Lien Scheme Involved Amounts Totaling Trillions of Dollars

SALT LAKE CITY—An indictment unsealed Thursday in federal court in Salt Lake City charges Harvey Douglas Goff, age 53, of Ogden, with violations of federal law in connection with alleged schemes to obstruct justice, impede internal revenue laws, pass fictitious documents purporting to be actual financial instruments, assert diplomatic immunity, and defraud others through the use of a fraudulent lien scheme.

Goff was arrested Thursday morning in Ogden. He had an initial appearance Thursday before Magistrate Judge Samuel Alba. Goff refused to stand when ordered to, which led to U.S. Marshal intervention; refused the appointment of counsel; would not state his name or acknowledge his identity; and claimed he had been kidnapped from his home even though the court made findings in his presence that federal agents had served a duly authorized search warrant. A mental health evaluation was ordered. The case is being investigated by the FBI’s Joint Terrorism Task Force and IRS Criminal Investigation.

The 14-count indictment charges Goff with obstruction of justice, impeding internal revenue laws, fictitious obligations, attempt to commit mail fraud, and mailings in furtherance of a scheme and artifice to defraud.

Ten counts of the indictment, which allege attempted mail fraud or mailings in furtherance of a scheme and artifice to defraud, relate to conduct that started with traffic stops in Ogden and continued through subsequent court proceedings in Weber County related to the traffic stops. Goff claimed diplomatic immunity during one of the traffic stops and challenged the jurisdiction of the state court judge, the indictment alleges. Goff, who represented himself in the proceedings, filed several pleadings in his state felony prosecution. His requests were denied by the court and he was bound over for trial. In December 2010, Goff failed to appear for a pretrial conference and a bench warrant was issued for his arrest.

The indictment alleges that in November 2010, Goff mailed documents to the attention of various employees or entities of the State of Utah, Weber County, Ogden City, and the Ogden Police Department entitled “Notice of International Commercial Claim Within the Admiralty ab initio Administrative Remedy of Harvey Douglas Goff, Jr., Creditor Secured Party.” The documents claimed the agencies contracted to pay more than $53 trillion in damages to Goff. The documents purported to be part of a “self-help administrative process” and asserted that the recipients had 10 days to respond before a “default” resulted.

In an apparent effort to create an appearance of indebtedness, Goff followed up by filing a lien against various employees and entities of the State of Utah, Weber County, Ogden City, and the Ogden Police Department falsely asserting that the employees and entities each owed Goff, jointly and severally, more than $53 trillion. The lien was filed on 77 parcels located within Weber County, including municipal property and private residences associated with the employees and entities.

The indictment also charges Goff with obstructing justice in an effort to impede a matter in the U.S. Tax Court by repeatedly filing false and frivolous documents involving the judge in an IRS case and impeding internal revenue laws. Two counts of the indictment also allege Goff passed fictitious documents to the U.S. Department of Treasury.

The potential penalty for each count of obstruction of justice, attempt to commit mail fraud, and mailings in furtherance of a scheme and artifice to defraud is up to 20 years in federal prison. The two fictitious obligation counts each carry potential penalties of up to 25 years. The penalty for impeding internal revenue laws is up to three years in prison. The potential fine for each count of the indictment is $250,000.
Indictments are not findings of guilt. Individuals charged in indictments are presumed innocent unless or until proven guilty in court.

A former Los Angeles-based real estate developer who admitted playing a key role in a $50 million mortgage fraud scheme was sentenced today to 14 years in federal prison for masterminding a scheme that defrauded banks by deceiving them into funding inflated mortgages.

Charles Elliott Fitzgerald, 48, formerly of Newbury Park and Beverly Hills, was sentenced by United States District Judge Dean D. Pregerson, who also ordered Fitzgerald to pay $42,676,269 in restitution to two of the victim banks that he defrauded.

At today’s sentencing hearing, Judge Pregerson said, “This is not a case about deregulation or exploiting loopholes. This is a case of good old-fashioned lying and cheating.”

A representative of one of the victim banks, RBC Mortgage Company, told Judge Pregerson that the fraud scheme caused not only the direct financial loss, but also millions of dollars of indirect costs and loss of jobs at the bank.

Fitzgerald pleaded guilty in May to one count of conspiracy to commit bank fraud and loan fraud; three counts of bank fraud; one count of organizing, managing, and supervising a continuing financial crimes enterprise; one count of concealment money laundering; and one count of obstruction of justice.

Fitzgerald has been in federal custody since December 2006, when he was arrested and deported by authorities in the Independent State of Samoa, a Pacific island nation to which he fled in June 2003 after he was sued by the two victim banks.

Fitzgerald was the seventh defendant to plead guilty in the scheme. Previous defendants who pleaded guilty are:

Mark Alan Abrams, 47, of Los Angeles, who along with Fitzgerald orchestrated the scheme;

Nicole LaViolette, 38, of Palm Springs;

Jamieson Matykowski, 35, of Laguna Niguel;

Timothy Holland, 37, of Santa Ana;

Richard Maize, 54, of Beverly Hills; and

L. Scott Robinson, 46, of Dana Point.

Charges are still pending against three other defendants allegedly involved in the scheme. These are real estate agents Joseph Aram Babajian, 55, of Beverly Hills and Kyle Grasso, 37, of Paso Robles; and appraiser Lila Rizk, 41, of Trabuco Canyon. Trial for those defendants is currently set to begin on October 21 before Judge Pregerson.

In another development in this investigation, prosecutors on Tuesday filed a criminal information against mortgage banker Thomas R. Schiff, 47, of Brentwood. Schiff was charged with, and has agreed to plead guilty to, making a false statement on his 2001 federal income tax return. Schiff, along with Maize, was a co-owner of the mortgage brokering company Americorp Funding. In his plea agreement, Schiff admitted that in 2001 he received more than $170,000 in payments from Fitzgerald, Abrams and their companies. He further admitted that he willfully failed to report this income on his 2001 federal income tax return.

The case against Schiff marks the 11th defendant charged, and he will become the 8th defendant to plead guilty.

According to court documents, Fitzgerald and the others were involved in a wide-ranging and sophisticated conspiracy to defraud federally insured mortgage lenders out of tens of millions of dollars. As part of the scam, the co-conspirators obtained inflated mortgage loans on expensive homes in some of California’s most exclusive neighborhoods, including Beverly Hills, Bel Air, Holmby Hills, Malibu, Carmel, Mill Valley, Pebble Beach and La Jolla. The court documents charge that the co-conspirators sent false documentation, including bogus purchase contracts and appraisals, to the victim banks to deceive them into unwittingly funding mortgage loans that were hundreds of thousands of dollars higher than the homes actually cost. Lehman Brothers Bank alone was deceived into funding more than 80 such inflated loans from 2000 into 2003, resulting in tens of millions of dollars in losses.

Lehman Brothers Bank and RBC Mortgage Company sued Fitzgerald, Abrams and others in federal court in Los Angeles in 2003 and obtained a receivership, temporary restraining orders, and preliminary injunctions against them. Judge Pregerson appointed David J. Pasternak as receiver to recover assets acquired with proceeds of the fraud. The receiver, as well as attorneys and forensic accountants employed by him, have cooperated extensively with the government’s ongoing criminal investigation.

The charges against Fitzgerald and the others are part of an ongoing investigation being conducted by the Federal Bureau of Investigation and IRS-Criminal Investigation.

LOS ANGELES—A former mortgage broker who helped orchestrate a massive mortgage fraud scheme that caused well over $40 million in losses was sentenced today to 78 months in federal prison.

Mark Alan Abrams, 49, of downtown Los Angeles, was sentenced by United States District Judge Dean D. Pregerson. In addition to the prison term, Judge Pregerson ordered Abrams to pay more than $41 million in restitution to two federally insured banks.

In issuing the sentence, Judge Pregerson said it was important to hold fraud artists “accountable for great misdeeds.” The court noted that Abrams’ willingness to defraud banks, utilize credit information belonging to unknowing victims and induce underlings to participate in the scheme was “particularly evil.”

Abrams’ sentencing followed his guilty pleas to conspiracy to commit bank fraud and loan fraud, bank fraud, making a false statement on a tax return and obstruction of justice. Abrams was one of two men who led a massive mortgage fraud that involved properties across California. In addition to being a leader of the scheme, Abrams engaged in active efforts to cover up his role and destroy evidence when the fraud started to come to light. Abrams’ obstruction in a related civil case was so serious that a Judge Pregerson found him in contempt of court and put him in jail for 30 days.

A real estate developer, Charles Elliott Fitzgerald, who along with Abrams ran the fraud scheme, was previously sentenced to 14 years in federal prison (see: http://www.justice.gov/usao/cac/pressroom/pr2008/136.html).

Abrams and Fitzgerald ran a wide-ranging and sophisticated scheme that obtained inflated mortgage loans on homes in some of California’s most expensive neighborhoods, including Beverly Hills, Bel Air, Holmby Hills, Malibu, Carmel, Mill Valley, Pebble Beach, and La Jolla. Members of the conspiracy—real estate brokers, appraisers, and mortgage bankers, who all shared in the profits from the fraudulent sales—sent false documentation, including bogus purchase contracts and appraisals, to the victim banks to deceive them into funding mortgage loans that were hundreds of thousands of dollars more than the homes actually cost. Lehman Brothers Bank alone was deceived into funding more than 80 such inflated loans from 2000 into 2003, resulting in tens of millions of dollars in losses.

A total of 11 real estate professionals have been convicted of federal charges related to the scheme.

This case is the result of an investigation by the Federal Bureau of Investigation and IRS-Criminal Investigation.

PREET BHARARA, the United States Attorney for the Southern District of New York, and JOSEPH M. DEMAREST, JR., the Assistant Director-in-Charge of the New York Office of the Federal Bureau of Investigation (“FBI”), announced the unsealing of an Indictment yesterday charging LOUIS CHERICO, a lawyer who practiced in New York City and Westchester County, with participating in a wide-ranging scheme to commit mortgage fraud, obstruction of justice, and money laundering.
According to the Indictment filed in Manhattan federal court:
From July through December of 2002, CHERICO participated in a fraudulent real estate investment scheme which had, as its primary objective, the purchase of multimilliondollar residential properties in various communities in Westchester County, New York, including Purchase, Eastchester, and Rye, with loans obtained through the submission of false and misleading information to banks and other lenders. Many of the loans were equal to or in excess of one hundred percent of a property’s actual sale price, so that the defendant and his coconspirators did not have to put any of their own money at risk in the transaction.
CHERICO served as the attorney for various coconspirators in negotiating and closing the fraudulent purchases that were part of the scheme. CHERICO and his co-conspirators submitted to numerous federally-insured banks various documents, including loan applications, contracts of sale, deeds, real estate transfer documents, and title reports. Those documents contained materially false or misleading information about the income, assets, existing debt and credit-worthiness of the borrower, the chain of title to the property, and the sale price of the home, as well as the borrower’s intent to reside in the property as a primary residence, when, in fact, the properties were typically purchased for investment purposes. As a result of the scheme to defraud, CHERICO and his co-conspirators obtained millions of dollars in loan proceeds, enabling them to control certain properties that they otherwise would not have been able to purchase and finance.
The Indictment also charges CHERICO with laundering the illegal proceeds obtained from the sale of one of the properties used in the mortgage fraud scheme by transferring the proceeds from a bank account controlled by CHERICO to an account that was controlled by one of his co-conspirators, DOMINICK DeVITO. The transaction was designed to conceal and disguise the nature, location, source, ownership, and control of the illegal proceeds.
The Indictment further charges CHERICO with obstruction of justice, and conspiracy to obstruct justice, in connection with the 2003 sentencing of DOMINICK DeVITO, following DeVITO’s conviction in United States v. Pasquale Parello, et al.,(01 Cr. 1120) in United States District Court for the Southern District of New York on charges of racketeering and mortgage fraud. Specifically, CHERICO assisted DeVITO in concealing profits that DeVITO earned from the sale of a property located in Purchase, New York, and in submitting an affidavit containing false and misleading information about the sale to the United States Probation Office.
CHERICO, 69, of Eastchester, New York, was arrested this morning and was presented and arraigned this afernoon in Manhattan federal court. The case has been assigned to United States District Judge COLLEEN McMAHON.
If convicted, CHERICO faces a maximum sentence of 30 years in prison on each of the six counts of mortgage fraud, 20 years in prison on the money laundering count, 10 years in prison on the obstruction count, five years in prison on the conspiracy to obstruct justice, and a fine of the greater of $1,000,000, or twice the gross gain or loss resulting from the crime.
Mr. BHARARA praised the work of the FBI.
This case is being prosecuted by the Office’s Organized Crime Unit. Assistant United States Attorney JONATHAN B. NEW is in charge of the prosecution.
The charges contained in the Indictment are merely accusations, and the defendant is presumed innocent unless and until proven guilty.

INDIANAPOLIS—Kathy Puckett, 47, of Richmond, Ind., was sentenced today to 51 months upon her guilty plea to mail fraud and obstructing justice announced Joseph H. Hogsett, U.S. Attorney, Southern District of Indiana. This followed an investigation by the Richmond Police Department, Indiana Secretary of State Todd Rokita’s Prosecution Assistance Unit, and the Federal Bureau of Investigation, Muncie Office.
Kathy Puckett was a co-owner of Richmond Mortgage and served as its sole mortgage originator. Puckett’s job was to prepare loan documents including loan applications and other documents supporting buyers’ income and ability to pay. Between March 2006 and February 2008, Puckett submitted false information to the lenders including inflated bank account balances, false verifications of employment, false verifications of rent, misrepresenting one borrower’s name to reflect a better credit score, and false gift letters. These actions resulted in fraudulent loans exceeding $200,000. In addition to her mortgage broker fee, Puckett received a yield spread premium fee that was not disclosed to the borrower which represented a fee for a higher interest loan given to the borrower. During the investigation of her mortgage fraud activities, in January 2008, Puckett directed an acquaintance to remove documents from files that were to be turned over to the FBI.
According to Assistant U.S. Attorney Gayle L. Helart, who is prosecuting the case for the government, U.S. District Judge Larry J. McKinney also ordered three years of supervised release following her release from prison.

PREET BHARARA, the United States Attorney for the Southern District of New York, and JOSEPH M. DEMAREST, JR., the Assistant Director-in-Charge of the New York Office of the Federal Bureau of Investigation (“FBI”), announced the unsealing of an Indictment yesterday charging LOUIS CHERICO, a lawyer who practiced in New York City and Westchester County, with participating in a wide-ranging scheme to commit mortgage fraud, obstruction of justice, and money laundering.

According to the Indictment filed in Manhattan federal court:

From July through December of 2002, CHERICO participated in a fraudulent real estate investment scheme which had, as its primary objective, the purchase of multi-million-dollar residential properties in various communities in Westchester County, New York, including Purchase, Eastchester, and Rye, with loans obtained through the submission of false and misleading information to banks and other lenders. Many of the loans were equal to or in excess of one hundred percent of a property’s actual sale price, so that the defendant and his co-conspirators did not have to put any of their own money at risk in the transaction.

CHERICO served as the attorney for various co-conspirators in negotiating and closing the fraudulent purchases that were part of the scheme. CHERICO and his co-conspirators submitted to numerous federally-insured banks various documents, including loan applications, contracts of sale, deeds, real estate transfer documents, and title reports. Those documents contained materially false or misleading information about the income, assets, existing debt and credit-worthiness of the borrower, the chain of title to the property, and the sale price of the home, as well as the borrower’s intent to reside in the property as a primary residence, when, in fact, the properties were typically purchased for investment purposes. As a result of the scheme to defraud, CHERICO and his co-conspirators obtained millions of dollars in loan proceeds, enabling them to control certain properties that they otherwise would not have been able to purchase and finance.

The Indictment also charges CHERICO with laundering the illegal proceeds obtained from the sale of one of the properties used in the mortgage fraud scheme by transferring the proceeds from a bank account controlled by CHERICO to an account that was controlled by one of his co-conspirators, DOMINICK DeVITO. The transaction was designed to conceal and disguise the nature, location, source, ownership, and control of the illegal proceeds.

The Indictment further charges CHERICO with obstruction of justice, and conspiracy to obstruct justice, in connection with the 2003 sentencing of DOMINICK DeVITO, following DeVITO’s conviction in United States v. Pasquale Parello, et al.,(01 Cr. 1120) in United States District Court for the Southern District of New York on charges of racketeering and mortgage fraud. Specifically, CHERICO assisted DeVITO in concealing profits that DeVITO earned from the sale of a property located in Purchase, New York, and in submitting an affidavit containing false and misleading information about the sale to the United States Probation Office.

CHERICO, 69, of Eastchester, New York, was arrested this morning and was presented and arraigned this afernoon in Manhattan federal court. The case has been assigned to United States District Judge COLLEEN McMAHON.

If convicted, CHERICO faces a maximum sentence of 30 years in prison on each of the six counts of mortgage fraud, 20 years in prison on the money laundering count, 10 years in prison on the obstruction count, five years in prison on the conspiracy to obstruct justice, and a fine of the greater of $1,000,000, or twice the gross gain or loss resulting from the crime.