PHILADELPHIA—Frank J. Dattilo, 64, of Holland, Pennsylvania, was sentenced today to 15 months in prison for a scheme to defraud mortgage lenders in an effort to obtain money and property, announced United States Attorney Zane David Memeger. DAttilo was the owner and operator of the mortgage brokerage firm Provident Financial Group (“PFG”), located in Bensalem, PA. He employed Michael Giello as a mortgage broker and loan officer, and Jason Megow as a loan processor. Dattilo marketed to people with poor credit or low incomes. Between January 2004 and February 2007, Dattilo, Giello, and Megos created false documents for use in mortgage applications. The falsified forms, among other things, overstated borrowers’ income, falsely showed that borrowers had rental histories, and showed that a property was an income-producing rental property when, in fact, it was not. These fraudulent documents made borrowers appear more creditworthy than they were, thereby misleading the banks into funding the mortgage loans.
All three defendants pleaded guilty to two counts, each, of mail fraud. Giello was sentenced to one year and one day; Megow was sentenced to one day in prison and five years of supervised release. In addition to the prison term, U.S. District Court Judge Norma Shapiro ordered the three defendants to pay total restitution in the amount of $117,673.66.
This case was investigated by the Federal Bureau of Investigation and Pennsylvania Department of Banking. It was prosecuted by Assistant United States Attorney Maria M. Carrillo.

Four Detroit area residents were indicted on charges of wire fraud and interstate transportation of money taken by fraud, announced United States Attorney Barbara L. McQuade. McQuade was joined in the announcement by Special Agent in Charge Andrew G. Arena, Federal Bureau of Investigation.
Charged in the 14-count indictment, which was unsealed this week, were MELVIN A. JOHNSON, 49, of Lathrup Village; CURTISS JOHNSON, 46, of Novi; BRADY MUSE, JR, 48, of Novi; and LANITA J. GATEWOOD, 53, of Detroit.
The indictment charges that from November 2004 through February 2006, these individuals knowingly participated in a scheme to defraud mortgage lenders. The loan applications were completed or supervised by Melvin Johnson or Curtiss Johnson at CHALLENGE MORTGAGE’s branch office in Southfield, Michigan, where Melvin was the branch manager and Curtiss a loan officer. Challenge Mortgage was a mortgage broker based in Florida.
The indictment alleges that the loan applications were materially false or fraudulent and that when the mortgage loans closed, Melvin Johnson and Curtiss Johnson benefitted financially through checks made payable to Challenge Mortgage and other businesses with which Melvin Johnson was associated, such as JEM Marketing Realty, JEM Processing, and First United Realty.
The indictment also alleges that the fraudulent information provided in the loans documents included false employers, overstated income, fictitious bank accounts, stolen identities, and information obtained from forged deeds, and that as a part of the scheme, Brady Muse created counterfeit documents to support the fraudulent loan packages assembled by Melvin Johnson and Curtiss Johnson. It also alleges that Lanita Gatewood allowed property she did not own to be titled in her name, and that she distributed the proceeds of the fraud to other participants in the scheme.
The defendants are charged with multiple counts of wire fraud and interstate transportation of money taken by fraud. Each count of wire fraud carries a maximum penalty of 20 years’ imprisonment and a $250,000 fine. Each count of interstate transportation of money taken by fraud carries a maximum penalty of 10 years’ imprisonment and a $250,000 fine. The defendants could also be ordered to pay restitution to the mortgage lenders.
An indictment is only a charge and is not evidence of guilt. A defendant is entitled to a fair trial in which it will be the government’s burden to prove guilt beyond a reasonable doubt.
The case was investigated by the Federal Bureau of Investigation.

David B. Fein, United States Attorney for the District of Connecticut, today announced that a federal grand jury sitting in New Haven has returned a second superseding indictment charging a total of 10 individuals with various offenses related to their alleged participation in a mortgage fraud conspiracy. Six defendants, including Syed A. Babar of New London, have been charged previously with various mortgage fraud offenses stemming from the alleged scheme. The second superseding indictment charges four additional defendants, MARSHALL ASMAR, 40, of Joanne Drive, Milford; WENDY WERNER, 45, of Sarasota, Florida; REHAN QAMER, 38, formerly of Ashtabula, Ohio, and MOHAMMAD SALEEM, 39, formerly of Flushing, New York.
The indictment alleges that, between August 2006 and May 2010, Syed A. Babar, also known as “Ali” and “Asad,” 28, of New London, was the de facto leader and organizer of a conspiracy to obtain millions of dollars in residential real estate loans, including loans insured by the Federal Housing Administration, through the use of sham sales contracts, false loan applications and fraudulent property appraisals. The indictment alleges that ASMAR and WERNER entered into sales contracts with straw purchasers to sell homes for a price higher than the actual price that ASMAR and WERNER, as the sellers, would receive. Members of the conspiracy—which included a mortgage broker, two attorneys and a real estate appraiser—submitted false documentation in connection with loan applications that were submitted, including fraudulent appraisals of the properties being purchased in order to justify the inflated sales price and the loan amount being sought to fund each purchase. The indictment further alleges that members of the conspiracy created a fictitious construction company called “Sheda Telle Construction, LLC,” in order to divert fraud proceeds to it and, in some cases, to falsely justify the artificially inflated sales price of houses based on renovations purportedly made to the property that, in fact, did not occur. The co-conspirators then split the fraud proceeds.
It is alleged that, in August 2006, WERNER, through her company, Marbo Restorations, LLC, sold three houses on Lake Street in Norwich to QAMER, a straw purchaser working with Babar. The fraudulently inflated sales prices for 35, 37, and 41 Lake Street were $260,000, $270,000, and $270,000, respectively, and QAMER obtained residential real estate loans to purchase homes for those amounts. WERNER provided Babar with approximately $283,000 of the proceeds generated from the sale of the three houses. Babar then wrote 10 checks totaling approximately $179,000 to QAMER.
SALEEM also is alleged to have served as a straw purchaser during the conspiracy. Babar is alleged to have recruited and paid straw purchasers up to $20,000 to nominally purchase homes.
Contrary to the representations made on the loan applications, it is alleged that the straw purchasers never occupied the houses as their primary residences, failed to make payments on the loans and the properties went into foreclosure, including the three Lake Street properties that QAMER purchased from WERNER.
The alleged mortgage fraud scheme involved approximately 35 properties and loans obtained in the amount of approximately $10 million. Current losses from the scheme are estimated to be at least $2.5 million.
The indictment charges ASMAR, WERNER, QAMER, and SALEEM with one count of conspiracy to commit wire fraud, which carries a maximum term of imprisonment of five years. ASMAR and WERNER also are charged with eight counts of wire fraud, which carries a maximum term of imprisonment of 20 years on each count. The indictment also charges ASMAR with four counts of making false statements, which carries a maximum term of imprisonment of five years on each count. Finally, the indictment charges WERNER and QAMER with one count of mail fraud, which carries a maximum term of imprisonment of 20 years.
The second superseding indictment was returned on July 29, 2010, and unsealed on September 15. ASMAR was arrested on August 20. He entered a plea of not guilty to the charges and is released on a bond in the amount of $250,000, fully secured by real property. WERNER was arrested in Florida on September 10. On September 21, she appeared before United States Magistrate Judge Donna F. Martinez in Hartford and entered a plea of not guilty to the charges. She is released on a bond in the amount of $85,000, fully secured by real property.
QAMER and SALEEM are currently being sought by law enforcement.
U.S. Attorney Fein stressed that an indictment is not evidence of guilt. Charges are only allegations, and each defendant is presumed innocent unless and until proven guilty beyond a reasonable doubt.
U.S. Attorney Fein stated that the investigation is ongoing.
This case is being investigated by the Federal Bureau of Investigation and the U.S. Department of Housing and Urban Development – Office of Inspector General, and is being prosecuted by Assistant United States Attorneys Eric J. Glover and Susan Wines.
In July 2009, the U.S. Attorney’s Office and the Federal Bureau of Investigation announced the formation of the Connecticut Mortgage Fraud Task Force to investigate and prosecute mortgage fraud cases and related financial crimes occurring in Connecticut. In addition to investigating past mortgage fraud schemes, the Task Force will focus on emerging crime trends that are associated with the growing tide of foreclosures, including foreclosure rescue schemes, and short sale schemes. Citizens are encouraged to report any suspected mortgage fraud activity by calling 203-333-3512 and requesting the Connecticut Mortgage Fraud Task Force, or by sending an email to ctmortgagefraud@ic.fbi.gov.
The Connecticut Mortgage Fraud Task Force includes representatives from the U.S. Attorney’s Office; Federal Bureau of Investigation; Internal Revenue Service – Criminal Investigation; U.S. Postal Inspection Service; U.S. Department of Housing and Urban Development, Office of Inspector General; Federal Deposit Insurance Corporation, Office of Inspector General; and State of Connecticut Department of Banking.
To report financial fraud crimes, and to learn more about the President’s Financial Fraud Enforcement Task Force, please visit www.stopfraud.gov.

CHICAGO—Three partners in a failed North Shore development project, a title company executive, and a loan officer were charged in a federal indictment unsealed yesterday with engaging in a $15.7 million residential mortgage and construction loan fraud scheme to help finance the failed mixed-use commercial development known as the Center of the Northshore, federal law enforcement officials announced. The five defendants allegedly caused various lenders and a title company to lose at least $8.45 million. The loan proceeds allegedly were used to make lulling interest payments on multiple fraudulent residential mortgages, as well as to make interest payments on a $26.2 million loan to finance the purchase of 14 acres at the intersection of Dundee Road and Skokie Boulevard in Northbrook for the proposed mixed-use development, which ultimately fell into foreclosure.

The 11-count indictment, which was returned by a federal grand jury on May 26, was unsealed after four of the five defendants were arrested yesterday by federal agents. The arrests and charges were announced today by Patrick J. Fitzgerald, United States Attorney for the Northern District of Illinois; Thomas A. Kelly, Special Agent in Charge of the U.S. Secret Service in Chicago; and Robert D. Grant, Special Agent in Charge of the Chicago Office of the Federal Bureau of Investigation.

The defendants and charges against each are as follows:

Edward Renko, 49, of Glenview, who was chief executive officer of the now-defunct EAG Capital Holdings, Inc.—two counts of wire fraud and one count each of bank fraud and making a false statement to influence the action of a bank;

Alexander Field, 42, of Northbrook, formerly president of EAG Capital—three counts of wire fraud and one count of bank fraud;

Gary Fishkin, 54, of Glencoe, formerly chief operating officer of EAG Capital—two counts of wire fraud and one count each of bank fraud and making a false statement to influence the action of a bank;

Kalliope Shaykin, 51, of Chicago, formerly president of Absolute Title Services, Inc., in Schaumburg—seven counts of wire fraud and one count of making a false statement to influence the action of a bank; and

Tatyana Furman, 41, of Northbrook, formerly a loan officer and mortgage broker at American United Mortgage Co., in Northbrook, which was 50 percent-owned by EAG Capital—seven counts of wire fraud.

Renko, Field, Fishkin, and Furman were arraigned yesterday before Magistrate Judge Maria Valdez in U.S. District Court, and were ordered to remain in federal custody pending a detention hearing at 11 a.m. Tuesday. Shaykin was not arrested and was scheduled to be arraigned today before U.S. District Judge Harry Leinenweber in federal court.

According to the indictment, between June 2006 and November 2007, the defendants fraudulently obtained at least $8.45 million in residential loan proceeds by repeatedly obtaining mortgages secured by residences owned by Renko, Field, and Fishkin, located respectively at 711, 700, and 688 Greenwood Rd., Northbrook. The mortgages were obtained purportedly to refinance existing loans secured by those residences, but instead of using the loans to pay off the existing mortgages, the defendants allegedly converted the fraudulently obtained loans to their own use, including to pay personal expenses, business expenses, and interest payments on the $26.21 million loan financing the purchase of property for the proposed Center of the Northshore.

On multiple occasions, the indictment alleges that Furman prepared, and Renko, Field, and Fishkin signed, fraudulent mortgage loan applications that contained false statements that failed to disclose the respective defendant’s existing mortgage liabilities and the purpose of the loans. Shaykin allegedly created and submitted to lenders fraudulent title insurance policies under the name of Title Company A that intentionally omitted prior existing mortgages and liens on the respective defendant’s residences.

The indictment alleges that Renko, Field, and Fishkin distributed at least $720,000 in fraudulently obtained loan proceeds to Shaykin through various means, and that those four defendants distributed at least $240,000 to Furman through various transactions. Overall, Renko, Field, and Fishkin obtained home mortgages and a construction loan totaling at least $15,790,000 and caused actual losses to lenders and Title Company A totaling at least $8.45 million.

The indictment seeks forfeiture totaling nearly $10.5 million from all five defendants.

The government is being represented by Assistant U.S. Attorney Ryan S. Hedges.

Wire fraud carries a maximum penalty of 20 years in prison and a $250,000 fine. However, four of the wire fraud counts allegedly affecting financial institutions, together with bank fraud and making a false statement to influence the action of a bank, each carry a maximum penalty of 30 years in prison and a $1 million fine. As an alternative, the court may impose a maximum fine totaling twice the loss to any victim or twice the gain to any defendant, whichever is greater, and restitution is mandatory. If convicted, the court must determine a reasonable sentence to impose under the advisory United States Sentencing Guidelines.

DENVER—Cedric Lipsey, age 35, and Philip A. Martinez, age 34, both from Denver, Colorado, were indicted by a federal grand jury last week on charges of wire fraud as part of a mortgage fraud scheme, U.S. Attorney David Gaouette, FBI Special Agent in Charge James Davis, and IRS Criminal Investigation Special Agent in Charge Christopher M. Sigerson announced. Lipsey was arrested by federal agents without incident. He appeared in U.S. District Court in Denver on August 31st, 2009 for an initial appearance, where he was advised of the charges pending against him. He appeared in court again today, where U.S. District Court Magistrate Judge Kristen L. Mix authorized his release on a $50,000 property bond.

According to the indictment, beginning in April 2004, and continuing thereafter until about March 2006, in the District of Colorado and elsewhere, Cedric Lipsey, aided and abetted by defendant Philip A. Martinez, did knowingly devise and intend to devise a scheme to defraud lending companies that funded residential mortgage loans and to obtain money from them by means of materially false and fraudulent pretenses, representations, and promises.

Cedric Lipsey, a licensed real estate agent, held himself out as a successful real estate agent and investor. Philip A. Martinez was a loan officer and mortgage broker.

Lipsey orchestrated the purchase and resale or refinancing of numerous residential properties, including the sale of one of his own homes, by paying individuals to participate as “investors” in what he referred to as an investment “opportunity.” Lipsey and Martinez arranged for these so-called “investors” to use their good credit to obtain mortgage loans to purchase the properties. Shortly after the first set of loans that helped these individuals purchase properties, Lipsey caused them to sell the properties to a second set of buyers at substantially higher prices, with Lipsey and Martinez taking a combination of commissions, fees, and proceeds from the first and second transactions.

Lipsey falsely represented that the first buyers would be purchasing and had purchased the properties for less than their actual market value. The first sales were not “distressed”, as the defendants sometimes represented to facilitate their fraud. In fact, the first buyers purchased the properties at or near their market value, and there was no legitimate reason for the substantial increase in price when the same properties were resold shortly thereafter.

Lipsey and Martinez arranged to have a variety of fraudulent documents submitted to the lenders in support of the loan applications. These consisted primarily of documents purporting to show proof of the borrowers’ employment, proof of the borrowers’ assets, and sources of the borrowers’ asset, and incomes. The defendants also used forged signatures where necessary to facilitate the scheme. Furthermore, Lipsey enabled certain appraisers to create false reports which reflected that the subject properties were “comparable” to the higher quality or otherwise more valuable properties, when they were not.

“Mortgage fraud weakens our economy, threatens the recovery of the housing market, and makes it more difficult for law-abiding folks to purchase a home,” said United States Attorney David Gaouette.
“Mortgage fraud hurts borrowers, financial institutions, and legitimate homeowners,” said FBI Denver Division Special Agent in Charge James Davis. “The FBI, in conjunction with our law enforcement, regulatory, and industry partners, will continue to diligently pursue perpetrators of mortgage fraud schemes.

“Mortgage fraud creates a significant loss of tax revenue, drives buyers into foreclosure, leave lenders burdened with bad loans and neighborhoods with abandoned and deteriorating properties,” said Christopher M. Sigerson, Special Agent in Charge, IRS Criminal Investigation, Denver Field Office.

If convicted of wire fraud, which are counts one through 27, the penalty is not more than 20 years in federal prison, and up to a $250,000 fine, per count. If convicted of count 28, monetary transaction in property derived from unlawful activity, the defendant faces not more than 10 years in federal prison, and up to a $250,000 fine.

The case was investigated by the Federal Bureau of Investigation (FBI), and the Internal Revenue Service – Criminal Investigation (IRS CI).

The case is being prosecuted by Assistant U.S. Attorney Linda Kaufman.

MINNEAPOLIS—Earlier today in federal court in the District of Minnesota, two people pleaded guilty to their roles in a scheme that defrauded mortgage lenders out of approximately $4.2 million. My Dinh Lam, age 30, of Minneapolis, and Ashley Elizabeth Prasil, age 27, of Eden Prairie, pleaded guilty to one count of conspiracy to commit wire fraud in connection with the scheme. The defendants, who were charged on April 21, 2011, entered their pleas before United States District Court Judge Susan Richard Nelson in St. Paul.

In their plea agreements, the defendants admitted that from December 18, 2006, through December of 2007, they conspired to defraud mortgage lenders in connection with the marketing of the Cloud 9 Sky Flats (“Cloud 9″), a Minnetonka development. The defendants admitted that the scheme involved finding buyers to apply for mortgage loans to purchase units in the development, knowing that each buyer would receive a kickback of approximately 30 percent of the reported purchase price of any unit. The application forms submitted to the lenders did not disclose these kickbacks. The kickback payments were returned to the buyers through an account controlled by a co-conspirator, with a portion skimmed off and shared among the defendants. More than 40 Cloud 9 units were sold through the scheme, and more than 80 percent of the loans have since defaulted. In excess of $4.2 million was transferred to accounts controlled by Sheri Lynn Delich, a person who has been charged by Information in this case.

For their crimes, the defendants face a potential maximum penalty of five years in prison. Judge Nelson will determine their sentences at a future hearing, yet to be scheduled.

This case is the result of an investigation by the Federal Bureau of Investigation and the Internal Revenue Service-Criminal Investigation Division. It is being prosecuted by Assistant U.S. Attorney Robert M. Lewis.

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

Two Houston Men Sentenced to Prison for Mortgage Fraud
U.S. Attorney’s Office June 01, 2011

HOUSTON—Adrian Levale Cole and Albert Terrance Watkins, both of Houston, have been sentenced to prison for their roles in a multi-million-dollar mortgage fraud scheme, United States Attorney José Angel Moreno announced today.

Cole, 40, owned and operated the “fictitious” companies AC Homes and WT Homes and generated more than $10 million in fraudulent home loan submissions at and through Phantom Marketing, Capri Mortgage, and United National Mortgage by recruiting borrowers with good credit in Houston and the surrounding area. He pleaded guilty to wire fraud and false representation of Social Security numbers in June 2010. Today, United States District Judge David Hittner sentenced Cole to a 108-month term of incarceration to be followed by a three-year term of supervised release.

Watkins, 47, who devised the scheme with Cole to purchase multiple residential properties in the greater Houston area through fraudulent mortgage loans, was sentenced to 150 months’ incarceration by United States District Judge David Hittner. Watkins’ role in the scheme was two-fold. He was both a recruiter of borrowers with good credit on behalf of Phantom Marketing and a loan processor at Capri Mortgage and subsequently at United National Mortgage. Watkins pleaded guilty in June 2010 to conspiracy to commit wire fraud. Judge Hittner has also imposed a three-year term of supervised release to be served by Watkins upon completion of his prison term.

The scheme involved the borrowers with good credit to agree and to apply for home mortgage loans from multiple lenders, with the understanding that they would not be responsible for the monthly mortgage payments—rather, Phantom Marketing would make all payments on all loans. Watkins explained to the borrowers that the portions of the approved loan proceeds from the purchased homes would go to them and/or Watkins and/or Cole and others. As was true of most of the other loans that were part of this scheme, only the first few monthly mortgage payments were made, and then the mortgage loans went into default for non-payment.

Specifically, as related to Cole and his counts of conviction, in December 2004 Cole purchased a Houston residential property for $110,000, an “inflated” sales price, using a false Social Security number belonging to a minor on the home mortgage loan application with a “created” line of credit that was ultimately approved for $99,000. Loan funds from the bank account of the lender, People’s Choice Home Loans Inc., were wired into the bank account of the title company. Out of the loan proceeds, a check in the amount of $69,100 issued to AC Homes, Cole’s company, as a “Contractor Loan.” No construction work of any kind was ever done by AC Homes on that property located in Houston. On June 23, 2005, Cole sold this property to a “straw purchaser,” who purchased it for a greater “inflated” sales price of $150,000. According to the title file, $105,000 went to pay off Cole mortgage loan and $39,551.33 cash went to seller, Cole. No improvements were ever done to this property. The straw buyer defaulted on $150,000 in loans and the loss to bank, after resale of the foreclosed home, has been determined to be $105,128.

In addition to the prison terms, Judge Hittner has also ordered Cole and Watkins to pay restitution, jointly and severally, to various financial institutions who are currently the servicers of the loans as a result of the bankruptcy and closure of the now defunct, initial lenders. The final amount of restitution will be determined by the court within 90 days.

The investigation leading to the charges was the result of a joint investigation conducted by agents of the FBI, Friendswood Police Department, Internal Revenue Service – Criminal Investigations and the Social Security Administration – Office of Inspector General. Assistant United States Attorneys Melissa J. Annis and Carolyn Ferko prosecuted the case.

PHOENIX—Phoenix resident Paige Kinney, aka Jaime Lee Lawler, 42, pleaded guilty in two separate cases in federal district court on Friday. In one case, Kinney admitted to her leadership role in a $40 million mortgage fraud involving Countrywide Home Loans, and in the second case, she admitted to committing bankruptcy fraud, bank fraud, and mail fraud.

“This defendant’s fraudulent activities were pervasive—she targeted financial institutions, she undermined the integrity of the bankruptcy court, and she stole from an insurance company,” said U.S. Attorney Dennis K. Burke. “For those in the real estate and mortgage industry: If you engage in fraud to line your pockets at the expense of others, we will come after you with everything we have. I congratulate the IRS and FBI on a thorough investigation.”

“Today’s guilty plea signifies the continued commitment by the FBI, the Arizona Mortgage Fraud Task Force, and the United States Attorney’s Office in targeting mortgage and bankruptcy fraud,” said John Strong, Federal Bureau of Investigation Acting Special Agent in Charge, Phoenix Division. “The FBI and its law enforcement partners will continue to aggressively pursue those who are involved in these types of fraudulent schemes. Mortgage fraud has greatly impacted the citizens of Arizona over the past few years and will continue to remain a top criminal priority of the FBI.”

Kinney admitted that from January of 2005 through December of 2007, she and others recruited straw buyers to purchase homes the buyers never intended to live in by obtaining mortgage loans the buyers never should have received. Kinney arranged for the loan applications to be submitted with false information about the employment, income, and assets of the buyers so they would qualify for the loans. The loans, totaling almost $40 million, were obtained based on inflated property appraisals. The excess cash totaling $9 million was then diverted to Kinney and her co-conspirators.

Kinney further admitted that she continued her illicit activities while she was pending trial on the mortgage fraud charges. She declared bankruptcy and then attempted to hide assets and liabilities by changing her name. She committed additional financial fraud by arranging for friends to fraudulently obtain a loan to purchase a Mercedes. And she committed insurance fraud by staging a phony burglary of her residence and then collecting $130,000 from Allstate Insurance Company.

Kinney pleaded guilty to a total of 13 felony offenses, many of which each carry a maximum prison sentence of 30 years and a maximum fine of $1 million. In determining an actual sentence, the federal district court judge will consult the U.S. Sentencing Guidelines, which provide appropriate sentencing ranges. The judge, however, is not bound by those guidelines in determining a sentence.

Sentencing is set before Judge Neil V. Wake on September 12, 2011. The investigation in this case was conducted by the IRS and FBI. The prosecution is being handled by Kevin M. Rapp and Monica B. Klapper, Assistant U.S. Attorneys, District of Arizona, Phoenix.

A 36-year-old Savage man pleaded guilty yesterday in federal court in Minneapolis to participating in a $13 million mortgage fraud scheme that involved no fewer than 25 properties in Prior Lake, Savage, and Minnetonka, among other Minnesota communities. Appearing before United States District Court Judge Ann D. Montgomery this morning, Ericvan Anthony McDavid specifically pleaded guilty to one count of wire fraud. He was indicted, along with two co-defendants, on June 15, 2010. McDavid’s sister, Renee Lynise McDavid, age 38, of Brooklyn Park, pleaded guilty on January 25, 2010, to one count of conspiracy to commit wire fraud in connection with the same scheme. She was charged on January 19, 2011.

In his plea agreement, Ericvan McDavid admitted that between April of 2005 and February of 2009, he conspired to obtain loan proceeds fraudulently by making false representations and promises as well as by withholding material information. During that time, McDavid was either an owner or co-owner of several businesses, including EVM Properties, Skyy Realty, and Universal, Inc., through which he bought, sold, and managed real estate.

To carry out this fraud scheme, McDavid recruited “straw buyers” to purchase selected properties by promising them payments of $15,000 to $52,000 per transaction. Once a buyer agreed to purchase a particular property, McDavid provided that buyer with funds to put toward the purchase, thereby misleading the lender into believing that the buyer actually had a financial interest in repaying the loan, when, in reality, that was not the case.

McDavid then produced or caused the production of false loan applications on behalf of the buyers. Those applications overstated the buyers’ assets and employment status. Because of the false applications, mortgage loans were approved in no fewer than 25 real estate transactions, with total loan proceeds amounting to approximately $13 million. While those proceeds were intended to pay for the properties and other transaction-related expenses, McDavid admittedly used portions of them to benefit himself personally.

Ultimately, the properties involved in the fraudulent transactions fell into default and ended up in foreclosure. Following foreclosure, they were sold for a total of about $4 million, resulting in a loss due to this scheme of about $9.2 million.

In her plea agreement, Renee McDavid admitted participating in the scheme from 2006 through 2008. In her capacity as a licensed real estate agent and mortgage broker, she was responsible for losses incurred in five of the 25 property transactions noted above. In those instances, she entered false information on loan applications so straw buyers would qualify for mortgage loans they otherwise would not be eligible to receive. Again, those misrepresentations included overstating applicant income and falsifying employment histories. As a result of the material misrepresentations in those five instances alone, lenders issued loan proceeds totaling more than $1.7 million and ultimately incurred a loss of approximately $768,000.

Ericvan McDavid’s two co-defendants, Larry Africanus Hutchinson, age 39, of St. Paul, and Jerone Ian Mitchell, age 35, of Minneapolis, have pleaded guilty to one count of conspiracy to commit wire fraud. They are awaiting sentencing.

For his crime, Ericvan McDavid faces a potential maximum penalty of 20 years in prison. Renee McDavid faces a potential maximum penalty of five years for her crime. Judge Montgomery will determine their sentences at a future hearing, yet to be scheduled.

These cases are the result of investigations by the Federal Bureau of Investigation and the Minnetonka Police Department. They are being prosecuted by Assistant U.S. Attorney Christian S. Wilton.

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

SACRAMENTO, CA—United States Attorney Benjamin B. Wagner announced that United States District Judge Morrison C. England, Jr. sentenced Ralondria Stafford, 37, of San Francisco, and Necole Ward, 32, of Las Vegas, (both formerly of Vallejo, Calif.) for their roles in a mortgage fraud scheme carried out in Vallejo between 2005 and 2006. Judge England sentenced Stafford to 21 months in prison and Ward to 12 months and a day in prison. The prison sentences are to be followed by three years of supervised release and both defendants were ordered to pay $200,000 in restitution. Stafford and Ward pleaded guilty on June 10, 2010.

This case was the product of a joint investigation by the Federal Bureau of Investigation and the Internal Revenue Service, Criminal Investigation. Assistant United States Attorney Kyle Reardon prosecuted the case.

According to court documents, Stafford and Ward, who are sisters, operated RN Realtors in Vallejo. Between July 2005 and August 2006, they used two straw buyers to purchase properties that they owned in Vallejo. They offered the buyers $5,000 for the use of their names and financial information, and told the buyers that the purchase would be in name only and that Stafford would purchase the properties back in six to 12 months.

In the course of the conspiracy, Stafford and Ward prepared “Uniform Residential Loan Application” forms in the straw buyers’ names containing false statements that included overstating of the straw buyer’s income, claiming false employment at employers, and misidentifying properties as a primary residence.

At sentencing, Judge England said that the sentences were driven by several justifications, including the need to punish the defendants for their acts of greed and to deter others who might be considering similar conduct. He also cited the fact that both defendants had real estate licenses at the time of their crimes and were therefore aware of the illegal nature of their fraud.

Judge England dismissed Stafford’s argument that she should be given a sentence of home confinement so as not to be separated from her 7-year-old son. Judge England told Stafford that had her child been her number one priority at the time she was considering breaking the law, she would not have gotten into trouble. “You made your choice,” said Judge England, “now I have to deal with it.”

In addressing Ward, Judge England noted that she was highly educated, with degrees from Swarthmore and the University of San Francisco, and her conduct in this case was extremely serious given that she knew that her conduct was illegal and her education made her more culpable than someone who could not appreciate fully the wrongfulness of her acts.

This law enforcement action is part of the work being done by President Barack Obama’s Financial Fraud Enforcement Task Force. President Obama established the interagency Financial Fraud Enforcement Task Force to wage an aggressive, coordinated, and proactive effort to investigate and prosecute financial crimes. The task force includes representatives from a broad range of federal agencies, regulatory authorities, inspectors general, and state and local law enforcement who, working together, bring to bear a powerful array of criminal and civil enforcement resources. The task force is working to improve efforts across the federal executive branch, and with state and local partners, to investigate and prosecute significant financial crimes, ensure just and effective punishment for those who perpetrate financial crimes, combat discrimination in the lending and financial markets, and recover proceeds for victims of financial crimes. One component of the FFETF is the national Mortgage Fraud Working Group, co-chaired by U.S. Attorney Wagner, which is tasked with combating mortgage fraud schemes. For more information on the task force, visit StopFraud.gov.

SOURCE: FBI

CHICAGO—A federal jury convicted a disbarred Chicago lawyer on fraud charges for her role in facilitating staged real estate transactions involving Chicago homes in 2003, federal law enforcement officials announced today. The defendant, Lorie Westerfield, was found guilty on three counts of wire fraud and was acquitted on one additional fraud count by a jury Monday after a week-long trial in U.S. District Court.

Westerfield, 46, of Chicago, acted as a seller’s attorney and title company representative in fraudulent transactions that she knew a co-defendant had arranged to obtain lender proceeds from the fraudulent sales. Westerfield faces a maximum penalty of 20 years in prison and a $250,000 fine on each of the three fraud counts. She remains free on bond while awaiting sentencing, which was set for Aug. 4 by U.S. District Judge Samuel Der-Yeghiayan.

In 2008, following a previous federal conviction involving bankruptcy fraud, Westerfield, voluntarily consented to disbarment.

Westerfield and 11 co-defendants were among 67 Chicago area defendants charged in a dozen separate mortgage fraud cases in June 2008 as part of Operation Malicious Mortgage, a nationwide initiative against fraudulent home-lending schemes. All 11 co-defendants previously pleaded guilty in the case and are also awaiting sentencing. These 11 co-defendants, including five loan officers, admitted to having various roles in a fraud scheme that obtained more than $3.2 million collectively in mortgage loan proceeds from more than a dozen lenders by submitting false loan applications using stolen identities for 17 purported home purchases in Chicago between January 2003 and November 2005. The scheme was orchestrated by defendant Freddie Johnson, who arranged for various co-defendants to appear at staged real estate closings as the purported buyers, sellers, and their representatives, in some instances using the identities of deceased individuals, to obtain the loan proceeds to be paid to the purported sellers and their nominees. Johnson and three other co-defendants testified as government witnesses at Westerfield’s trial.

The guilty verdict was announced by Patrick J. Fitzgerald, United States Attorney for the Northern District of Illinois; Robert D. Grant, Special Agent in Charge of the Chicago Office of the Federal Bureau of Investigation; and Thomas A. Kelly, Special Agent in Charge of the U.S. Secret Service, Department of Homeland Security.

The government is being represented by Assistant U.S. Attorneys Joel M. Hammerman and Tony U. Iweagwu, Jr.

PROVIDENCE, RI—A federal grand jury in Providence on Tuesday returned indictments against a loan officer and a loan processor employed at the same mortgage company, and a former Rhode Island attorney currently involved in the real estate industry in an alleged “straw borrowing” scheme that netted more than $3.5 million dollars in fraudulently obtained mortgages on 13 properties in five Rhode Island communities, it was announced by United States Attorney Peter F. Neronha.

The grand jury returned a 13-count indictment charging Juan Carlos Hernandez, 41, of West Warwick, R.I., a loan officer with National City Mortgage Company; Miguel Valerio, 51, of Providence, R.I., a loan processor with National City Mortgage Company; and James D. Levitt, 65, of Pawtucket, R.I., a former attorney who controlled two companies formed for the purpose of engaging in real estate transactions. The properties are located in Cranston, Central Falls, Coventry, Pawtucket, and Providence.

In addition, Levitt is named in a separate eight-count indictment alleging three counts of bank fraud, three counts of wire fraud, and two counts of tax fraud in connection with mortgage transactions in Providence separate from the conspiracies outlined in the indictment naming Levitt, Juan Carlos Hernandez, and Miguel Valerio.

The indictments allege that Juan Carlos Hernandez and Miguel Valerio conspired to recruit and pay “straw purchasers” to purchase properties they would not normally qualify to purchase, with the intent of taking control of the properties to collect rent on and to sell within a short period of time, and divide the profits among them. The “straw-borrowers” were paid various fees and were regularly advised by the defendants that they would not be responsible for the mortgages for which they were applying.

In addition, the indictment alleges that Hernandez, Valerio, and Levitt conspired to obtain “straw purchasers” to apply for and obtain mortgages on four properties in which the three had a financial interest.

A separate indictment alleges that James Levitt schemed to commit mail and wire fraud by obtaining mortgages on three properties which he expected to control, two of which were obtained in the name of an associate based on false and fraudulent information.

The cases are being prosecuted by Assistant U.S. Attorney Luis M. Matos.

The matters were investigated by the Federal Bureau of Investigation, U.S. Department of Housing and Urban Development Office of Inspector General, and Internal Revenue Service, Criminal Investigations.

An indictment is merely an allegation and is not evidence of guilt. A defendant is entitled to a fair trial in which it will be the government’s burden to prove guilt beyond a reasonable doubt.

SACRAMENTO, CA—United States Attorney Benjamin B. Wagner announced that United States District Judge Morrison C. England, Jr. sentenced Ralondria Stafford, 37, of San Francisco, and Necole Ward, 32, of Las Vegas, (both formerly of Vallejo, Calif.) for their roles in a mortgage fraud scheme carried out in Vallejo between 2005 and 2006. Judge England sentenced Stafford to 21 months in prison and Ward to 12 months and a day in prison. The prison sentences are to be followed by three years of supervised release and both defendants were ordered to pay $200,000 in restitution. Stafford and Ward pleaded guilty on June 10, 2010.

This case was the product of a joint investigation by the Federal Bureau of Investigation and the Internal Revenue Service, Criminal Investigation. Assistant United States Attorney Kyle Reardon prosecuted the case.

According to court documents, Stafford and Ward, who are sisters, operated RN Realtors in Vallejo. Between July 2005 and August 2006, they used two straw buyers to purchase properties that they owned in Vallejo. They offered the buyers $5,000 for the use of their names and financial information, and told the buyers that the purchase would be in name only and that Stafford would purchase the properties back in six to 12 months.

In the course of the conspiracy, Stafford and Ward prepared “Uniform Residential Loan Application” forms in the straw buyers’ names containing false statements that included overstating of the straw buyer’s income, claiming false employment at employers, and misidentifying properties as a primary residence.

At sentencing, Judge England said that the sentences were driven by several justifications, including the need to punish the defendants for their acts of greed and to deter others who might be considering similar conduct. He also cited the fact that both defendants had real estate licenses at the time of their crimes and were therefore aware of the illegal nature of their fraud.

Judge England dismissed Stafford’s argument that she should be given a sentence of home confinement so as not to be separated from her 7-year-old son. Judge England told Stafford that had her child been her number one priority at the time she was considering breaking the law, she would not have gotten into trouble. “You made your choice,” said Judge England, “now I have to deal with it.”

In addressing Ward, Judge England noted that she was highly educated, with degrees from Swarthmore and the University of San Francisco, and her conduct in this case was extremely serious given that she knew that her conduct was illegal and her education made her more culpable than someone who could not appreciate fully the wrongfulness of her acts.

This law enforcement action is part of the work being done by President Barack Obama’s Financial Fraud Enforcement Task Force. President Obama established the interagency Financial Fraud Enforcement Task Force to wage an aggressive, coordinated, and proactive effort to investigate and prosecute financial crimes. The task force includes representatives from a broad range of federal agencies, regulatory authorities, inspectors general, and state and local law enforcement who, working together, bring to bear a powerful array of criminal and civil enforcement resources. The task force is working to improve efforts across the federal executive branch, and with state and local partners, to investigate and prosecute significant financial crimes, ensure just and effective punishment for those who perpetrate financial crimes, combat discrimination in the lending and financial markets, and recover proceeds for victims of financial crimes. One component of the FFETF is the national Mortgage Fraud Working Group, co-chaired by U.S. Attorney Wagner, which is tasked with combating mortgage fraud schemes. For more information on the task force, visit StopFraud.gov.

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

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

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

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

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

PITTSBURGH—A resident of Richland Township, Pennsylvania has been sentenced in federal court to 27 months in prison and two years of supervised release on his conviction of wire fraud conspiracy, United States Attorney David J. Hickton announced today.

United States District Judge Nora Barry Fischer imposed the sentence on Daniel Sporrer, 47, of Gibsonia, Pennsylvania. Judge Fischer also ordered Sporrer to pay approximately $575,000 in restitution.

According to information presented to the court, Sporrer participated in a mortgage fraud scheme with Robert Arakelian, who was a mortgage broker associated with Pittsburgh Home Loans; Karen Atkison, who was a closing agent who worked with Sporrer; and others. As part of the conspiracy, Arakelian submitted false loan applications to lenders that falsely reported that the borrowers had sufficient funds in their own accounts to make the down payments associated with the purchases of real estate and to otherwise qualify for the loans to finance the purchases of the real estate. The closing documents, which were prepared and executed by Sporrer and Atkison, falsely reported to the lenders that the borrowers made down payments from their own funds at the closings, when, in fact, they did not make any payments at the closings. In addition, Sporrer advanced money to Arakelian in advance of the closings so that Arakelian could purchase certified checks, copies of which were made to present to the lenders to falsely verify that the borrowers had made the down payments.

Assistant United States Attorney Brendan T. Conway prosecuted this case on behalf of the government.

U.S. Attorney Hickton commended the Mortgage Fraud Task Force who conducted the investigation that led to the conviction of Sporrer. The Mortgage Fraud Task Force is comprised of investigators from federal, state, and local law enforcement agencies and others involved in the mortgage industry. Federal law enforcement agencies participating in the Mortgage Task Force include the United States Secret Service; Federal Bureau of Investigation; the Internal Revenue Service – Criminal Investigation; the United States Department of Housing and Urban Development, Office of Inspector General; and the United States Postal Inspection Service. Other Mortgage Fraud Task Force members include the Allegheny County Sheriff’s Office; the Pennsylvania Attorney General’s Office, Bureau of Consumer Protection; the Pennsylvania Department of Banking; the Pennsylvania Department of State, Bureau of Enforcement and Investigation; and the United States Trustee’s Office.

Mortgage industry members with knowledge of fraudulent activity are encouraged to call the Mortgage Fraud Task Force at (412) 894-7550. Consumers are encouraged to report suspected mortgage fraud by calling the Pennsylvania Attorney General’s Consumer Protection Hotline at (800) 441-2555.

MINNEAPOLIS—Earlier today in federal court in St. Paul, a jury convicted a 44-year-old Burnsville man of conspiring with others to bilk mortgage lenders out of more than $43 million. Following a six-day trial, the jury found Troy David Chaika guilty on seven counts of wire fraud, three counts of mail fraud, and one count of conspiracy to commit wire fraud and mail fraud. Chaika was indicted on April 12, 2010.

The indictment filed in this case and the evidence presented at trial indicated that between 2005 and 2008, Chaika conspired with others, including Dustin Lee LaFavre, prosecuted in a separate action, to obtain money fraudulently through over 100 residential property transactions. To further this scheme, Chaika and LaFavre negotiated with builders of new properties as well as owners of existing properties to buy both single pieces of property and property groupings, known as “bulk purchases,” at greatly reduced prices. Chaika and LaFavre then solicited real estate purchasers by promising they would receive large cash pay-outs, or “kickbacks,” from lenders’ funds.

Chaika and LaFavre failed to tell potential buyers about the reduced prices they had negotiated for the properties, choosing instead to quote them the grossly inflated prices. By charging buyers the higher prices, Chaika and LaFavre acquired enough cash from loan proceeds to pay buyers their kickbacks and still have money left for themselves and their co-conspirators. Once a potential buyer was recruited through this scheme, Chaika and LaFavre, or someone working on their behalf, drafted a purchase agreement that reflected the inflated sale price only and failed to disclose to lenders the kickback amount to the buyer. Occasionally, Chaika, LaFavre, or someone working for them drafted a so-called addendum to the purchase agreement, setting forth the planned kickback, or “pay-out,” to the buyer, but that document was never provided to the lender.

In several instances, Chaika and LaFavre, or others on their behalf, worked with buyers and mortgage loan officers to prepare false documents for use in the application process. In addition, Chaika and LaFavre sometimes loaned buyers money for down payments or to pad their bank balances while the application process was pending. Because of those material misrepresentations, numerous lenders agreed to fund mortgage loans for the purchase of the residential properties. Furthermore, after the mortgage loans were secured, property title companies prepared documents and handled closings based on the fraudulent information provided by Chaika and LaFavre or others on their behalf. Again, those misrepresentations were material.

In furtherance of this scheme, Chaika prompted no fewer than seven wire transfers of loan proceeds from which he and others obtained cash kickbacks. He also caused false documents to be sent through the U.S. mail and by commercial carriers on at least three occasions.

For his crimes, Chaika faces a potential maximum penalty of 20 years in federal prison on each count. United States District Court Judge Richard H. Kyle will determine his sentence at a future hearing, yet to be scheduled. On December 7, 2009, Dustin Lee LaFavre pleaded guilty to one count of conspiracy and awaits sentencing.

This case is the result of an investigation by the Federal Bureau of Investigation and the U.S. Postal Inspection Service. It is being prosecuted by Assistant U.S. Attorneys Nancy E. Brasel and David M. Genrich.

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

FRESNO, CA(Source: FBI) — United States Attorney Benjamin B. Wagner announced that United States District Judge Lawrence J. O’Neill sentenced Wrenl Burge, 40, of Fresno, to 41 months in prison and Albert Lewis Ellis, 46, also of Fresno, to 33 months in prison for a scheme to falsify mortgage loan documents. Burge was ordered to pay $1,011,524 in restitution, and Ellis was ordered to pay $548,178 in restitution to the mortgage lenders.According to their plea agreements, Burge and Ellis each admitted that they each obtained a Social Security number that belonged to another person and used that Social Security number to obtain mortgages to purchase various properties in Fresno. As part of their scheme to defraud, Burge and Ellis, using the fraudulently obtained Social Security numbers, would each submit mortgage loan applications to lenders and would falsify information regarding their employer, their salary, and their assets. The homes eventually went into foreclosure, causing a combined loss to the lending institutions of $1,559,702.

This case is the product of a joint investigation by the United States Secret Service, the Social Security Office of Inspector General, and the Federal Bureau of Investigation. The case was prosecuted by Assistant U.S. Attorney Michele Thielhorn.

In announcing the indictment, U.S. Attorney Machen and Assistant Director in Charge McJunkin commended the work of those who investigated the matter for the FBI’s Washington Field Office, including special agents and forensic accountants. They also cited the efforts of those who worked on the case from the U.S. Attorney’s Office, including Paralegal Specialists Diane Hayes and Sarah Reis, and Assistant U.S. Attorney Daniel Friedman. Finally they acknowledged the work of Assistant U.S. Attorney Virginia Cheatham, who is prosecuting the case along with the office’s Asset Forfeiture and Money Laundering Section.

WASHINGTON—Ronald Johannes Sneijder, 48, a former owner of a title and escrow company based in the District of Columbia, pled guilty today to the lead count in a recently filed indictment, bank fraud, announced U.S. Attorney Ronald C. Machen Jr. and James W. McJunkin, Assistant Director in Charge of the FBI’s Washington Field Office.

Sneijder, of Herndon, Virginia, entered his guilty plea today before the Honorable Alan Kay in the U.S. District Court for the District of Columbia. He also agreed to forfeiture of $1,256,000. He is to be sentenced later this summer or fall by the Honorable Emmet G. Sullivan. Sneijder faces a probable sentence under the sentencing guidelines of 30 to 37 months of incarceration, restitution in the amount of $1,256,000, a fine, and other conditions.

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

According to the statement of offense, signed by the defendant, Sneijder was the manager and majority owner of a title and escrow company known as Red Box Settlements, located in the 1600 block of U Street NW, Washington, D.C. On about January 13, 2004, Sneijder purchased a residence at 1325 Independence Avenue SE. About a month later, he refinanced the loan through Wells Fargo Bank, obtaining a home equity line of credit with a maximum credit limit of up to $575,000.

In February 2005, the defendant sought a $581,000 refinance loan from First Savings Mortgage Corporation, using as collateral his house at 1325 Independence Avenue SE, which was already encumbered with the home equity line of credit from Wells Fargo. First Savings Mortgage Corporation approved the loan on the condition that the Wells Fargo line of credit would be paid off and closed and the lien in the public record be “released” so that no additional money could be borrowed on the Wells Fargo line of credit, and so that there would be no other loans that would take precedence over the First Savings Mortgage Corporation loan.

After settlement, Sneijder paid off the Wells Fargo line of credit but did not close it. Thereafter, from March 2005 to November 2006, he again borrowed money against the Wells Fargo line of credit. He obtained cash advances up to approximately $558,000 by the end of November 2006.

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

Later in November 2006, Sneijder sought a $675,000 loan from Wachovia Bank using as collateral 1325 Independence Avenue SE, which was already encumbered with the Wells Fargo home equity line of credit and the First Savings Mortgage Corporation loan. Wachovia approved the loan on the condition that the Wells Fargo line of credit would be paid, closed, and the Recorder of Deeds be notified of the closure so that no additional money could be borrowed on the Wells Fargo line of credit. The defendant paid down less than half of the line of credit, and again failed to close the Wells Fargo account. From January to August 2007, Sneijder again continued to borrow money against the Wells Fargo line of credit for a total amount due and owing of approximately $573,000.

Sneijder failed to repay the approximate $573,000 Wells Fargo line of credit, the $581,000 First Savings Mortgage Corporation loan, and the $675,000 Wachovia loan, resulting in foreclosure of 1325 Independence Avenue SE, the proceeds of which were insufficient in value to repay the approximate $1,829,000 loaned to the defendant.

In announcing the plea, U.S. Attorney Machen and Assistant Director in Charge McJunkin commended the work of those who investigated the matter for the FBI’s Washington Field Office, including Special Agents and Forensic Accountants. They also cited the efforts of those who worked on the case from the U.S. Attorney’s Office, including Paralegal Specialists Diane Hayes and Sarah Reis, and Assistant U.S. Attorney Daniel Friedman. Finally they acknowledged the work of Assistant U.S. Attorney Virginia Cheatham, who is prosecuting the case along with the office’s Asset Forfeiture and Money Laundering Section.

MINNEAPOLIS—Earlier today in federal court in the District of Minnesota, two people pleaded guilty to their roles in a scheme that defrauded mortgage lenders out of approximately $4.2 million. My Dinh Lam, age 30, of Minneapolis, and Ashley Elizabeth Prasil, age 27, of Eden Prairie, pleaded guilty to one count of conspiracy to commit wire fraud in connection with the scheme. The defendants, who were charged on April 21, 2011, entered their pleas before United States District Court Judge Susan Richard Nelson in St. Paul.

In their plea agreements, the defendants admitted that from December 18, 2006, through December of 2007, they conspired to defraud mortgage lenders in connection with the marketing of the Cloud 9 Sky Flats (“Cloud 9″), a Minnetonka development. The defendants admitted that the scheme involved finding buyers to apply for mortgage loans to purchase units in the development, knowing that each buyer would receive a kickback of approximately 30 percent of the reported purchase price of any unit. The application forms submitted to the lenders did not disclose these kickbacks. The kickback payments were returned to the buyers through an account controlled by a co-conspirator, with a portion skimmed off and shared among the defendants. More than 40 Cloud 9 units were sold through the scheme, and more than 80 percent of the loans have since defaulted. In excess of $4.2 million was transferred to accounts controlled by Sheri Lynn Delich, a person who has been charged by Information in this case.

For their crimes, the defendants face a potential maximum penalty of five years in prison. Judge Nelson will determine their sentences at a future hearing, yet to be scheduled.

This case is the result of an investigation by the Federal Bureau of Investigation and the Internal Revenue Service-Criminal Investigation Division. It is being prosecuted by Assistant U.S. Attorney Robert M. Lewis.

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

MINNEAPOLIS—Earlier today in federal court in the District of Minnesota, two people pleaded guilty to their roles in a scheme that defrauded mortgage lenders out of approximately $4.2 million. My Dinh Lam, age 30, of Minneapolis, and Ashley Elizabeth Prasil, age 27, of Eden Prairie, pleaded guilty to one count of conspiracy to commit wire fraud in connection with the scheme. The defendants, who were charged on April 21, 2011, entered their pleas before United States District Court Judge Susan Richard Nelson in St. Paul.

In their plea agreements, the defendants admitted that from December 18, 2006, through December of 2007, they conspired to defraud mortgage lenders in connection with the marketing of the Cloud 9 Sky Flats (“Cloud 9″), a Minnetonka development. The defendants admitted that the scheme involved finding buyers to apply for mortgage loans to purchase units in the development, knowing that each buyer would receive a kickback of approximately 30 percent of the reported purchase price of any unit. The application forms submitted to the lenders did not disclose these kickbacks. The kickback payments were returned to the buyers through an account controlled by a co-conspirator, with a portion skimmed off and shared among the defendants. More than 40 Cloud 9 units were sold through the scheme, and more than 80 percent of the loans have since defaulted. In excess of $4.2 million was transferred to accounts controlled by Sheri Lynn Delich, a person who has been charged by Information in this case.

For their crimes, the defendants face a potential maximum penalty of five years in prison. Judge Nelson will determine their sentences at a future hearing, yet to be scheduled.

This case is the result of an investigation by the Federal Bureau of Investigation and the Internal Revenue Service-Criminal Investigation Division. It is being prosecuted by Assistant U.S. Attorney Robert M. Lewis.

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