Frank J. Dattilo, 64, Holland, Pennsylvania, was sentenced to 15 months in prison for a scheme to defraud mortgage lenders in an effort to obtain money and property.

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.

United States Attorney Zane David Memeger announced the sentence.

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.

By Jimmy

An indictment was unsealed today charging Allie Speight, Maurice Thomas, Jerome Manker, and Andre McCrea with various counts of conspiracy to commit wire fraud, wire fraud, bank fraud, conspiracy to commit money laundering, making false statements on loan applications, bribery of bank employees, and identity theft, announced United States Attorney Zane David Memeger. The indictment alleges that Allie Speight, a/k/a “Allie Speights,” a/k/a “Ah Speights,” and Maurice Thomas, a/k/a “Sabir Thomas,” orchestrated a scheme to induce others to obtain loans as straw borrowers in return for receiving a percentage of the loans. Jerome Manker allegedly received funds from the loans for construction and rehabilitation work that he never performed.

According to the indictment, Speight and Thomas would act as brokers, scouting for depressed properties and enticing others to purchase the properties by obtaining loans that were far in excess of the properties’ values. Speight and Thomas used a mortgage broker in Pittsburgh to prepare and submit loan applications that contained false W-2 statements and pay stubs, mostly from the fictitious company of “Allied Construction and Development, Corp.,” owned by Allie Speight. The mortgage broker, John Polosky, charged elsewhere, received payments from the loan proceeds outside of the payments identified in the HUD-1 settlement sheets for the loans. Speight and Thomas received at least 10-percent of the loan proceeds that they helped to broker. In many cases, Speight and Thomas allegedly created forged letters from the straw borrowers that directed title companies to send the proceeds to Fred A. Johnson, Jr., charged elsewhere, an accountant based in West Philadelphia. Johnson then laundered the loan proceeds by disbursing the monies to various bank accounts according to Speight’s and Thomas’ directions. By misdirecting the funds to Johnson, the lenders were not aware that the loan monies were ultimately disbursed to individuals not entitled to receive the funds, including Speight, Thomas, and members of Speight’s family. According to the indictment, over $3 million in loans were obtained during the course of the charged wire fraud conspiracy.

The indictment also charges another scheme to obtain loans from Wachovia Bank using straw borrowers. According to the indictment, Jerome Manker and Andre McCrea, a former Wachovia employee, submitted loan applications that contained false documents. Over the course of three loans, Manker and McCrae obtained from Wachovia over $300,000 in loan proceeds. In July 2007, after McCrea was no longer working for Wachoiva, McCrea bribed another Wachovia employee to push a third Manker loan using a straw borrower.

INFORMATION REGARDING THE DEFENDANTS

NAME ADDRESS AGE OR YEAR OF BIRTH
Allie Speight Philadelphia 55
Maurice Thomas Philadelphia 57
Jerome Manker Philadelphia 55
Andrea McCrea Philadelphia 28

If convicted, defendant Allie Speight faces a maximum possible sentence of 152 years imprisonment, five years of supervised release, a fine of at least $3.5 million, and a $1,000 special assessment; defendant Maurice Thomas faces a maximum possible sentence of 100 years imprisonment, five years of supervised release, a fine of at least $2.5 million, and a $600 special assessment; defendant Jerome Manker faces a maximum possible sentence of 160 years imprisonment, five years of supervised release, a fine of at least $5.5 million, and a $700 special assessment; defendant Andrea McCrea faces a maximum possible sentence of 160 years imprisonment, five years of supervised release, a fine of at least $5.75 million, and a $700 special assessment.

The case was investigated by the Federal Bureau of Investigation and the Internal Revenue Service. It is being prosecuted by Assistant United States Attorney Daniel Velez.

Acting United States Attorney Robert S. Cessar announced today, June 22, 2010, that Andrew McCullough, a resident of Allegheny County, Pennsylvania, has been sentenced in federal court in Pittsburgh to 15 months in prison to be followed by three years’ supervised release on his conviction of wire fraud conspiracy in connection with a mortgage fraud scheme.

United States District Judge Joy Flowers Conti imposed the sentence on McCullough, age 37, of Bethel Park, Pennsylvania.

According to information presented to the court by Assistant United States Attorney Bruce J. Teitelbaum, McCullough was employed in various capacities with several mortgage brokerage companies, including New Era Financial, Prestige Mortgage Services, Money Solutions, Mortgage Solutions and Iron Gate Mortgage. While employed at those mortgage broker companies, McCullough participated in a conspiracy in which he and his co‑conspirators submitted false information and documents to lenders. The information typically overstated the income and assets of the borrowers and overstated the value of the properties that were to serve as collateral for the loans. Some of the false documents included the following: false and altered documents verifying assets, such as bank statements; false and altered documents verifying income, such as pay stubs and W‑2s; back‑dated land contracts; false and altered Verification of Employment documents; false and altered Verification of Rent documents; false and altered account documents verifying self‑employment; false and altered loan payoff and debt satisfaction documents; appraisals that inflated the true market value of the properties; appraisals that represented that they were prepared by licensed appraisers when they were really prepared by unlicensed appraisers; and false and altered checks representing purchaser down payments.

Mr. Cessar commended the Mortgage Fraud Task Force for the investigation leading to the successful prosecution of McCullough. 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 Federal Bureau of Investigation; the Internal Revenue Service—Criminal Investigation; the United States Department of Housing and Urban Development, Office of Inspector General; the United States Postal Inspection Service; and the United States Secret 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.

Acting United States Attorney Robert S. Cessar announced today, June 22, 2010, that Andrew McCullough, a resident of Allegheny County, Pennsylvania, has been sentenced in federal court in Pittsburgh to 15 months in prison to be followed by three years’ supervised release on his conviction of wire fraud conspiracy in connection with a mortgage fraud scheme.

United States District Judge Joy Flowers Conti imposed the sentence on McCullough, age 37, of Bethel Park, Pennsylvania.

According to information presented to the court by Assistant United States Attorney Bruce J. Teitelbaum, McCullough was employed in various capacities with several mortgage brokerage companies, including New Era Financial, Prestige Mortgage Services, Money Solutions, Mortgage Solutions and Iron Gate Mortgage. While employed at those mortgage broker companies, McCullough participated in a conspiracy in which he and his co‑conspirators submitted false information and documents to lenders.

The information typically overstated the income and assets of the borrowers and overstated the value of the properties that were to serve as collateral for the loans. Some of the false documents included the following: false and altered documents verifying assets, such as bank statements; false and altered documents verifying income, such as pay stubs and W‑2s; back‑dated land contracts; false and altered Verification of Employment documents; false and altered Verification of Rent documents; false and altered account documents verifying self‑employment; false and altered loan payoff and debt satisfaction documents; appraisals that inflated the true market value of the properties; appraisals that represented that they were prepared by licensed appraisers when they were really prepared by unlicensed appraisers; and false and altered checks representing purchaser down payments.

Mr. Cessar commended the Mortgage Fraud Task Force for the investigation leading to the successful prosecution of McCullough. 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 Federal Bureau of Investigation; the Internal Revenue Service—Criminal Investigation; the United States Department of Housing and Urban Development, Office of Inspector General; the United States Postal Inspection Service; and the United States Secret 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.

Frank S. Guzik Jr., 41, of Derry owned and operated investment and housing companies in Monroeville. He received more than $14 million from 105 investors before disappearing, federal court filings say. He promised annual returns of 8 percent to 14 percent from the practice of “flipping” properties — buying distressed houses cheaply, fixing them up and quickly selling for a profit.

Prosecutors say that in reality, Guzik provided multiple investors with mortgages on the same properties and assigned them higher values than they were worth. For one property on McNeilly Avenue in Dormont, he took money from different investors and provided them with mortgages ranging from $25,000 to $100,000, the federal indictment states.

One of Guzik’s last acts before vanishing was to purchase $200,000 worth of untraceable gold coins, according to information unsealed recently. He hasn’t been seen here since about March 2008. He is charged with mail and wire fraud and faces up to 20 years in prison if convicted.

Bernardo Katz, 50, of Mt. Lebanon was charged with two co-defendants a year ago for trying to sell properties for more than they were worth from 2005 to 2007, and for lying about their values and the amount of rent they generated. Federal prosecutors linked Katz and the others to wire transfers from two banks totaling $1.7 million.

Katz, a cellist-turned-investor, developed commercial properties in Mt. Lebanon and bought several Beechview buildings. He fled to Brazil in 2007 with three of his four children, authorities say.

Charged with wire and bank fraud, Katz faces up to 30 years in prison if convicted.

Acting United States Attorney Robert S. Cessar announced today, May 28, 2010, that during the week beginning May 24, 2010, one attorney pleaded guilty in connection with a mortgage fraud scheme and another attorney was sentenced to two years of imprisonment in connection with a different mortgage fraud scheme.

On May 27, 2010, Daniel Sporrer, a resident of Pittsburgh, Pennsylvania, pleaded guilty in federal court in Pittsburgh to a charge of wire fraud conspiracy in connection with a mortgage fraud scheme.

Sporrer, age 46, pleaded guilty to one count before United States District Judge Nora Barry Fischer.

In connection with the guilty plea, Assistant United States Attorney Brendan T. Conway advised the court that 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.

Judge Fischer scheduled sentencing for October 29, 2010. The law provides for a total sentence of 20 years in prison, a fine of $250,000, or both. Under the Federal Sentencing Guidelines, the actual sentence imposed is based upon the seriousness of the offense and the criminal history, if any, of the defendant.

On May 25, 2010, Robert Danenberg, a resident of Pittsburgh, Pennsylvania, was sentenced to two years of incarceration and three years of supervised release on his conviction of wire fraud conspiracy in connection with a different mortgage fraud scheme.

United States District Judge Ambrose imposed the sentence on Danenberg, age 55.

According to information presented to the court by Assistant United States Attorney Brendan T. Conway, Danenberg is an attorney who specialized in closing real estate transactions. He participated in a mortgage fraud conspiracy in which a co-conspirator recruited buyers to purchase properties at fraudulently elevated prices and financed through fraudulently obtained loans. Danenberg’s role in the conspiracy was to close the fraudulent loans, and the closings themselves were fraudulent in two ways. First, the closings required the borrowers to bring certified funds to the closings from their own funds to make the down payments associated with the purchase. The borrowers, however, did not have sufficient funds to make the down payments and were often getting cash back at the closings. The down payments were paid by the sellers, the mortgage broker, and on several occasions, by Danenberg himself. The closings were also fraudulent in that the settlement statements reflected payments to contractors for work purportedly already done on the properties serving as collateral for the loans. In fact, however, as Danenberg well knew, those payments were kickbacks to participants in the conspiracy.

In total, Danenberg closed approximately 70 fraudulent loans totaling in excess of $5,000,000 of loan proceeds. Danenberg pleaded guilty after four days of trial.

The Mortgage Fraud Task Force conducted the investigation that led to the prosecution of Sporrer and Danenberg. 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 Investigations; 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.

Acting United States Attorney Robert S. Cessar announced today, February 12, 2010, that on February 11, 2010, Randy Berger and Elleni Berger, residents of Pittsburgh, Pennsylvania, pleaded guilty in federal court to a charges of wire fraud conspiracy in connection with a mortgage fraud scheme. Elleni Berger also pleaded guilty to a charge of filing a false tax return.

Randy Berger, age 39, and Elleni Berger, age 43, pleaded guilty before United States District Judge Joy Flowers Conti.

In connection with the guilty plea, Assistant United States Attorney Brendan T. Conway advised the court that the Bergers operated All Credit Finance, which was a mortgage broker company that assisted borrowers obtain financing collateralized by real estate. The couple participated in a conspiracy in which they and other members of the conspiracy submitted fraudulent loan applications on behalf of borrowers that overstated their financial condition, and a series of fraudulent documents that supported those misrepresentations. In addition, Randy and Elleni Berger submitted appraisals that were fraudulent in that the appraisals overstated the values of the properties that were serving as collateral for the loans, and represented that they had been prepared by licensed appraisers when, in fact, they were not prepared by licensed appraisers.

Elleni Berger also filed false tax returns that were false in that they reported significantly less income than she actually earned.

Judge Conti scheduled sentencing for June 16, 2010. The law provides for a total sentence of 23 years in prison, a fine of $500,000, or both, for Elleni Berger, and a total sentence of 20 years in prison, a fine of $250,000, or both, for Randy Berger. Under the Federal Sentencing Guidelines, the actual sentences imposed are based upon the seriousness of the offense and the criminal history, if any, of the defendants.

The Mortgage Fraud Task Force conducted the investigation that led to the prosecution of Randy and Elleni Berger. 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 Federal Bureau of Investigation; the Internal Revenue Service, Criminal Investigations; the United States Department of Housing and Urban Development, Office of Inspector General; the United States Postal Inspection Service; and the United States Secret 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.

A Doylestown lawyer admitted his guilt yesterday in federal court in connection with a $14.6 million mortgage-fraud scheme that victimized 35 homeowners from fall 2004 to June 2007.

Stephen G. Doherty, 43, pleaded guilty to 15 counts of conspiracy, wire fraud and related bankruptcy and money-laundering offenses. U.S. District Judge Mary McLaughlin set sentencing for May 24.

The government alleged that Doherty and four others targeted homeowners facing foreclosure, promised to help them save their homes, engaged in real-estate transactions with straw purchasers and obtained dozens of bogus mortgages.

Authorities said most of the victims did not ultimately lose their homes in the scheme. Doherty, a bankruptcy lawyer, admitted involvement with four mortgage scams involving homeowners in Chalfont, Quakertown, Perkasie and Lumberville. The Perkasie and Lumberville homeowners were clients of Doherty.

In fall 2004, Doherty mailed advertisements to distressed homeowners and referred respondents to co-defendant Edward McCusker, who owned a mortgage company. McCusker, who has pleaded not guilty in the case, allegedly told homeowners he could save their homes by getting a mortgage in someone else’s name for a year, while they leased the house back at a rent they could afford.

Instead, court papers said McCusker, of New Hope, arranged for the homeowner’s residence to be transferred to a straw purchaser, used fake documents to obtain a mortgage in the name of the straw purchaser and took proceeds of sales for himself and co-defendants.

The plea memo said that Doherty and his partner, Jeffrey Bennett, received an initial referral fee of $1,500 per mortgage, later increased to 2 percent of the loan proceeds. The fee wasn’t disclosed on the settlement form as being paid to Doherty and Bennett, the plea memo said, to conceal incentive payments the law firm was receiving to steer homeowners to McCusker.

When Doherty referred some homeowners to McCusker, he would file bankruptcy papers – not intending to actually proceed with bankruptcy – to delay the sheriff’s sale so that the sale to the straw purchaser could go through, the memo said.

When financing was obtained, Doherty dismissed the bankruptcy petition a day before closing, the plea memo said. Doherty is free on $100,000 unsecured bond pending sentencing. Three other defendants in the case – including McCusker’s wife; Jacqueline, of New Hope; Bennett, of Springfield, and John Bariana, of Mullica Hill, N.J. – have also pleaded not guilty.

The latest foreclosure statistics from RealtyTrac are out, and the news isn’t very good. According to the Q1 2008 U.S. Foreclosure Market Report, which tracks foreclosure filings (including default notices, auction sale notices and bank repossessions), 649,917 properties were foreclosed upon during the first quarter of the year, a 23% increase from the previous quarter and a 112% increase from the first quarter of 2007. The report also shows that one (1) in every 194 U.S. households received a foreclosure filing during the quarter.

Foreclosure activity in the quarter increased on a year-over-year basis in 46 out of the 50 states and in 90 of the nation’s 100 largest metro areas, demonstrating that most regions of the country are seeing more foreclosures. In some areas there are also some unusual, non-market factors impacting the foreclosure numbers. For example, the city of Philadelphia in late March issued a temporary moratorium on all foreclosure auctions for April, and the city has since adopted a program that will delay foreclosure proceedings on owner-occupied properties until the owners have met face-to-face with lenders to attempt a loan workout plan that would prevent foreclosure.

While programs like those in Philadelphia are certain to have a positive long-term impact, they could be simply deferring another flood of foreclosures, and that could extend the length of time it takes the market to recover from the current downward cycle, in which we’ve already seen seven consecutive quarters of increasing foreclosure activity.

Click on the map to the left for a close up view of exactly where foreclosure-related activity is playing out across the United States. As you’ll see, one (1) in every 54 Nevada households received a foreclosure filing during the first quarter, the highest foreclosure rate in the nation and 3.6 times the national average. Foreclosure filings were reported on 19,595 Nevada properties during the quarter, up 3% from the previous quarter and up 137% from the first quarter of 2007.

Foreclosure filings were reported on 169,831 California properties during the first quarter, the highest total in the nation at a rate of one (1) in every 78 households — the nation’s second highest foreclosure rate. Foreclosure activity in California increased 32% from the previous quarter and was up nearly 213% from the first quarter of 2007.

Arizona documented the nation’s third highest state foreclosure rate, with one (1) in every 95 households receiving a foreclosure filing during the quarter. Foreclosure filings were reported on 27,404 Arizona properties during the quarter, up 45% from the previous quarter and up nearly 245% from the first quarter of 2007.

Foreclosure filings were reported on 87,893 Florida properties during the first quarter, the second highest state total and giving Florida the nation’s 4th highest foreclosure rate — one (1) in every 97 households received a foreclosure filing during the quarter. Foreclosure activity in the state was up 17% from the previous quarter and up 178% from the first quarter of 2007.

Colorado foreclosure activity increased 33% from the previous quarter and 78% from the first quarter of 2007, and the state’s foreclosure rate ranked No. 5 among the states. Foreclosure filings were reported on 18,996 Colorado properties during the quarter, a rate of one in every 110 households.

Other states with foreclosure rates among the top 10 were Georgia, Michigan, Ohio, Massachusetts and Connecticut.

A federal judge in Philadelphia, Pennsylvania, has thrown out a lawsuit against lenders who supplied funds to a mortgage broker who previously pled guilty to charges of mortgage fraud, finding that lenders are not obliged to monitor mortgage broker actions. The decision is a major setback for 842 victims of Wesley A. Snyder‘s company, Personal Financial Management, who could have used the strategy to recover some of their losses, had it succeeded. The victims are said to have approximately $30 million in the scam.

The claim rejected by U.S. District Judge James Giles started in the fall of 2007, when a Fleetwood, Pennsylvania, couple–Douglas and Andrea Jones–filed a lawsuit, hoping to have it certified as a class action suit. According to paperwork filed with the court, defendants in the complaint included:

• ABN AMRO Mortgage Group, Inc.
• Chase Home Mortgage Corporation
• Citimortgage, Inc.
• Citicorp Home Mortgage Services, Inc.
• Countrywide Home Loans, Inc.
• Fifth Third Mortgage Company
• Florida Capital Bank Mortgages
• GMAC Mortgage Corporation
• GMAC Mortgage Asset Management, Inc.
• GMAC Mortgage Group, Inc.
• HSBC Mortgage Corporation (USA)
• Indymac Financial Services Corporation
• Moorequity, Inc.
• National City Mortgage, Inc.
• nBank, N.A.
• Provident Funding Group, Inc.
• Saxon Home Mortgage
• Saxon Mortgage, Inc.
• Sovereign Bank
• SunTrust Mortgage, Inc.
• U.S. Bank, N.A.
• Wachovia Mortgage Corporation
• Washington Mutual Home Loans, Inc.
• Wells Fargo
• Home Mortgage, Inc.
• John Doe Mortgage Companies

In their suit, Douglas and Andrea Jones alleged that several Pennsylvania companies, owned or controlled by Wesley Snyder, offered them Equity Slide Down Mortgages as part of what they say was a mortgage servicing Ponzi scheme. The Joneses said Snyder failed to monitor and supervise his companies, which did not credit them properly for payments and pre-payments of interest and principal on their mortgages. They further alleged that, following the bankruptcy of Snyder’s companies, the defendants in the case–the companies listed above–failed to notify them properly that they had taken over as servicing agents on the mortgage loans and demanded payments from them in amounts substantially higher than owed on the loans serviced by Snyder’s companies. The Joneses also claimed that each defendant was guilty of having committed numerous RESPA violations.

Specifically,the Joneses alleged that they applied for and closed on two separate Equity Slide Down mortgages through Snyder’s companies–one for each of their two properties–in 2002 and 2005, respectively. They alleged that at all times after closing they remitted their monthly mortgage payments to Snyder’s company and that they were current on all payments owed and had pre-paid a large portion of the principal balance by way of a large principal reduction payment made soon after closing.

They further alleged that in September 2007, after the bankruptcy filing of the Snyder’s company, they learned for the first time that SunTrust and Countrywide claimed to hold their respective mortgages and notes. According to the Joneses, SunTrust and Countrywide demanded payment for amounts that were duplicative and excessive and that failed to credit properly the payments and pre-payments they had made to the Snyder. The Joneses say that the Snyder’s companies were the “servicing agents” of each Defendant, as defined by the Real Estate Settlement Procedures Act (RESPA), and that Snyder’s companies were otherwise the Defendants’ agents under Pennsylvania agency law.

More specifically, the Joneses alleged that:

1. Each defendant employed one or more of the Snyder’s companies to originate, close, and service all the mortgage loans at issue.
2. Each Defendant knew the Joneses were making all mortgage payments to the Snyder Entities.
3. Each Defendant knew it was sending all mortgage statements and federal tax forms to Snyder rather than to the Joneses.

In dismissing the suit, U.S. District Judge Giles said the Joneses’ recollections were trumped by documents they signed stating payments would be made to mortgage bank ABN Amro Mortgage Group, meaning, Snyder was not ABN’s agent and ABN had no duty to oversee him.

Ex-Utah mayoral candidate charged with real estate fraud: The Utah Attorney General’s Office charged a former Eagle Mountain mayoral candidate with fraud on Wednesday. Richard Culbertson, 55, and his wife Kathleen Culbertson, 51, were charged in a mortgage fraud case in which they allegedly used their daughter and son-in-law’s names to buy a home. According to the Attorney General’s Office, the Culbertsons used someone else’s names to obtain multiple home loans and also inflated their income on applications by more than $10,000 per month. One loan was earmarked for remodeling and landscaping work, but the $59,324 was pocketed by Richard Culbertson instead.

Squatters, scams plague foreclosures: Call them signs of a tattered economy – indicators that something’s amiss including in the San Fernando Valley: squatters inhabiting foreclosed homes, a record number of cars being repossessed, a growing number of family heirlooms being left behind at local pawn shops. With more than 80,000 foreclosures in California during the last quarter of 2007 setting a state record – up 115 percent over the previous year – property owners have struggled to keep squatters and thieves off their vacant properties.

Sacramento realty fraud unit’s funds decline; complaints rise: The funding for real estate fraud investigations and prosecutions has dwindled to the lowest level since 2001 in Sacramento County, even as the two detectives who investigate the crimes say they’re fielding a mounting number of complaints. In real estate fraud units, investigators’ and prosecutors’ salaries are funded with $2 fees paid each time certain deeds are filed in the county recorder’s office. The real estate downturn corresponds with a nose dive in the recording fees. In fiscal 2001, the county collected $460,000 in such fees, but is now on track to collect only about $400,000 by the time this fiscal year ends in June.

Pennsylvania official pushes mortgage reforms: The state’s top banking regulator is pushing a slate of reform measures to end predatory lending, staunch mortgage fraud and foreclosures across the state. “We’re hoping the (reform) package will be completed and become law sometime this year,” said Steven Kaplan, secretary of banking. “Pennsylvania consumers need more protection from mortgage fraud.” Mortgage fraud in the Pittsburgh area was highlighted a month ago when 24 people were charged with operating lending scams by the U.S. Attorney General’s office here. It is conducting more than 50 mortgage-fraud examinations as part of its newly formed Western Pennsylvania Mortgage Fraud Task Force.

New York politicians offer a good first step: It’s too soon to declare New York’s subprime mortgage crisis over and done with – an estimated 28,000 New Yorkers statewide remain at risk of losing their homes to foreclosure – but Gov. Spitzer and Attorney General Andrew Cuomo this week announced reforms that will make it much harder to repeat the abuses of recent years. At the root of the mortgage crisis was the tendency of bankers, brokers, appraisers and other real estate professionals to bend lending rules and home price estimates to the breaking point in order to book loans and walk off with lucrative fees. In many cases, people without sufficient income to repay a loan ended up with mortgages – only to fall behind on payments and lose their homes.

Indictment names four Texans in mortgage fraud case: A federal grand jury in Houston has indicted four people in connection with a $15 million mortgage fraud scheme carried out over four years, the U.S. Attorney’s Office said Wednesday. According to the indictment, Carlos Paul Gonzalez and Ken Russell Browder, who ran Advantage C&R Funding Group and First Advantage Funding Group, would find people with good credit to pose as home buyers and apply for mortgages. Though the borrowers didn’t qualify for the loans and didn’t plan to live in the homes, the applications were doctored to gain approval from lenders, the indictment alleges. The homes were spread throughout the Houston area, according to the indictment.

Real Estate and Mortgage fraud is funding crime in the United Kingdom: The UK’s Association of Chief Police Officers (ACPO) says property sales are also being used launder money made from drugs, trafficking and prostitution. Average UK mortgage fraud losses are £700m a year and the figure is growing. False valuations and bogus applications were among the methods used, said the intelligence report being sent to the financial industry and police forces.

Michigan AG’s ties to mortgage firms may explain inaction on foreclosures: Evidence is surfacing that home loan institutions have, based on demographic studies, steered minority homeowners into high-risk subprime mortgages. That opens the door to possible prosecution of civil rights violations in addition to the abuse of fair lending laws. With calls increasing for state attorney generals to sue guilty lenders, Michigan Attorney General Mike Cox may be compromised. His list of campaign contributors includes a number of mortgage interests.

Some mortgage fraud cases will not be criminally prosecuted!: Amid all the anguish arising from the swelling volume of home foreclosures in and around Stockton, California, there has been much talk about real estate fraud. But most of the complaints cannot be criminally prosecuted, representatives of the San Joaquin County Office of the District Attorney said yesterday.

Foreclosure vultures prey on Portland, Oregon, homeowners: As national foreclosure rates hit their highest levels ever, people calling themselves “foreclosure consultants,” are filling Craigslist, billboards and mailers with offers to “save your home.” Detective Liz Cruthers, who investigates white-collar crimes for the Portland, Oregon, Police Bureau, says she’s spending much of her time learning the intricacies of “mortgage rescue fraud” and chasing down the bad guys.

Utah seeks stiffer penalties for real estate fraud: A Utah legislative committee is recommending the passage of a bill aimed at increasing criminal and civil penalties against people involved in mortgage fraud. The Senate Business and Labor Standing Committee on Tuesday unanimously approved SB134 for further consideration by the state Legislature.

FBI targets mortgage fraud in Hawaii: The FBI has opened multiple mortgage fraud investigations in Hawai’i as a result of the fallout from the nation’s subprime mortgage crisis, the bureau’s director said yesterday. FBI Director Robert S. Mueller III, speaking to reporters on a stopover following a trip to Asia, confirmed the subprime mortgage mess has reached Hawai’i.

Countrywide accused of mortgage fraud: Already burned in the subprime mortgage meltdown, lending giant Countrywide Financial Corp. is now under investigation in Florida for possible unfair and deceptive trade practices, state officials said Thursday. Officials say they have received more than 150 formal complaints about Countrywide since setting up a mortgage fraud hotline last year.

Arrest made in Erie, Pennsylvania, real estate fraud case: A key figure in an ongoing federal investigation into suspected mortgage fraud in the city of Erie, Pennsylvania, will plead guilty to fraud and money-laundering charges. The U.S. Attorney’s Office in Erie on Thursday filed criminal charges against Frank Kartesz II. Kartesz, 39, is accused of one count each of mail fraud and criminal conspiracy to commit mail fraud, wire fraud and bank fraud. The government alleges he was part of a scheme in which he and others bought run-down houses and sold them at artificially inflated prices. Most of the buyers were low-income people who knew little about the home-buying process.

Illinois mortgage broker in jail for selling credit histories: Homeowners already worried about with a slumping real estate market and tighter restrictions on home loans should look to the case of an Illinois mortgage broker as another cautionary tale.

Georgia real estate appraiser sentenced to prison for mortgage fraud: After submitting fraudulent appraisals on incomplete houses as part of a mortgage fraud scheme, a Georgia real estate appraiser has been sentenced to prison.

Yesterday, on AboutRalph.com, I blogged about how Donald Trump’s organization is bidding to bring a casino to Philadelphia, and about how I feel that this would be a disastrous move. Now, one day later, word comes that 10 Philadelphians have been arrested and charged in a massive mortgage fraud scam that involved nearly 200 separate properties.

From the Philadelphia Daily News:

the grand jury charged that Mahn Huu Doan, 38, of S. 72nd St., and an associate had made up bogus bank records, W-2 forms and pay stubs to get government-backed mortgage loans.

Most of the mortgages came from a company owned by Vincent Sirolli, 64, of West Deptford, N.J. Sirolli and three employees allegedly processed the bogus loan applications and got Doan the money he needed to buy the homes.

The feds said an appraiser inflated the value of the homes and two settlement agents prepared bogus paperwork to conceal the fraud.

Click here for the complete story.

If you’re wondering if reporting real estate or mortgage fraud to the federal authorities pays off or not (for the person who reports the crime), check this out.

The U.S. Attorney’s office for the Eastern District of Pennsylvania yesterday announced that Columbia National, Inc. has agreed to pay $800,000 to the U.S. government to resolve civil allegations brought about by a former employee that the company submitted false and fraudulent claims to the Department of Housing and Urban Development (HUD) to reimburse Columbia National for losses arising from foreclosures on government insured mortgage loans. The whistle blower in the case, a former Columbia National employee named Cynthia Santore-Smith, is now set to receive a whopping $160,000 from the proceeds of the settlement for her role in alerting federal authorities to what was going on!

According to U.S. Attorney Patrick Meehan, Columbia National offered a range of mortgage loan products, including government insured or government guaranteed loans, from a branch office in Bensalem, Pennsylvania. Upon learning of the irregularities in its loan origination process, Columbia National closed its Bensalem branch office and terminated the employees it believed might have been involved in the irregularities. American Home Mortgage Holdings, Inc. purchased Columbia National, Inc. in 2002, and subsequently renamed the company American Home Mortgage Servicing, Inc.

The government has several programs to help people buy their own homes. Through the HUD, the government insures certain qualifying loans. Consumers who take advantage of these government programs are those who otherwise have difficulty obtaining mortgage loans from the conventional mortgage lending market. The programs therefore make home ownership a reality for people who may have lost hope that they would ever buy their own homes.

To make these programs as widely available as possible, the government relies on private mortgage lending companies like Columbia National / American Home Mortgage Servicing to do much of the work. These companies are responsible for originating the loans. That is, these companies determine whether particular individuals qualify for the government programs. To do that, the companies gather information about potential borrowers, document that information, and evaluate whether the borrowers meet the government standards for the loans. The Columbia National / American Home Mortgage Servicing’s of the world then lend money to consumers, but the government bears the risk that the loans might go into foreclosure. Should the consumer be unable to pay back the companies, then the government reimburses the companies for any losses they may have suffered.

In Columbia National / American Home Mortgage Servicing’s case, the government alleged that former employees of Columbia National Inc. (NOT Cynthia Santore-Smith) created false and fraudulent documents in association with the origination of government insured and government guaranteed loans. According to the allegations, former employees, working out of the company’s Bensalem branch office, created false and fraudulent verification of employment documents, gift letters, credit references, and income documents. These false and fraudulent documents were used to qualify certain individuals for loans, who later on were unable to pay back the loans, causing losses to the company, which were passed on to the government.

The settlement not only reimburses the government for losses it has already incurred, it also protects the government from losses that may arise in the future. Columbia National / American Home Mortgage Servicing is now taking extra steps to ensure that loans originated at the company’s former office in Bensalem are legitimate. Before it submits any insurance claim on defaulted loans from the Bensalem office, the company will undertake a targeted review of those loans using a checklist of fraud “red flags.” If there are indications of fraud in a loan, the company will not seek reimbursement from the government for that loan.

The headline for today’s post is not a misprint. Just when you thought you’ve seen it all, a story like this one comes out and knocks you off your feet. According to the Pittsburgh Tribune-Review, a Fayette County (PA) Assistant District Attorney was fired earlier this week after a title insurance company filed a lawsuit alleging he that the ADA forged closing documents bearing the title company’s name on real estate transactions through the ADA’s private law office. From today’s Pittsburgh Tribune-Review:

First American Title Insurance Co. filed the complaint Monday against Mark F. Morrison and Deborah DeFranks Morrison in Fayette County Common Pleas Court. In one instance, First American alleges Morrison and his wife, who is a secretary at his law office in Hopwood, South Union Township, were unable to account for money received from a mortgage company to pay off a mortgage for a client’s Hopwood residence at the time of the Aug. 17 closing. In lieu of satisfying the outstanding mortgage to Vanderbilt Mortgage, Morrison’s law office continued paying the monthly amount due, the lawsuit claims. As of Feb. 7, the outstanding mortgage was $46,615, according to the lawsuit…

During an interview with the Tribune-Review on Tuesday night, Morrison denied that he or his wife forged any documents and said the mortgage has been paid off. “I feel in the end, it’s going to be shown that I haven’t done anything wrong,” Morrison said. “The main point is the money was always there. There’s no money missing.”

Morrison has practiced law in Fayette County for more than two decades, serving as a defense attorney, solicitor for county departments and, most recently, as a prosecutor. District Attorney Nancy D. Vernon hired Morrison in August to fill a new position, administrative assistant district attorney, which the county salary board set at $34,963 annually…

Vernon said yesterday that Morrison had been very helpful in prosecuting some high-profile criminal defendants. However, some of the allegations could constitute criminal charges, leaving her with no alternative but to fire Morrison, she said. “I terminated him to avoid the appearance of impropriety in this office,” Vernon said. “I felt that I had no recourse.” If any criminal allegations were to arise, Vernon said she would refer the matter to the state Attorney General’s Office.

In its lawsuit, First American says it believes Morrison and DeFranks Morrison forged documents in the form of closing protection letters, title commitment letters and title insurance policies. In turn, those documents were issued to buyers and lenders in real estate transactions in which the defendants supplied the closing services, according to attorney Stacey F. Vernallis, of Pittsburgh.

Click here for the rest of the article.

For me, there are two ways I can approach this one. On the one hand, I can sound the alarm that even the prosecutors are dirty. That, of course, is not true, so I’m not even going to go there. On the other hand, I can hope and pray that this is all a big misunderstanding and that Morrison won’t be found guilty of misappropriation of funds and/or conspiracy to commit fraud.

The last thing we need right now in the fight against real estate and mortgage fraud is a case involving someone who is supposed to be prosecuting the bad guys. I mean really, can you image what an uphill battle we’d have on our hands if state officials were in on the action? It’s too difficult to even conceive, so I’m going with the ‘other hand.’ Let’s all hope this one is just a big misunderstanding!