As evidenced by these announced arrests and indictments, mortgage fraud is a significant crime problem in Nevada. Mortgage fraud has likely accelerated the recent decline in the Las Vegas housing market. As of February 2008, Nevada was the top state in the nation for investor-owned mortgage defaults.

While the vast majority of practioners are honest, mortgage fraud schemes are being orchestrated by individuals within the industry such as: mortgage bankers/brokers, loan officers, realtors, title/escrow officers, appraisers, and other industry related personnel. These schemers have contributed significantly to the demise of the real estate market in Las Vegas and have inflated entire new developments by establishing bogus comparatives. For example, the schemers utilize straw buyers or stolen identities to flip the houses between each other. The schemers make payments on the properties for a short period of time and then allow the house to go into foreclosure. This establishes inflated comps which are used within the real estate industry to establish appraisal values. The end result is that home buyers purchase properties in communities that are greatly over valued, and they are then unable to sell or re-finance the property, eventually leading to foreclosure. The lending institution or the federal government is left to suffer massive economic losses.

To combat this criminal activity, the Las Vegas Division of the FBI has created the Southern Nevada Mortgage Fraud Task Force, which is housed in FBI office space. The following law enforcement partners have allocated investigators to this task force: the Las Vegas Metropolitan Police Department, Internal Revenue Service-Criminal Investigation, the Housing and Urban Development and Social Security Administration-OIGs, United States Postal Inspection Service, and the Nevada Attorney General’s Office. Further, the United States Attorney’s Office has designated an Assistant United States Attorney to work full time on task force matters.

The Las Vegas FBI has an excellent working relationship with each of these participating agencies, and we continue to look forward to leveraging each agency’s strengths to combat mortgage fraud.

A telephone hotline has been established to receive complaints concerning potential mortgage fraud. The telephone number is 702-584-5555.

TRENTON, NJ—A Marlboro, N.J., real estate developer admitted today to his role in an investment fraud conspiracy which embezzled nearly $1 million raised in connection with purported commercial real estate developments in New Jersey, U.S. Attorney Paul J. Fishman announced.

Allen Weiss, 60, of Marlboro, pleaded guilty to an information charging him with one count of conspiracy to commit wire fraud. Weiss entered his guilty plea before U.S. District Judge Anne E. Thompson in Trenton federal court.

According to the information to which the defendant pleaded guilty and statements made in court:

Weiss admitted that he conspired with others from January 2009 to February 2010 in a scheme to embezzle investment funds he raised in connection with purported commercial real estate developments. Weiss and his co-conspirators founded a series of holding corporations to solicit investments to develop commercial real estate, including professional services locations for physicians in Holdmel, Hazlet, and Neptune, N.J. Weiss admitted that he and his coconspirators embezzled nearly $1 million in investments funds contributed by victims toward the projects. He also admitted that he lied to those and other victims to raise additional funds, which Weiss and his co-conspirators spent on personal expenses. Weiss pleaded guilty to one count of conspiracy to commit wire fraud, which carries a maximum potential penalty of 20 years in prison and a $250,000 fine.

U.S. Attorney Fishman credited special agents of the FBI, under the direction of Special Agent in Charge Michael B. Ward, for the investigation leading to the guilty plea.

The government is represented by Assistant U.S. Attorney André M. Espinosa of the U.S. Attorney’s Office Economic Crimes Unit in Newark.

This case was brought in coordination with 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.

Defense counsel: Robert A. Honecker, Jr., Esq., Ocean, N.J.

RICHMOND, VA—Jodi D. Robinson, age 38, a Richmond realtor and owner of Citicorp Investments, a Virginia LLC, pled guilty today to a five-year mortgage loan fraud, in violation of Title 18, United States Code, Section 1341. Robinson is facing a sentence of 30 years in prison and a fine of $1 million dollars when she is sentenced by Chief United States District Judge James R. Spencer on July 31, 2011. Neil J. MacBride, United States Attorney for the Eastern District of Virginia; Kenneth R. Taylor, Special Agent in Charge of HUD’s Office of Inspector General; Keith Fixel, the Inspector in Charge of the Postal Inspection Service; and Michael Morehart, Special Agent in Charge of the FBI, announced today’s guilty plea.

Robinson admitted to obtaining 16 different fraudulent real estate loans in amounts totaling $2.4 million in a four-part scheme that defrauded Washington Mutual Bank; Sun Trust Bank; the Federal National Mortgage Association, known as Fannie Mae; the Federal Home Loan Mortgage Corporation, known as Freddie Mac; and the U.S. Department of Housing and Urban Development’s (HUD) Section 8 Rental Voucher program for needy individuals. The total loan losses were approximately $1.2 million. The total losses to HUD were approximately $105,000. Robinson is facing 30 years in prison and $1million in fines.

There were four overlapping parts of the scheme. First, on real estate transactions where Robinson was simply the real estate agent, she and her accomplices would misrepresent the creditworthiness of the borrowers in a wide variety of ways. A frequent misrepresentation on the loan applications related to the borrowers’ employment status and involved the overstatement of the monthly employment income.

The second part of the scheme related to real estate transactions in which Robinson was not merely an agent, but was buying and selling properties that she rented out. On these, she secretly used nominees or straw parties to purchase the rental properties using mortgage loans.

The mortgage loan applications were thus fraudulent in that they did not disclose (i) Robinson as the real party in interest, (ii) Robinson’s true creditworthiness, especially in concealing all the other loans for which she was secretly liable on other nominee transactions, and (iii) the fact that the properties were not owner-occupied. In addition, the financial information on the nominee borrowers was falsified to fraudulently enhance the buyers’ creditworthiness, in the same way as in the selling agent realty transactions.

A third part of the scheme was a fraud on the U.S. Department of Housing and Urban Development’s (HUD) Section 8 Rental Voucher program for needy individuals. After the nominee purchases were completed, Robinson, the nominee, maintained the ownership interest, paying the mortgage and managing the property. With many of the properties, Robinson applied with HUD to have herself and her properties qualified to participate in HUD’s subsidized rental program, making her eligible to receive tenant referrals and direct rental payments from HUD. In this process, Robinson induced HUD to transmit the rental subsidy directly to her. She then used to the money to make the monthly mortgage payments to the banks.

The fourth part of the scheme also related to the rental properties. To make more money on these properties, Robinson would “sell” the properties at a higher price to another nominee/straw party, who would fraudulently obtain another mortgage loan in the same way previously described. Robinson thereby obtained access to the proceeds of the new loan. Thus, as part of the sham sale, Robinson would take the proceeds of the new mortgage loan, payoff the existing mortgage loan (which was less than the new loan), pay the transactional expenses, and then convert the remainder of the money to herself.

The case was investigated by HUD’s Office of the Inspector General, the United States Postal Inspection Service, and the FBI, Richmond Division. Assistant United States Attorney David T. Maguire is prosecuting the case for the United States.

A copy of this press release may be found on the website of the United States Attorney’s Office for the Eastern District of Virginia at http://www.justice.gov/usao/vae. Related court documents and information may be found on the website of the District Court for the Eastern District of Virginia at http://www.vaed.uscourts.gov or on http://pacer.uspci.uscourts.gov.

NEWARK, NJ—A Union City, New Jersey real estate investor and property manager was sentenced today to 24 months in prison for conspiring to launder money in order to make contributions to public officials in Union City in exchange for favors, U.S. Attorney Paul J. Fishman announced.

Itzhak Friedlander, 43, previously pleaded guilty before U.S. District Judge Jose L. Linares to an information charging him with one count of conspiracy to launder money to conceal and disguise unlawful activity. Judge Linares also imposed the sentence today in Newark federal court.

According to documents filed in this case and statements made in court:

Friedlander admitted that from June 2007 to August 2008, he conspired with government cooperating witness Solomon Dwek and co-conspirators Michael Altman and Shimon Haber to launder money from Dwek through Friedlander’s account at a purported charitable entity called Gmach Shefa Chaim. Dwek said the funds were proceeds of unlawful activities—namely, bank fraud, trafficking in counterfeit goods, and concealment of property from a federal bankruptcy court and trustee. The conspirators planned to funnel the money through Gmach Shefa Chaim to public officials in Union City in exchange for approvals to develop a Union City property. Friedlander admitted that the value of funds that he conspired to launder was approximately $175,000.

In addition to the prison term, Judge Linares sentenced Friedlander to two years of supervised release.

Altman was sentenced on March 31, 2011, to 41 months in prison, and Haber was sentenced on May 25, 2010, to five months in prison and five months of home confinement for their respective roles in the conspiracy.

U.S. Attorney Fishman credited special agents of the FBI, under the direction of Special Agent in Charge Michael B. Ward, and IRS – Criminal Investigation, under the direction of Victor W. Lessoff, with the investigation that led to today’s sentence.

The government is represented by Assistant U.S. Attorney Dustin Chao of the U.S. Attorney’s Office Special Prosecutions Division in Newark.

Defense counsel: Stacy Ann Biancamano, Esq; Timothy M. Donohue, Esq., West Orange, N.J.

David B. Fein, United States Attorney for the District of Connecticut, announced that KEVIN J. O’KEEFE, 51, of Simsbury, was sentenced today by Chief United States District Judge Alvin W. Thompson in Hartford to one day of imprisonment, time served, and three years of supervised release, for his role in two fraud schemes.

According to court documents and statements made in court, O’KEEFE was a vice president at Fleet Bank (and Bank of America after it acquired Fleet Bank) in Hartford. From approximately October 2001 to February 2007, O’KEEFE conspired with Paul Aparo, an attorney, and Richard R. Girouard, a real estate developer, to enrich themselves through the use of O’KEEFE’s position at the bank and by corrupting the bidding process on distressed loans that Fleet Bank was selling. As part of the scheme, O’KEEFE, Aparo, and Girouard created shell companies through which to submit bids on distressed loans being sold by Fleet Bank and with which to receive and distribute proceeds from the scheme. O’KEEFE had access to and obtained confidential information belonging to Fleet Bank and provided that information to Aparo and Girouard so that it could be used to submit winning bids on distressed loans. O’KEEFE also intentionally provided outdated information to other bidders involved in the bidding process in order to cause those bidders to submit artificially low bids. O’KEEFE provided Aparo and Girouard with access to the most up-to-date information. O’KEEFE also excluded bidders who he, Aparo, and Girouard believed would submit competitive bids for a distressed loan on which O’KEEFE, Aparo, and Girouard sought to bid.

Girouard paid O’KEEFE and Aparo approximately $100,000 on one loan that Girouard obtained through the corrupt assistance of O’KEEFE and Aparo. In addition, Girouard agreed to pay a shell company, called “Lexington Associates,” 15 percent of the profits on another distressed loan on which Girouard, with O’KEEFE and Aparo’s corrupt assistance, had submitted a winning bid. The 15 percent of the profits on the loan that Girouard (through his own shell company) paid to Lexington Associates amounted to more than $1.4 million, which O’KEEFE and APARO essentially split evenly.

Between December 2005 and January 2006, as part of a second scheme, O’KEEFE and Aparo defrauded Bank of America and Aparo’s client out of money. In that scheme, a client contacted Aparo about getting a mortgage release from Bank of America for an old mortgage. Aparo contacted O’KEEFE about it, and O’KEEFE checked Bank of America’s internal records for the mortgage. O’KEEFE found that no record of the mortgage existed within the bank. However, Aparo and O’KEEFE conspired to defraud the client and the bank by telling the client that the bank would release the mortgage for $55,000, which the client paid to Aparo through his law firm’s trust account. Aparo then paid the $55,000 to O’KEEFE, and a mortgage release on behalf of Bank of America was provided to the client.

On June 11, 2008, O’KEEFE pleaded guilty to one count of conspiracy to commit financial institution bribery and one count of bank fraud.

On November 24, 2009, Girouard pleaded guilty to one count of conspiracy to commit financial institution bribery. On April 30, 2010, he was sentenced to 30 months of imprisonment and was ordered to pay a fine in the amount of $15,000.

On July 24, 2008, Aparo pleaded guilty to one count of conspiracy to commit financial institution bribery and one count of bank fraud. On March 8, 2011, he was sentenced to 24 months of imprisonment and was ordered to pay a fine of $20,000.

This case was investigated by the Federal Bureau of Investigation and was prosecuted by Assistant United States Attorney Eric J. Glover.

NEWARK, NJ—Michael Kaufman, the CEO and founder of purported real estate investment firm Home Start America, Inc. (“HSA”), and loan officer David Wynn admitted yesterday and today to directing a long-running, large-scale wire fraud conspiracy through Kaufman’s company, U.S. Attorney Paul J. Fishman announced.

Kaufman, 43, of Reading, Pa., pleaded guilty Monday, April 11, 2011, to a superseding indictment charging both men with conspiracy to commit wire fraud. Wynn, 45, of Englewood, N.J., pleaded guilty today to the same charge. Both defendants entered their guilty pleas before U.S. District Judge Dennis M. Cavanaugh in Newark federal court.

According to documents filed in this case and statements made in court:

Kaufman founded HSA in Bloomfield, N.J., and at one time employed more than 30 people. Kaufman, through HSA, purchased and sold residential real estate properties. As part of the scheme, Kaufman and others recruited people—often first-time home buyers—to purchase properties quickly, with promises of no money down, no closing costs, and repairs paid for by HSA. Kaufman would then steer the purchasers to loan officers, including Wynn.

Many of the properties sold by HSA had actually been bought by HSA shortly before, and then “flipped” to the unsuspecting buyers for far more than HSA paid. Kaufman, Wynn, and others falsely inflated the buyers’ income and assets on loan documents to make it appear that the buyers could afford the properties HSA was selling, when the purchasers did not have the means to buy the properties.

Victim financial institutions—relying on the false figures in the loan documents—then issued the mortgage loans, unaware of the purchasers’ true financial conditions. HSA and Kaufman received illicit profits when the transactions closed, and Wynn and other loan officers received commissions for their fraudulent work. After the closings, the buyers could not make the payments on the properties, and nearly always lost the properties to foreclosure.

The fraud, which began as early as 2002 and lasted through June 2005, caused over $1.5 million in loss to the banks, and earned hundreds of thousands of dollars in profits for Kaufman and HSA.

At sentencing, Kaufman and Wynn each face a maximum of 20 years in jail and a fine of $250,000, or twice the gain or loss derived from their offenses.

U.S. Attorney Fishman praised the Department of Housing and Urban Development’s Office of Inspector General, under the direction of Joseph W. Clarke, Special Agent in Charge for the Mid-Atlantic Region; and the FBI, under the direction of Special Agent in Charge Michael B. Ward, for the investigation of this case.

The government is represented by Assistant U.S. Attorneys Bohdan Vitvitsky and Zach Intrater of the U.S. Attorney’s Office Criminal Division in Newark.

Defense counsel:
Kaufman: Robert De Groot, Esq., Newark, N.J.
Wynn: Stephen N. Dratch, Esq., Livingston, N.J.

PREET BHARARA, the United States Attorney for the Southern District of New York, announced that STEVEN BYERS, the former president and chief executive officer of the private equity firm WexTrust Capital, LLC (“WexTrust Capital”), was sentenced today to 160 months in prison on charges stemming from a fraud that raised more than $9 million from investors in private placement real estate offerings. BYERS, 48, was sentenced in Manhattan federal court by U.S. Court of Appeals Judge DENNY CHIN.

Manhattan U.S. Attorney PREET BHARARA said: “Steven Byers used smoke and mirrors to defraud his investors out of millions of dollars. But his scheme was ultimately exposed for the sham that it was, and now he will be punished severely for his crimes.”

According to the indictment and other documents previously filed in Manhattan federal court:

From 2003 to 2008, WexTrust Capital was a globally diversified private equity company specializing in investments in real estate and specialty finance opportunities. It was affiliated with several companies of a similar name, including WexTrust Securities, LLC, a broker-dealer registered with the United States Securities and Exchange Commission (“SEC”).

Beginning in 2003, BYERS, along with co-defendant JOSEPH SHERESHEVSKY and others, raised money from investors pursuant to private placement offerings, and then used material amounts of that money for other purposes without disclosing the diversion of funds to investors. In one such private placement, BYERS and others raised approximately $9.2 million in investor funds by representing that the funds would be used to purchase and operate seven commercial properties that were leased to the United States General Services Administration (“GSA”). According to the GSA private placement memorandum issued to investors by WexTrust Capital, the $9.2 million raised from investors, together with a mortgage of approximately $21 million, would be used to purchase the seven GSA properties and cover related acquisition expenses. The seven GSA properties, however, were never purchased. Instead, funds raised from investors were diverted for other purposes, none of which was disclosed to investors. BYERS and others later agreed to make up a story that they would then tell the GSA investors regarding what happened to their investment.

* * *

BYERS, of Oakbrook, Illinois, previously pled guilty to conspiracy to commit securities fraud and securities fraud. In addition to his prison term, Judge CHIN sentenced BYERS to three years of supervised release and ordered him to pay $7,700,630.35 in restitution and to forfeit $9.2 million in proceeds from his crimes.

BYERS’ co-defendant, JOSEPH SHERESHEVSKY, 54, of Brooklyn, New York, and Norfolk, Virginia, pled guilty to similar charges on February 3, 2011, and is scheduled to be sentenced on May 13, 2011, at 10:30 a.m., before Judge CHIN.

Mr. BHARARA praised the work of the Federal Bureau of Investigation in this case. Mr. BHARARA also thanked the U.S. Securities and Exchange Commission for its assistance in the investigation.

This case was brought in coordination with President BARACK OBAMA’s Financial Fraud Enforcement Task Force, on which Mr. BHARARA serves as a co-chair of the Securities and Commodities Fraud Working Group. 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.

Assistant United States Attorneys VIRGINIA CHAVEZ ROMANO and JILLIAN B. BERMAN are in charge of the prosecution.

Was a Fugitive for Almost a Year

BALTIMORE—Daniel E. Fink Jr., age 44, of Baltimore, who operated Homemaxx Title & Escrow LLC (Homemaxx), a title company that conducted residential real estate closings with offices in Middle River and Parkville, Maryland, pleaded guilty today to wire fraud in connection with a scheme to defraud lenders and homeowners of more than $2.2 million.

The guilty plea was announced by United States Attorney for the District of Maryland Rod J. Rosenstein and Special Agent in Charge Richard A. McFeely of the Federal Bureau of Investigation.

According to Fink’s plea agreement, from February 2003 to July 2004, Fink defrauded lenders, a title insurance company, and homeowners to obtain more than $2.2 million. Fink made arrangements for Homemaxx to act as the title company for real estate settlements and refinancing transactions. Lenders deposited funds in Homemaxx escrow accounts that Fink controlled. As part of the scheme, Fink caused title insurance to be issued to individuals purchasing or refinancing real estate, but concealed facts that negatively affected the buyers’ title in the real estate transactions. Fink also made misrepresentations to lenders in connection with transactions in which Fink acted as a party to the real estate transaction and handling the settlement on behalf of Homemaxx. For example, in a number of transactions, Fink represented to lenders that he was purchasing property and obtained a loan for that purpose. In fact, Fink purchased only the ground rent connected to that address and used the remainder of the loan for his personal benefit.

In addition, despite Fink’s representations to lenders that escrow funds were properly distributed after settlement, Homemaxx to failed to pay outstanding first mortgages on real estate transactions or to properly record deeds. Fink also improperly transferred substantial amounts of money from a Homemaxx escrow account into other accounts, and used the money intended to be disbursed pursuant to real estate closing documents for personal expenditures unrelated to real estate transactions.

Among other personal expenditures, Fink used the money to buy personal gifts for women, including over $200,000 of escrow money to purchase a property in Florida for a female acquaintance, and $59,728 to purchase a new 2004 Mercedes CLK 500 for a woman Fink knew from the Gentlemen’s Gold Club. Fink also used $61,965 to buy a 2003 Hummer H2, repeatedly spent the proceeds of his scheme at the Gentlemen’s Gold Club, on gambling, and on trips to Paradise Island, Bahamas.

In April 2004, Fink was confronted by representatives of the title insurance company about substantial amounts of money missing from the Homemaxx escrow account. Fink later fled the Baltimore area and used aliases to engage in real estate transactions in Florida. On March 26, 2009, a federal grand jury in Baltimore returned an indictment charging Fink with wire fraud and money laundering in connection with the scheme. Fink was arrested in Florida on February 15, 2010.

As part of his plea agreement, Fink is required to pay restitution in the full amount of the victims losses, estimated to be at least $2.2 million.

Fink faces a maximum sentence of 20 years in prison and a $250,000 fine for wire fraud, although if the court accepts the plea, Fink is expected to be sentenced to four years in prison. U.S. District Judge J. Frederick Motz has scheduled sentencing for June 17, 2011 at 11:00 a.m.

The Maryland Mortgage Fraud Task Force was established to unify the agencies that regulate and investigate mortgage fraud and promote the early detection, identification, prevention, and prosecution of mortgage fraud schemes. This case, as well as other cases brought by members of the task force, demonstrates the commitment of law enforcement agencies to protect consumers from fraud and promote the integrity of the credit markets. Information about mortgage fraud prosecutions is available at http://www.usdoj.gov/usao/md/Mortgage-Fraud/index.html.

United States Attorney Rod J. Rosenstein commended the FBI and the United States Attorney’s Office, Southern District of Florida for their assistance in the investigation and prosecution, and thanked Assistant United States Attorney Harry Gruber, who is prosecuting the case.

URBANA, IL—A Chicago-area man, Salvatore DiBenedetto, 52, of Downers Grove, appeared in federal court in Urbana today after his arrest on a 16-count indictment charging him with defrauding an Arcola, Illinois bank of approximately $2.5 million from April 2008 to February 2010. The indictment had remained sealed pending DiBenedetto’s arrest and court appearance. DiBenedetto was ordered detained in the custody of the U.S. Marshals Service pending a hearing scheduled on Apr. 12.

The indictment alleges that from April 2008 to February 2010, DiBenedetto and others engaged in a fraudulent real estate scheme that defrauded the Arcola Homestead Savings Bank of Arcola of approximately $2.5 million. According to the indictment, DiBenedetto was the president and shareholder of two businesses, Avanti Equity Group, LLC and X Factor LLC, both of Lombard, Ill. DiBenedetto allegedly represented that the businesses provided various mortgage services, including brokerage services, marketing, underwriting, and payment collection. During the period of the alleged scheme, DiBenedetto represented to the bank that he was performing mortgage management services on its behalf and for its benefit and the bank allowed DiBenedetto to perform activities related to the issuing of mortgages.

As part of the scheme, the indictment alleges DiBenedetto engaged in various false representations to owners of distressed residential and commercial properties to transfer the property to a third party who would obtain financing, rehabilitate the property and sell to interested buyers. The owners released their ownership of the properties and DiBenedetto recruited small business owners to buy various real estate in Chicago. DiBenedetto allegedly caused false representations to be made on loan applications and falsely represented to the title company that he was an authorized representative of the bank. Based on DiBenedetto’s false representations, the title company disbursed the funds to accounts controlled by DiBenedetto and another. DiBenedetto allegedly used loan proceeds to pay the expense of the properties and to convert the loan proceeds to his personal use and benefit.

The charges are the result of an investigation by the Federal Deposit Insurance corporation (FDIC); the Federal Bureau of Investigation; and the U.S. Postal Inspection Service. The case is being prosecuted by Assistant U.S. Attorney Elly M. Peirson.

If convicted, each offense of bank fraud (four counts); wire fraud (four counts); and making a false statement on a loan application (four counts) carries a maximum statutory penalty of up to 30 years’ imprisonment and a fine of $1,000,000. Each count of money laundering (four counts) carries a statutory maximum penalty of 10 years in prison.

Members of the public are reminded that an indictment is merely an accusation; the defendant is presumed innocent unless proven guilty.

HOUSTON—An 11-count sealed indictment charging conspiracy and wire fraud has been unsealed following the arrests of Claymon “Butch” Trammell, Michelle Trammell, and Jeannettea Williams, United States Attorney Tim Johnson announced today. Claymon Trammell operated real estate and home repair companies in the Houston area. Michelle Trammell, Claymon Trammell’s daughter, operated as a mortgage broker while Jeannettea Williams, Claymon Trammell’s wife, operated as a real estate agent.

Claymon Trammell, 59, of Manvel, Texas; Michelle Trammell, 37, of Katy, Texas; and Jeannettea Williams, 54, of Manvel, Texas, are charged for their alleged involvement in a scheme to defraud residential mortgage lenders out of loans totaling more than $2.5 million in connection with purchase money home loans. The three were arrested this morning without incident by FBI agents at their residences.

According to allegations in the indictment, the defendants paid individuals to use their names and credit on loan applications to buy residential properties and submitted fraudulent home repair and other invoices to pay themselves from the loan proceeds. Michelle Trammell allegedly filled out loan applications for the straw buyers and provided lenders with false information about borrowers’ employment, income, assets and intent to occupy the properties. Jeannettea Williams notarized borrower occupancy affidavits that borrowers intended to occupy the properties as primary residences, even though she and Claymon Trammell occupied two of the properties, according to the indictment.

The Indictment also provides notice to each defendant of the intent of the United States to forfeit their interest in the $2.5 million they allegedly obtained as a result of the mortgage fraud scheme.

The maximum penalty, upon conviction, for conspiracy and wire fraud affecting a financial institution is 30 years in prison and a $1 million fine.

The three defendants are expected to make their initial appearance today at 2:00 p.m. before United States Magistrate Judge Calvin Botley.

This case was investigated by the FBI and is being prosecuted by Assistant United States Attorney Belinda Beek.

PLANO, TX—U.S. Attorney John M. Bales announced today that 40 individuals have been arrested and charged in connection with a major mortgage fraud scheme in the Eastern District of Texas.

The 16-count indictment was returned by a federal grand jury on March 10, 2010, and includes one count of conspiracy to commit mail and wire fraud, 12 counts of mail fraud, and three counts of money laundering. All 40 defendants, from Texas, Florida, Massachusetts, Tennessee, and Georgia, are charged with one count of conspiracy to commit mail and wire fraud. Many of the defendants are also charged with various counts of mail fraud and money laundering.

According to the indictment, beginning in 2004, John Barry, 41, of Windemere, Fla., owned and operated, TKI Group, Inc. and JAB Consulting, businesses out of Florida through which he solicited real estate agents, property finders, mortgage brokers, title company attorneys or escrow officers, property appraisers, and straw buyers to facilitate this scheme. The purpose of the scheme was to defraud lending institutions by convincing them to approve mortgage loans for residential properties for which the property values had been fraudulently inflated. The indictment specifically lists 114 residential properties located in the Texas cities of Allen, Arlington, Cedar Hill, Coppell, Corinth, Cypress, Dallas, Flower Mound, Fort Worth, Frisco, Granbury, Heath, Highland Village, Houston, Keller, Lantana, Lewisville, Little Elm, Lubbock, Magnolia, McKinney, Plano, Roanoke, Southlake, Spring, The Woodlands, and Willis.

In announcing the indictment, U.S. Attorney Bales specifically noted the breadth of the financial scheme, “This indictment brings to light a criminal scheme that is quite breathtaking in its scope and beyond disturbing as far as the boldness of the fraud. The agents have done a remarkable job putting together this investigation and we look forward to presenting all of the evidence in court. Hopefully, others involved in mortgage fraud will be taking notice—we will be relentless in discovering, exposing and holding accountable those who have committed similar crimes.”

If convicted, the defendants face up to 20 years in federal prison for the conspiracy charge, up to 20 years in federal prison for each count of mail fraud charge, and up to 10 years in federal prison for each count of money laundering.

“Mortgage fraud creates so much harm to individuals, businesses and our economy, but today’s indictment is a strong reminder how serious our system considers this criminal activity,” said Erick Martinez, Assistant Special Agent in Charge, IRS-Criminal Investigation, Dallas Field office. “Those who line their pockets with profits from these schemes should know they will not go undetected and will be held accountable.”

“Evidence collected by the FBI to support today’s indictments proves that financial crime conspiracies, particularly mortgage fraud, still threaten our economic stability,” said Robert E. Casey, Jr., Special Agent in Charge of the FBI Office in Dallas. “This investigation illustrates the North Texas law enforcement community’s commitment to root out those who perpetrate mortgage fraud. Although increased prosecutions alone will not solve the mortgage crisis, we hope these prosecutions will help deter future fraud.”

This case is being investigated by the FBI and the Internal Revenue Service and is being prosecuted by Assistant U.S. Attorney Shamoil Shipchandler.

This law enforcement action is part of 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.

An indictment is not evidence of guilt. All defendants are presumed innocent until proven guilty beyond a reasonable doubt in a court of law.

NORFOLK, VA—James C. Alberts, 45, of Point Pleasant, N.J., was sentenced in Norfolk federal court today to four and one-half years in prison for conspiring to commit bank fraud, and was ordered to pay over $1.7 million in restitution. Alberts previously pled guilty to the charge on December 6, 2010.

Neil H. MacBride, United States Attorney for the Eastern District of Virginia, made the announcement after Alberts was sentenced by United States District Judge Raymond A. Jackson.

According to court documents, Alberts was involved in a conspiracy to commit mortgage fraud on various properties located in the Cape Charles area of the Eastern Shore of Virginia. The court records indicate Alberts was a co-owner of Creative Property Development, a company involved in the purchase, development, and sale of real estate property in Northampton County, Virginia. Alberts sold real estate developed by Creative Property Developments to his fellow co-conspirators. To affect the sales, Alberts provided the co-conspirators with the necessary funds to make the down payments and qualify for mortgage loans, but did not disclose this arrangement on the mortgage loan applications. As a result of these sales, Creative Property Developments earned hundreds of thousands of dollars of profit on these properties. Because of his actions, Alberts’ co-conspirators fraudulently obtained mortgage loans valued in excess of $2.8 million.

This case was investigated by the Federal Bureau of Investigation, the United States Secret Service, and Virginia State Police. Assistant United States Attorneys Robert J. Seidel, Jr. and Joseph L. Kosky prosecuted the case on behalf of the United States.

A copy of this press release may be found on the website of the United States Attorney’s Office for the Eastern District of Virginia at http://www.justice.gov/usao/vae. Related court documents and information may be found on the website of the District Court for the Eastern District of Virginia at http://www.vaed.uscourts.gov or on http://pacer.uspci.uscourts.gov.

WASHINGTON—Noah Black, 42, of Hyattsville, Maryland, pled guilty today to federal charges of wire fraud and aggravated identity theft in connection with a mortgage fraud scheme, announced U.S. Attorney Ronald C. Machen Jr.; James W. McJunkin, Assistant Director in Charge of the FBI’s Washington Field Office; and David Beach, Special Agent in Charge, Washington Field Office, U.S. Secret Service.

Black entered his guilty pleas in U.S. District Court for the District of Columbia. The Honorable Judge Richard W. Roberts scheduled sentencing for June 16, 2011.

According to the factual proffer presented to the court, during May 2006, Black arranged a fraudulent real estate sale of a home in Upper Marlboro, Maryland that at one time was owned in the name of one of his family members. Black pretended to be another individual, referred to in court as “D.S.,” in order to secure mortgage loans of approximately $700,000. He had obtained the identifying information of D.S. when Black, a realtor, attempted to sell a different home to the victim.

In order to corroborate his alleged identity, Black had a fraudulent Maryland driver’s license created. The license combined Black’s own photo with the identifying information of the victim. He continued using the fraudulent identification when he obtained two motor vehicles by fraud later that year.

On or about May 18, 2006, as part of the settlement process on the home in Upper Marlboro and relying upon the defendant’s fraudulent representations, New Century Mortgage Corp., which is located in Reston, Virginia, sent a fax to Settlement Solutions, which is located in Maryland. After the sale was completed, the mortgage eventually went into default while it was listed as owned by D.S.

In announcing the guilty plea, U.S. Attorney Machen, Assistant Director in Charge McJunkin, and Special Agent in Charge Beach praised the outstanding work of the special agents who worked on the case from the FBI’s Washington Field Office and Secret Service. They also acknowledged the assistance of Paralegal Specialist Mary Treanor and Assistant United States Attorney Thomas E. Zeno, who prosecuted this case.

LAS VEGAS—A former Lake Las Vegas resident who convinced persons in the United States and Japan to invest over $26 million in mining projects in South America, Nevada, and California and a real estate project in Arizona was sentenced today to six-and-a-half years in federal prison and ordered to pay $23.5 million in restitution to the victims, announced Daniel G. Bogden, United States Attorney for Nevada.

Alberto DoCouto, 68, a former resident of Lake Las Vegas in Henderson, Nevada, was sentenced by U.S. District Judge James C. Mahan. DoCouto pleaded guilty in June 2010 to securities fraud.

“The defendant willfully and knowingly made false promises and representations regarding mining and real estate projects and induced persons to provide him with money which he used for his personal enrichment,” said U.S. Attorney Bogden. The sentencing judge found today that Mr. DoCouto was delusional and not generally remorseful.

From about 2001 to 2007, DoCouto created numerous limited liability companies and corporations, and told investors that he and his companies were engaged in exploring and developing a series of lucrative mining claims in Peru, Guyana, California, and Nevada. DoCouto told investors that the mines held valuable precious metals such as gold and diamonds worth billions of dollars, and persuaded them to invest millions of dollars in the alleged projects in exchange for shares of stock, promissory notes and investment contracts in the companies. DoCouto repeatedly represented to the investors that their monies were needed to bring the projects to fruition. In fact, DoCouto’s companies and projects were a façade; the shares of stock that the investors thought they owned in DoCouto’s companies were worthless; and none of the mining projects were developed. DoCouto instead diverted and converted the investors’ funds for his own personal enrichment, including for the purchase of an opulent 6,000 square foot home at Lake Las Vegas and several luxury automobiles, all of which were seized and forfeited by authorities. After the purported mining projects failed, DoCouto solicited funds from investors in Canada, Kuwait, and elsewhere for a real estate development project in Arizona. DoCouto obtained hundreds of thousands of dollars from investors to run water to the property and to develop the project, but again, he converted much of the money for his own personal purposes, including to pay the mortgage on his home, to pay for lavish home improvements, to make payments to a riding stable, and for various cash expenditures.
The case was investigated by the FBI, with assistance from the United States Bureau of Land Management, and prosecuted by Assistant United States Attorneys Timothy S. Vasquez and Nicholas Dickinson.

Defendant Faces Up to 20 Years in Federal Prison

DALLAS—David Boles, 52, of Colleyville, Texas, who owned Metro Buy Homes, LLC., pleaded guilty this afternoon before U.S. Magistrate Judge Irma C. Ramirez to one count of mail fraud, announced U.S. Attorney James T. Jacks of the Northern District of Texas. Boles faces a maximum statutory sentence of 20 years in prison and a $250,000 fine. In addition, as part of his plea agreement with the government, Boles agrees to pay restitution for losses resulting from all of his criminal conduct and not just limited to losses stemming from his conviction offense. Boles is scheduled to be sentenced by U.S. District Judge Jane J. Boyle on May 26, 2011.

According to documents filed in the case, from January 2008 through August 2010, Boles ran a scheme to defraud a number of investors by making materially false representations to them. For instance, he advised that invested money would be used to buy real estate and that investments would be secured by real estate. To further the scheme, Boles sent Deeds of Trust and Real Estate Liens that purportedly gave investors liens against specific properties in exchange for their investment. However, Boles did not own a number of the properties that were supposedly used to secure the investments, and some of the Deeds of Trust and Real Estate Lien Notes that he sent investors were fraudulent. Boles also sent checks to investors and advised them that the checks represented profits from their investments. However, in many cases the checks were simply drawn from the principal investments made by the investor. On other occasions, Boles funded checks written to one investor with money received from other investors. Boles believed that telling the investors that the checks represented earnings on their investments would encourage them to invest more money.

Boles also set up a website which he occasionally used to deceive investors by posting fictitious figures showing investments to be profitable when they were not, again to encourage investors to invest more money.

This law enforcement action is part of 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.

The case is being investigated by the FBI. Assistant U.S. Attorney Jay S. Weimer is in charge of the prosecution.

GREENBELT, MD—Chief U.S. District Judge Deborah K. Chasanow sentenced former attorney Frank P. Jenkins II, age 45, of LaPlata, Maryland, today to 46 months in prison followed by three years of supervised release for wire fraud and mail fraud in connection with a scheme to defraud his clients and lenders in real estate transactions. Chief Judge Chasanow also entered an order that Jenkins pay restitution of $1,835,589.

The sentence was announced by United States Attorney for the District of Maryland Rod J. Rosenstein; Special Agent in Charge Richard A. McFeely of the Federal Bureau of Investigation; Charles County Sheriff Rex W. Coffey; and Charles County State’s Attorney Anthony B. Covington.

According to the plea agreement, prior to September 15, 2009, Jenkins was licensed to practice law in Maryland and did business as Frank P. Jenkins, PC; The Jenkins Group, Inc.; Jenkins Real Estate, Inc.; and Exit Prom Homes Realty. On September 15, 2009, Jenkins was disbarred.

Jenkins admitted that from about 2006 through 2009, he caused clients to transfer money into bank accounts that he controlled, then embezzled the funds for his own purposes, rather than fulfilling his fiduciary obligations to his clients. Jenkins admitted that he used the stolen money to pay his personal expenses, purchase tickets to the Washington Capitals hockey games and to repay other clients whom he had previously defrauded. According to the plea agreement, Jenkins also made false statements to his clients as to his handling of estates and civil litigation, and to lenders. Jenkins also provided his clients with fraudulent documents, including deeds and deeds of trust relating to property. Jenkins admitted that he forged the signatures of his clients, including on a consent decree requiring clients to pay $150,000 to settle a breach of contract suit.

In June 2009, Jenkins applied for a loan to refinance a property that he fraudulently told the lender he had purchased. In fact, Jenkins had entered into a contract to purchase the property, misrepresenting to the owners of the property that he would file a deed of trust and promissory note. Jenkins did record the deed showing he had purchased the property, but did not record the deed of trust. Jenkins received a check for $128,654.19 from the lender based on the fraudulent loan application. The deed Jenkins filed was subsequently rescinded and restored to the original owners, who were also awarded $150,000 each in compensatory and punitive damages, as well as attorney’s fees, by the Circuit Court for St. Mary’s County.

United States Attorney Rod J. Rosenstein commended the FBI, the Charles County Sheriff’s Office, and the Charles County State’s Attorney’s Office for their work in this investigation and prosecution. Mr. Rosenstein thanked Assistant United States Attorneys Stuart A. Berman and Deborah A. Johnston, who prosecuted the case.

ALBUQUERQUE—Douglas F. Vaughan, 63, has been indicted by a federal grand jury on charges stemming from a fraudulent investment operation that was actually a multi-million-dollar Ponzi scheme. The 30-count indictment generally alleges that, between 2005 and 2010, Vaughan operated a promissory note investment program, which he marketed as a means of generating revenue to grow his real estate business, as a Ponzi scheme. It further alleges that Vaughan owed more than $76 million in unpaid principal and interest payments to approximately 600 investors when the fraudulent scheme collapsed in early 2010.

United States Attorney Kenneth J. Gonzales said that the indictment is the result of a joint federal-state investigation that was initiated by the Securities Division of the New Mexico Regulation and Licensing Department in September 2009, and later expanded to include the Federal Bureau of Investigation (FBI); U.S. Postal Inspection Service, and U.S. Secret Service.

The indictment was unsealed this morning by the United States District Court for the District of New Mexico after law enforcement officers arrested Vaughan at a residence in Albuquerque’s North Valley. It charges Vaughan with three counts of wire fraud, 17 counts of mail fraud, five counts of money laundering, and five counts of false writings and documents. If convicted, Vaughan faces a maximum penalty of 20 years in prison on each of the wire and mail fraud counts, a maximum of 10 years in prison on each of the money laundering counts, and a maximum of five years in prison on each of the false writings counts. The indictment also seeks forfeiture of a residence in Las Vegas, Nevada, as well as a money judgment in excess of $74 million.

Vaughan is scheduled for an initial appearance at 2:00 p.m. this afternoon before Chief United States Magistrate Judge Richard L. Puglisi in Albuquerque federal court.

As used in the indictment, a Ponzi scheme is an investment fraud that involves the payment of purported returns to existing investors from funds contributed by new investors. According to the indictment, Vaughan was the chairman, chief executive officer, president, and majority shareholder of Vaughan Company Realtors (VCR), a business that operated primarily as a residential real estate brokerage and was at one time the largest independent residential brokerage in New Mexico. In spring 1993, Vaughan allegedly began a promissory note investment program (Promissory Note Program) to generate revenue to grow VCR’s business. The typical note had a three-year term, an interest rate ranging from 8 percent to 40 percent per year, and provided for interest to be paid in monthly installments. At the end of the note’s term, Vaughan either paid off the principal or offered the investor the opportunity to “roll over” the principal into a new note. Vaughan allegedly signed each promissory note on behalf of VCR.

The indictment alleges that Vaughan led investors to believe that their investments in the Promissory Note Program were actually or virtually risk-free because they were guaranteed by VCR, Vaughan’s personal guarantee, and a $2.5 million deed of trust on certain real estate. Vaughan allegedly marketed his Promissory Note Program by representing that the invested funds would be used to purchase real estate and to acquire smaller real estate companies. Instead, Vaughan used the Promissory Note Program funds primarily for three undisclosed purposes: (i) to pay the interest and principal on promissory notes taken out by earlier investors; (ii) to pay himself, under the guise of salary, bonuses, or some other personal transfers; and (iii) to subsidize the operation of VCR, which was generating insufficient “legitimate” revenues to sustain itself.

According to the indictment, by 2005, the Promissory Note Program was the primary source of revenue for VCR and, without the infusion of capital generated by new Promissory Note Program investors, VCR was insolvent. Despite this, Vaughan allegedly continued to distribute the same marketing materials for the Promissory Note Program, sign the same promissory notes, and make the same corporate and personal guarantees. Although Vaughan represented to investors that he would not extend more than $2,500,000.00 in promissory notes, financial records allegedly reflect that the aggregate principal balance owed to note holders far exceeded this amount:

2004 – $24,351,605.00
2005 – $32,299,363.37
2006 – $39,969,110.68
2007 – $49,984,845.80
2008 – $62,844,445.57
2009 – $74,386,623.38.

From at least 2005 through February 2010, Vaughan allegedly used funds from new Promissory Note Program investors to make interest payments to existing note holders and thus lulled existing investors into believing that they were being paid returns from VCR’s legitimate business revenues. However, VCR’s corporate tax returns reflected the following annual losses:

2004 – $4,041,048.00
2005 – $5,595,285.00
2006 – $7,461,409.00
2007 – $9,913,893.00
2008 – $13,313,323.00
2009 – $13,907,738.00

As alleged in the indictment, when his Ponzi scheme began to collapse and he became unable to meet the monthly interest payments to note holders, Vaughan made false and misleading excuses to investors and failed to disclose that VCR had insufficient revenue to make the interest payments. In February 2010, when Vaughan filed for personal and corporate bankruptcy, the aggregate principal balance owned to approximately 600 note holders was approximately $74,745,723.93 and the interest expense owed to note holders exceeded $1 million per month.

In announcing the indictment, United States Attorney Gonzales said, “The case against Vaughan is fundamentally about deceit. Vaughan allegedly misrepresented to investors their guaranteed rate of return, the safety of their investments, and even what it was they were investing in. People who trusted Vaughan ended up losing a lot of money, in some cases, their life savings. My office will diligently and aggressively prosecute Vaughan and others like him who seek to defraud people out of their hard earned money. I commend the Securities Division of the New Mexico Regulation and Licensing Department, the FBI, the Postal Inspection Service, and the Secret Service for the persistent and thorough investigation that led to this significant indictment, and their ongoing efforts to protect the public by detecting and stopping these fraudulent investment schemes.”

Carol K.O. Lee, Special Agent in Charge, Albuquerque Division of the FBI said, “I would like to commend the work of all the investigators and the FBI agents involved in this case for making today’s indictment possible. The FBI is committed to vigorously investigating Ponzi schemes and other types of investment frauds. Besides inflicting serious economic harm on individual victims, these crimes also undermine confidence in our financial markets.”

“Utilizing its specialized expertise and experience, the securities division fights fraudsters across the state of New Mexico every day, by investigating and prosecuting,” said New Mexico Regulation and Licensing Superintendent J. Dee Dennis Jr. “By perpetrating an alleged $76 million fraud, Doug Vaughan has the dubious distinction of being the largest alleged Madoff-like Ponzi schemer in New Mexico history. Our highly dedicated staff will continue to regulate the securities industry, educate the public, and enforce the law to protect the investing public from financial predators,” said Dennis.

“Doug Vaughan’s arrest brings to a close a Ponzi scam that financially devastated as many as 600 victims, many of them New Mexico residents,” said Fort Worth Division Inspector in Charge Randall C. Till. “Consumers have the right to receive mail free of fraudulent promises and deliberate misrepresentations. Before even Charles Ponzi gave the scam its name in the early 20th century, Postal Inspectors vigorously investigated these types of frauds and remain committed to defending innocent consumers against those who would abuse the U.S. Mails to further their criminal enterprises.”

“Cooperation and partnerships among federal and state investigators, allows us to combine not only our resources, but also our expertise, to combat fraudulent investment Ponzi schemes,” Richard Ferretti, Resident Agent in Charge, Albuquerque Resident Office of the U.S. Secret Service commented.

United States Attorney Gonzales has assigned Assistant United States Attorney Gregory J. Fouratt to prosecute the case.

An indictment contains only charges and is not evidence of guilt, and the defendant is presumed innocent unless and until proven guilty.

This case was brought in coordination with the President’s Financial Fraud Enforcement Task Force, which 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. The task force is also making the public aware of resources available to protect against these types of fraud and how to report fraud when it occurs. To learn more about investment scams, how to take steps to protect yourself from scams or how to report investment fraud if you believe you have been victimized, the task force recommends that you visit its website, www.StopFraud.gov.

David B. Fein, United States Attorney for the District of Connecticut, announced that RICHARD NOVAK, 47, of Middletown, pleaded guilty today before Chief United States District Judge Alvin W. Thompson in Hartford to one count of making a false statement on a federal mortgage loan document.

This matter stems from an investigation into an extensive mortgage fraud scheme headed by Syed Babar and others during which participants obtained 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.

According to court documents and statements made in court, NOVAK acted as the attorney representing the seller of a residence located at 97 Bradford Avenue in East Haven. NOVAK also had power of attorney for the seller and had previously lived at the residence. In connection with the closing for the property, which occurred on approximately June 4, 2008, NOVAK knowingly signed a HUD-1 settlement statement that contained several false statements, including an overstatement of the amount required to pay off a second lien on the property, a representation that the buyer had paid a $22,000 deposit when no deposit was ever paid, a representation that $48,345.62 was owed to “Sheda Telle Construction” for an “outstanding invoice” when there was no outstanding invoice, and a representation that $6,140 of the seller’s funds would be used to pay off “GE Money Bank for PMSI in appliances” when no such payoff was owed.

The 97 Bradford Street property eventually went into foreclosure and the lender suffered a loss of more than $120,000.

Judge Thompson has scheduled sentencing for June 6, 2011, at which time NOVAK faces a maximum term of imprisonment of five years.

On February 1, 2011, Babar pleaded guilty to multiple federal charges related to his leadership of this extensive mortgage fraud scheme, which has caused losses in excess of $3.2 million to lenders. He awaits sentencing.

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, Susan Wines, and Liam Brennan.

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 e-mail 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.

Wifredo A. Ferrer, United States Attorney for the Southern District of Florida, Henry Gutierrez, Postal Inspector in Charge, U.S. Postal Inspection Service, John V. Gillies, Special Agent in Charge, Federal Bureau of Investigation, Miami Field Office, and J. Thomas Cardwell, Commissioner, State of Florida’s Office of Financial Regulation, announced that defendants Monique Mitchell, 29, of Pembroke Pines, and Sheldon Martin, 34, of Plantation, pled guilty this morning in West Palm Beach federal court to one count of making false statements on a HUD-1 Real Estate Settlement Form in connection with a mortgage fraud scheme. Sentencing has been scheduled for July 21, 2010 before U.S. District Judge Donald Middlebrooks.

According to records filed with the court and statements made during the plea hearing, defendant Monique Mitchell was employed by Attorneys Title Center, in Pembroke Pines. Defendant Sheldon Martin was a self-employed licensed mortgage broker in Plantation. At the plea, Mitchell and Martin admitted that they knowingly prepared a false HUD-1 Settlement Statement Form in connection with the January 2008 sale of a $1,250,000 home in Fort Lauderdale. The HUD-1 Form included false information to Regions Bank, the lender, about the down payment, the cash on hand at closing, and the amount repaid to the previous lender. In addition, the defendants concealed from Regions Bank money paid to The Pines Law Center at the closing.

At sentencing, the defendants face a maximum statutory sentence of up to five years in prison. Co-defendant, attorney Michael Samuda, is scheduled for trial in June 2010.

“This is a wake-up call to those in the mortgage industry who think they can get away with mortgage fraud,” said Special Agent in Charge John V. Gillies of the FBI’s Miami Division. “Submitting false information on loan documents is a crime and the FBI and its partners will investigate and prosecute those that break the law.”

Mr. Ferrer commended the investigative efforts of the U.S. Postal Inspection Service, FBI, and State of Florida’s Office of Financial Regulation. This case is being prosecuted by Assistant U.S. Attorney Jeffrey Kay.

A copy of this press release may be found on the website of the United States Attorney’s Office for the Southern District of Florida at www.usdoj.gov/usao/fls. Related court documents and information may be found on the website of the United States District Court for the Southern District of Florida at www.flsd.uscourts.gov or http://pacer.flsd.uscourts.gov.

Nora R. Dannehy, Acting United States Attorney for the District of Connecticut, announced that WILLIAM ATHAN, 63, of Shelton, Connecticut and Naples, Florida, waived his right to indictment and pleaded guilty today before United States District Judge Vanessa L. Bryant in Hartford to one count of conspiracy to commit mail fraud and wire fraud related to a $3.6 million mortgage fraud scheme.

According to documents filed with the Court and statements made in court, ATHAN, Jose Guzman and Brian Guimond, and others participated in the operation of a real estate and mortgage fraud scheme that arranged for individuals to purchase properties and fund mortgages of houses located Connecticut. As part of the scheme, ATHAN, Guzman and another individual created a New London-based Real Estate Investment Company, which was engaged in both the business of buying and selling real estate properties, and the mortgage origination business.

Through this scheme, the co-conspirators arranged for and assisted in arranging for various individuals, or “borrowers,” to obtain funding from various mortgage companies and mortgage originators, or “lenders.” The co-conspirators arranged for numerous persons to purchase residential real estate properties, and secured the funding for the mortgages for the properties from various lenders. The borrowers usually were individuals who had good credit but were of modest means with low levels of income. The co-conspirators located real estate properties, specifically residential housing properties located in New London County, to be purchased by the borrowers using the funds loaned from various lenders. In order to recruit and entice the individuals to act as the borrowers, the co-conspirators, at times, compensated the borrowers. In order to secure the funding from lenders, the co-conspirators falsified material information on the borrowers’ mortgage loan applications, including information regarding income, assets, employment, rent history, as well as the borrowers’ intention to make the properties their primary residence.

ATHAN, who had access to an individual with a real estate license and who operated a real estate business, secured property listings for the properties that the co-conspirators wanted to sell, and eventually sold to the borrowers using the funds from the fraudulently obtained mortgages, and then shared in the real estate commissions collected on the sale of those properties.

On certain transactions, including transactions on which ATHAN served as the borrower, ATHAN, Guzman and others falsified closing records, including false work invoices from The Cutting Edge, a home improvement contractor and landscaping company controlled by Guimond, and caused checks to be issued at the closing made payable to The Cutting Edge from funds provided by the lenders. The checks were payment for work that purportedly was performed on properties prior to the closing, but which had not been performed as represented. The checks were then converted to cashiers’ checks, which were used during the closing as down payments from the borrower. Through this scheme, the co-conspirators collected large commissions and fees, and a portion of the funds advanced by the lenders, which were intended to be used to finance the purchase of the properties, were in fact used for the benefit of the co-conspirators and their various companies.

More than 200 fraudulent mortgages were funded during the period of the conspiracy. As a result of defaults on the mortgages, the lenders suffered losses of more than $3.6 million.

Judge Bryant has scheduled sentencing for May 21, 2009, at which time ATHAN faces a maximum term of imprisonment of 20 years and a fine of up to approximately $7.2 million.

Guzman and Guimond have pleaded guilty to charges related to their participation in this scheme and await sentencing.

Acting U.S. Attorney Dannehy stated the investigation is ongoing.

This case is being investigated by the Federal Bureau of Investigation, with the assistance of the U.S. Department of Housing and Urban Development and the Waterford Police Department. The case is being prosecuted by Assistant United States Attorney Michael S. McGarry.