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September 18, 2010

Virginia Real Estate Agent in Mortgage Fraud Conspiracy Sentenced

ALEXANDRIA, VA—Jorge Cidar Mendez Chavez, 42, of Ashburn, Va., was sentenced today to 27 months in prison, followed by three years of supervised release, for conspiracy to commit bank fraud. Chavez was also ordered to pay restitution in the amount of $1,688,400.
Neil H. MacBride, United States Attorney for the Eastern District of Virginia and Shawn Henry, Assistant Director in Charge of the FBI Washington Field Office, made the announcement after sentencing by United States District Judge Liam O’Grady. Chavez pled guilty on Jan. 8, 2010.
According to court documents, Chavez, a real estate agent, served an important role in a mortgage fraud conspiracy, which continued for approximately 18 months from the summer of 2007 through the end of 2008, involved at least seven properties and fraudulent loans of almost $6 million. Chavez helped straw buyers provide false information to federally-insured financial institutions and private commercial lenders. The false information included false employment, salary and asset information. Chavez created, maintained or controlled two businesses—Intellitech-US and Cercig, Inc.—to corroborate the false information. Chavez also worked with Fidelino Ferrufino, an individual who recruited straw buyers in an unrelated conspiracy. Mr. Ferrufino was convicted after a three week trial in August 2010. His sentencing is scheduled for Oct. 22, 2010.
This case was investigated by the FBI’s Washington Field Office. Assistant United States Attorneys Charles Connolly and Marla Tusk 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.usdoj.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.

Posted By: Ralph Roberts @ 12:02 am | | Comments (0) | Trackback |
Filed under: Bank Fraud,Mortgage Fraud Scheme,Straw Buyer,Virginia

September 1, 2010

McLean Man Sentenced 63 Months for Mortgage Fraud

ALEXANDRIA, VA—Aaron V. Hernandez, 41, of McLean, Va., was sentenced today to 63 months in prison, followed by four years of supervised release, for running a mortgage fraud scheme that caused more than $4.5 million in losses. Hernandez was ordered to pay more than $4.5 million in restitution and was ordered to forfeit approximately $2.4 million.

Neil H. MacBride, United States Attorney for the Eastern District of Virginia; Shawn Henry, Assistant Director in Charge of the FBI Washington Field Office; and Daniel S. Cortez, Inspector in Charge of the Washington Division of the United States Postal Inspection Service, made the announcement after sentencing by United States District Judge Claude M. Hilton.

On May 21, 2010, Hernandez pled guilty to conspiracy to commit mail fraud and bank fraud. According to court documents, Hernandez was employed by a company in Woodbridge, Va., during 2006 and learned from its employees how to falsify the loan applications of prospective purchasers of vacant, sub-divided lots in North Carolina and South Carolina. The fraud included providing fake employment information and inflating buyers’ income levels, value of the real estate that they owned, or other liquid assets purportedly held by the applicants.

In December 2006, Hernandez struck out on his own and formed mortgage companies in Northern Virginia, using the same fraudulent practices he learned from his previous employer. His businesses grew to more than 10 employees, at least three of whom he conspired with to provide false and fraudulent loan applications to lenders.

Court documents list at least 14 properties that Hernandez financed through these fraudulent practices, all of which eventually resulted in foreclosure. The financial loss suffered totaled more than $4.5 million.

This case was investigated by the FBI Washington Field Office and the United States Postal Inspection Service. Assistant United States Attorneys Mark D. Lytle and Inayat Delawala 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.usdoj.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.

Posted By: Ralph Roberts @ 12:03 am | | Comments (0) | Trackback |
Filed under: Loan Fraud,Mortgage Fraud,Virginia

June 7, 2010

Virginia Real Estate Investor Sentenced 46 Months for Mortgage Fraud

ALEXANDRIA, VA – Ahmad Z. Abbasi, 36, of Woodbridge, Va., was sentenced today to 46 months in prison, followed by three years of supervised release, and ordered to pay $1,637,412 in restitution. Abbasi pled guilty on March 3, 2010, to conspiracy to commit mail fraud for recruiting unqualified buyers who provided false information to obtain multiple mortgage loans, which were ultimately foreclosed.

Neil H. MacBride, United States Attorney for the Eastern District of Virginia; Daniel S. Cortez, Postal Inspector in Charge, U.S. Postal Inspection Service; and Shawn Henry, Assistant Director in Charge of the FBI Washington Field Office, made the announcement after sentencing by United States District Judge James C. Cacheris.

According to court documents, from April 2006 to February 2008, Abbasi recruited relatives or associates to fraudulently obtain over $4.5 million in refinanced or new home loans for the purchase of six properties. In furtherance of the scheme, Abbasi and his coconspirators submitted fraudulent loan applications through the U.S. Mail and other means that contained false information regarding the purchasers’ income, employment, and intent to occupy the homes as primary residences. The purchasers fraudulently represented that they worked at the defendant’s auto dealership, submitting false paystubs and W-2s in order to obtain the loans. After these initial purchases were completed, the co-conspirators typically would flip the properties to unqualified buyers at inflated prices, again submitting false information as to the purchasers’ income, employment, and occupancy status.

The real estate agent and mortgage broker involved in the transactions received commission payments from the initial sales, and the participants likewise received undisclosed kickback payments from the sales proceeds generated by the fraudulently inflated secondary sales. After the purchasers subsequently defaulted on the mortgage loans, the lenders initiated foreclosure proceedings, selling the properties for substantial losses.

As a result of these fraudulent loans, Abbasi received kickbacks and proceeds from the loans, refinances, or inflated flips totaling approximately $746,324. The borrowers for each of the properties subsequently defaulted on their loans, resulting in approximately $1,637,412 in losses to the lenders.

This case was investigated by the U.S. Postal Inspection Service and the FBI Washington Field Office. Assistant United States Attorney Inayat Delawala prosecuted the case on behalf of the United States.

-By Virginia Real

Posted By: Ralph Roberts @ 12:22 am | | Comments (0) | Trackback |
Filed under: Loan Modification Fraud,Mail fraud,Mortgage Fraud Scheme,Straw Buyer,Virginia

May 26, 2010

Virginia Businessman Sentenced to Five Years in Prison for $2.3 Million Mortgage and Investment Scheme

RICHMOND, VA—Chief United States District Judge James R. Spencer sentenced Robert S. Capehart, 55, of Richmond, Virginia to five years in prison on one count of mail fraud, and ordered him to pay $1,967,074 in restitution. Neil H. MacBride, United States Attorney for the Eastern District of Virginia; and Michael F.A. Morehart, Special Agent-in-Charge of the FBI’s Richmond Field Office, made the announcement.

Capehart was the president of two Virginia companies, Retirement Investment Group (RIG) and BYB Investments. Through these companies, he promoted real estate ventures, including a convenience store and multiple pieces of real estate that he purchased for rental and investment purposes. Capehart admitted to falsifying mortgage applications, check kiting and defrauding 22 investors in a Ponzi scheme.

Court documents show that from 2003 until 2006, Capehart purchased approximately 40 rental properties with little or no down payment and a large mortgage-backed loan. In obtaining the loans from banks, however, he did not fully disclose all of his real estate loan liabilities and other real estate holdings. As time passed, he would obtain new appraisals and refinance the properties based on the appreciated value of the properties without disclosing all of his liabilities and real estate holdings. After paying off the original loan, Capehart would then use the excess funds for business and personal purposes. The combined losses of Wachovia Bank NA, J. P. Morgan Chase Bank, and Suntrust Bank were approximately $252,000.

Capehart also admitted that as the real estate appreciation slowed down or disappeared in or about 2006, he could not generate additional funds by simply refinancing the properties. Therefore, he turned to private investors whom he solicited with a promissory note program carrying high interest rates, such as 20 percent over three months, equating to an annual rate of 80 percent. He represented that he would be able to pay such high rates of interest because he was investing in a variety of properties, such as the Sans Souci Hotel and Apartment Complex in Buckroe Beach, Virginia a beach house in Kure Beach, N.C., a convenience store in Richmond, Virginia and various other properties in Newport News and Hampton, Va.

Capehart solicited money from approximately 22 potential investors and induced them to invest approximately $2.053 million by making materially false, fraudulent and misleading representations. Capehart’s program was a Ponzi scheme, in which early investors are paid with the contribution of later investors rather than the profit from an underlying business activity. Capehart also lulled investors into believing that their “investment” funds would be safe and secure. To prevent the discovery of the true use of investors’ funds and forestall legal action by investors, Capehart encouraged investors not to seek the immediate return of funds but to “roll over” their investments and thereby purportedly earn even greater profits.

Court documents show that in late 2006 and early 2007, in order to continue to buy time, Capehart began kiting hundreds of thousands of dollars of checks between First Market Bank, Village Bank and First Capital Bank. The purpose of the illegal scheme is to artificially inflate the balance of a checking account to allow checks that have been written to clear that would otherwise bounce.

The case was investigated by the FBI’s Richmond Field Office. Assistant United States Attorney David T. Maguire 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.usdoj.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.

May 11, 2010

Leader of $9 Million Mortgage Fraud Scheme Sentenced 60 Months in Prison

ALEXANDRIA, VA—Ruben Rojas, 30, of Vienna, VA, was sentenced today to 60 months in prison, followed by five years of supervised release, for leading a mortgage fraud scheme that caused more than $9 million in losses. Rojas was also ordered to pay restitution in the amount of $9.5 million. A lawful permanent resident from Bolivia, Rojas will be turned over to immigration authorities for deportation proceedings following his release from prison.

Neil H. MacBride, United States Attorney for the Eastern District of Virginia; Col. David Rohrer, Fairfax County Chief of Police; and Shawn Henry, Assistant Director in Charge of the FBI Washington Field Office, made the announcement after sentencing by United States District Judge Gerald Bruce Lee. Rojas pled guilty to conspiracy to commit wire and bank fraud on Dec. 22, 2009.

“Ruben Rojas was motivated by one thing—greed,” said U.S. Attorney MacBride. “Nearly every home in this scheme is now in foreclosure, causing scores of homeowners to see big drops in their home equity and banks to lose millions. Mortgage fraud continues to be a big threat in this area, and we hope anyone who learns of potential fraud will report it so we can shut it down.”

According to court documents, Rojas, a real estate agent, was part of a wide-ranging mortgage fraud conspiracy in which he and others secured fraudulent loans for “straw buyers” with good credit to purchase properties for other individuals. Rojas recruited and paid several straw buyers to use their names and credit to secure financing for the properties. The straw buyers signed fraudulent loan applications in order to obtain much larger loans than they were qualified to receive; the loan applications misstated, among other things, the straw buyers’ income, assets, employment, citizenship status, and intent to live in the property. Rojas deposited large sums of money into the straw buyers’ bank accounts, or added the straw buyers to his own bank accounts, to create the appearance that the straw buyers had assets. Rojas also obtained fake bank statements, pay stubs and W-2s to corroborate the false statements in the loan applications.

During the course of the conspiracy, Rojas and his co-conspirators engaged in more than 30 fraudulent property transactions in the Eastern District of Virginia and obtained more than $24 million in mortgage loans to purchase the properties. The straw buyers defaulted on the bulk of the fraudulent loans and the properties either went into foreclosure or were short-sold for sizeable losses. As a result, more than 20 banks and lenders suffered losses in excess of $9 million.

Rojas’ sister, Lourdes Rojas Almanza, pled guilty on Dec. 17, 2009, for her role as a loan officer in the conspiracy. Almanza is scheduled for sentencing on June 4, 2010. Litcia Linares pled guilty on Jan. 8, 2010, for her role as a real estate agent in the conspiracy. Linares is scheduled for sentencing on May 13, 2010. Rojas’ brothers—Grovert Rojas and Jaime Nino Rojas—have also been charged in a superseding indictment, along with 10 straw buyers, for their involvement in the conspiracy. One of the straw buyers, Juan De La Cruz Aguayo, pled guilty on March 18, 2010. Aguayo is scheduled for sentencing on June 11, 2010.

This case was investigated by the Fairfax County Police Department and FBI’s Washington Field Office. Assistant United States Attorneys Charles Connolly and Marla Tusk prosecuted the case on behalf of the United States.

A 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.usdoj.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.

Posted By: Ralph Roberts @ 12:08 am | | Comments (0) | Trackback |
Filed under: Foreclosure Fraud,Mortgage Fraud Scheme,Straw Buyer,Virginia

February 25, 2010

Richmond real estate promoter pleads guilty to mail fraud

A Richmond, VA, real estate promoter who cheated 22 investors out of more than $2 million and three banks out of $252,000 pleaded guilty to mail fraud in federal court yesterday.

Robert S. Capehart, 54, faces up to 20 years in prison and a fine of $250,000 when sentenced May 24 by U.S. District Judge James R. Spencer. The plea agreement calls for him to make full restitution of $2,305,000.

“Robert Capehart stole millions by lying to his lenders and investors,” said U.S. Attorney Neil MacBride. “This deceit is at the heart of our financial crisis and that is why we are dedicating so much of our resources to detecting and prosecuting financial fraud in this district.”

According to a criminal information filed in the case, from 2003 to 2006 Capehart purchased about 40 rental properties. When obtaining loans from banks, he did not disclose all his loan liabilities and other real estate holdings.

Capehart bought property in the rising real estate market with little or nothing down and then refinanced it after it appreciated in value. He used the proceeds from the new mortgage to pay off the old one and kept the excess for business and personal use.

When property values started to fall in 2006, he could no longer make money by refinancing, so he sought and misled private investors into buying promissory notes that would pay interest rates as high as 20 percent over three months.

The program, however, quickly became a Ponzi scheme in which he needed new investors to pay off old ones to keep it going.

The victimized banks were Wachovia, J.P. Morgan Chase and SunTrust.

After accepting his plea yesterday, U.S. Magistrate Judge M. Hannah Lauck allowed Capehart to remain on bond pending sentencing. The case is being handled by David T. Maguire, an assistant U.S. Attorney.

By Frank Green

Posted By: Ralph Roberts @ 12:58 pm | | Comments (0) | Trackback |
Filed under: Mail fraud,Mortgage Fraud Scheme,Virginia

February 24, 2010

Virginia Beach Man Sentenced to Five Years for Wire Fraud and Mortgage Loan Scheme

Wayne Marlon Benedic Lezama, 44, of Virginia Beach, Va., was sentenced today in Norfolk federal court to five years in prison and ordered to pay $1.1 million in restitution for wire fraud in connection with a scheme to obtain over $4 million with 14 mortgage loans in the Tidewater area. Neil H. MacBride, United States Attorney for the Eastern District of Virginia, made the announcement after Lezama was sentenced by Senior United States District Judge Henry Coke Morgan, Jr. Lezama previously pled guilty on November 23, 2009.

According to court documents, Lezama participated in a scheme from August 2005 until January 2007 to obtain mortgage financing to purchase homes throughout southeastern Virginia, including real estate in the cities of Norfolk, Hampton, Virginia Beach, Chesapeake, and Suffolk. The property would be purchased in the name of Lezama or a nominee buyer. During the course of the scheme over $4 million in financing was obtained through fraudulent means, including submitting false financial information regarding down payments, monthly income and liquid assets.

The Federal Bureau of Investigation investigated the case. Assistant United States Attorney Robert J. Seidel, Jr. prosecuted the case on behalf of the United States.

Posted By: Ralph Roberts @ 10:37 pm | | Comments (0) | Trackback |
Filed under: Mortgage Fraud Scheme,Virginia,Wire Fraud

February 22, 2010

Richmond investment firm boss charged with mail fraud

Donald C. Lacey, who ran a real estate firm involving investors from the Richmond area and millions of dollars, has been accused in federal court of making false promises and rarely using the money for real estate projects.

The U.S. attorney’s office charged Lacey, a former Henrico County police officer, with one felony count each of mail fraud and engaging in unlawful monetary transactions. The charges were filed late Wednesday.

The charge of mail fraud carries a maximum penalty of 30 years in prison. The maximum penalty for the second charge is 10 years. The maximum fine for each charge is $250,000.

“I think they ought to throw the book at him,” said Allan Mullian, a Richmond investor who, along with his family, had $2 million invested in as many as 100 properties in the Richmond area through companies Lacey was involved in.

Mullian received interest payments for 10 years from his investments, but the money stopped coming in late 2008. He’s not sure if he will recover his money.

Jeffrey Everhart, Lacey’s court-appointed attorney, said yesterday that more will be known in the next two or three weeks about how the case will evolve.

The U.S. attorney’s office declined to comment about the case.

Bond and plea hearings are set for March 15.

Lacey was the managing member of Capital Funding & Consulting, which was marketed as a private real estate investing firm that pooled investor funds to make short-term loans on investment properties, according to the filing in the U.S. District Court for the Eastern District of Virginia.

Lacey also ran several other businesses, including Clayton Investment Group, Premier Investment Properties and Tower Building Properties. He funneled money from Capital Funding through the entities under his control.

In effect, the money was supposed to be used to buy and fix up houses in the Richmond area and flip them at a profit.

“The loans exceeded the loan-to-value ratios promised to investors and the money. . . was rarely used for the designated real estate projects,” according to the court filing.

Lacey promised investors that the loans never would exceed 80 percent of value and that Capital Funding would ensure that the projects were viable, secure investments, according to the charges.

Instead, most of the money was used to pay pre-existing debt service on loans from Old Dominion Financial Services Inc., another company in which Lacey was involved, according to the filing.

Old Dominion, like Capital Funding, also solicited funds from investors and used the money to make loans to borrowers engaged in real estate activities.

Investors were promised high returns of 10 percent to 12 percent a year on promissory notes secured by deeds of trust.

Henrico-based Old Dominion was run by David A. Silver.

Old Dominion is listed as a creditor in a bankruptcy filing of Tamara B. Lacey, Lacey’s wife. Her bankruptcy petition claimed assets of $4.3 million and liabilities of $47.2 million. About $25.8 million of the debt is in promissory notes and guarantees of business obligations.

Mullian and at least a dozen investors sued, claiming they were duped in what some called an elaborate Ponzi scheme involving Richmond-area properties leveraged to the hilt.

According to the Tamara Lacey bankruptcy petition, the couple owned five houses – two in Mechanicsville, two near the Rappahannock River in Middlesex County and one near Wintergreen in Nelson County, ranging in value from $430,000 to $1.5 million.

They also owned a boat valued at $37,000, court records show.

The mail fraud charge says that Lacey sent a letter to an investor in Williamsburg in September 2008, saying that the money was “safe and secure,” the federal court filing said. The intent was to obtain money and property on false and fraudulent pretenses, it said.

The charge of engaging in unlawful monetary transactions involves a check written in May 2008 for $55,000 from one of Lacey’s companies that was used as a payment on his American Express account, according to authorities.

Lacey, if convicted, would forfeit any property traceable to the violations.

The forfeited property would include but not be limited to a value of not less than $7 million and no more than $20 million related to the mail fraud charge, the filing said. It also would include a sum of $55,000 for the unlawful monetary transaction charge.

Posted By: Ralph Roberts @ 11:10 pm | | Comments (0) | Trackback |
Filed under: Mail fraud,Old Dominion Financial Services Inc,Ponzi Scheme,Virginia

December 27, 2009

Disbarred Lawyer, Real Estate Investor Convicted of Massive Fraud Schemes

Disbarred Lawyer, Real Estate Investor Convicted of Massive Fraud Schemes

NORFOLK, VA—Troy A. Titus, 43, of Virginia Beach, Virginia, was convicted by a Norfolk federal jury today of operating multiple fraud schemes to steal and misappropriate more than $7 million from clients and investors.

Neil H. MacBride, United States Attorney for the Eastern District of Virginia, and A.J. Turner, Special Agent in Charge of the Norfolk Field Office of the Federal Bureau of Investigation, made the announcement after the jury issued its verdict following four days of deliberations.

“Today, a jury found Troy Titus stole millions from people who trusted him to protect their investments,” U.S. Attorney MacBride said. “Today’s conviction is a testament to the ability of our law enforcement partners to tackle complicated investment and mortgage fraud cases. Especially in the light of the recent economic crisis, we are even more determined to work together to aggressively fight financial fraud in this district.”

“This case represents a strong investigative and prosecutive effort to protect our citizens and the financial services industry, and by extension, the larger economy,” said Special Agent in Charge Turner. “To that end, we will continue to target those who, motivated by greed, prey on honest investors and damage our country’s financial confidence.”

On March 25, 2009, a grand jury charged Titus in a superseding indictment with 49 counts of fraud-related charges. After a four-week trial, a jury at the Norfolk federal courthouse found Titus guilty of 33 charges, and he faces up to 590 years in prison when he is sentenced on April 15, 2010 by United States District Judge Raymond A. Jackson.

According to court documents and evidence at trial, Titus was a lawyer practicing in Virginia who also conducted investment seminars focusing primarily on real estate and estate planning. Titus approached clients or seminar participants and induced them into investing money with him to purchase and rehabilitate real estate, promising to return the money at a later date with a high rate of interest. However, Titus obtained many of the real properties involved through fraud or transferring the properties into trusts controlled by him. Instead of using the funds as promised, Titus directed the investment income toward paying business or personal expenses, backfill investment losses, and at times to make token payments or repay previous investors.

In addition, Titus misappropriated funds given to him by elderly or incapacitated clients who provided him with income intended to be held in trust and took steps to conceal those uses from those who inquired about the management of the trust. Trial evidence showed that Titus failed to make payments for the trust clients’ basic medical and housing needs. Titus engaged in a similar scheme to defraud involving real estate closing funds he held in trust.

Court records and evidence at trial indicate that the loss amount attributed to Titus’s activities totaled more than $7 million and affected approximately 30 victims. The Virginia State Bar revoked his law license in 2005.

This case was investigated by the Norfolk Field Office of the FBI, with assistance from the Virginia Attorney General’s Office, the State Corporation Commission, and the Virginia State Bar. The case was prosecuted by Assistant United States Attorneys Melissa O’Boyle and Michael Moore.

September 25, 2008

Real Estate and Mortgage Fraud Roundup

While members of Congress, President Bush, and the Treasury Department attempt to work out (pun intended) the $700 billion Troubled Asset Relief Program, real estate and mortgage fraud continues to be the fastest-growing white collar crime in American:

WaMu loaned millions to California home flippers convicted in fraud scheme: Records show WaMu, America’s largest savings and loan, financed at least 43 mortgages worth $24.5 million on properties bought and sold by members of the Soni family since 2007. Of the 22 homes sold in that period, at least six have become problems for WaMu: Four were foreclosed, one received a notice of default and another was listed for sale at a $260,000 loss. Total value of WaMu’s mortgages on the troubled properties: $2.7 million.

Weld County’s ‘Most Wanted’ fugitive — a developer — busted in Mexico: Weld County’s “Most Wanted” fugitive sits in a California jail today after a dogged investigation led to his arrest in Mexico. Mark Strodtman, a Greeley developer, was indicted March 25 by Weld County grand jury on 23 felonies, including racketeering. Strodtman, 51, and two others are accused in a mortgage fraud scheme that left many Greeley area families in foreclosure, reduced property values of neighboring homes and defrauded lenders, according to the Weld County District Attorney’s Office.

Brothers admit to million-dollar mortgage fraud: Federal prosecutors say two Virginia brothers have pleaded guilty in a million-dollar mortgage fraud scheme. Twenty-nine-year-old Mohammed Rababeh of Vienna and 31-year-old Ahmed Rababeh of Haymarket pleaded guilty Wednesday to conspiring to commit bank fraud.

Former mortgage loan officer pleads guilty to fraud scheme: A 25-year-old woman pleaded guilty in federal court yesterday to participating in a mortgage fraud scheme and faces up to five years in prison and $250,000 in fines. Paula Galacgac admitted that, while working as a loan officer for Mortgage Ability, LLC she recruited two “straw buyers” for properties on O’ahu and assisted them in fraudulently applying for mortgage loans worth more than $400,000. Other members alleged to be part of the fraud conspiracy were named in a separate criminal indictment returned by a federal grand jury May 30.

Officials say Florida man is part of mortgage scheme: A Seffner man was arrested Wednesday in connection with a multimillion-dollar mortgage fraud scheme that victimized dozens of people since 2004, the Florida Department of Law Enforcement said. Michael Fetterhoff, 37, of 205 Kingsway Road, was charged with grand theft of more than $100,000. Fetterhoff worked in sales for Advanced Mortgage Solutions, a mortgage broker company associated with other home improvement businesses that persuaded mostly minority customers in poor areas of Florida to take out home loans, FDLE spokeswoman Trena Reddick said.

Kansas City mortgage fraud ringleader sentenced to 13 years: A Kansas City businessman was sentenced to 13 years in prison for a $17 million mortgage fraud scheme that included buying a home owned by former Jackson County Executive Katheryn Shields and her husband. Raymond Zwego Jr. will also pay nearly $5.6 million in restitution and serve three of those years in prison for a probation violation.

AARP Calls For Help For Victims of Mortgage Fraud: Florida is one of only three states that doesn’t offer financial protection to victims of fraudulent loans. We’re also first in the nation for mortgage fraud. The Florida Association of Mortgage Brokers and AARP are calling on lawmakers to revive the Mortgage Brokerage Guaranty Fund. The fund was quietly cut in the 90’s. It would pay some victims or mortgage fraud 20,000 dollars for their losses. AARP Spokesman Dave Bruns said if the program hadn’t been canceled, today the state would have 24 (m) million dollars to help victims.

Delray Beach mortgage agent guilty of fraud: A Delray Beach mortgage broker pleaded guilty Friday to participating in a wire fraud scheme to misappropriate more than $1.2 million in client funds supposedly held in escrow for real estate transactions and related expenses. John Mohan, 38, faces up to 20 years in prison when he is sentenced Dec. 19 in federal court. According to the U.S. Attorney’s Office, Mohan worked as a mortgage broker and closing agent. He collected money from buyers and lenders and represented to the parties that the funds were being held in escrow to be disbursed for various specified purposes, including the satisfaction of pre-existing mortgages. Prosecutors said Mohan used the money for personal use and investments and tried to conceal the fraud and prevent immediate foreclosure of the property by sometimes making payments on the homeowner’s original mortgage.

Virginia mortgage broker sentenced in real estate fraud scheme: A mortgage broker from Norfolk has been sentenced to four years in federal prison in a mortgage fraud case involving a home in northern Virginia. Fifty-year-old David A. Freelander was sentenced last Friday in Alexandria federal court. He has to pay more than $5.4 million in restitution.

Florida AG suing 10 companies, 15 individuals for mortgage fraud: Florida Attorney General Bill McCollum announced last Friday that his state’s Mortgage Fraud Task Force is suing 10 companies and 15 individuals for their alleged roles in a Central Florida mortgage fraud scheme. The suit alleges that the group obtained more than $37 million in mortgage loans for at least 60 homes and siphoned off more than $6 million of the loan proceeds for their personal use.

12 indicted in Atlanta mortgage fraud scheme: Local authorities said last Monday they charged 12 men with an elaborate mortgage fraud scheme in Atlanta’s West End neighborhood and seized more than $200,000 of assets. In indictments filed last week, Fulton County District Attorney Paul Howard Jr. accused the men of buying and selling nine homes using false appraisals that were more than double the homes’ actual value. Seven of the houses were in the 30310 zip code in the West End, where 26 homes were put up for foreclosure auction in late June.

Posted By: Ralph Roberts @ 9:14 pm | | Comments (2) | Trackback |
Filed under: California,Colorado,Florida,Georgia,Hawaii,Kansas,Virginia,Washington Mutual

September 2, 2008

Virginia Mortgage Fraud Update: Rajasekhar Marni and a Venture Capitalist in the news

Two newsworthy real estate fraud items out of the state of Virginia (which according to the FBI ranks as one of the top 10 hot spots/states for mortgage fraud) :

Real Estate Broker Rajasekhar Marni Pleads Guilty to Defrauding Clients

Rajasekhar Marni, 47, of Reston, Virginia, pled guilty on August 21st in United States District Court to federal wire fraud and money laundering charges in connection with a real estate fraud scheme that took place in 2005 and 2006. Chuck Rosenberg, U.S. Attorney for the Eastern District of Virginia, and Joseph Persichini, Jr., Assistant Director in Charge, FBI, Washington Field Office, made the announcement. Marni faces up to 30 years in federal prison, three years of supervised release, a fine of at least $500,000, and full restitution when he is sentenced by U.S. District Judge T.S. Ellis, III on October 31, 2008.

According to court documents, Rajasekhar Marni was the president of Loanworth Corporation, Inc., a Vienna, Virginia-based real estate firm. He defrauded three sets of clients resulting in a loss to those victims of approximately $1.14 million. In March 2006, Marni arranged to purchase a Fairfax Station, Virginia home for $889,000. The homeowners agreed to finance Marni’s purchase. Marni had the victims transfer title to him while he signed a deed of trust setting out the terms of the loan. Marni recorded with Fairfax County documentation transferring title to the property to him but never recorded the documentation related to the loan. Marni then sold the property to a third party and used the proceeds to, among other things, buy a house for himself in Vienna, Virginia.

As part of the plea, Rajasekhar Marni admitted to also defrauding a Lorton, Virginia couple, whom he convinced in November 2005 to transfer title to their property to Loanworth for six months while he tried to sell the property to a third party. During that time, without the homeowners’ knowledge, Marni took out loans against the property totaling $227,778. He never repaid the loans, which subsequently went into default. In June 2006, title in the home, which Marni had not sold to a third party, was returned to the original owners. Less than four months later, one of Marni’s lenders foreclosed on the home, resulting in a loss of the victims’ equity in the property.

Marni also admitted to defrauding a Silver Spring, Maryland couple of $23,000 that was to be used as a down payment on an undeveloped parcel of land.

Assistant United States Attorney Timothy D. Belevetz is prosecuting the case on behalf of the United States.

Also out of Virginia…

Former Venture Capitalist Scott E. Luellen Sentenced to Seven Years for Orchestrating Real Estate Investment Scheme

Scott E. Luellen, 35, of Washington, D.C., was sentenced late last week (August 29, 2008) to seven years in federal prison for orchestrating a real estate investment scheme in northern Virginia and Delaware. Chuck Rosenberg, U.S. Attorney for the Eastern District of Virginia, and Jeffrey Irvine, Special Agent in Charge, United States Secret Service, Washington Field Office, made the announcement after Luellen was sentenced by United States District Judge Liam O’Grady. Luellen pled guilty to one count of money laundering on May 13, 2008.

According to court documents, Luellen was the former Managing Director of Ideal Ventures, LLC and the Virginia Heritage Foundation II. From September 2004 through to November 2007, Luellen convinced approximately 20 potential investors, including a private equity firm, to invest millions of dollars in fraudulent real estate projects. Specifically, Luellen made material false representations concerning real estate development projects to induce investors to provide him with funds. Luellen received approximately $1.7 million from investors during the course of his scheme. Luellen then used those funds to finance a lavish lifestyle, which included living at the Ritz Carlton in Georgetown .

Assistant United States Attorney G. Derek Andreson prosecuted the case on behalf of the United States.

Posted By: Ralph Roberts @ 3:11 pm | | Comments (0) | Trackback |
Filed under: Mortgage Fraud,Real Estate Fraud,Virginia

August 14, 2008

Mortgage Fraud Statistics

According to the Federal Bureau of Investigation (FBI), which earlier today issued yet another Mortgage Fraud Advisory, here are the latest Real Estate Fraud statistics:

  • Estimated Annual Losses: $4 billion to $6 billion
  • Total Mortgage Fraud Suspicious Activity Reports in Fiscal Year 2007: 46,717, with $813 million in losses
  • Total FBI Mortgage Fraud Task Forces/Working Groups (June 2008): 42
  • Pending FBI Mortgage Fraud Investigations (May 2008): 1,380
  • Cases opened in Fiscal Year 2007: 462 (compared to 295 in Fiscal Year 2003)
  • Successes in Fiscal Year 2007: 321 indictments/informations; 260 convictions
  • States with Significant Mortgage Fraud problems in 2008:
  1. Florida
  2. Nevada
  3. Michigan
  4. California
  5. Utah
  6. Georgia
  7. Virginia
  8. Illinois
  9. New York
  10. Minnesota

May 14, 2008

FBI Releases Major Report on Real Estate and Mortgage Fraud

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. 2008-05-13_2333.jpg

  6. 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.

March 14, 2008

Residential Mortgage Fraud Against Lenders Continues to Rise

The Mortgage Bankers Association (MBA) yesterday announced that the Mortgage Asset Research Institute (MARI) has completed its 10th Periodic Mortgage Fraud Case Report to MBA. The report examines the current state of residential mortgage fraud and misrepresentation in the U.S. based on participating subscribers’ reports to MARI.

The report, which sites Florida as topping the MARI Fraud Index list for the second consecutive year and Nevada climbing to the No. 2 ranking, was released during MBA’s annual National Fraud Issues Conference in Chicago.

MARI_Fraud_Index.jpg

Clearly, the current market conditions, compounded by mortgage fraud, are having a detrimental impact on our entire national economy. The MARI report provides critical insight for those in the real estate finance industry to better understand the factors contributing to these circumstances so that our communities are better protected.

According to the Mortgage Fraud Case Report, “The conditions in the mortgage industry for the last half of 2007 made the year one for the record books.” Overall, 2007 marked the lowest volume of mortgage loan originations since 2002, the highest number of delinquencies and foreclosures, rapid and near complete shutdown of the non-conforming secondary market and hundreds of announced closures of mortgage originators.

Highlights in the Mortgage Fraud Case Report include:

  • In addition to Florida and Nevada, the remainder of this year’s top ten (in order): Michigan, California, Utah, Georgia, Virginia, Illinois, New York and Minnesota
  • Colorado showed the greatest improvement from prior years’ rankings, dropping out of the top ten for the first time in five years
  • The most common types of fraud found in 2007 originations continue to be in the areas of employment history and claimed income
  • The continuing unsettled state of the mortgage market as a whole does not bode well for any improvement in avoiding fraud in the coming year

The complete Mortgage Fraud Case Report is available both on the MBA Website, and MARI’s Web site.

October 2, 2006

Countrywide Home Loans’ Says Indiana Man is Responsible for Massive Mortgage Fraud Scam

The nation’s largest independent home loan lender, Countrywide Financial Corp., is suing a Fishers, Indiana, man for orchestrating a mortgage fraud scheme in which dozens of Virginia residents were tricked into buying homes in Indianapolis and Westfield, Indiana, at significantly inflated prices. Countrywide alleges that Robert Penn worked with relatives in Virginia–and associates that included appraisers and mortgage companies–to defraud hundreds of homeowners.

According to the Indianapolis Star, Countrywide’s lawsuit lists 112 properties, but on Thursday, Prudential Realtors in Indianapolis put that number closer to 400. By some accounts, the Star reports, the dollar value of the loans, many of which have defaulted or are now in foreclosure, is somewhere between $40-$80 million.

Click here for more on this developing story.

Posted By: Ralph Roberts @ 12:41 am | | Comments (3) | Trackback |
Filed under: Countrywide,Indiana,Mortgage Fraud,Virginia