BIRMINGHAM—A 32-year-old Birmingham man pleaded guilty today in federal court to mail fraud charges connected to a mortgage fraud scheme that totaled more than $1 million, announced U.S. Attorney Joyce White Vance in conjunction with FBI and Housing and Urban Development officials.
AL CARSON ROCKETT, JR., was charged in a five-count information filed in U.S. District Court in Birmingham and pleaded guilty today before U.S. District Judge R. David Proctor to all charges. He agreed to forfeit $1,090,046 to the government as proceeds of illegal activity.
The four mail fraud counts involve parcels containing mortgage-application documents sent by a private postal carrier from Birmingham to mortgage companies in June, July and August 2005. The mortgage fraud ring operated between 2004 and 2006, according to court documents. Count Five of the information sought the forfeiture from Rockett.
According to Rockett’s plea agreement, he conducted the mortgage fraud as follows:
Rockett convinced people they could buy houses from him without any down payment or closing costs and without the need for documents to support a loan application. Buyers were told the houses were ready to be used as government-subsidized rental properties, that tenants were available to move in immediately and rent payments would exceed the mortgage payments. In many instances, however, there were no tenants, the buyers couldn’t make the mortgage payments, and the properties quickly fell into foreclosure.
On other loans, Rockett stated on loan documents that buyers were making down payments when, in fact, Rockett was making the payment.
Finally, none of the loan documents disclosed Rockett was paying each buyer between $3,000 and $10,000 as an inducement to buy his properties. The mortgage loan documents involved required that all cash payments between a buyer and seller associated with a real estate transaction be disclosed.
“This case is a clear example of the dangerous fraud that has permeated our real estate markets,” Vance said. “This prosecution should send a clear signal to anyone who has, or might consider falsifying any type of loan documents that it is our goal to investigate every case and bring the perpetrators to justice. This is not just a question of addressing losses to our financial community,” she said. “We have seen the value of our homes plummet and our communities put at risk by individuals who steal, lie and abuse the system. When a person lies on loan documents and then goes into foreclosure, we all suffer.”
HUD Inspector General Kenneth Donohue said Rockett’s case is an example of how his office, working with law enforcement agencies and U.S. Attorneys’ Offices across the country, will pursue individuals who are participating in mortgage fraud schemes, which are eating away at the economic heart of this country. “We will use whatever means necessary—both civil and criminal—to isolate and punish mortgage companies’ leadership and personnel who are corroding the soundness of HUD programs,” Donohue said.
“Mortgage fraud tears at our economy and threatens the American dream,” said FBI Special Agent in Charge Patrick Maley. “As the mortgage fraud problem continues to grow, the people of North Alabama can be assured that the FBI, along with our law enforcement partners, will be there to aggressively investigate and bring to justice those who would work to defraud financial institutions through lies and deceit,” he said.
The maximum sentence for each mail fraud count is 20 years in prison and a $1 million fine.
Special agents of the FBI and HUD’s Office of Inspector General investigated the case. Assistant U.S. Attorney Patrick Carney prosecuted it on behalf of the United States.

WASHINGTON – Representatives of President Obama’s Financial Fraud Enforcement Task Force will host the latest of a Mortgage Fraud Summit on THURSDAY, SEPTEMBER 30, 2010 in LOS ANGELES. President Obama established the interagency Financial Fraud Enforcement Task Force to wage an aggressive, coordinated and proactive effort to investigate and prosecute financial crimes. The task force includes representatives from a broad range of federal agencies, regulatory authorities, inspectors general, and state and local law enforcement who, working together, bring to bear a powerful array of criminal and civil enforcement resources. The task force is holding another summit Wednesday in Fresno, and it has previously hosted mortgage fraud summits in Miami, Phoenix and Detroit.

In the morning session, task force members will meet with the general public, legal services providers and banking, mortgage and real estate industry representatives to discuss trends in the region and the effect of mortgage fraud on the community. Following the public portion of the meeting, the task force members will hold a press conference to discuss the work of the task force to combat mortgage fraud. In the afternoon, the task force members will meet privately with law enforcement agencies involved in the investigation of mortgage fraud.

Participating in the summits will be Assistant Attorney General for the Civil Division Tony West, United States Attorney André Birotte Jr., Chief of the FBI’s Financial Crimes Section Sharon Ormsby, Deputy Inspector General at the Department of Housing and Urban Development Michael Stephens and Executive Director of the Financial Fraud Enforcement Task Force Robb Adkins. Additionally, representatives from the Federal Trade Commission, the Treasury Department’s Financial Crimes Enforcement Network, U.S. Postal Inspection Service, U.S. Secret Service, the California Department of Justice and local police agencies will participate in the summits.

A 32-year-old Birmingham man pleaded guilty today in federal court to mail fraud charges connected to a mortgage fraud scheme that totaled more than $1 million, announced U.S. Attorney Joyce White Vance in conjunction with FBI and Housing and Urban Development officials.

Al Carson Rockett, Jr.,  was charged in a five-count information filed in U.S. District Court in Birmingham and pleaded guilty today before U.S. District Judge R. David Proctor to all charges. He agreed to forfeit $1,090,046 to the government as proceeds of illegal activity.

The four mail fraud counts involve parcels containing mortgage-application documents sent by a private postal carrier from Birmingham to mortgage companies in June, July and August 2005. The mortgage fraud ring operated between 2004 and 2006, according to court documents. Count Five of the information sought the forfeiture from Rockett.

According to Rockett’s plea agreement, he conducted the mortgage fraud as follows:

Rockett convinced people they could buy houses from him without any down payment or closing costs and without the need for documents to support a loan application. Buyers were told the houses were ready to be used as government-subsidized rental properties, that tenants were available to move in immediately and rent payments would exceed the mortgage payments. In many instances, however, there were no tenants, the buyers couldn’t make the mortgage payments, and the properties quickly fell into foreclosure.

On other loans, Rockett stated on loan documents that buyers were making down payments when, in fact, Rockett was making the payment.

Finally, none of the loan documents disclosed Rockett was paying each buyer between $3,000 and $10,000 as an inducement to buy his properties. The mortgage loan documents involved required that all cash payments between a buyer and seller associated with a real estate transaction be disclosed.

“This case is a clear example of the dangerous fraud that has permeated our real estate markets,” Vance said. “This prosecution should send a clear signal to anyone who has, or might consider falsifying any type of loan documents that it is our goal to investigate every case and bring the perpetrators to justice. This is not just a question of addressing losses to our financial community,” she said. “We have seen the value of our homes plummet and our communities put at risk by individuals who steal, lie and abuse the system. When a person lies on loan documents and then goes into foreclosure, we all suffer.”

HUD Inspector General Kenneth Donohue said Rockett’s case is an example of how his office, working with law enforcement agencies and U.S. Attorneys’ Offices across the country, will pursue individuals who are participating in mortgage fraud schemes, which are eating away at the economic heart of this country. “We will use whatever means necessary – both civil and criminal – to isolate and punish mortgage companies’ leadership and personnel who are corroding the soundness of HUD programs,” Donohue said.

“Mortgage fraud tears at our economy and threatens the American dream,” said FBI Special Agent in Charge Patrick Maley. “As the mortgage fraud problem continues to grow, the people of North Alabama can be assured that the FBI, along with our law enforcement partners, will be there to aggressively investigate and bring to justice those who would work to defraud financial institutions through lies and deceit,” he said.

The maximum sentence for each mail fraud count is 20 years in prison and a $1 million fine.

Former Irving Police Officer Pleads Guilty in HUD Fraud Case  “Good Neighbor Next Door/Officer Next Door”

DALLAS—Ramon Anthony Reyes, Jr. has pleaded guilty before U.S. District Judge Jane J. Boyle  to one count of making a false statement to the U.S. Department of Housing and Urban Development (HUD) with regard to his participation in HUD’s “Good Neighbor Next Door/Officer Next Door” mortgage program, announced U.S. Attorney James T. Jacks of the Northern District of Texas. Reyes, 45,  faces a maximum statutory sentence of two years in prison and a $250,000 fine. He is scheduled to be sentenced by Judge Boyle on April 29, 2010.

Under the terms of the “Good Neighbor Next Door/Officer Next Door” mortgage program offered through HUD, law enforcement officers receive a 50 percent discount from the list price of a home in return for living in the property as their sole residence, for 36 months. Participating law enforcement officers also may not own any other residential real estate property at the time they submit their purchase offer and for one year previous to that date. The purpose of the program is to strengthen communities by encouraging employed, professional law enforcement officers to live in areas needing revitalization.

According to plea documents filed in the case, Reyes was employed as a police officer for the City of Irving since 1998. In 1998, Reyes purchased a home located on Dorothy Drive in Grand Prairie, Texas, and began living there.

In 2007, Reyes purchased another home, located on Palo Alto Drive in Mesquite, Texas, using the “Good Neighbor Next Door/Officer Next Door” mortgage program. To comply with the program’s requirements, Reyes transferred title of this Grand Prairie home to a relative and continued to live in the Grand Prairie home, maintaining all utilities in his name and paying the property taxes on the residence.

Reyes admitted that he made a false statement on the annual certification form for the program when he signed the form certifying that he had continuously resided at the Mesquite address, when he knew that he had not.

“Good Neighbor Next Door/Officer Next Door”  “Good Neighbor Next Door/Officer Next Door”

I wrote about Lend America earlier last month here on my Flipping Frenzy blog. The article concerned Lend America’s negative esteem among the halls of the Housing and Urban Development (HUD) for having, “…a default rate that is eight times the industry’s average.”

Within 48 hours, first the Federal Housing Administration (FHA), then the Government National Mortgage Association (Ginnie Mae) the next day withdrew their approval for Lend America to participate in the FHA single family insurance program.

A national mortgage lender, Lend America is known for its aggressive media marketing campaigns: full-page newspaper ads and television infomercials to solicit business from homeowners facing foreclosure, can no longer originate or underwrite FHA loans or issue Ginnie Mae securities.

The FHA also imposed civil money penalties against the Melville, N.Y. lender for $512,500 based upon two notices of violation issued to the Company last month. Lend America has 30 days to challenge the withdrawal action and the imposition of civil money penalties before an Administrative Law Judge. The action taken today follows a Quality Assurance review that found Lend America, also doing business as Ideal Mortgage and Lending Key violated a number of HUD/FHA requirements.

Lend America has originated some 11,300 FHA-backed loans over the last two years, ranking them No. 22 out of 13,419 (as of today, make that 13,418) among FHA lenders by volume.

In a terse statement today, a Lend America spokesperson offered this response: “The company is surprised and disappointed by today’s action by the U.S. Department of Housing and Urban Development’s Mortgagee Review Board. The Company is currently reviewing all possible options and remedies in response to this action, and will respond shortly once a decision has been reached.”

“The FHA’s action triggers an immediate default in the Ginnie Mae program,” said Ginnie Mae Executive Vice President Mary Kinney. “We have taken these steps to protect the integrity of our MBS program and the American taxpayer.”

“We have no tolerance for lenders who abuse their FHA-approval,” said FHA Commissioner David Stevens. “The evidence in this case points to a disturbing pattern of senior officials and underwriters, either not knowing what they were doing, or not caring. Therefore, Ideal (Lend America) has been immediately withdrawn from participating in the FHA-insured mortgage program.”

In October, the Justice Department filed suit at HUD’s request to bar Lend America from making government-backed loans, accusing the company of falsely certifying borrowers who received $14 million in FHA-backed loans. However, U.S. District Judge Joseph F. Bianco denied the government’s request for a temporary restraining order that would prevent Lend America from making such loans while a civil fraud injunction against the company and one of its senior managers is being decided.

Lend America was the first lender in the country to receive approval from HUD to underwrite, close and insure Hope for Homeowners loan transactions without prior HUD review. In May, it launched a $500,000 a month advertising campaign with the tagline “Relief Comes In The Form Of Hope” featuring full page ads in The New York Times, The Washington Post, USA Today, The Wall Street Journal, and Newsday. In addition, it launched a series of 60 second format TV commercials and cable TV infomercials featuring phony anchors for the “Mortgage Loan Network.”

As we all know, rampant fraud in the real estate industry has increased so sharply that the FBI recently warned of an “epidemic” of financial crimes which, if not curtailed, could become “the next S&L crisis.” With that in mind, a who’s who of federal and state entities are encouraging real estate professionals throughout Florida, Georgia, and North and South Carolina to attend a free, one-day symposium being held at the Savannah International Trade and Convention Center, June 22, in Savannah, Georgia.

While little is known at this point about the schedule, the symposium’s coordinators–which include the U.S. Department of Housing and Urban Development, the Florida Office of Financial Regulation, the Georgia Department of Banking and Finance, the North Carolina Commissioner of Banks, and the South Carolina Department of Consumer Affairs–are sure to put on a very informative and educational event.

If you are a FL, GA, NC, or SC-based mortgage banker, mortgage broker, loan originator, REALTOR®, appraiser, closing attorney, builder, developer, or law enforcement official, you should seriously consider attending. For more information or to register for the one-day symposium, click here or call Doris L. Needham in the Dept. of Housing and Urban Development office in Atlanta, GA, at (404) 331-5001, ext. 2075.