FIRST NATIONAL BANK of EDINBURG, Texas is in a QUESTIONABLE POSITION with the current LAWSUIT as an alleged CONSPIRED PARTNER of convicted felon Mauro Padilla, defrauding multiple investors in various developments, Maria del Rosario Padilla was the loan guarantor and bookkeeper. Mauro Padilla: “I am guilty, and I agree that the evidence proves my guilt beyond a reasonable doubt.” Facing federal prison time sentence on November 17, 2010.

Depositions that were scheduled well in advance in the “Tundra Village Scandal” for certain executives of First National Bank did not take place this week as previously scheduled. No one showed up from First National, not even their attorney.

Their reason: they allegedly had scheduling conflicts.

However, rather than just reschedule the depositions to fit into their schedules, First National has now filed motions seeking to avoid having their executives being deposed at all. First National previously ignored two properly filed notices of deposition, and then finally voluntarily agreed to have their executives attend depositions this week when Plaintiffs filed a motion to compel them to do so.

In what appears to be nothing more than a transparent avoidance tactic, defendants Robert Gandy III (First National CEO/President) and Michael V. McCarthy (First National Chief Lending Officer) are now maneuvering to escape being deposed altogether. The “Tundra Village Scandal” involves First National Bank, convicted felon Mauro Padilla, and Fidelity National Title Insurance, along with other defendants, being sued for various claims arising from the Tundra Village Townhomes fiasco, including claims for real estate fraud, conspiracy, breach of contract, and negligence.

These avoidance tactics lead many involved in this litigation to believe First National greatly fears what will be revealed by these executives under oath, and what might be confirmed regarding previous damaging statements made by former First National Branch President Mike Maldonado during his prior depositions.

What else is there about these loans and transactions they are expending great effort and expense to avoid disclosing? Are they trying to avoid being asked if they knew about felon Mauro Padilla’s fraud and schemes? Are they trying to hide proof that once they became aware of Padilla’s illegal schemes the bank then took steps to cover it up?

Many have questioned the highly unusual loan practices by First National when they kept funding five separate developments undertaken by felon Padilla (starting in 2006) when at least four projects still have no final plat map in place (four years later). Wasn’t anyone overseeing these loans and projects before handing out millions in loan draws over and over again to felon Padilla?

Additionally, information has surfaced showing that, after First National foreclosed on the Tundra Village project, the bank gave 100% financing to a small developer in Edinburg, Texas, allowing for the acquisition and completion of the project. Oddly, the project is located over 200 miles away from the buyer’s home city of Edinburg.

The short-term 100% loan, which many consider unusually risky in today’s lending environment, is only 11 months from maturing and yet the project remains untouched — even despite First National also giving this new developer a $6,000,000 line of credit to finish the project (on top of the $9,300,000 acquisition price which was 100% financed). Since real estate values would never support the sale of the unfinished Tundra Village four-plexes at values high enough to repay the bank’s $15,300,000 exposure (plus interest), many believe this transaction was just a ploy simply to remove the project from First National’s books with no legitimate expectation of loan and interest repayment.

We wonder how the bank’s shareholders would feel about this if deposition testimony proves this to be true? Is this another reason the First National executives are ducking and running for cover?

United States Attorney John E. Murphy announced that in San Antonio, former LaCoste National Bank president Jodi P. Gwyn faces between three and five years in federal prison and restitution totaling more than $8 million after pleading guilty this afternoon to one count of making false entries in bank books and records.
Appearing before United States Magistrate Judge Pamela Mathy, Gwyn admitted that in September 2008, he intentionally made a false entry in the LaCoste National Bank’s general ledger in order to deceive bank examiners. Gwyn’s false entry noted a $2.5 million loan to particular individuals when, in fact, the loan proceeds had already been advanced to a different bank customer.
Sentencing is scheduled for January 27, 2011, before United States District Judge Orlando Garcia.
This case was investigated by special agents with the Federal Deposit Insurance Corporation Office of Inspector General and the Federal Bureau of Investigation. Assistant United States Attorney Thomas Moore is prosecuting this case on behalf of the government.

DALLAS—Three Dallas businessmen, Mark Manners, Robert L. Loeb, and Andrew Siebert, who were involved in a massive mortgage fraud scheme that they ran in the area, were sentenced this afternoon by U.S. District Judge Barbara M.G. Lynn, announced James T. Jacks, acting U.S. Attorney for the Northern District of Texas.

Mark Manners was sentenced to 30 months in prison, followed by three years of supervised release, and ordered to pay $1,762,362.71 in restitution.

Robert L. Loeb was sentenced to 18 months in prison, followed by two years of supervised release, and ordered to pay $2,027,841,34 restitution.

Andrew Siebert was sentenced to 60 months in prison, followed by three years of supervised release, and ordered to pay $2,027,841.34 restitution.

Their co-defendant in the scheme, Charles Cooper Burgess, 53, was sentenced in March 2008 to nearly 22 years in prison and ordered to pay more than $3 million in restitution for his role in this mortgage fraud scheme and another scheme involving golf course property in Arkansas. Burgess pled guilty in January 2006 to his involvement in two fraudulent schemes, one involving mortgage fraud and one involving defrauding individuals who invested in golf course property in Arkansas. In November and December 2006, Burgess testified about Manners and Siebert’s extensive role in the mortgage fraud scheme. At the conclusion of that trial, both Manners and Siebert were convicted.

Regarding the mortgage fraud scheme, Burgess admitted that he recruited 20 straw buyers with good credit but limited funds to sign loan and closing documents to purchase homes. As part of a signed “investor management agreement,” Burgess promised to provide the down payment at closing as well as make all mortgage payments. When Burgess’s company needed additional funds for borrower down payments, Siebert agreed to steal bank escrow funds for the borrowers’ down payment. As part of the scheme, Siebert also falsified settlement document on at least 20 loan closings. Siebert only agreed to steal these escrow funds if Burgess agreed to pay Siebert $5000 from each closing as a “kickback payment.” Evidence at trial showed that Siebert stole escrow funds on 20 separate loans and then concealed the theft of these lender funds by falsifying loan closing documents.

Siebert stole lender funds held in escrow and then provided these funds to Manners prior to closing so that Manners could purchase a cashier’s check in the name of the straw buyer. When Siebert received the cashier’s check back from Manners, Siebert falsely certified to the lender on the settlement statement that the down payment came from the borrower. On the settlement statement, Siebert also fraudulently accounted for disbursements to Burgess’ company by falsely listing the expense as a phony lien pay off, or as a “marketing and relocation fee” due to Burgess’ company. Eleven different lenders testified at trial that Siebert falsified the settlement statements to conceal his wrongful and fraudulent release of lender escrow funds. Each lender testified that the loan would never have been funded if the lender had known about the fraudulent use of lender escrow funds.

From December 2002 through March 2004, Siebert stole escrow funds which resulted in the loss of $2,027,841 to 16 different lenders. As a result of Siebert submitting false certifications on settlement statements for each of these 20 loans, Siebert and Manners fraudulently induced the disbursement of loans totaling more than $7 million.

Acting U.S. Attorney Jacks praised the investigative efforts of the Federal Bureau of Investigation and the Federal Deposit Insurance Corporation, Office of Inspector General. The case was prosecuted by Special Assistant U.S. Attorney William M. Martin of the U.S. Department of Justice Anti-Trust Division and Assistant U.S. Attorney David Jarvis.

This Thursday a mortgage broker from San Antonio, TX pleaded guilty money laundering in a fifty-million dollar mortgage fraud scheme. We here at Loansafe.org report about mortgage fraud and real estate scams almost daily as the cases keep rounding up. The FBI, the Justice Department, state AGs, and the mortgage fraud task force have been doing an excellent job putting an end to these unscrupulous practices around the nation.

Ledale Lashette Coles, 36, signed a plea deal back in 2008 to the scheme, and this Thursday plead guilty before Judge John Primomo. Coles ran a company called Supreme Mortgage Group LLC that was used as just one of the entities involved in this massive mortgage fraud scheme. The scam was primarily blamed first on Robert Brooks from Dallas, TX.

Brooks, among his wife, Cheryl, are two out of 22 people that were indicted back in June for their part in the scheme. Each defendant in San Antonio took part in the “flipping” scam that caused over fifty-million dollars in loans to go into default.

Back on June 17th, the Justice department, the FBI, and the IRS named this investigation “Operation Stolen Dreams.”
In the indictment it stated that from May 17, 2005, through February 21, 2008, Robert purchased properties that were priced at the current market value, and later used “straw buyers” to buy the homes at inflated prices. It’s said he offered each straw buyer between $10-25k.

Other defendants include lawyer Richard Howard, former Sheriff’s Deputy George Autobee, a real estate agent out of San Antonio, mortgage processors, and escrow and title officers. It took quite a few individuals to orchestrate a scheme this large.

Brooks managed to get mortgages for the straw buyers using false information and then a year or so later let the properties go into default. According to additional indictment charges, Brook’s scheme could not be completed without assistance from other people in the mortgage industry, including appraisers, title officers, escrow officers, and mortgage processors who helped submit all of the false documentation and information to the banks.

Additional records show that Coles helped with more than a million dollars in fraudulent loans. Coles is now is facing up to 10 years in prison and is to be sentenced December 1 before US District Xavier Rodriguez.

By Evan Bedard on October 1, 2010 www.Loan-Safe.org
Unless otherwise noted, you can republish our articles and graphics for free.

HOUSTON—Albert Terrance Watkins has pleaded guilty to committing wire fraud arising from a $10 million mortgage fraud scheme, United States Attorney José Angel Moreno announced today.

Watkins, 46, a Missouri City area resident, was indicted in June 2009 along with others of perpetrating a scheme to defraud lenders of mortgage loans by making false/fraudulent claims on mortgage loan applications and having some borrowers make false representation of a Social Security number on those same applications. Today, he pleaded guilty and admitted his role in the multi-million dollar fraud scheme before U.S. District Judge David Hittner who has set sentencing for Sept. 27, 2010.

Watkins’ role was two-fold—that of a recruiter of borrowers with good credit on behalf of Phantom Marketing and as a loan processor at Capri Mortgage and United National Mortgage. Watkins and Adrian Levale Cole, who pleaded guilty to these same charges on June 29, 2010, devised a scheme to purchase multiple residential properties in the greater Houston area through fraudulent mortgage loans. Through their association with several companies—including Capri Mortgage Services, United National Mortgage and Phantom Marketing—Watkins and Cole were able to obtain more than $10 million in fraudulent loans as part of this mortgage fraud scheme between June 2003 and July 2006. On the sales agreement for a newly constructed residential property located in Friendswood, Texas, Albert T. Watkins was listed as the broker and buyer’s agent. Previously, Watkins communicated with the seller’s real estate agents and explained that the offer on the house was more than the asking price, because the house was to be modified to be A.D.A. (American Disabilities Act) approved. This was one of many examples of how Watkins was able to inflate the selling price of the homes in the Friendswood development. After the closing on the property, Watkins received two cashier’s checks—one for $11,500 and one for $9,750—and distributed five other cashier’s checks to other individuals. No construction work of any kind was ever done by any construction company to make any improvements on that property located in Friendswood, Texas.

As with other loans obtained as part of this scheme, only the first few monthly mortgage payments were made and the mortgage loans went into default for non-payment.

Watkins, who has been permitted to remain on bond with electronic monitoring until sentencing, faces a maximum punishment of up to 20 years in prison and a fine not to exceed $250,000 along with a three-year term of supervise release.

A third defendant charged in this case is pending trial in mid-July 2010.

The investigation leading to the charges in this case was conducted by the FBI, Internal Revenue Service-Criminal Investigations, Social Security Administration-Office of Inspector General, and the Friendswood Police Department. Assistant United States Attorney Melissa J. Annis and Assistant United States Attorney Carolyn Ferko prosecuted the case.

(HOUSTON) – Two sealed indictments charging Veronica Frazier, Robert Veazie and Felton Greer with fraudulently obtaining home purchase loans have been unsealed, United States Attorney José Angel Moreno announced today. Both indictments were returned under seal on May 5, 2010, and were unsealed Friday once the three defendants were in custody.

Frazier, 42, of Pearland, was charged in a five-count indictment with conspiracy and wire fraud arising from a scheme to defraud residential lenders in connection with individual condominium purchases in a building located at 917 Main Street in Houston, also known as “The Kirby Lofts.”

Veazie, 35, and Greer, 41, both of Houston, were each charged in a separate but related four-count indictment with conspiracy and wire fraud relating to the Kirby Lofts scheme, as well as in connection with other single-family home purchases in the Houston area.

Greer surrendered to FBI agents Friday morning, while Veazie surrendered to the United States Marshals Service. Both appeared before U.S. Magistrate Judge Mary Milloy who allowed them to be released upon posting $50,000 bond. Frazier was arrested by FBI agents Friday morning and is expected to appear before U.S. Magistrate Judge Nancy K. Johnson at 2:00 p.m. today.

According to the allegations in the indictment returned last week, the Kirby Lofts transactions were sham sales. From about January 2006 to October 2006, Frazier recruited individuals with good credit to act as borrowers in applications for mortgage loans to purchase units in The Kirby Lofts and, with the assistance of co-conspirators, assisted these “straw borrowers” with providing false information and documents to induce lenders to fund purchases of units in The Kirby Lofts. The indictment also alleges Frazier and other co-conspirators submitted invoices for payment from loan proceeds and used the money to pay themselves and straw borrowers from loan proceeds.

The indictment against Veazie and Greer alleges they acted as “straw borrowers” in the Kirby Lofts scheme and also for other residential loans involving single-family residential properties in the Houston area. According to the indictment, Veazie and Greer received kickbacks from loan proceeds and provided false statements and documents to induce lenders to fund the purchase loans.

The maximum penalty, upon conviction, for conspiracy and wire fraud is 20 years in prison and a fine up to $250,000.

The investigation leading to the charges was conducted by the FBI. Assistant United States Attorneys Belinda Beek and Vernon Lewis are prosecuting the case.

This indictment 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.

By Phillip Mcneal

HOUSTON—Vincent Wallace Aldridge and Tori Aldridge, both of Fresno, Texas, surrendered themselves to federal authorities as a result of the return of a 19-count indictment arising from an alleged scheme to defraud residential mortgage lenders of more than $3.7 million in connection with home purchases in the Houston area, United States Attorney José Angel Moreno, FBI Special Agent in Charge Richard C. Powers, and Internal Revenue Service-Criminal Investigation (IRS-CI) Special Agent in Charge Rodney E. Clarke announced today. Vincent Aldridge, 45, is a former fee attorney of First Southwestern Title Company and attorney with Aldridge and Associates, while Tori Aldridge, 32, is a former employee of the same title company.

Vincent and Tori Aldridge surrendered to special agents of the FBI and IRS-CI at the FBI this morning and both are expected to make their initial appearances before U.S. Magistrate Judge John R. Froeschner in Houston later today. A third defendant, Gilbert Barry Isgar, 50, of Katy, Texas, the co-owner of Waterford Homes, appeared before U.S. Magistrate Judge John R. Froeschner earlier this week pursuant to a summons. Isgar was arraigned and his case was set for jury selection and trial before U.S. District Court Judge Sim Lake on May 24, 2010.

The 19-count indictment returned by a Houston grand jury on Thursday, March 25, 2010, accuses Vincent Aldridge, Tori Aldridge, and Isgar of conspiracy to commit wire fraud, wire fraud, conspiracy to commit money laundering, and money laundering.

According to the allegations in the indictment, Vincent and Tori Aldridge and Isgar conspired to devise and execute a scheme during 2004 and 2005 to receive proceeds from real estate transactions based upon materially fraudulent information that was intentionally supplied to at least three lending institutions as the basis for an agreement between the lending institutions and borrowers.

Vincent Aldridge allegedly lured borrowers by representing the scheme as an investment opportunity. For the use of the borrowers’ credit to obtain mortgage loans, they were promised $10,000 after the closing of their respective property. They were also allegedly told that the property would be sold after a year for a profit. Once a borrower agreed to the deal, Vincent Aldridge and Tori Aldridge acting as both an escrow officer and a loan processor and met with the borrower to obtain the necessary personal identifying information to complete the borrower’s lending package.

Prior to the submission of the lending packages to the lending institutions, it is alleged that Vincent and Tori Aldridge modified the lending package to enhance the borrower’s ability to qualify for the requested loan. These enhancements, according to the indictment, included fraudulently overstating the borrower’s income, misrepresenting the borrower’s principal residence as rental property and misrepresenting the purchase property as the principal residence. The mortgage loans totaled approximately $3,700,000. Each property sold in amounts between $344,000 and $365,000 and were funded to First Southwestern Title Company by wire.

As a part of the scheme, the indictment alleges that Isgar, co-owner of Waterford Custom Homes, inflated the sales price of the properties to be purchased by the aforementioned recruited borrowers. As a part of the alleged illicit agreement between the Aldridges and Isgar, the Aldridges were to receive the proceeds of their scheme by including disbursement authorizations for attorney’s fees signed by Isgar to the title company prior to closing. These amounts were listed on the loan closing documents as seller disbursements for attorney fees and were in addition to the attorney’s fees stated on the attorney fee line in the closing documents.

Once the loans were funded to the title company, the Aldridges are accused of causing several checks to be drawn on the account of the title company, each totaling more than $10,000, payable to a bank account controlled by Aldridge & Associates. The checks totaled approximately $442,089 and represented a portion of the illicit proceeds obtained through the mortgage fraud scheme.

The maximum penalty, upon conviction, for the conspiracy to commit wire fraud and each of the 11 wire fraud counts is 20 years in prison as well as substantial fines. The maximum penalty for the conspiracy to launder money and for each of the six money laundering counts is 10 years in prison. A conviction for money laundering carries the most significant fine of $250,000 or twice the amount of the criminally derived property, whichever is greater.

Assistant United States Attorney Jennifer Lowery is prosecuting the case.

The investigation leading to the charges was conducted by the FBI and IRS-CI, members of President Obama’s Financial Fraud Task Force. The President established the interagency Financial Fraud 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.

Lead Defendant Eric Rulack Farrington, Jr. Convicted on All 32 Counts

DALLAS—A mortgage fraud trial that began in mid-February before U.S. District Judge Sam A. Lindsay, concluded late this afternoon when the jury found all eight defendants guilty of various offenses related to their role in a mortgage fraud scheme they operated in the Dallas area from March 2002 to January 2006, announced U.S. Attorney James T. Jacks of the Northern District of Texas.

The lead defendant in the case, Eric Rulack Farrington, Jr., 57, of Irving, Texas, was the president of Eric Farrington Seminars, Inc. and Prestige Capital Corporation, which did business as Farrington Mortgage Group. He was a manager of EFC Investments, LLC, which did business as EFC Management Company. All were located in Dallas.The jury convicted Farrington on all 32 counts of the superseding indictment, including:

* one count of conspiracy to commit wire fraud
* one count of bank fraud and aiding and abetting
* 15 counts of wire fraud and aiding and abetting
* 10 counts of money laundering and aiding and abetting
* five counts of engaging in a monetary transaction with criminally derived property and aiding and abetting

Other defendants, their roles, and counts on which they were convicted are:

Janice Little Shepherd, 51, of Irving, Texas, Farrington’s former fiancé, was a mortgage broker who did business as EFC Capital Mortgage Company, in Dallas. She was convicted on:

* one count of conspiracy to commit wire fraud
* 11 counts of wire fraud and aiding and abetting
* four counts of engaging in a monetary transaction with criminally derived property and aiding and abetting

Regis Lamont Williams 44, of Dallas, was a Texas certified real estate appraiser who did business as Executive Certified Appraisal. He was convicted on:

* one count of conspiracy to commit wire fraud
* one count of bank fraud and aiding and abetting
* nine counts of wire fraud and aiding and abetting
* five counts of engaging in a monetary transaction with criminally derived property and aiding and abetting

Kevin Ray Sanderson, 35, of Irving, Texas, was a business associate of Farrington and the vice president of Farco Construction, Inc., Dallas, which also did business as Farrington Mortgage Group. He was convicted on:

* one count of conspiracy to commit wire fraud
* one count of bank fraud
* four counts of wire fraud and aiding and abetting
* one count of money laundering

James Edward Jones, 44, of Dallas, was a real estate agent. He was convicted on:

* one count of conspiracy to commit wire fraud
* two counts of wire fraud and aiding and abetting

Edwin Terrence Bell, 43, of Fort Worth, Texas, was in the real estate management business and was the president of Togetherness, Inc. Bell also did business as The Togetherness Group and TTG, Inc. He was convicted on:

* one count of conspiracy to commit wire fraud
* five counts of wire fraud and aiding and abetting
* two counts of engaging in a monetary transaction with criminally derived property and aiding and abetting

Micheal (sic) Lewis Andrews, 50, of Plano, Texas, was chief executive officer of Second Chance Mortgage, Inc. and did business as 2nd Chance Mortgage. He was convicted on:

* two counts of wire fraud and aiding and abetting

Robert John Mason, 55, of Oak Leaf, Texas, was an employee of Prestige Capital Corporation. He was convicted of:

* two counts of wire fraud and aiding and abetting

Prior to trial, Marcus Allen Parker, 35, of Rowlett, Texas, who was an associate of defendant Kevin Ray Sanderson, pleaded guilty to one count of conspiracy to commit wire fraud. In addition, prior to trial, charges were dismissed against Tony Earl Anderson, 52, of Dallas and Christopher N. Williams, 43, of Flower Mound, Texas. All three testified as government witnesses.

The statutory maximum penalties for conspiracy to commit wire fraud and wire fraud is 20 years in prison and a $250,000 fine, per count. The maximum statutory penalty for bank fraud is 30 years in prison and a $1 million fine, per count. The statutory maximum penalty for money laundering is 20 years in prison and a $500,000 fine, per count. The maximum statutory penalty for engaging in a monetary transaction with criminally derived property is 10 years in prison and a $250,000 fine, per count.

The government presented evidence at trial that Farrington, a motivational speaker who had authored a real estate book and had an infomercial on making money in real estate that ran on late night television, largely orchestrated the scheme. The defendants located single-family residences for sale in the Dallas area, including distressed and pre-foreclosure properties, and negotiated a sales price with the seller. They created surplus loan proceeds by inflating the sales price to an arbitrary amount substantially more than the fair market value of the residence, many times using inflated appraisals. In some cases, they would create a bogus outstanding mortgage lien to be discharged. They recruited individuals with high credit scores to act as borrowers and falsely represented to them that the property would be managed by the defendants and rented by a suitable tenant; that the mortgage, interest, taxes, insurance and property maintenance would be paid from the rental income; and the purchasers/borrowers would have no expenses. The borrowers had no intention to live in the property and did not have sufficient income to repay the loans. They said they relied on Farrington.

Further evidence presented by the government showed that the defendants prepared and submitted fraudulent loan documents showing inflated incomes in the names of the borrowers and obtained loans in inflated amounts based on these fraudulent loan documents. Then they used the fraudulently obtained surplus loan proceeds to pay the sellers kickbacks, to conceal the fraud, and distributed the bulk of the proceeds among themselves. They would then allow the loan to go into foreclosure after a few payments were made on the loan.

Some of the residences used in the scheme are:

* 1420 Travis Circle South, Irving, Texas
* 6231 Azalea Lane, Dallas
* 7730 Cliffbrook Drive, Dallas
* 10907 Cinderella Lane, Dallas
* 7617 Arborgate Drive, Dallas
* 13735 Ashridge Drive, Dallas
* 6824 Winterwood Lane, Dallas
* 6840 Winterwood Lane, Dallas
* 6915 Winterwood Lane, Dallas
* 7012 Creek Bend Road, Dallas
* 1509 Appalachian Drive, Allen, Texas

Following a conviction on Count One, the conspiracy, the criminal forfeiture allegation requires the defendants to forfeit $4,500,070 to the U.S. The forfeiture allegation also requires the defendants, upon conviction of any of Counts Two through 17, to forfeit various sums of money, totaling nearly $4 million, as listed in the superseding indictment.

Mortgage fraud is a major focus 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.

U.S. Attorney Jacks praised the investigative efforts of the FBI and Internal Revenue Service – Criminal Investigation. Assistant U.S. Attorneys Joseph Revesz and Walt Junker are prosecuting the case.

Real Estate Investor Ordered to Pay Over $4.1 Million in Restitution

Sherman, Texas – U.S. Attorney John M. Bales announced today that a 38-year-old Grapevine, Texas man has been sentenced to federal prison for his role in a mortgage fraud scheme in the Eastern District of Texas.

Esshan Samuel “Sam” Agha pleaded guilty on Oct. 19, 2009, to conspiracy to commit mail fraud and was sentenced to 51 months in federal prison today by U.S. District Judge Marcia Crone. Agha was also ordered to pay restitution in the amount of $4,127,131.50.

According to information presented in court, from Oct. 2005 to Feb. 2008, Agha, a real estate investor, devised a scheme in which he solicited others to buy homes that in most cases were in fact owned by himself or an unnamed co-conspirator. A smaller number of homes were also owned by a third party for whom Agha brokered the sales. Agha facilitated the scheme by making false statements that included misrepresentations such as overstating the buyers’ income and stating that the buyers intended to occupy the homes as their primary residence. All of the loans involved in the scheme went into default when the buyers failed to make the mortgage payments on the homes, which included 24 properties in Collin County and one in Tarrant County.

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.

Among 40 defendants charged by a federal grand jury indictment (PDF) announced this week in a Texas case are Daniel Ayers and Anthony Flores, reports the Dallas Morning News.

The two, who reportedly served as title company attorneys or escrow officers in real estate transactions at issue in the case, are 1996 graduates of Southern Methodist University’s law school.

They allegedly were recruited by a Florida businessman, along with real estate agents, mortgage brokers, property appraisers, straw buyers and others, to participate in a Dallas-area mortgage 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,” states a U.S. Department of Justice press release about the Eastern District of Texas case.

The case concerns some 114 houses in the Dallas area, on which lenders lost about $20 million, although all of the defendants are not accused of participating in all of the transactions at issue. Half of the $20 million allegedly went to the scheme’s claimed ringleader, Florida businessman John Barry.

Attorney David Finn represents Ayers. He tells the ABA Journal that his client was cooperating with the government before the indictment was handed down in what Finn describes as a “massive” investigation and will continue to do so. He anticipates that a voluntary surrender date for Ayers will be arranged next week.

“I believe that the evidence will show that my client allowed himself to be sucked into the vortex of fraud and deceit perpetrated and orchestrated by Mr. Barry,” says Finn in an e-mail to the ABA Journal. “The evidence will show that, unlike Mr. Barry, who allegedly pocketed approximately $10 million, my client derived very little financial benefit from the transactions outlined in the Indictment.”

Barry could not be reached for comment by the Dallas Morning News, which apparently didn’t attempt to contact the other defendants. The phone number listed for the Ayers & Flores firm on its website is temporarily disconnected, according to a recorded message that responded to an ABA Journal call, and Flores did not immediately respond to an e-mailed request for comment by the ABA Journal.

The indictment includes charges of mail fraud, conspiracy to commit mail and wire fraud, and money laundering.

“We’re trying to capture and take on the entire apparatus that he had established,” said U.S. Attorney John Bales of Barry in an interview yesterday with the Dallas Morning News.

He tells the newspaper he expects to announce more mortgage fraud cases soon.

Man Sentenced to More than Three Years in Federal Prison in Mortgage Fraud Scheme
Defendant Apprehended on a Shrimp Boat in Caribbean Sea

DALLAS—James Ragnauth, a defendant charged in a mortgage fraud case, who was on the lam for about six weeks and apprehended on a shrimp boat in the Caribbean Sea by the U.S. Coast Guard in March 2009, was sentenced today by U.S. District Judge Sidney Fitzwater to 37 months in federal prison, announced U.S. Attorney James T. Jacks of the Northern District of Texas. Judge Fitzwater also ordered Ragnauth to pay approximately $205,000 in restitution.

Ragnauth pleaded guilty in September 2009 to one count of causing false entries to deceive the U.S. Department of Housing and Urban Development (HUD). According to the indictment, Ragnauth incorporated J.R. Mortgage, located in Dallas, and was in charge of the company’s day-to-day loan operations and supervised several loan officers, including co-defendant Rosa Irene Galvan and Ignacio Juan Jasso, charged in a related case.

Ragnauth admitted in documents filed in court that in 1997 and 1998, he and loan officer Jasso knowingly and willfully made false entries in HUD statements in connection with several residential loans. As part of their scheme to defraud HUD, Ragnauth and Jasso created, and caused others to create and later submit to HUD, several false and fraudulent documents, such as a Uniform Residential Loan Application which contained false information, a fraudulent W-2 form and a fraudulent credit report. At the sentencing hearing today, Ragnauth was found to be the organizer leader of a mortgage fraud scheme that caused the fraudulent funding of 30 residential loans, totaling more than $1.8 million.

Both Galvan and Jasso have pleaded guilty to their roles and are scheduled to be sentenced on February 26, 2010.

While Ragnauth was a fugitive in the Beaumont, Texas area, the U.S. Marshals Service in Beaumont featured Ragnauth’s photo on local newscasts along with information that he might be leaving the U.S. on a boat from Port Arthur, Texas. Ragnauth, a naturalized citizen, was captured by the U.S. Coast Guard when he was attempting to flee to his native Guyana. Guyana is located just east of Venezuela on the northern coast of South America. Ragnauth made it about half way to Guyana, being arrested in international waters between Cuba and Haiti.

The case was investigated by the FBI and HUD-Office of Inspector General. Assistant U.S. Attorney David Jarvis was in charge of the prosecution.

The San Antonio, Texas, office of the Federal Bureau of Investigation (FBI) announced today the establishment of a telephone hotline to receive complaints from the public regarding allegations of real estate and mortgage fraud.

As Flipping Frenzy readers know all to well, the FBI considers mortgage fraud to be a significant and growing crime which often affects unknowing consumers, and which has a direct impact upon the overall economic health of the U.S. economy. The collapse of the subprime mortgage market, as well as the recent economic downturn, has been met with a corresponding increase in fraud and schemes connected to mortgages and related transactions. The establishment of the San Antonio hotline will aid the FBI and by providing a direct line of alert should mortgage fraud be suspected.

If you suspect real estate or mortgage fraud in the San Antonio area, call the fraud hotline at (210) 650-6777.

Image via WikipediaAccording to CBS television affiliate KHOU in Houston, Texas, two former National Basketball Association (NBA) players have been arrested and taken into custody by the FBI for charges related to mortgage fraud. If the charges stick, Dirk Minnifield and Grant Gondrezick‘s arrest would mark the third time this year that a current or former NBA player was accused of being involved in a wide-ranging real estate fraud scheme.

From KHOU:

Two former NBA players allegedly involved in mortgage fraud scheme
05:23 PM CST on Tuesday, December 9, 2008

Two former NBA players are in federal custody on Tuesday.

The FBI arrested them for reportedly being involved in a mortgage fraud scheme in Harris and Montgomery Counties.

Dirk Minnifield and Grant Gondrezick are among four people indicted in the case. Federal investigators said the group would recruit buyers in name only for properties.

One of the suspects, who owned a home improvement business, is accused of falsely showing he had done custom renovations.

Others are accused of preparing false loan documents.

All four could face up to five years in prison.

Dirk Minnifield and Grant Gondrezick are no strangers when it comes to run-ins with the law. According to their Wikipedia entries, Minnifield spent a year in jail after writing bad checks and violating probation on those charges (but later went on to serve as a drug counselor with the NBA), while Gondrezick was among three former NBA players once indicted on drug-related charges.

Earlier, as first reported by Flipping Frenzy in August of this year, current Chicago Bulls player Lindsay Hunter was accused of mortgage fraud in Michigan. According to reports, Hunter’s case is now being investigated by the Wayne County (MI) Register of Deeds’ mortgage-fraud task force and the FBI.

A 45-year-old Houston, Texas, mortgage broker has been indicted and charged with conspiracy, wire fraud and money laundering in connection with an alleged scheme to defraud lenders out of more than $12 million in residential mortgage loans.

Clarence Lewis, III, who operates Motown Mortgage Group in Houston, stands accused of recruiting people to purchase residential properties with the intent to deceive mortgage lenders concerning their ability and incentive to repay the loans. Lewis and others prepared and provided to mortgage lenders, according to allegations in the indictment, falsified documents to support loan applications. Furthermore, appraisals used as evidence of the value of the properties in questions were allegedly created by someone other than an licensed appraiser, yet a licensed appraisers name and license were consistently and fraudulently used.

Proceeds from Clarence Lewis’ loans were deposited into bank accounts in business names associated with Lewis, including Motown Mortgage Group and Astro Construction Company. Some of the funds were also used to pay individuals who provided services necessary to promote and perpetuate the scheme.

Each of Lewis’ wire fraud counts carries a maximum possible penalty of 20 years imprisonment and $250,000 fine. A conviction for money laundering carries a maximum sentence of 20 years and a $500,000 fine. The maximum possible sentence for engaging in a financial transaction involving more than $10,000 in criminally derived property, is 10 years imprisonment and a $250,000 fine.

The criminal charges against Clarence Lewis, III are the result of a joint investigation conducted by special agents of the FBI and the Internal Revenue Service—Criminal Investigations Division. The case is being prosecuted by Assistant U.S. Attorney Melissa J. Annis (Eastern District of Texas).

More Americans are facing foreclosure than at any other time in recent memory. According to the May 2008 U.S. Foreclosure Market Report™ from RealtyTrac, foreclosure filings (i.e., default notices, auction sale notices, and bank repossessions), were reported on 261,255 properties during the month of May, which translates into a 7% increase over April and a 48% increase from May 2007. The report also shows one (1) in every 483 U.S. households received a foreclosure filing during the month of May, the highest monthly foreclosure rate since RealtyTrac began issuing its report in 2005.

Nevada, California, and Arizona post top state foreclosure rates

With one in every 118 households receiving a foreclosure filing in May, Nevada posted the highest state foreclosure rate for the 17th consecutive month. Foreclosure filings were reported on a total of 9,009 Nevada properties, an increase of nearly 24% from the previous month and a 72% increase from May 2007.

California’s foreclosure activity in May increased 11% from the previous month and 81% from May 2007, helping the state continue to register the nation’s second highest state foreclosure rate. One (1) in every 183 California households received a foreclosure filing during the month of May, a rate that was 2.6 times the national average.

Arizona’s May foreclosure rate — 1 in every 201 households received a foreclosure filing during the month — ranked third highest in the U.S. for the second month in a row. Arizona’s foreclosure activity increased nearly 12% from the previous month and almost 119% from May 2007.

One in every 228 Florida households received a foreclosure filing in May, giving it the fourth highest foreclosure rate in the country. Michigan foreclosure activity in May increased nearly 25% from the previous month, helping the state’s foreclosure rate to jump to fifth highest in the country after ranking No. 9 the previous month. One in every 353 Michigan households received a foreclosure filing in May.

Other states with foreclosure rates ranking among the top 10 for the month of May were Georgia, Colorado, Massachusetts, Ohio and New Jersey.

Detailed state-by-state data is available here.

For the second month in a row, California and Florida cities accounted for nine out of the top 10 metropolitan foreclosure rates among the 230 metropolitan areas tracked in the report. Seven cities in California were in the top 10, led by Stockton in the top spot. One in every 75 Stockton area households received a foreclosure filing in May– more than six times the national average. Other California cities in the top 10 were Merced at No. 3, Modesto at No. 4, Riverside-San Bernardino at No. 5, Vallejo-Fairfield at No. 7, Bakersfield at No. 8, and Sacramento at No. 9.

The Cape Coral-Fort Myers metro area in Florida registered the second highest metro foreclosure rate in May, with one in every 79 households receiving a foreclosure filing during the month. The other Florida metro area in the top 10 was Port Lucie-Fort Pierce at No. 10.

Las Vegas was the only city outside of California and Florida with a foreclosure rate ranking among the top 10. One in every 96 Las Vegas households received a foreclosure filing in May, more than five times the national average and No. 6 among the metro areas.

Metro areas with foreclosure rates among the top 20 included Phoenix at No. 12, Detroit at No. 14, San Diego at No. 17 and Miami at No. 19.

Next up: Speculation about when the slide will end / have we seen the worst of the worst. Weighing in on the topic is Joe G. Henry of Long & Foster-affiliated W.C & A.N Miller Realtors in Virginia (comment found on ForeclosurePulse):

Defendable recovery will be 2011 due to the highest volume of ARM resets occurring in June 2008 and the typical foreclosure process lasts 12 months from Notice of Default, Notice of Trustee Sale, Foreclosure Auction, then seasoning to a Bank Owned (REO) — plus a 15-18 month housing inventory. Moreover, for every one bank-owned listing in Fairfax County, we have three short sales, which 80 percent of these will actually be foreclosed. There are three crisis response talking points concerning this scenario: (1) added liquidity; (2) mark down distressed assets; and (3) act now.

What’s your take? Do you agree with Joe G. Henry or do you have a theory of your own?

If you are interested in the federal government’s handling of real estate and mortgage fraud prevention and prosecution, read “FBI Halts Some Cases to Investigate Mortgage Frauds,” by Bloomberg’s Robert Schmidt. If you don’t have time to read the entire article, here’s just what you need to know:

• The FBI, confronting a surge in mortgage fraud, has ordered more than two dozen of its field offices to stop probing certain financial crimes so agents can focus on real estate and mortgage fraud.
• Kenneth Kaiser, chief of the bureau’s criminal investigative division, issued this directive late last week on a video conference call with the heads of 26 FBI offices in areas where real estate fraud is out of control.
• An FBI spokesperson said the shift was made after an analysis of how agents are spending their time. Approximately 150 FBI agents were working on more than 1,300 real estate fraud cases before the directive was issued.
• The 26 FBI field offices were told to temporarily suspend opening new cases dealing with price fixing, mass marketing, wire fraud, mail fraud and environmental crimes. Current cases aren’t being dropped, the FBI spokesperson said.
• FBI field offices in Florida, Georgia, California, Nevada, Arizona, Texas, New York, Ohio, Michigan, Illinois, Indiana and Minnesota–all rated as real estate and mortgage fraud hot spots–are participating.
• “Diverting FBI resources to deal with cases of mortgage fraud is exactly what Chairwoman Mikulski wants to avoid,” Melissa Schwartz, a spokeswoman for U.S. Senator Barbara Mikulski, who heads the appropriations subcommittee for the FBI, told Bloomberg late yesterday.
• The Attorney General of the United States, Michael Mukasey said last week that the Justice Department, the FBI’s parent agency, “won’t create a national task force to combat mortgage fraud as the government did with corporate crime after Enron. “This isn’t that kind of phenomenon,” he said.

For more on this developing story, read FBI Halts Some Cases to Investigate Mortgage Frauds.

The FBI just released a comprehensive new report on real estate and mortgage fraud, and, as you might expect given everything we talk about here on Flipping Frenzy, it isn’t a pretty picture. The information contained in the report can get quite technical, with plenty of charts, graphs, and hard numbers. Regardless, it’s worth the read–see “The 2007 Mortgage Fraud Report.” Among the Report’s key findings:

1. Real Estate and Mortgage Fraud is clearly on the rise. Although there is no central way to track the total extent of the problem, the FBI received 46,717 Suspicious Activity Reports related to real estate and mortgage fraud last year—compared to 35,617 in 2006 and just 6,936 in 2003. Only 7% of these reports documented an exact dollar amount in terms of losses, but even so, the total loss from this 7% was $813 million. The FBI’s caseload has also escalated. By the end of fiscal year 2007, the Bureau was handling just over 1,200 real estate and mortgage fraud investigations—a 47% increase from 2006 and a whopping 176% increase from 2003.
2. The downward trend in the housing market will continue (see forecasts provided by the Mortgage Bankers Association in the report), providing further incentive for shady real estate industry insiders to look for dishonest ways to turn a profit and growing opportunities for scam artists to prey on vulnerable homeowners.
3. The subprime lending crisis is a contributing factor to real estate mortgage fraud, both directly and indirectly. Subprime loans, designed for people with poor or limited credit histories, now represent more than 13% of all outstanding loans–double the percentage of five years ago. These high-interest, high-risk loans contributed to the 2.2 million foreclosures filed during 2007, up 75% from 2006. The trouble actually began when home prices were rising a few years ago, leading to relaxed lending practices throughout the industry and the exaggeration of assets by industry insiders and borrowers under their charge anxious to qualify for loans, both of which contributed to fraud.
4. The top 10 hotspots nationwide for mortgage fraud in 2007, carefully mapped from multiple public and private sources, were:
   
   1. Florida
   2. Georgia
   3. Michigan
   4. California
   5. Illinois
   6. Ohio
   7. Texas
   8. New York
   9. Colorado
   10. Minnesota

   Other states significantly affected include: Arizona, Maryland, Utah, Nevada, Missouri, Indiana, Tennessee, Virginia, New Jersey, and Connecticut. The north-central region of the United States had the largest share of fraud, followed by the west and southeast regions.



5. The latest mortgage scams run the gamut: from builder-bailout schemes where developers unload excess inventory through financial trickery, to foreclosure rescue schemes that trick homeowners into signing over the deed to their house; from seller-assistance scams that use false appraisals to sell homes, to identity theft that leads to home equity credit lines being opened and drained.

The FBI’s report also briefly recounts the agency’s own response to the problem, including the Bureau’s participation in the Department of Justice’s Mortgage Fraud Working Group, through which the agency says it is helping to identify large-scale real estate industry insiders and criminal enterprises conducting systemic real estate fraud

The purpose of the The 2007 Mortgage Fraud Report is to provide insight into the breadth and depth of real estate and mortgage fraud crimes in the United States. The report updates the 2006 Mortgage Fraud Report and addresses current fraud projections, issues, and hot spots (as noted above). The objective of the report, according to the FBI, is to provide FBI program managers with relative data to justify real estate and mortgage fraud investigative and preventive resources and for investigators to identify real estate and mortgage fraud activity.

Approximately 200 Washington homeowners who paid for a service they thought would help save their homes from foreclosure will receive partial refunds under a settlement announced yesterday by the Washington Attorney General’s Office. The homeowners each paid between $1,200.00 and $1,500.oo to Foreclosure Assistance Solutions LLC, of Clearwater, Florida. More than 70% of homeowners who signed up with Foreclosure Assistance Solutions ended up losing their homes anyway. The company went out of business in fall 2007.

From Washington State’s Attorney General, Rob McKenna:

“We believe Foreclosure Assistance Solutions used coercive tactics to pressure consumers into paying for a service they really couldn’t afford and then doing little or nothing to actually help those consumers save their homes,” Attorney General Rob McKenna said. “Today’s settlement puts some money back into the pockets of those who bought into the company’s false promise of hope.”

The Attorney General’s Office accused Foreclosure Assistance Solutions of violating the state’s Consumer Protection Act, Credit Services Organization Act, and Commercial Telephone Solicitation Act. According to the state’s complaint filed with the settlement yesterday, Foreclosure Assistance Solutions sent letters and postcards to consumers whose homes were in foreclosure. Some of the solicitations mimicked official government notices. The messages instructed the consumers to call the company for help.

More from the Attorney General’s Office:

“Foreclosure Assistance Solutions employees delivered a deceptive sales pitch to frighten consumers into believing they needed to act quickly. Homeowners who paid for the service were then presented with a contract that prohibited them from contacting the mortgage lender that initiated the foreclosure for any reason. And for consumers who paid Foreclosure Assistance Solutions with a credit card, the contract prohibited them from trying to dispute the charges by contacting their credit card provider before Foreclosure Assistance Solutions. Consumers who did would not receive a refund.”

Foreclosure Assistance Solutions did not admit to any wrongdoing in the settlement but agreed to pay $78,125 in restitution to Washington consumers, as well as $20,000 in attorneys’ fees. The settlement also includes injunctive provisions limiting how the company does business, should it offer services again in the future, as well as an additional $100,000 in civil penalties for failure to comply with the agreement.

Foreclosure Assistance Solutions will be providing the Attorney General’s Office with contact information for Washington consumers who purchased its services. The state will mail checks to eligible recipients within the next three months. The total restitution will be divided among all eligible recipients; individuals will likely receive $300-$500 each. Anyone who has questions about the settlement can contact the State of Washington Attorney General’s Consumer Resource Center at 1-800-551-4636 between 10 a.m. and 3 p.m. weekdays (Pacific Time).

In related news, the Texas Attorney General’s Office reached a settlement with Foreclosure Assistance Solutions and its operators earlier this month. A court agreed in September 2007 to freeze the defendants’ assets on conjunction with Texas’ investigation, and the company subsequently went out of business.

The Washington Attorney General’s Office introduced legislation this past legislative session to help protect homeowners from foreclosure rescue scams where the “rescuer” agrees to purchase a distressed property then sell or lease it back to the original homeowner. Washington House Bill (HB) 2791 takes effect June 12, 2008. The new law will require that the purchaser prove the homeowner is able to make the payments and provide a written contract with clearly disclosed terms. The new law also gives the homeowner the right to cancel the contract within five (5) business days, and also requires that the original homeowner receive at least 82% of the difference between the property’s fair market value and the underlying mortgage should the home be sold to a third party.

A licensed real estate agent in Texas has been sentenced to serve one year and six months in federal prison for bank fraud and engaging in financial transactions with criminally derived property stemming from a mortgage fraud investigation. In addition to an 18-month prison term, U.S. District Judge Keith Ellison ordered John Turner Jr., 52, to pay a $2,000 fine and serve three years of supervised release upon completion of his prison term.

According to his plea agreement, Turner arranged for a straw borrower to purchase a residence in Houston, Texas. He amended the purchase contract, instructing the title company to disburse $62,000 of the loan proceeds to a remodeling company of the buyer’s choice, ostensibly for repairs and upgrades to be made at the residence. First National Bank of Arizona funded the $213,377 mortgage loan in November of 2006. At closing, Turner submitted a $62,000 false invoice in the name of First Class Construction Inc., for repairs and remodeling. The title company and First National Bank of Arizona were unaware that First Class Construction, Inc., was owned by Turner nor that the repairs and remodeling had not been done and would never be done.

Turner took the $62,000 check to a check cashing business where, after cashing the check, he received receiving 51 $1,000 money orders, a money order in the amount of $365, and $9,992 in cash.

The Assistant U.S. Attorney in the Western District of Texas recently scored one for the good guys when he successfully secured guilty verdicts in United States District Court against five people for their roles in a multi-million dollar mortgage fraud scheme.

Following a nine day trial that ended last Friday (March 28), an Austin, Texas jury convicted:

• Cornelius Robinson, 47, of Austin, Texas, who was the leader and organizer of the fraud scheme. Robinson was convicted of conspiracy to make false statements related to a loan, conspiracy to commit wire fraud, five substantive counts of wire fraud, nine counts of false statements related to a loan, one count of aiding and abetting the receipt of commissions or gifts from loans by a bank employee, conspiracy to commit money laundering and seven counts of money laundering.
• Licensed loan officer and mortgage broker Michael Breon, 39, formerly of Austin and a current resident of McKinney, Texas, and a straw purchaser. Breon was convicted of conspiracy to make false statements related to a loan, one count of wire fraud and one count of conspiracy to commit money laundering.
• Sindu Sukumaran, 36, wife of Michael Breon and a straw purchaser. Sukumaran was convicted of wire fraud.
• Marlon Nathan Torres, 45, of Hutto, Texas, a licensed real estate agent and buyer and seller of real estate in the Austin area. Torres was convicted of one count each of conspiracy to commit money laundering and money laundering.
• Jeffrey Andre Wilkins, 46, of Austin, a cousin of Cornelius Robinson and a straw purchaser. Wilkins was convicted of one count each of conspiracy to make false statements related to a loan, conspiracy to commit wire fraud, false statement related to a loan, conspiracy to commit money laundering and money laundering.

Sentencing for all five–who were the last of 16 defendants indicted in January of this year by the Federal Grand Jury in Austin–is scheduled for June 20, 2008. Eleven co-defendants who pleaded guilty to related charges prior to trial are set for sentencing on June 6, 2008. The co-defendants include:

• Silvia Seelig, 45, of Austin, and wife of Cornelius Robinson who during the conspiracy, was a licensed real estate agent and a straw buyer.
• George H. Watson, 55, of Austin, a licensed attorney who specializes in real estate transactions. Watson served as the closing attorney on most of the real estate transactions described in the Indictment.
• James Douglas Atwood, 51, of Austin, Cornelius Robinson’s uncle and a straw buyer.
• Russell Snead, 43, of the Seattle, Washington area and a straw buyer.
• Doris Ann Hill, 40, of Austin, a personal banker employed at Wells Fargo Bank. For a fee, Hill agreed to provide a false verification of deposit to loan underwriters in relation to three real estate transactions involving Snead.
• Licensed real estate agent Julius Meyers Lofton, 45, of Austin, and a straw buyer.
• Roy Rivers, 52, of Austin, and a straw buyer.
• Danielle Guice Rosas, 40, of Austin, and a straw buyer.
• Stanley Ma, 27, of Honolulu, Hawaii and a straw buyer.
• Leonard Brown, 38, of Houston, Texas, who provided a false verification of employment in association with Onyx Consulting and Stanley Ma.
• Straw buyer Leroy Williams, 46, of Austin.

From September 1999 until now, the defendants participated in a scheme to defraud mortgage lenders, including federally insured financial institutions, with regard to loans acquired to purchase 25 properties in the Austin and San Antonio, Texas areas. The scheme centered around the use of real estate flips. That is, the defendants purchased property at one price and would immediately sell, or flip the property to a straw buyer at a higher price. In doing so, the mortgage lenders were deceived as to the true nature of the transaction and the financial status of the straw buyer. The straw buyers did not make the subsequent monthly mortgage payments and all of the loans went into default and have been either foreclosed upon or are the subject of current foreclosure proceedings.