MADISON, WI—John W. Vaudreuil, United States Attorney for the Western District of Wisconsin, announced that Carlos R. Solis and Marty G. Mendez were sentenced yesterday by U.S. District Judge William M. Conley in prosecutions stemming from a federal mortgage fraud and tax fraud investigation.
Carlos R. Solis, 33, Morrisonville, Wis., a former real estate agent, was sentenced to a year and a half in federal prison. He pleaded guilty on May 25, 2010, to a bank fraud charge.
Marty G. Mendez, 27, Sun Prairie, Wis., a former tax preparer at Mendez Connection—a Madison area tax preparation business owned by his mother—was sentenced to a year and a day in federal prison. He pleaded guilty on May 17, 2010, to assisting in the filing of a false income tax return.
Three other individuals have been convicted of related charges:
Gail L. Mendez, 45, Sun Prairie, Wis., the former owner of Mendez Connection and the mother of Marty Mendez, pleaded guilty to bank fraud and assisting in the filing of a false tax return. She will be sentenced on November 4.
Amy B. Strait, 43, McFarland, pleaded guilty to conspiracy to obstruct the bank fraud investigation. She will be sentenced on November 23.
David Knickmeier, 45, Madison, a former tax preparer at Mendez Connection, pleaded guilty to assisting in the filing of a false income tax return and was sentenced on September 28, 2010, to one year and a day in federal prison.

The Mortgage Fraud Scheme

In pleading guilty to the bank fraud, Solis acknowledged the following facts:
During 2006 and 2007 Gail Mendez worked as a tax preparer in the Madison area, doing business as Mendez Connection. Amy Strait was employed as a mortgage loan officer at Park Bank, a federally insured financial institution. Carlos Solis did business as a real estate agent.
Park Bank had a mortgage loan program that allowed borrowers to apply for a loan using an Individual Taxpayer Identification Number (ITIN) instead of a Social Security Number. An ITIN is a nine-digit tax processing number issued by the IRS to aliens who are required to have a U. S. taxpayer identification number but are not eligible to obtain a social security number. Under Park Bank’s ITIN mortgage program, a borrower applying for an ITIN loan was required to submit to the bank copies of the borrower’s income tax returns for the prior two tax years. Under the program, the bank did not check with the IRS to verify the income stated on a borrower’s submitted federal tax returns.
From February 2006 to October 2007, Gail Mendez, Strait, and Solis engaged in a scheme to defraud Park Bank and to obtain money owned by the bank and under its custody and control. In connection with approximately 50 ITIN loans totaling more than $8 million, Gail Mendez, Strait and Solis caused false tax returns to be fabricated and presented to Park Bank. The returns falsely inflated borrowers’ income and had not been filed with the IRS. When Park Bank discovered the scheme, Gail Mendez, Carlos Solis, and Amy Strait, conspired to obstruct the investigation. After Gail Mendez learned from Solis and Strait which loans were under investigation, she directed her employees to destroy evidence of the scheme.
The scheme resulted in losses to Park Bank exceeding $400,000.
The Tax Fraud Scheme
In pleading guilty to the tax charge, Marty Mendez acknowledged the following facts:
Marty Mendez was employed as a tax preparer at Mendez Connection a Madison area tax preparation business owned by his mother—Gail Mendez—in the Madison area. On various dates from 2005 to 2008, Gail Mendez and her employees, including Marty Mendez and David Knickmeier, willfully aided and assisted taxpayers in filing U.S. Individual Income Tax Returns that falsely and fraudulently claimed dependents and child tax credits to which they were not entitled. At sentencing the Court found that the tax loss was in excess of $900,000.
On December 7, 2007, Gail Mendez learned that the IRS was investigating the claiming of child tax credits on returns prepared at Mendez Connection. At her direction, employees of Mendez Connection removed from the Mendez Connection files and destroyed any notes referring to the fraudulent child tax credits.
These charges are the result of an investigation conducted by the Federal Bureau of Investigation and Internal Revenue Service Criminal Investigation. The prosecution of these individuals has been handled by First Assistant U.S. Attorney Stephen P. Sinnott.
This case 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.

MADISON, WI—Stephen P. Sinnott, United States Attorney for the Western District of Wisconsin, announced the filing of informations charging five individuals with submitting false loan applications to banks and mortgage lenders to obtain home mortgages. Specifically, the informations charged:

1. Brian Bowling, 44, of Sun Prairie, Wisconsin, with wire fraud;
2. Jason Khodadad, 29, of Madison, Wisconsin, with conspiracy to submit a false loan application;
3. Joseph Bowman, 59, of Black Earth, Wisconsin, with conspiracy to submit a false loan application;
4. Joshua Hughes, 28, of Madison, with conspiracy to submit a false loan application; and
5. Richard Hurkman, 62, of Oshkosh, Wisconsin, with conspiracy to submit a false loan application.

If convicted of wire fraud, Bowling faces a maximum penalty of 30 years in prison. If convicted of conspiracy to submit a false loan application, Khodadad, Bowman, Hughes, and Hurkman each face five years in prison.

The informations charged that the defendants defrauded banks and mortgage lenders by submitting loan applications for home loans that, among other things, inflated the borrowers’ income amounts, exaggerated assets and understated liabilities, falsified employment information, misrepresented the source of downpayment funds, and omitted secondary financing information.

Hughes and Bowman pleaded guilty on Wednesday May 19, 2010, in U.S. District Court in Madison before Judge Barbara Crabb. Sentencing for Bowman is scheduled for July 22, 2010, at 1:20 p.m. Sentencing for Hughes is set for July 29, 2010, at 1:20 p.m.

Khodadad is scheduled to plead guilty on Tuesday May 25, 2010, at 1:40 p.m. Bowling is scheduled to plead guilty on Friday May 28, 2010, at 1:20 p.m. Hurkman’s plea hearing has not yet been set.

These cases are part of President Barack Obama’s Financial Fraud Enforcement Task Force. President Obama established the interagency Financial Fraud Enforcement Task Force to wage an aggressive, coordinated, and proactive effort to investigate and prosecute financial crimes. The task force includes representatives from a broad range of federal agencies, regulatory authorities, inspectors general, and state and local law enforcement who, working together, bring to bear a powerful array of criminal and civil enforcement resources. The task force is working to improve efforts across the federal executive branch, and with state and local partners, to investigate and prosecute significant financial crimes, ensure just and effective punishment for those who perpetrate financial crimes, combat discrimination in the lending and financial markets, and recover proceeds for victims of financial crimes.

The charges are the result of an investigation conducted by the Madison office of the Federal Bureau of Investigation. The prosecution of this case has been assigned to members of the Financial Fraud Enforcement Task Force in the U.S. Attorney’s Office in Madison.

MADISON, WI— John W. Vaudreuil, United States Attorney for the Western District of Wisconsin, announced that Brian K. Bowling, 44, of Sun Prairie, Wisconsin, was sentenced today by U.S. District Judge Barbara B. Crabb to 51 months in prison, with a five-year term of supervised release. Judge Crabb also ordered Bowling to pay $377,271 in restitution. Bowling was convicted of two counts of wire fraud on May 28, 2010.

Bowling pled guilty to engaging in a mortgage fraud scheme using his mortgage brokerage company called Platinum Concepts. Bowling defrauded banks and other mortgage lenders by submitting false loan applications to obtain home loans. The loan applications included inflated income amounts, exaggerated assets, falsified employment information, bogus down payments, and silent second mortgages. To date, five individuals have pleaded guilty to participating in this scheme.

At today’s sentencing, Judge Crabb told Bowling he engaged in very serious criminal conduct that affected a lot of people and involved over $1.7 million in intended losses. Judge Crabb expressed concern that despite Bowling having a good upbringing and all the advantages to succeed, he still engaged in criminal conduct to make more money and to build up his business and standing in the community.

These cases are part of President Barack Obama’s Financial Fraud Enforcement Task Force. President Obama established the interagency Financial Fraud Enforcement Task Force to wage an aggressive, coordinated, and proactive effort to investigate and prosecute financial crimes. The task force includes representatives from a broad range of federal agencies, regulatory authorities, inspectors general, and state and local law enforcement who, working together, bring to bear a powerful array of criminal and civil enforcement resources. The task force is working to improve efforts across the federal executive branch, and with state and local partners, to investigate and prosecute significant financial crimes, ensure just and effective punishment for those who perpetrate financial crimes, combat discrimination in the lending and financial markets, and recover proceeds for victims of financial crimes.

The charges are the result of an investigation conducted by the Madison office of the Federal Bureau of Investigation. The prosecution of this case has been assigned to Assistant United States Attorney Dan Graber.

MADISON, WI—Stephen P. Sinnott, United States Attorney for the Western District of Wisconsin, announced the filing of informations charging five individuals with submitting false loan applications to banks and mortgage lenders to obtain home mortgages. Specifically, the informations charged:

1. Brian Bowling, 44, of Sun Prairie, Wisconsin, with wire fraud;
2. Jason Khodadad, 29, of Madison, Wisconsin, with conspiracy to submit a false loan application;
3. Joseph Bowman, 59, of Black Earth, Wisconsin, with conspiracy to submit a false loan application;
4. Joshua Hughes, 28, of Madison, with conspiracy to submit a false loan application; and
5. Richard Hurkman, 62, of Oshkosh, Wisconsin, with conspiracy to submit a false loan application.

If convicted of wire fraud, Bowling faces a maximum penalty of 30 years in prison. If convicted of conspiracy to submit a false loan application, Khodadad, Bowman, Hughes, and Hurkman each face five years in prison.

The informations charged that the defendants defrauded banks and mortgage lenders by submitting loan applications for home loans that, among other things, inflated the borrowers’ income amounts, exaggerated assets and understated liabilities, falsified employment information, misrepresented the source of downpayment funds, and omitted secondary financing information.

Hughes and Bowman pleaded guilty on Wednesday May 19, 2010, in U.S. District Court in Madison before Judge Barbara Crabb. Sentencing for Bowman is scheduled for July 22, 2010, at 1:20 p.m. Sentencing for Hughes is set for July 29, 2010, at 1:20 p.m.

Khodadad is scheduled to plead guilty on Tuesday May 25, 2010, at 1:40 p.m. Bowling is scheduled to plead guilty on Friday May 28, 2010, at 1:20 p.m. Hurkman’s plea hearing has not yet been set.

These cases are part of President Barack Obama’s Financial Fraud Enforcement Task Force. President Obama established the interagency Financial Fraud Enforcement Task Force to wage an aggressive, coordinated, and proactive effort to investigate and prosecute financial crimes. The task force includes representatives from a broad range of federal agencies, regulatory authorities, inspectors general, and state and local law enforcement who, working together, bring to bear a powerful array of criminal and civil enforcement resources. The task force is working to improve efforts across the federal executive branch, and with state and local partners, to investigate and prosecute significant financial crimes, ensure just and effective punishment for those who perpetrate financial crimes, combat discrimination in the lending and financial markets, and recover proceeds for victims of financial crimes.

The charges are the result of an investigation conducted by the Madison office of the Federal Bureau of Investigation. The prosecution of this case has been assigned to members of the Financial Fraud Enforcement Task Force in the U.S. Attorney’s Office in Madison.

More than two years agp, I wrote a blog entry titled “Call To Action: Automated Notification Systems Are Needed for Change in Status of Property Ownership.” Now, someone’s finally doing something about it. But before I go there, take a look what I wrote (in part) back on June 22 of 2006:

Here’s a better approach to stopping unscrupulous mortgage ‘rescue’ firms and others who prey off the ignorance of unsuspecting homeowners: Just like they do in the credit scoring industry, start a national campaign aimed at getting homeowners to be more in tune with what their local government says is the ownership status of their property. How many times have you seen those advertisements on television for companies selling credit score monitoring services? As a result, more American’s know their credit score now than at any other time in history.

Local governments should act now to establish notification systems to alert homeowners of any changes to the ownership rights of their property. How simple would it be for an automated system to be kicked into place once real estate-related documents are filed with the proper authorities? Pretty darned easy! If I can do it for the people who inquire about my real estate services (send them automated e-mail messages, that is), surely local government can procure a system that e-mails and snail-mails notification immediately upon any attempted change in status to real estate.

With the stakes being as high as they are, can we really afford not to have automated notification of the change of property ownership status in place?

Now, some two years later, word comes from the Dane County, Wisconsin, Register of Deeds that they just launched a free online service that affords consumers the ability to have their name monitored within the Register of Deeds office in order to track possible fraudulent activity. According to Kristi Chlebowski, Dane County’s current register of deeds, county residents are notified only when the name they have submitted to the new Property Fraud Alert system is found on a document recorded in the Register of Deeds office.

“Protecting consumers information and real estate property are our top priorities,” says Chlebowski. “While the Property Fraud Alert will not prevent fraud from happening, it will provide an early warning system that will allow our citizens to take appropriate actions should they deem possible fraud activity has occurred with their property.”

Flipping Frenzy salutes Kristi Chlebowski and the staff of the Dane County, Wisconsin, Register of Deeds office. Your Property Fraud Alert system is a step in the right direction!

Federal prosecutors say a Lake Geneva, Wisconsin; mortgage broker cheated lending companies out of more than $4 million. Thirty-three-year-old James Lytle did what a lot of other Real Estate fraudsters do… he used straw buyers and fraudulent loan applications to obtain properties, collect seller fees and then let the properties go into foreclosure. The Janesville (Wisconsin) Gazette interviewed me for an article on Lytle’s exploits:

Committing mortgage fraud has become easier since sales and loan approvals largely are done through computers, said Ralph Roberts, a mortgage fraud expert who developed the watchdog Web site www.flippingfrenzy.com.

Fudging income numbers or employment history is easy, and creating false documents and identities requires only a few mouse clicks.

“Guys are able to just plug this stuff into a computer,” Roberts said. “The world has gone virtual. When you used to buy money (through a mortgage) for a house, you’d sit across from someone at a bank or a credit union and they’d ask you questions.”

FBI Supervisory Special Agent Dave Gorr, who is in charge of the White Collar Crime Program in Milwaukee, said mortgage fraud is becoming one of the bureau’s top priorities. Industry insiders commit about 80 percent of all mortgage fraud and there are many types of schemes that can be hidden in the paper trail.

Read Case shows dangers of fraud.