year period during which the investor owned the property, the TJ Group was responsible for all payments and maintenance on the property. In some instances, Helgason and Balko also provided investors with funds to pay the buyer’s portion of the property purchase price and worked with others to provide lenders with false loan applications on behalf of the investors so that they would qualify for the loan, according to the plea agreements.

The two men, on behalf of the investors, obtained approximately $35 million in mortgage proceeds to purchase the properties from the TJ Group. Ultimately, the scheme collapsed, and the TJ Group did not repurchase the properties or continue making payments to the investors in order to pay their mortgages. The investors were left owning properties with mortgages that exceeded their property’s market value.

At the sentencing hearing held last week, Minneapolis City Council President Barb Johnson and Mike Christienson, Director of the Minneapolis Department of Community Planning and Economic Development both testified regarding the significant impact suffered by the city and the community as a result of the fraud.

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Stefan M. Guerra, 30, of Lee’s Summit, Missouri, and Daryle A. Edwards, 37, and Leon T. Jones, 42, both of Olathe, Kansas., have pleaded guilty in separate appearances before a U.S. Chief District Judge for their roles in a $12.6 million mortgage fraud scheme that involved 25 residential properties in Lee’s Summit and Raymore, Mo.

Guerra, Edwards, and Jones each admitted to participating in a conspiracy to defraud mortgage lenders from June 2005 to May 2007. They are among more than a dozen scammers who were involved in buying and selling new homes in the Raintree and Belmont Farms subdivisions in Lee’s Summit and the Eagle Glen subdivision in Raymore.

According to court documents, buyers purchased the homes at inflated prices, obtaining mortgage loans by providing false information to mortgage lenders, then kept the extra proceeds. The buyers created shell companies for the purpose of receiving those kickbacks from the builder, with kickbacks reaching up to $125,000 on each house.

In total during the course of the conspiracy, mortgage lenders approved 25 loans totaling more than $12.6 million. From that total, buyers received approximately $2.3 million without the lenders’ knowledge.

Stefan Guerra, a former mortgage loan officer at Midwest Equity Mortgage, admitted that he was involved in the purchase of one property and acted as a broker on 11 other properties involved in the conspiracy. The loans on the 12 properties totaled more than $5 million.

Leon Jones admitted he purchased a property in Lee’s Summit as part of the conspiracy, a purchase that involved Stefan Guerra. Jones also admitted that he made material misrepresentations upon which the lender relied in making the mortgage loans totaling $509,000. From the purchase of this property, unbeknownst to the lender, Leon Jones received approximately $50,000.

For his part, Daryle Edwards admitted that he purchased a property in Lee’s Summit as part of the conspiracy, and that he made material misrepresentations upon which the lender relied in making the mortgage loans totaling $410,000. Edwards used a false Social Security number, a false address and false employment, and falsely claimed that he would occupy the property. Darlye Edwards also admitted that he made false representations regarding the use of loan proceeds; Edwards received a $76,600 check payable to DAECO Construction, Inc., a company owned by Edwards, which was not disclosed to the mortgage lender or to the title company.

Co-defendant Ronald E. Brown, Jr., 39, of Gladstone, MO, pleaded guilty in early January of this year, to his role in the conspiracy. Brown, a self-employed insurance agent doing business as The Brown Insurance Agency in Kansas City, Kansas, obtained insurance for the properties that were purchased. After purchasing two false Social Security numbers for $10,000, Brown used the false Social Security number to purchase three properties in Lee’s Summit. In each case, Brown made material misrepresentations upon which the lenders relied in making the mortgage loans, which totaled $1,339,700. From the purchase of these properties, unbeknownst to the lenders, Brown received a total of $279,426.

Under federal statutes, Stefan Guerra, Leon Jones and Daryle Edwards are each subject to a sentence of up to five years in federal prison without parole, plus a fine up to $250,000 and an order of restitution. A sentencing hearing will be scheduled after the completion of a presentence investigation by the United States Probation Office.

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Gerald Carti, a 62-year-old loan officer and owner of a filed mortgage New Jersey-based mortgage company, pled guilty last week to wire fraud conspiracy and money laundering conspiracy in connection with a mortgage fraud and property-flipping scheme involving rental properties in Paterson, NJ.

Carti, who ran US Mortgage Corp., was originally scheduled to go on trial May 4th, admitted conspiring with his co-defendants and several others to originate mortgage loans fraudulently and to launder proceeds of the loans for the four years between 2002 and 2005. Carti pleaded guilty before U.S. District Judge Jose Linares to one count of wire fraud conspiracy, which carries a maximum statutory penalty of 30 years in prison and a fine of $1 million, and one count of money laundering conspiracy, which has a maximum statutory penalty of 10 years in prison and a fine of $250,000.

Under the advisory U.S. Sentencing Guidelines, Gerald Carti now faces an actual sentencing range of between 46 and 71 months in prison. He will also be required to pay restitution to the victims, estimated at $1,030,745, not including interest. The guidelines are advisory only, and Judge Linares has discretion in imposing a sentence within, above or below the guidelines range.

Carti admitted that he conspired with Michael Eliasof, a former Paramus, NJ, real estate agent; William C. Colacino Jr., a now-deceased Garfield, NJ, attorney previously identified as an un-indicted co-conspirator; Melanie Gebbia, William C. Colacino Jr’s legal assistant; William Ottaviano, an appraiser; Frank Corallo, a former US Mortgage loan processor; co-defendant Renford Davis, of Paterson, and Hopeton Bradley, who jointly managed many of the Paterson properties involved in the scheme; and others. Eliasof, Gebbia, Ottaviano, Corallo, Bradley (who has since died) and one other conspirator have each pleaded guilty in connection with the scheme. A trial is scheduled to begin on May 4 for Davis and co-defendants Amer Mir, of Jersey City, NJ, and Frederick Ugwu, of Saddle River, NJ.

Gerald Carti admitted helping Michael Eliasof obtain mortgage loans for borrowers to purchase two- and three-family homes in Paterson, knowing that the borrowers would be putting no money down to purchase the properties. Carti also admitted permitting the borrowers to submit loan applications to US Mortgage falsely stating that they had made substantial down payments and allowing US Mortgage to fund the loans, even though the borrowers had not made any down payments. Carti then admitted that the closings of the loans took place at the law office of William C. Colacino Jr., then a Garfield municipal judge, and that Carti received as a commission 50 percent of the fees that US Mortgage received for each loan.

Carti also admitted that by April 2004, Residential Funding Corporation informed US Mortgage that some of the loans were part of a scheme involving Carti, Michael Eliasof and William C. Colacino Jr.

According to Carti, during a meeting concerning these allegations, M.M. and S.M., both senior officers at US Mortgage, were informed that the loans were no-money-down deals.

Carti stated that after the meeting, S.M. directed him to pay off the loans by refinancing them through new mortgage loans for the existing unqualified borrowers or reselling the Paterson properties, which Carti partly accomplished with Corallo’s assistance by originating new mortgage loans for some of the Paterson properties through US Mortgage.

According to Carti, S.M. insisted that these new mortgage loans be brokered, rather than funded and underwritten by US Mortgage. In addition, Carti admitted that he gave applications for mortgage loans for some of the properties to his co-defendant, Mir, a loan officer at Jersey City-based United Home Mortgage Co., who demanded bribes from others to ensure that the mortgage loans being sought were funded. Finally, Carti admitted that in 2002, S.M. told him he would receive a commission from American Title & Settlement Services, LLC, which S.M. controlled, for each mortgage loan that he referred to American Title for title insurance, and that he received these commissions through an entity called Dream On Enterprises, LLC.

Carti’s guilty plea is the latest step in an investigation by the U.S. Department of Housing and Urban Development Office of Inspector General (HUD-OIG), the FBI, the U.S. Postal Inspection Service and the IRS Criminal Investigations Division into fraudulent Federal Housing Administration-insured and conventional mortgage loans originated by various New Jersey mortgage companies, including US Mortgage and United Home Mortgage. The investigation has resulted in a dozen guilty pleas from New Jersey residents.

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Joseph Baumeister has pled guilty to bank fraud charges in a mortgage fraud scheme involving 16 area properties, United States Attorney Catherine Hanaway announced last week.

According to court documents, between January 2007 and October 2008, Joseph A. Baumeister operated a scheme to defraud several mortgage lenders through his St. Louis, MO-based company, Prophet Development. Baumeister used straw purchasers to buy 16 residential properties based on misrepresentations to lenders. He then took money from the closings of the properties by artificially inflating the sales price or by falsely claiming that various home improvements had been made.

After the closings on the properties, Baumeister found tenants for the properties, collected rent, and made mortgage payments on occasion. Eventually, mortgage payments fell behind or were not made, and the majority of these properties went into foreclosure. All told, Baumeister stole $364,523.00, which was used in large part to pay for a wide range of personal expenses.

Baumeister, 56, St. Louis, 63126, pled guilty to one felony count of bank fraud. He now faces a maximum penalty of 30 years in prison and/or fines up to $1,000,000, when he is sentenced on May 1, 2009.

As an aside, last November, U.S. Attorney Hanaway convened the first meeting of the U.S. Attorney’s Mortgage Fraud Task Force. The task force consists of over 70 residents of the Eastern District of Missouri involved in banking, mortgage brokerage, real estate sales, title insurance, real estate appraising as well as federal, state, and local law enforcement, regulatory officials and non-government organizations. Anyone wishing to report suspected mortgage fraud or participate in the work of the task force is encouraged to call the Mortgage Fraud hotline at 1-866-587-9571.

Image via WikipediaA New Jersey attorney who ran his law practice from the basement of his home, has pleaded guilty to stealing approximately $4,000,000.00 entrusted to him for 20 different real estate closings. Michael Rumore, 50, of Lyndhurst, NJ, gambled away the stolen funds at a variety of Atlantic City, NJ, casinos, including the Trump Taj Mahal Casino Resort.

According to Deborah Gramiccioni, director of the State of New Jersey’s Division of Criminal Justice, Rumore pleaded guilty to first-degree money laundering and second-degree theft by failure to make required disposition of property received. Under the terms of his plea agreement, the State of New Jersey will recommend Michael “Mike” Rumore be sentenced to 15 years in state prison. In addition, he must sign a consent judgment to pay full restitution to the victims ($6,200,00.00), which are five title insurance companies (First American Title Insurance Co., New Jersey Title Insurance Co., Fidelity National Title Insurance Co., Stewart Title Insurance Co., and Lawyers Title Insurance Co.).

Michael Rumore’s sentencing hearing is schedule for April 17, 2009. He is currently free on $100,000 bail.

According to the plea agreement, Michael Rumore was hired as an attorney and settlement agent for numerous real estate purchasers. Between April 2007 and August 2008, he received approximately $4 million into his attorney trust account from various mortgage companies. He had a duty to disburse the funds for closings and use them to pay balances on existing mortgages and other associated costs and fees. In pleading guilty, Rumore admitted that he instead transferred the funds into his personal and business accounts and used them to gamble at casinos in Atlantic City, primarily on slot machines.

A licensed attorney since 1984, Michael Rumore was disbarred in mid-September of last year.

To update a story we first told you about on October 13, 2008, Derek Davis — aka Terry McCullough, 62, of Sacramento, California — pled guilty last week to mail fraud and structuring currency transactions with a financial institution to evade Currency Transaction Reports (CTR) in connection with his role in a widespread mortgage fraud scheme involving cash-back-at-closing. Davis’ misdeeds cost lenders more than $2,500,000.

According to Assistant United States Attorneys Courtney Linn and Phil Ferrari, Derek Davis admitted that between March 2005 and December 2006, he participated in a mortgage fraud scheme in which several individuals purchased approximately 20 residential real properties using a form of 100 percent financing called “80/20.”

In the transactions, Derek Davis caused material misstatements to be made about the purchasers’ monthly income and intent to occupy the property. He further admitted that in the transactions an amount approximately equal to the difference between the purchase price and the true market price of the properties was credited as cash-back-at-closing of each escrow to the bank account of a Nevada Corporation he controlled called Calorneva Land Company.

Not surprising, Davis concealed the cash-back-at-closing credits from lenders. Some of the proceeds from the cash back facet were diverted to accounts held in the name of third parties, but in fact controlled by Derek Davis, and used for a variety of purposes, including making mortgage payments on several of the properties. In total, approximately $1,400,000 was transferred to Calorneva Land Company from escrow companies in connection with the approximately 20 real property transactions.

Cash-back-at-closing schemes prey upon lenders willing to finance as much as 100 percent of the purchase price of real property.

Derek Davis is scheduled to be sentenced on February 27, 2009. Charges remain pending against a second defendant in this case, Dino Rosetti, who is next scheduled to appear in court this Friday, January 9, 2009.

California REALTOR® Jose Oliva Sentenced for Real Estate Fraud: A real estate agent from Fontana, Calif., who was arrested in July of this year on felony charges connected to real estate fraud, has finally been sentenced… to six (6) months in jail followed by three (3) years probation.

John Matouk pleads guilty in Michigan of quitclaim deed fraud: According to the Wayne County Prosecutor’s Office, in February 2004, Matouk, who owned half a property in the 1100 block of Telegraph in Dearborn, forged a quitclaim deed from an elderly couple that transferred the entire property to his company, LM Investments of Dearborn LLC. Before his sentencing last week, Matouk was ordered to pay $26,000 in real estate taxes, the outstanding balance on a $650,000 loan, and court and probation costs. Because of his plea, Matouk received a sentence of two (2) years’ probation.

Rockland County, New York, task force targets mortgage fraud: Rockland County, NY, officials are trying to fight the worsening mortgage fraud problem by forming a Real Estate Fraud Investigation Task Force. The task force, a joint effort of Rockland District Attorney, County Clerk and County Sheriff, will investigate and prosecute cases involving recorded real estate documents, with an emphasis on instances in which the victim’s home is at risk of foreclosure.

U.S. Attorney charges Missouri mortgage brokers with cash-back-at-closing fraud: John F. Wood, United States Attorney for the Western District of Missouri, announced that several mortgage brokers are among six Missouri residents indicted by a federal grand jury last week for participating in several related mortgage fraud schemes. Charles M. Davis, 34, of Rogersville, Mo., Cheryl Joan Kassebaum, 42, and her husband, Scott Allen Kassebaum, 42, both of Ozark, Mo., Randall Lee Hall, 59, and Shanda Lynn Moore, 44, both of Springfield, Mo., and Steven Ray Spencer, 47, of Carl Junction, Mo., were charged in a 55-count indictment returned by a federal grand jury in Springfield. Davis, a former mortgage broker, was the owner of Master Marketing Consultants. The Kassebaums, former mortgage brokers, were owners of Metro Consulting Group. Hall is a former mortgage broker.

Westport, Connecticut, mortgage broker Fred Stevens pleads guilty to mortgage fraud: Stevens, 53, of Easton, Conn., is charged with submitting fraudulent mortgage applications with IndyMac Bank and other financial institutions resulting in losses of over $1,000,000.

Florida real estate appraiser Juan Gonzalez guilty of mortgage fraud: Gonzalez fraudulently obtained loans on more than 40 properties, victimizing numerous lenders and grossing over $5,000,000 in the process. As a result, the 51-year-old will spend the next 30 years in federal prison and pay a $1 million fine.

The U.S. Attorney for the Southern District of California, Karen Hewitt, announced that former mortgage loan offers Rafael Santiago and Angel Armendariz pled guilty today in federal court in San Diego to conspiring to commit wire fraud in connection with a $16 Million mortgage fraud scam. Three other loan officers — Abner Betech, Said Betech, and Aviva Betech — already pleded guilty to conspiring to commit wire fraud.

According to court documents, Rafael Santiago, Abner Betech, Said Betech, Aviva Betech, and Angel Armendariz admitted to committing mortgage fraud. In 2005, Abner and Said Betech and others founded Creative Financial Solutions, Inc. (“CFS”), a mortgage brokering company formerly located at 707 Broadway Avenue, Suite 1720, San Diego. CFS was in the business of sending loan application packages and other documents to lenders for review and funding. CFS did not fund loans but received commissions from the lenders when the loans closed. All five also often received kickback payments when loans closed.

Rafael Santiago, Abner Betech, Said Betech, Aviva Betech, and Angel Armendariz admitted in court that CFS obtained mortgage loans for unqualified borrowers by, among other things, submitting false loan applications, false bank statements, and false income documentation.

In total, the victim lenders funded more than $16 million in loans on properties that have since foreclosed or are in the stream of foreclosure.

Sentencing for Rafael Santiago, Abner Betech, Said Betech, and Aviva Betech is scheduled for April 13, 2009, and sentencing for Angel Armendariz is scheduled for April 20, 2009. A sixth defendant, Lucette Montane, remains at large and is actively being sought by federal authorities.

A 45-year-old Wilton, Connecticut, real estate attorney has pleaded guilty to one count of conspiracy to commit bank fraud, one count of fraud in loan and credit applications, and one count of mail fraud in connection with an $8 million real estate fraud scam through which he and others defrauded federally insured financial institutions, property owners, and others who sought to refinance their mortgages. Joseph Kriz, who recently forfeited his license to practice law, is now free on bond pending a sentencing hearing on Thursday, October 23.

According to documents filed with the U.S. District Court in Bridgeport, Connecticut, and statements made in court, Joseph Kriz was both a practicing real estate attorney in Westport, Connecticut, and a licensed mortgage broker, as well as a principal of Aspetuck Building & Development, LLC. In pleading guilty, Kriz admitted that, between January 2005 and March 2008, he and his co-conspirators altered and created false documents to obtain financing for properties which far exceeded the real value underlying their mortgages. In one instance, Kriz and his co-conspirators commissioned a false appraisal of a property that boosted a home’s square footage, thereby inappropriately increaing the value of a property and the loan.

Joseph Kriz also admitted that he converted funds from the sale and refinancing of his clients’ homes for his own personal use rather than pay off the mortgages on the properties as he had promised his clients.

During many of the property refinancings he handled, Kriz mailed to a title insurance company–First American Title Insurance Co.–a title policy representing that a new mortgage was the primary lien on a property. However, Kriz converted those new mortgages to fund his and his co-conspirators’ development projects, and the existing mortgages remained the primary lien on the properties.

As a result of this fraudulent conduct, Kriz defrauded banks and his clients of more than $8 million. He now faces a up to 65 years in federal prison and fines totaling nearly $16 million.

A hedge fund-backed real estate speculator and rental property owner in Columbus, Ohio, is facing 35 years in prison for his role in a mortgage fraud scheme that fraudulently secured more than $2.6 million in mortgage loans. Donald F. Green, 48, pleaded guilty in U.S. District Court last Friday to one count of income tax evasion, one count of conspiracy to commit bank fraud and wire fraud, and one count of bank fraud.

According to Green’s plea agreement, Green bought houses usually in need of substantial repairs in distressed neighborhoods in Columbus, Ohio, in 2003 and 2004 at or near their true-market value. In 2003, Green developed a working relationship with Jonathan L. Boyd, a loan officer at Summer Tyme Mortgage. Boyd would recruit straw buyers to purchase Green’s properties using fictitious income numbers in order to increase their reported credit worthiness. Court documents also reveal that Boyd arranged for inflated appraisals of many of those properties by Darneil Gaither. All three–Green, Boyd, and Gaither–used false information to obtain approximately $2,651,200 in mortgage loans.

In 2004, Green sold similar houses to other straw buyers through a scheme set up by codefendants Aryeh Schottenstein, Jeffrey Lieberman and Shawn Griffin in an investment program with Stillwater Capital Partners. Stillwater paid Griffin substantial amounts of money to renovate these properties provided by Green, but Griffin failed to follow through on any renovations. Green received consulting fees on several of these deals yet failed to report the income on his tax returns.

Green also gave his tax preparer schedules of fictitious improvements made on many of the properties in order to reduce his capital gains profits and therefore his taxes on the sale of the properties. By not reporting all of his income, Green fraudulently avoided an additional tax due and owing of $100,332.97 for 2003, and $130,043.19 for 2004.

Green and the others were indicted in August, 2007. Charges are still pending against Boyd and Gaither. Schottenstein, Lieberman and Griffin have plea agreements pending.

• Mortgage Fraud Law Goes into Effect in North Carolina: Among the list of new laws taking effect tomorrow in North Carolina–a law making it easier to prosecute residential mortgage fraud by defining the practice and creating tougher punishments for repeat offenders.
• Mortgage Inquiries Swamping Arizona: Arizona’s mortgage regulator has shut down a handful of firms for fraud and other illegal lending practices this year, but at least 40 other investigations are stalled because there is no money to fund them.
• California Real Estate Firm Investigated for Fraud: Federal investigators are looking into Crisp & Cole Real Estate’s operations for possible mortgage fraud after a federal raid of 13 of the now-defunct California company’s offices.
• New Jersey Lawyer-Judge at Center of Land-Flip Investigation: A NJ lawyer who is also his town’s judge may have played a central role in a scheme to defraud lenders by obtaining mortgages based on inflated appraisals of run-down properties.
• Minnesota Mortgage Firm is the Focus of Fraud Probe: Investigators are probing mortgage fraud complaints involving Universal Mortgage and several of its employees that are said to have used straw buyers to buy property at inflated prices.
• Guilty Plea Entered in Missouri Fraud Case: A 30-year-old man from St. Louis is the fifth person implicated in a mortgage fraud ring involving dozens of homes and millions of dollars in real estate transactions dating back to 2005. Daniel Mann pleaded guilty to conspiracy to commit wire fraud and now faces a maximum penalty of five years in prison. Mann admitted to arranging a number of fraudulent real estate transactions that were part of a larger fraud ring coordinated by another person who pleaded guilty in September to similar charges and will be sentenced in December.
• Canadian Paralegal Convicted in $30 Million Mortgage Fraud Scam: An Edmonton fraudster has been convicted of supporting a criminal organization by helping to swindle unsuspecting real estate investors out of nearly $30 million. Sixty-one-year-old Terry Ellis was found guilty of 12 counts of fraud and one count of forgery in connection with a massive mortgage fraud believed to be the biggest in Alberta history.
• Editorial Questions Michigan Attorney General’s Record on Real Estate Fraud: In the state hardest hit by real estate and mortgage fraud-related foreclosures, its attorney general, Mike Cox–who has won nationwide notoriety for locking up parents behind in their child support payments–has yet to file a single criminal complaint against any mortgage broker or lending entity.
• Two Sentenced in Connection with $15 Million Mortgage Fraud Case in Ohio: Two people have been sentenced to prison in connection with what prosecutors describe as a mortgage fraud scam in upscale Cleveland suburbs. Builder and developer, Edward Emery received a sentence totaling 34 months and a fine of $10,000. Eloise Anderson will spend nearly a year in prison and has been ordered to pay $35,000 in restitution.

A pair of brothers from New York’s Staten Island are headed to jail after pleading guilty to a Real Estate Fraud scam that appears to have involved members of the infamous Gambino crime family. Thirty-year-old James LaForte, Jr. and his 36-year-old brother, Joseph LaForte, posed as attorneys for banks in real estate transactions that netted the two and their parents over $14 million in illegal proceeds.

According to Staten Island Live, the younger LaForte has been sentenced to five to 15 years in prison for his role in the scam, while his older brother netted three-and-a-half to 10 years behind bars.

From silive.com and the Staten Island Advance:

James LaForte Jr. and Joseph W. LaForte fronted a Mineola, L.I. law firm and acted as attorneys for banks in real-estate transactions. Along with their parents and other conspirators, they ripped off three dozen personal clients and lending institutions of more than $14 million over 17 months, ending in August 2005, prosecutors said…

Nassau County prosecutors said the siblings and their parents, James LaForte Sr. and Tina LaForte used a relative who was a criminal defense attorney on Staten Island to set up a law office in Mineola to close real-estate deals.

The ill-gotten proceeds allegedly paid for pricey cars, a boat, real estate and mortgages on homes owned by the defendants and their wives. Most of the 36 victims were from Long Island and Queens.

James LaForte Sr., 61, of New Dorp, is the son of Joseph (Joe the Cat) LaForte, a reputed capo in the Gambino crime family.

Is anyone really surprised the Mob is involved in Real Estate Fraud? For more, read Swindling siblings sentenced in real estate scam

Many people believed this day would never come, but exactly one year to the day from when he was apprehended by Federal authorities, this nation’s most notorious Real Estate and Mortgage Fraud-related criminal has finally been sentenced for his role in a brazen string of acts that stunned nearly everyone who had ever played a hand in Real Estate and Mortgage Fraud forensics.

Thirty-eight-year-old Matthew Bevan Cox, the poster child for Real Estate and Mortgage Fraud in this country… the same man who kept federal authorities at bay for over three years and was the subject of an intense nationwide manhunt (and whose face landed on the U.S. Secret Service’s list of the Most Wanted Fugitives for his role in numerous Real Estate and Mortgage Fraud scams)… cried like a little baby in U.S. District Court in Atlanta yesterday afternoon, and was promptly sentenced to serve 26 years in Federal prison AND pay his victims up to $12 million in restitution.

For those of you who have never heard Matthew Cox talk about his crimes, the following clip, from NBC affiliate WSMV-TV in Nashville, Tennessee, will give you a small taste of what was going his mind:

Matthew Cox was indicted by a Federal grand jury in Atlanta in late-September of 2005 on 42 counts of mortgage fraud, identity theft, money laundering, and conspiracy. The Middle Districts of Tennessee and Florida filed criminal charges against Cox in April of this year, charging him conspiracy to commit mortgage fraud, aggravated identity theft, and passport fraud.

Cox, who was pleaded guilty to all charges on April 10th of this year, was apprehended on November 16, 2006 in Tennessee after a Nashville man read about him in a local newspaper and tipped off U.S. Secret Service agents. In the world of Real Estate and Mortgage Fraud forensics, no one person’s name sends a shiver up the back of a spine more so than Matthew Cox, who was also known as Maxwell Price, David Richard Freeman, Gerald Scott Cugno, Michael Shawn Shanahan, Gary Lee Sullivan, Michael John Eckert, Michael White, Kevin White, David White, James Redd.

Matthew Cox used stolen identities to obtain drivers licenses, purchase vehicles, lease mail drops, rent apartments, and open bank accounts to receive Real Estate-related scheme proceeds throughout the states of Georgia, Florida, Alabama, South Carolina and North Carolina. Cox’s accomplice in many of his scams– Rebecca Marie Hauck–was sentenced on November 15, 2006 (the day before Cox was captured) by a U.S. District Judge in Georgia to serve 5 years and 10 months in prison for her role in the now infamous string of mortgage and bank fraud-related crimes.

How Cox be able to afford the $12 million he was ordered to pay in victim restitution is anyone’s guess, but despite his wicked ways, Matthew Cox was–and may still be–a talented writer and artist who just so happened to leave behind a number of works. According to WXIA-TV in Atlanta, a representative of the victims is planning to offer, perhaps as soon as this coming week, four of Cox’s paintings for sale on eBay, with 100 percent of the proceeds going into the victims’ restitution fund. Cox did signed away the rights to his future works, including any additional paintings and unpublished novels, past and future, to his victims’ restitution fund, so that too may provide some relief.

For now, we can all sleep a little better at night knowing that Matthew Cox is finally paying for his crimes. That said, 26 years in prison and $12 million in fines may not be enough for this guy or the others who try to follow his example.

Alexander MacInnes of the Herald News interviewed me this week for a story about a Bergen County, NJ, Real Estate developer who for years exploited unsuspecting homebuyers while bribing city employees to direct tenants in the houses he managed. The developer, 63-year-old Michael Eliasof, pleaded guilty Wednesday to conspiracy to commit money laundering. He was charged with taking nearly $2.5 million in illegal proceeds from the sale of overvalued properties to buyers not qualified to purchase them. Eliasof, who will be sentenced in late-February of next year, is looking at 10 years in prison and up to $250,000 in fines (or twice the amount he gained from his criminal activity).

From the Herald News, courtesy of NorthJersey.com:

The circle of professionals Eliasof worked with included Garfield Municipal Judge William C. Colacino Jr., who was the closing attorney for dozens of deals Eliasof lined up with inexperienced buyers. Colacino was not in court Wednesday and has not been indicted. He declined to comment Wednesday.

Eliasof and 10 co-conspirators, including mortgage brokers, loan officers and appraisers, artificially inflated the values of properties throughout Paterson. They then falsified loan applications and income levels for those buyers whom Eliasof lured in with “no money-down” deals, according to the federal charges.

Eliasof, 63, admitted to controlling the profits and dispersing kickbacks to his lawyer and mortgage broker. In another example of his reach, Eliasof admitted in court Wednesday that he bribed Paterson Section 8 caseworkers to direct tenants in the houses he managed.

In March, 14 public employees from Paterson and Passaic County were arrested on charges of taking bribes from an unnamed property manager who was cooperating with federal investigators. U.S. Attorney Hope Olds, who is prosecuting those cases, said the witness started cooperating after being caught in a real estate scheme.

More from Alexander MacInnes and the Herald News:

National real estate experts said the description of the fraud that occurred in Paterson is a variation of either illegal house flipping or a deal called “cash back at closing” — a scheme in which money is transferred off the books between the parties involved.

Ralph Roberts, a Michigan Realtor and author of “Protect Yourself from Real Estate and Mortgage Fraud: Preserving the American Dream of Homeownership,” said there’s a reason this type of fraud exists.

“It’s extremely profitable,” Roberts said. “That’s why they do it. It’s easier than working.”

As lucrative as the deals are, they often falter and leave a distinct footprint on communities.

“They hurt the neighborhoods, they hurt the tax base, they the hurt schools,” Roberts said. “Imagine living across the street from the house that now sits vacant.”

Read MacInnes’ entire article: “Magnate guilty in housing scheme”

Two industry insiders–one a prominent Realtor in Edmond, Oklahoma; the other a successful real estate broker in Kansas City, Missouri–have pleaded guilty in separate cases to committing mortgage fraud.

In the Oklahoma case, high profile Realtor Ann Campbell pleaded guilty on Wednesday to a federal felony charge of conspiracy to commit wire fraud in connection with cash back at closing scheme. The 66-year-old Campbell, who heads the RE/MAX affiliated “Ann Campbell Team,” was a primary figure in the sale of a home in Edmond’s upscale Oak Tree neighborhood. According to Assistant U.S. Attorney Susan Cox, Campbell–who represented the seller of the house–conspired to falsify loan-related documents that stated that the seller would pay certain closing costs that then were kicked back to the buyer through a title company account belonging to–guess who–Ann Campbell.

In a statement, Campbell’s attorney said “Mrs. Campbell has acknowledged making a serious error in judgement… She did not retain any funds beyond her normal commission…” But as part of her plea, has Campbell agreed to pay back more than $50,000 from her commission on the sale of three Oak Tree homes, and now faces up to five years in prison and a $250,000 fine.

In Kansas City, Missouri, 59-year-old real estate broker Doris Taylor pleaded guilty in federal court on Wednesday to transferring money obtained illegally through fraud across state lines. By pleading guilty, Taylor admitted that she caused a mortgage company to transfer $331,859 to an Independence, Missouri, bank account because of a fraudulent loan application. Taylor, who ran Doris J. Taylor Realty, faces up to 10 years in federal prison without the possibility of parole, plus a fine up to $250,000 and an order of restitution.