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.

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.

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.

The list of resources below has been compiled for anyone that suspects that they may be a victim of real estate or mortgage fraud or scam. The list was originally designed as a resource to report mortgage fraud, predatory lending scams and identity theft in Florida but may also serve those who are victims of many types of fraud in Florida. Other types of fraud may include:

Internet Scams
Phishing/Email Scams
Credit Card Fraud
Investment Fraud
Financial – Debt Elimination
Business/MLM Scams
Etc.

FBI Field Offices, Mortgage Fraud

White Collar Crime Supervisor

http://jacksonville.fbi.gov/

7820 Arlington Expressway, Suite 200
Jacksonville, FL 32211-7499
Phone: (904) 721-1211

White Collar Crime Supervisor

http://miami.fbi.gov/

16320 NW 2nd Ave.
North Miami Beach, FL 33169-6508
Phone: (305) 944-9101

White Collar Crime Supervisor

http://tampa.fbi.gov/

500 Zack St., Room 610, FOB
Tampa, FL 33602-3917
Phone: (813) 273-4566

Florida Attorney General – Consumer Protection

http://myfloridalegal.com/consumer

The Capitol PL-01
Tallahassee, FL 32399-1050
Phone: (850) 414-3300

HUD Field Office

Jacksonville Field Office
Charles E. Bennett Federal Building
400 W. Bay St., Suite 1015
Jacksonville, FL 32202
Phone: (904) 232-2627
Fax: (904) 232-3759

Miami Field Office
909 SE First Ave.
Miami, FL 33131
Phone: (305) 536-4456
Fax: (305) 536-5765

Orlando Field Office
3751 Maguire Blvd., Room 270
Orlando, FL 32803-3032
Phone: (407) 648-6441
Fax: (407) 648-6310

Tampa Field Office
500 Zack St., Suite 402
Tampa, FL 33602
Phone: (813) 228-2026
Fax: (813) 228-2431

HUD Regional Office

Atlanta Regional Office
40 Marietta St.
Five Points Plaza
Atlanta, GA 30303-2806
Phone: (404) 331-4111
Fax: (404) 730-2392

Florida Department of Banking and Finance Division of Financial Investigations

101 East Gaines St., Suite 516
Tallahassee, FL 32399-0350
Toll Free: (800) 848-3792 (Florida only)
Phone: (850) 410-9275
Fax: (850) 410-9628

Nationally Chartered Credit Unions

Region III – Atlanta

http://www.ncua.gov/

7000 Central Parkway, Suite 1600
Atlanta, GA 30328
Phone: (678) 443-3000
Fax: (678) 443-3020

State-Chartered Credit Unions

Florida Division of Banking
101 East Gaines St., Ste. 636
Tallahassee, FL 32399-0350
Phone: (850) 410-9111
Fax: (850) 410-9548

Savings & Loan Association or Savings Bank

Office of Thrift Supervision

http://www.ots.treas.gov/resultsort.cfm?catNumber=88&dl=17&edit=1

E-mail: consumer.complaint@ots.treas.gov
Southeast Region – Atlanta
1475 Peachtree St., N.E.
Atlanta, Georgia 30309
Phone: (404) 888-0771
Complaints: (800) 842-6929

National Fair Housing Alliance

To locate your local office:

http://www.nationalfairhousing.org

National Contact: E-mail: nfha@nationalfairhousing.org
1212 New York Ave., NW Ste 525
Washington, DC 2005
Phone: (202) 898-1661
Fax: (202) 371-9744

Florida Department of Agriculture and Consumer Services

Division of Consumer Services
2005 Apalachee Parkway
Terry Rhodes Building
Tallahassee, FL 32399-6500
Phone: 1-800-HELP-FLA (435-7352)

Florida Real Estate Commission (REC) Home Page

DBPR Customer Contact Center

http://www.myflorida.com

Disciplinary Activity Reports of Brokers and Appraisers:

http://www.myflorida.com

1940 North Monroe St.
Tallahassee, FL 32399-1027
Phone: (850) 487-1395
Fax: (850) 922-4191

Better Business Bureaus

Better Business Bureau of Northeast Florida

http://www.bbbnefla.org

E-mail: info@bbbnefla.org
4417 Beach Blvd., Suite 202
Jacksonville, FL 32207
Phone: (904) 721-2288
Fax: (904) 721-7373

Better Business Bureau Serving Southeast Florida and the Caribbean

http://www.bbbsoutheastflorida.org

E-mail: info@seflorida.bbb.org
2924 N Australian Ave.
West Palm Beach, FL 33407 –
Phone: (561) 842-1918
Fax: (561) 845-7234

Better Business Bureau of West Florida

http://www.clearwater.bbb.org

E-mail: info@bbbwestflorida.org
PO Box 7950
Clearwater, FL 33758 -7950
Phone: (727) 535-5522
Fax: (727) 539-6301

Better Business Bureau of Northwest Florida

http://www.nwfl.bbb.org

E-mail: info@nwfl.bbb.org
PO Box 1511
Pensacola, FL 32591 -1511
Phone: (850) 429-0002
Fax: (850) 429-0006

Better Business Bureau of Central Florida, Inc.

http://www.orlando.bbb.org

E-mail: info@orlando.bbb.org
151 Wymore Road, Ste. 100
Altamonte Springs, FL 32714 -
Phone: (407) 621-3300
Fax: (407) 786-2625

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.

New York business attorneys-Washington Mutual target of $92 million mortgage fraud scam

Federal attorneys filed charges against 9 people for $92 million WaMu mortgage fraud scheme.

New York, NY(JusticeNewsFlash.com)–The U.S. Attorney’s Office in Brooklyn filed federal charges against, real estate developer Thomas Kontogiannis plus eight other defendants in U.S. District Court in Brooklyn, New York on Thursday. Reuters reported lawyers for the federal government charged nine persons with conspiracy to commit bank and wire fraud through an orchestrated $92 million mortgage fraud scheme aimed at Washington Mutual Bank and a subsidiary of Credit Suisse Group AG, DLJ Mortgage Capital Inc.

Agents with the U.S. Federal Bureau of Investigation (FBI) www.fbi.gov and prosecuting attorneys allege Kostogiannis used New York City property developments in Brooklyn and Queens to defraud Washington Mutual and Credit Suisse Group of $92 million through fraudulent loans. Federal court documents claim the nine defendants, charged with federal fraud, sold properties with values based on false appraisals to finance projects. The defendants were so blatant as to provide appraisals of properties not even built and listed fake addresses. Government lawyers say the real estate developer used loans, financed by lenders under their control, and then sold the bogus mortgage loans to Washington Mutual and DLJ. The defendants will be arraigned in U.S. District Court in Brooklyn before the judge, on Thursday afternoon, plus face additional charges of bank fraud and money laundering.

This is another legal and financial blow which has come to light recently since former Washington Mutual Bank (WaMu), now Washington Mutual Inc., was seized by the U.S. Office of Thrift Supervision (OTS) and placed into the hands of the Federal Deposit Insurance Corporation (FDIC) http://www.fdic.gov on September 25, 2008. A 10-day bank run, which resulted in $16.4 billion in withdrawals, caused the federal government to step in, take over, and then sell off the banking subsidiaries to JPMorgan Chase for a mere $1.9 billion. JPMorgan chase acquired the bank with $33 billion in assets, minus its unsecured debt or equity claims as outlined by Wiki. On September 26, 2008, the very next day, JPMorgan Chase filed for Chapter 11 bankruptcy protection in Delaware. Washington Mutual Bank was the largest United States’ savings and loan association, and its closure and receivership, by the federal government, remains the largest bank failure in American history. The United States District Court, for the District of Columbia, received a lawsuit filing by lawyers representing Washington Mutual Inc., on March 20, 2009, demanding $13 billion in damages. Business litigation attorneys representing WaMu accuse the OTC and FDIC with the unjustified seizure of the bank and the ridiculously low sale price to JPMorgan Chase as part of its legal complaint. The U.S. Federal Bankruptcy Court in Delaware, in turn, received a counterclaim by attorneys representing JPMorgan Chase.

JusticeNewsFlash.com news for New York bank fraud attorneys.

Defendants Targeted Low-Income Buyers, Falsely Inflated Buyer Assets In Loan Applications

SAN JOSE—A federal grand jury in San Jose indicted Norma Valdovinos, Claudia Valdovinos, Linda Dung Tran, Elaine “Queenie” Ly, and Pablo Curiel, of San Jose, California, and Jesus Chavez, of Gilroy, California on May 11, 2011, with conspiracy to commit bank fraud, bank fraud, and making a false statement to a bank, United States Attorney Melinda Haag announced yesterday. Norma Valdovinos and Linda Tran were also charged with conspiracy to commit money laundering and money laundering. According to the indictment, the defendants ran a multi-million-dollar mortgage fraud scheme, fraudulently inducing banks to extend millions of dollars in loans to unqualified buyers, while the defendants pocketed over one million dollars in real-estate and mortgage commissions for themselves.

According to the 32-count indictment, from 2004 through August 2007, Ms. Norma Valdovinos, age 45, and Chavez, age 52, were real estate agents with Century 21 Golden Hills Real Estate and solicited primarily low-income home buyers to purchase homes, typically single-family residences, usually priced in excess of $500,000. They knew that the borrowers they solicited had insufficient incomes and assets to qualify for the mortgages they needed in order to buy the properties.

The indictment further alleges that Norma Valdovinos and Chavez referred their clients to Palacio Mortgage, owned by Linda Tran, age 33, knowing that Palacio Mortgage would falsely inflate and misrepresent the borrowers’ income, assets, and employment information so as to enable the borrowers to qualify for the loan or loans needed to buy a property. Linda Tran and “Queenie” Ly, age 32, with the assistance of Claudia Valdovinos, age 27, falsified the borrowers’ income, assets, employment, and the source of the borrowers’ down payments in the Uniform Residential Loan Applications (“URLAs”) they submitted to the banks. Tran and Ly also submitted false documents such as fake bank statements and letters from tax preparers falsely stating that the buyer owned his or her own business. The Palacio Mortgage defendants also made many of the same misrepresentations on behalf of borrowers seeking to refinance existing mortgages.

According to the indictment, Linda Tran also arranged for Pablo Curiel, age 71, to secretly provide funds for the down payment required on the borrowers’ loans, without the banks’ knowledge. This scheme resulted in upwards of $40 million in loans being provided to buyers that, but for the defendants’ fraud, would not have been loaned.

This indictment is the fifth indictment brought in this investigation, resulting in a total of 10 defendants that have been charged to date. In late 2010, the United States separately charged Lita Delara, 10-00465 JF, Guadalupe Perez Nieto, 10-00842 JF, John Nguyen, 10-00467 JF, and Zosimo Reyes, 10-00468 JF, for conspiracy to commit bank fraud, in violation of 18 U.S.C. § 849.

Norma Valdovinos, Claudia Valdovinos, and “Queenie” Ly were arrested on May 18, 2011, in San Jose, California, and made their initial appearances in federal court in San Jose that same day. Each was released on bond. Norma Valdovinos’ bond was set at $125,000, Claudia Valdovinos’ bond at $50,000, and Ly’s bond at $75,000. Chavez, Tran, and Curiel are expected to make their initial appearances before The Honorable Howard Lloyd, United States Magistrate Judge, on May 26, 2011, at 1:30 a.m.

The maximum statutory penalty for count one, conspiracy to commit bank fraud, in violation of 18 U.S.C. § 1349, and counts two through 11, bank fraud, in violation of 18 U.S.C. § 1344, is 30 years’ imprisonment, a $1 million fine, and restitution; for counts 12 through 21, making a false statement to a bank, in violation of 18 U.S.C. § 1014, is 30 years’ imprisonment, a $1 million fine, and restitution; count 22, conspiracy to commit money laundering, in violation of 18 U.S.C. § 1956(h), is 20 years’ imprisonment, a fine of $500,000 fine (or twice the gross gain or gross loss), and restitution; counts 23 through 28, engaging in monetary transactions using criminally derived property, in violation of 18 U.S.C. § 1957, is 10 years’ imprisonment, a $250,000 fine (or twice the amount of the criminally derived property involved in the transaction), and restitution; and counts 29 through 32, money laundering, in violation of 18 U.S.C. §§ 1956(a)(1)(A)(i) and (B)(i), is 20 years’ imprisonment, $500,000 fine (or twice the gross gain or gross loss), and restitution. The United States is also seeking the forfeiture of defendants’ real property and other assets derived from their fraudulent scheme. However, any sentence following conviction would be imposed by the court after consideration of the U.S. Sentencing Guidelines and the federal statute governing the imposition of a sentence, 18 U.S.C. § 3553.

Grant Fondo and David Callaway are the Assistant U.S. Attorneys who are prosecuting the case with the assistance of Kamille Singh and Jeanne Carstensen. The prosecution is the result of a three-year investigation by the Federal Bureau of Investigation and the Internal Revenue Service-Criminal Investigation.

Please note, an indictment contains only allegations against an individual and, as with all defendants, Norma Valdovinos, Claudia Valdovinos, Jesus Chavez, Linda Dung Tran, Elaine “Queenie” Ly, and Pablo Curiel must be presumed innocent unless and until proven guilty.

David B. Fein, United States Attorney for the District of Connecticut, today announced that a federal grand jury in Bridgeport has returned an indictment charging DOMINGOS DIAS, 41, of Trumbull, and HECTOR NATERA, 39, formerly of Bridgeport, with conspiracy, wire fraud, and bank fraud offenses stemming from their alleged involvement in a mortgage fraud scheme that has caused more than $3 million in losses to lenders. The indictment was returned on November 18, 2010, and was unsealed on May 11, 2011.

The indictment alleges that from approximately January 2006 to April 2008, DIAS, NATERA, and others conspired to obtain millions of dollars of fraudulent real estate loans from banks and real estate lenders for properties that were purchased in Bridgeport and New Haven. Working from offices located at 1944 Boston Avenue in Bridgeport, DIAS and NATERA held themselves out as real estate agents and mortgage brokers and recruited “straw buyers,” found sellers, and orchestrated and directed the creation and flow of fictitious documentation and information that were needed to obtain the fraudulent loans from lenders. After a loan for a property had been fraudulently obtained and a closing had occurred, DIAS and NATERA kept some of the fraud proceeds and distributed proceeds to other members of the conspiracy.

It is alleged that losses to mortgage lenders from this scheme total in excess of $3 million.

The indictment charges DIAS and NATERA with one count of conspiracy to commit wire fraud and bank fraud and one count of bank fraud. The indictment also charges DIAS with six counts and NATERA with four counts of wire fraud. Each of the charges carries a maximum term of imprisonment of 30 years and a fine of up to $1 million

DIAS was arrested on November 23, 2010. He had been released on bond until May 11 when U.S. Magistrate Judge Holly B. Fitzsimmons found that DIAS had violated the terms and conditions of his release and ordered the bond revoked and DIAS detained. The indictment was unsealed on that date.

NATERA is currently being sought by law enforcement. Citizens with information about this case, or any other suspected mortgage fraud activity, are encouraged to contact the Connecticut Mortgage Fraud Task Force at 203-333-3512, or by e-mail to ctmortgagefraud@ic.fbi.gov.

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.

This matter is being investigated by the Federal Bureau of Investigation and the United States Postal Inspection Service. The case is being prosecuted by Assistant United States Attorney Ann M. Nevins.

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 is focusing on emerging crime trends that are associated with the growing tide of foreclosures, including foreclosure rescue schemes and short sale schemes.

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.

David B. Fein, United States Attorney for the District of Connecticut, announced that NATHAN RUSSO, 34, of Johnston, Rhode Island, pled guilty today before Chief United States District Judge Alvin W. Thompson in Hartford to one count of conspiracy to commit wire fraud stemming from his participation in a mortgage fraud conspiracy.

According to court documents and statements made in court, RUSSO and others engaged in a scheme 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.

RUSSO was a mortgage broker employed by Action Mortgage Corp., a licensed mortgage broker in Cranston, Rhode Island. In pleading guilty, RUSSO admitted that he acted as a mortgage broker for five residential property sales that closed in between April and September 2007. All but one of these properties were in Connecticut. RUSSO prepared loan packages for these transactions, including loan applications for the buyer, which he knew to include false information about the buyer’s employment, assets and liabilities and the buyer’s intention to occupy the property as his principal residence. The loan applications also were supported by false documentation, including earning statements and fraudulent bank records.

Judge Thompson has scheduled sentencing for April 4, 2011, at which time RUSSO faces a maximum term of imprisonment of five years and a fine of up to $250,000.

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.

INDIANAPOLIS—Jerry J. Jaquess, Indianapolis, age 67, was sentenced to 30 months in prison late yesterday by Chief Judge David F. Hamilton for his participation in a large mortgage fraud scheme in the Indianapolis area, announced Timothy M. Morrison, United States Attorney for the Southern District of Indiana. Jaquess plead guilty to one count of wire fraud and one count of money laundering. Today’s sentencing follows a lengthy investigation conducted by Special Agents of the Internal Revenue Service – Criminal Investigation Division and investigators for the United States Attorney’s Office, with assistance by the Federal Bureau of Investigation. Eight other individuals have been charged in the schemes and those cases are currently pending before Judge Hamilton. The investigation is continuing as to other individuals who were involved in the mortgage fraud schemes.

Jaquess owned and operated Homevestors LLC, a company involved in the development and construction of new real estate properties, as well as the purchase and sale of existing residential real estate properties. As part of the mortgage fraud schemes, Jaquess and other individuals entered into contracts to purchase 186 duplexes in the Windsor Village neighborhood, located near Arlington Avenue and 21st Street, on the east side of Indianapolis. These properties were all owned by one person, thru various land trusts. Jaquess and others negotiated with this individual to purchase all of the duplexes at a price of $50,000.00 each (the last group of these properties actually sold for $60,000.00).

Jaquess used his company Homevestors to negotiate the purchase and sale of the first 11 Windsor Village properties. On each of the properties, Jaquess entered into a land contract (and other documents) immediately preceding the closing, showing that Homevestors LLC was purchasing the property from the owner for $50,000.00. He also entered into agreements to sell the properties to investors for $120,000.00 each. In early February 2005, prior to the first purchase agreements ever being finalized, Jaquess, or individuals associated with him, caused three of the Windsor Village properties to be listed on the Metropolitan Indianapolis Board of Realtors Multiple Listing Service (MLS) showing a list price of $120,000.00. Jaquess did not own the properties at the time they were listed and did not even enter into land contracts to purchase these properties (for $50,000.00 each) until mid-March 2005. These properties were the first three Windsor Village properties closed (on March 17, 2005). A few days after these properties closed, Jaquess and his associates caused these three sales (at $120,000.00 apiece) to be placed on the MLS. This allowed Jaquess and other individuals involved in the scheme to show these three properties as comparables on appraisals to be prepared for all of the remaining Windsor Village properties, thus making it appear that each of those properties were worth $120,000.00. Jaquess attended the closings as the seller of the properties, and generally also took the buyer (investor) down payment check to the closings. Jaquess signed the loan closing documents on behalf of Homevestors LLC, including the false HUD-1 Settlement Statements, showing that the investors were providing the down payments, which he knew to be untrue. After the closing, Jaquess received checks to Homevestors LLC for the amount of the fraudulent loan proceeds (generally more than $70,000.00 per property). Jaquess then caused Homevestors LLC to issue checks disbursing the fraudulent loan proceeds. Included in these checks were payments totaling approximately $42,000.00 payable to Jaquess personally, or a family member of his, as well as checks to repay the individuals “fronting” the down payment (plus $1,000.00 – $3,000.00 fee) and checks to pay the investors $4,000.00 for each property purchased.

According to Assistant U. S. Attorney Susan Heckard Dowd, who prosecuted the case for the government, Judge Hamilton ordered Jaquess to serve three years on supervised release following his 30 months of incarceration and also ordered him to pay $824,614.33 in restitution to Homecomings Financial and Argent Mortgage Company.

John Bravata, the founder and chairman of BBC Equities, LLC, was arrested yesterday at JFK International Airport, announced U.S. Attorney Barbara L. McQuade. Bravata was arrested on an inbound flight from Italy. McQuade was joined in the announcement by Special Agent in Charge Andrew G. Arena, Federal Bureau of Investigation.

Bravata is charged in a criminal complaint with wire fraud in connection with his solicitation of investor funds for BBC, which Bravata characterized as a real estate investment fund. The complaint charges that from 2006 through 2009, Bravata knowingly participated in a scheme to defraud investors. Bravata and those working on his behalf made multiple misrepresentations to numerous prospective investors, including misrepresentations regarding how their investment funds would be utilized, the security of funds invested with BBC, and the returns that could be expected by investors of BBC.

Bravata also misled investors by telling them that managers of BBC would not earn money unless BBC was profitable. He also represented that the managers of BBC did not take fees, commissions, or a salary. In reality, Bravata and others received lucrative compensation from BBC and related entities despite that fact that BBC was never profitable. Bravata also used investor funds to pay for the construction of his roughly 18,000 square foot personal home and to pay for other personal expenses.

The charge in the complaint, wire fraud, carries a maximum penalty of 20 years’ imprisonment and a $250,000 fine.

A complaint 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 and is being prosecuted by Assistant United States Attorney Louis P. Gabel.

Two Co-Defendants, Stephen Scott Brown and Tamara E. Scott, Sentenced to 37 Months and 24 Months

INDIANAPOLIS—Robert Andrew Penn, 44, formerly of Indianapolis, was sentenced to seven years in prison late yesterday by Circuit Judge David F. Hamilton for Penn’s part in a multi-million dollar mortgage fraud scheme in the Indianapolis area. Penn had entered guilty pleas to charges of wire fraud, conspiracy to commit wire fraud, and money laundering. Co-defendant Tamara E. Scott, age 50, Indianapolis, was sentenced to 24 months in prison for conspiracy to commit wire fraud and money laundering, and co-defendant Stephen Scott Brown, age 37, Indianapolis, was sentenced to 37 months in prison for conspiracy to commit wire fraud and money laundering.

These sentencings follow a lengthy investigation conducted by Special Agents of the Internal Revenue Service – Criminal Investigation Division with assistance from the Federal Bureau of Investigation. A total of nine individuals have been charged in these schemes. Jerry Jaquess and Timothy Brown were previously sentenced to 30 months and 37 months in prison, respectively, and the remaining cases are currently pending before Circuit Judge Hamilton. The investigation is continuing as to other individuals who were involved in the mortgage fraud schemes.

Between November 2003 and August 2005, at least 136 fraudulent loans, totaling $16,613,850.00, were obtained by Penn and his numerous business entities, assisted by Scott Brown, and others. The loans were obtained from Argent Mortgage Company, The MoneyStation, and People’s Choice Mortgage / Countrywide Home Loans. Penn accepted responsibility for all 136 of these loans.

Penn and his associates owned and operated numerous business entities which were created and used to illegally obtain loans on residential real estate properties in the Indianapolis area. Penn controlled and directed the activities of the other people involved in the illegal activities. Scott was married to Penn during the commission of all of the mortgage fraud crimes, and was involved in the business activities of most of the entities used to purchase, sell and manage properties in the fraudulent transactions. Brown was involved in the mortgage brokerage business and assisted in brokering many of the loans with Argent Mortgage Company and The MoneyStation.

Of the 136 fraudulent loans charged, 39 loans related to the purchase of properties from individual sellers, generally individuals who either did not have their homes listed to sell, or had them listed as “for sale by owner.” These loans totaled over $7,000,000.00 and were all issued by Argent Mortgage Company.

The remaining 97 fraudulent loan transactions charged all relate to the sale of duplexes in the Windsor Village neighborhood, located near Arlington Avenue and 21st Street, on the east side of Indianapolis. These loans totaled over $9,312,000.00 and were funded by Argent Mortgage Company, The MoneyStation and by People’s Choice Mortgage, a warehouse lender in Kentucky who had a correspondent lending agreement with Countrywide Home Loans in California. Countrywide Home Loans purchased all of these loans shortly after they were funded. All of the loans involved in the schemes went into default, and the lenders either foreclosed on the homes or took other action, including granting deeds in lieu of foreclosure or allowing short sales of the properties.

Scott’s involvement in the business included attending closings and signing fraudulent documents, receiving checks for fraudulent loan proceeds, depositing those checks to corporate bank accounts, obtaining cashiers’ checks to pay co-conspirators, and directing others in the disbursements to be made from the corporations. As part of the Windsor Village transactions, Scott, at Penn’s direction, added the names of investors to bank accounts of numerous entities and forged their signatures on bank account signature cards, to make it appear that the investors had assets which they did not have. Scott’s sentence reflected her involvement in approximately 130 fraudulent loans (including all 97 Windsor Village loans). The total amount of those loans was $14,931,300.00. Her total fraud loss was calculated at $6,149,300.00.

Stephen Scott Brown’s participation included filling out false loan applications, obtaining false documents, obtaining inflated appraisals, and submitting the fraudulent loan packages to the lenders, knowing the documents to be false. Brown received $1,500-2,000 for each fraudulent loan which he brokered. He also assisted in funding some of the fraudulent down payments. Stephen Scott Brown’s sentence reflected his involvement in 43 fraudulent loans, including the first 11 Windsor Village loans. The total amount of those loans was $6,575,300.00. The actual loss was calculated at $2,793,412.64.

According to Assistant United States Attorney Susan Heckard Dowd, who prosecuted these cases for the government, Circuit Judge Hamilton also ordered Penn, Scott and Brown to serve three years on supervised release following their incarceration and make restitution as follows:

Penn: $11,411,722.32
Scott: $2,793,412.64
Brown: $11,122,891.82

NEWARK, NJ—A former New Jersey loan officer was sentenced today to 70 months in prison in connection with a mortgage fraud and property-flipping scheme involving rental properties in Paterson, NJ ., United States Attorney Paul J Fishman announced. Amer Mir, 42, of Jersey City, NJ ., was previously convicted in December 2009 after a five-week jury trial of wire fraud and conspiracy to commit wire fraud before United States District Judge Jose L Linares. Judge Linares also imposed the sentence today in Newark federal court. According to documents filed in this case and statements made in court: While a loan officer at Jersey City-based United Home Mortgage Co ., Mir conspired to originate fraudulent mortgage loans that were used to finance and refinance the purchase of two- and three-family rental properties in Paterson, NJ. by borrowers who could not afford those loans.

During late 2003 through early 2005, Mir routinely overstated borrowers’ assets when taking their loan applications. In addition, he directed the creation of false letters concerning the borrowers’ credit histories. He received $200,000 in commissions once the fraudulent loans closed, as well as substantial cash payments from one of the ringleaders of the scheme.

And Judge Linares found that Mir lied to law enforcement prior to being charged and then perjured himself repeatedly while testifying at trial. In addition to the prison term, Mir was sentenced to three years of supervised release, ordered to pay $2,341,937.82 in restitution, and required to forfeit $210,000 in proceeds of the scheme. Mir’s case is part of an ongoing investigation by the United States Department of Housing and Urban Development Office of Inspector General (HUD-OIG), the FBI, the United States Postal Inspection Service and IRS-Criminal Investigation into fraudulent Federal Housing Administration-insured and conventional mortgage loans originated by various New Jersey mortgage companies.

The investigation has resulted in more than a dozen convictions of current or former New Jersey residents, including: Michael Eliasof, a former real estate agent who helped orchestrate the scheme; Gerald Carti, a former loan officer and shareholder of United States Mortgage Corp. who originated fraudulent mortgage loans during the scheme; Frederick Ugwu, a real estate investor who sold many Paterson properties during the scheme; Norman Barna, who like Ugwu sold many Paterson properties through the scheme; William Ottaviano, an appraiser who misstated the condition of many of the Paterson properties involved in the scheme; Renford Davis and Hopeton Bradley (now deceased), who jointly managed many of the Paterson properties involved in the scheme; Claribel Morrobel, a recruiter for the scheme; and Melanie Gebbia, the former legal assistant of William Colacino (now deceased), a former Garfield attorney and municipal court judge. Ugwu was convicted at the 2009 trial for his role in the scheme, and Judge Linares recently sentenced him to 50 months in prison and ordered him to pay more than $1.6 million in restitution and forfeit more than $1.75 million in proceeds from the scheme.

In addition, Judge Linares recently sentenced Corallo, Eliasof, Carti and Ottaviano to 51 months, 40 months, 27 months, 15 months, and six months in prison, respectively, for their roles in the scheme, while Barna, Gebbia, and Morrobel each received probation. United States Attorney Fishman credited special agents of HUD-OIG, under the direction of Special Agent in Charge Joseph W Clarke for the Mid-Atlantic region; special agents of the FBI, under the direction of Special Agent in Charge Michael B Ward in Newark; inspectors of the United States Postal Inspection Service, under the direction of Acting Postal Inspector In Charge Thomas E Boyle; and special agents of IRS-Criminal Investigation, under the direction of Special Agent in Charge Victor W Lessoff, for the investigation leading to today’s sentence.

The government is represented by Assistant United States Attorney Mark E Coyne, Chief of the United States Attorney’s Appeals Division, and Assistant United States Attorney Matthew E Beck of the United States Attorney’s Economic Crimes Unit. Defense counsel: Gerald M Saluti, Esq ., Newark, NJ.

Reported by: FBI

A Staten Island man was arrested earlier this morning on charges arising out of his alleged operation of a $12 million Ponzi scheme from 2007 to 2010. Joseph Mazella, the founder and president of the Great Atlantic Group, Inc., a Staten Island-based real estate and financial consulting company, was charged with securities fraud, wire fraud, and money laundering in a federal indictment that was unsealed earlier today in federal court in Brooklyn. The case has been assigned to Chief United States District Court Judge Carol B. Amon. The defendant is scheduled to be arraigned later today before United States Magistrate Judge Lois Bloom at the United States Courthouse, 225 Cadman Plaza East, Brooklyn, New York. The charges were announced by Loretta E. Lynch, United States Attorney for the Eastern District of New York, and Janice K. Fedarcyk, Assistant Director in Charge of the Federal Bureau of Investigation, New York Field Office.

As alleged in the indictment, Mazella solicited investments in Third Millennium Enterprises, Inc. and 150 West State Street Corp., both of which were associated with the Great Atlantic Group that supposedly invested in real estate projects and provided private mortgages. Mazella told prospective investors that he would invest their money in real estate projects, including projects in Trenton, New Jersey, a warehouse in Utica, New York, and a golf course development project. From approximately January 2007 until approximately December 2010, investors contributed a total of nearly $12 million to Third Millennium and 150 West State Street. As of December 2010, the combined closing balance of the bank accounts associated with the two companies was less than $15,000.

According to the indictment, Mazella described the investments as an opportunity to receive the returns of mutual funds and stocks, without any significant loss of liquidity, and at a fixed rate during the entire time period of investment. Solicitation materials distributed by Mazella characterized the investments as “geared toward individuals who are interested in earning more than traditional bank savings and CD rates but without the risk of the stock market.” Some investors were encouraged to obtain mortgages on their homes and to invest the mortgage proceeds with Third Millennium or 150 West State Street, and other investors, typically senior citizens, were encouraged to apply for reverse mortgages on their residences and to invest the proceeds with the two companies.

The indictment charges that, by as early as January 2007, Mazella had virtually stopped investing in real estate projects, and instead operated Third Millennium and 150 West State Street as a Ponzi scheme, in which he paid returns to investors from existing investors’ deposits or money paid by new investors. Many of the properties in which the companies held any mortgage or ownership interest were abandoned and in various states of disrepair, and the property taxes owed on several of those properties had fallen into arrears. Mazella also allegedly used investors’ money to pay his personal expenses, including payments for a Porsche, a mortgage on his personal residence, and family expenses.

“Perhaps the most egregious aspect of this case is that the defendant allegedly encouraged victims—some, senior citizens—to obtain mortgages on their homes and to invest the proceeds in what the indictment charges was nothing more than a Ponzi scheme,” stated United States Attorney Lynch. “We will aggressively investigate and prosecute those who perpetrate these crimes.” Ms. Lynch thanked the United States Postal Inspection Service, the Financial Industry Regulatory Authority, the Internal Revenue Service, and the Department of Housing and Urban Development (OIG), for their assistance.

FBI Assistant Director in Charge Fedarcyk stated, “Mazella lured investors with the promise of steady rates of return without market risk. In fact, because the investment scheme allegedly was an investment scam, the only one guaranteed to get rich quick was Mazella himself. The FBI is committed to protecting the investing public.”

If convicted, Mazella faces a maximum sentence of 20 years’ imprisonment for each count of securities fraud, wire fraud, and money laundering.

The government’s case is being prosecuted by Assistant United States Attorneys John P. Nowak and Evan Weitz.

The FBI has established a telephone hotline for victim investors in Third Millennium Enterprises and 150 West State Street Corp. The number is 212/384-1300.

The Defendant:
JOSEPH MAZELLA
Age: 52

BIRMINGHAM—A federal judge today sentenced the leader of a mortgage fraud ring in Jefferson County to six-and-a-half years in prison, announced U.S. Attorney Joyce White Vance, FBI Special Agent in Charge Patrick Maley and Department of Housing and Urban Development Acting Inspector General Michael Stephens.
U.S. District Judge Inge P. Johnson sentenced TIMOTHY WAYNE JOHNSON, 45, of Bessemer, on two counts of making false statements on a loan application, two counts of mail fraud against a financial institution, and one count of false statements to federal agents. Judge Johnson also ordered the defendant to forfeit $2.5 million to the government as proceeds of illegal activity. JOHNSON pleaded guilty to the charges and consented to the forfeiture in July.
“Mortgage fraud continues to threaten the communities and financial institutions within our district, and throughout the country,” Vance said. “This defendant is responsible for the largest mortgage fraud scheme prosecuted, thus far, in northern Alabama. This conviction should send the message that these frauds will be sought out and prosecuted to the fullest extent of the law. Fraud in loan applications will not be tolerated. We are pleased with the result of this prosecution, but there is much more to accomplish,” she said.
“Mortgage fraud and white collar crimes strike at the economic heart of the American system,” Stephens said. “The Inspector General’s Offices of HUD and the Social Security Administration work collaboratively with the FBI to investigate these crimes. We use a variety of investigative and analytical techniques to identify those who engage in mortgage fraud. To the extent that we can uncover and prosecute these activities, it is to everyone’s benefit,” he said. “This joint prosecutorial effort by the U.S. Attorney’s Office and law enforcement agencies has helped send a strong message that those who seek to unlawfully profit by committing acts of mortgage fraud will be vigorously prosecuted.”
“Mortgage fraud has a direct negative impact on property values, potentially making all of us victims,” Maley said. “I encourage anyone with information on possible fraud to report it to the FBI, so it can be investigated and rooted out.”
JOHNSON’S mortgage fraud scheme involved more than 40 real estate transactions that caused financial institutions to approve $2.5 million in loans that were fraudulently obtained through false statements and documents made by JOHNSON. The loans were on properties in Fairfield, East Lake, inner-city Birmingham and Bessemer, and about 75 percent of those mortgages have been foreclosed. JOHNSON created and controlled nearly every aspect of the mortgage fraud scheme and enlisted the participation of at least 10 other individuals who have been convicted for their conduct in the scheme, according to the government’s sentencing memorandum.
Government documents in the case outline JOHNSON’S illegal scheme as follows: As the center of the fraud, JOHNSON would approach people attempting to sell their homes and discover what price they wanted. He would do minimal work on the homes, have them appraised, and then attach a “mechanics lien” against the property for the difference between the appraised value and what the owner wanted for the house. Johnson would then proceed to find buyers, spreading the word that he could help individuals improve their credit or get approved for a mortgage loan.
His means of helping people secure loans often involved the creation of fraudulent letters purporting to show that the loan applicant received monthly disability payments from the Social Security Administration. Once loans were issued, based on false credit or disability income claims, Johnson would be paid the amount of the liens he placed on the properties.
This case was investigated by the FBI, and the Inspector General’s Offices of HUD and the Social Security Administration. Assistant U.S. Attorney Patrick Carney prosecuted the case.
This prosecution is part of President Barack Obama’s Financial Fraud Enforcement Task Force. President Obama established the interagency 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.

ALEXANDRIA, VA—Lourdes Rojas Almanza, 28, of Falls Church, Va., was sentenced today to 77 months in prison, followed by five years of supervised release, for her role in a multi-million-dollar mortgage fraud conspiracy. Almanza was also ordered to pay restitution in the amount of $9,718,749.
Neil H. MacBride, United States Attorney for the Eastern District of Virginia; Colonel David Rohrer, Fairfax County Chief of Police; and Shawn Henry, Assistant Director in Charge of the FBI Washington Field Office, made the announcement after sentencing by United States District Judge Gerald Bruce Lee. Almanza pled guilty on Dec. 17, 2009.
According to court documents, Almanza, a loan officer, was part of a wide-ranging mortgage fraud conspiracy, in which she and others recruited straw buyers with good credit to purchase properties for other individuals. As a loan officer, Almanza prepared fraudulent mortgage loan applications in the straw buyers’ names. The straw buyers signed the fraudulent loan applications in order to obtain much larger loans than they were qualified to receive; the loan applications misstated, among other things, the straw buyers’ income, assets, employment, citizenship status, and intent to live in the property. Almanza also obtained fake bank statements, pay stubs, and W-2′s to corroborate the false statements in the loan applications.
During the course of the conspiracy, Almanza and her co-conspirators engaged in more than 30 fraudulent property transactions in the Eastern District of Virginia and obtained over $24 million in mortgage loans to purchase the properties. The straw buyers defaulted on the bulk of the fraudulent loans and the properties either went into foreclosure or were short-sold for sizeable losses. As a result, more than 20 banks and lenders suffered losses in excess of $9 million. Almanza was directly involved in fraudulent transactions that yielded over $2.5 million in loss.
Almanza was initially scheduled to be sentenced on April 30, 2010, but the sentencing was continued after she attempted to flee the country on April 27, 2010. Almanza used her sister’s passport and booked a flight from Reagan National Airport to Bolivia, with a layover in Miami. The FBI, with the assistance of the Fairfax County Police Department, located and arrested Almanza when her flight landed in Miami.
Litcia Linares, 33, of Falls Church, Va., was also sentenced today to 27 months in prison, followed by three years of supervised release, for her role as a real estate agent in the conspiracy. Linares was also ordered to pay restitution in the amount of $7,509,849. Linares pled guilty on Jan. 8, 2010. Linares was married to co-defendant Grovert Rojas during the time she was involved in the conspiracy. Linares collected several commission checks for work that she and her then-husband did as real estate agents on the fraudulent straw buyer transactions.
Almanza’s brother, Ruben Rojas, pled guilty on Dec. 22, 2009, for his role as a realtor in the conspiracy. Rojas was sentenced on May 7, 2010 to 60 months in prison. Ten straw buyers have also been charged for their involvement in the conspiracy. One of the straw buyers, Juan De La Cruz Aguayo, pled guilty on March 18, 2010. Aguayo is scheduled for sentencing on June 11, 2010.
This case was investigated by the Fairfax County and Miami-Dade County Police Departments and FBI’s Washington Field Office. Assistant United States Attorneys Charles Connolly and Marla Tusk prosecuted the case on behalf of the United States.

A 46-year-old Golden Valley man pled guilty earlier today in federal court in Minneapolis to orchestrating a mortgage fraud scheme that resulted in the theft of more than $2.5 million from lenders nationally. The scheme centered on obtaining fraudulent loans for the purchase of 24 homes in the Twin Cities. Appearing before United States District Court Judge Joan N. Ericksen, Zack Zafer Dyab pled guilty to one count of conspiracy to commit wire fraud and one count of money laundering in connection to the crime. Dyab was indicted along with Julia Alexander Rozhansky, age 46, of Minnetonka, on December 8, 2009.
In his plea agreement, Dyab admitted that from 2003 through early 2007, he conspired with Rozhansky and others to induce through fraudulent means numerous mortgage lenders throughout the U.S. to loan substantial sums of money to unindicted co-conspirators, who happened to be relatives of Rozhansky. Dyab also admitted stealing large amounts of loan proceeds for his personal use.
At the time, Dyab owned American Choice Lending, Inc., a mortgage brokerage company. Rozhansky was his assistant and had supervisory authority over the company’s loan officers and loan processors.
To further the fraud scheme, Dyab often arranged for straw buyers to purchase properties at inflated prices from him or companies he owned. In other instances, he had straw buyers purchase properties at inflated prices from third-party sellers. After those sales, Dyab and Rozhansky purportedly caused the sellers to pay them a portion of the sale proceeds. In addition, Dyab sometimes had a real estate broker receive so-called real estate commissions from the transactions, which the broker then would sign over to Dyab.
In each transaction, Dyab admitted submitting a mortgage loan application that greatly exaggerated the monthly income and bank account balance of the straw buyer. On occasion, he also deposited funds into the bank account of a straw buyer in an effort to trick the lender into believing that the buyer had substantial liquidity. In addition, Dyab routinely provided straw buyers with money to bring to transaction closings, to be passed off as “down payments.” Moreover, he led lenders to believe that the straw buyers intended to live in the homes they were purchasing, when, in fact, he knew they actually planned to sell the homes to third-party straw buyers within a year. The third-party straw buyers then would default on the mortgage loans.
On February 15, 2005, at the conclusion of one of these real estate transactions, Dyab obtained $63,938.94 in seller proceeds by forging the seller’s name on the back of the proceed check. He then deposited the check into his own bank account. Then, on February 17, 2005, Dyab used $15,000 of those funds to purchase a cashier’s check.
For his crimes, Dyab faces a potential maximum penalty of five years in prison on the conspiracy charge and ten years on the money laundering charge. Judge Ericksen will determine his sentence at a future hearing, yet to be scheduled. Rozhansky also pled guilty before Judge Ericksen today. She, too, will be sentenced at a future hearing.
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 David J. MacLaughlin.