September 12th, 2014 at 12:33pm
An 11-page indictment from the U.S. Attorney for the Southern District of Iowa alleges that four men, including an attorney, defrauded financial institutions in the area in or around Des Moines, causing losses to the lenders of approximately $400,000.
The four defendants, who have been charged with bank fraud, are attorney Jason Springer, property flippers Nathan Smith and Patrick Steven, real estate agent Rick Makohoniuk and mortgage broker Jerod Hogan.
The indictment charges that Smith and Steven negotiated short sales with the lenders on the behalf of the selling homeowners. Lenders require the purchasers of such properties to be arm’s-length buyers in order to ensure that the properties are sold at fair-market value and are not simply a ruse for the sellers to get their properties back at a reduced mortgage. However, prosecutors allege that Smith and Steven purchased the homes without disclosing this to the lenders and that further, the selling prices were not fair-market value (short sale fraud). Note: Dear Banks: where were your appraisers when this happened?
Following the purchases, which involved 18 properties, Smith and Steven resold the homes for a profit, i.e., their true fair-market values. Attorney Springer is alleged to have participated by conducting the closings. Makohuniuk is alleged to have submitted false documents to a lender and Hogan alleged provided Smith and Steven with false documents they used to deceive the lenders.
The allged crimes occurred from approximately March 2009 to March 2011 and were investigated by both the FBI and the Office of Inspector General for the Department of Housing and Urban Development (HUD-OIG).
Publisher’s note: it is my observation that California has proportionately done less to investigate and prosecute short sale fraud than any other state, which probably explains why short sale fraud is as common as identity theft here.
Read the original article in the Algona Upper Des Moines.
To learn more about short sale fraud, read my book “How to Commit Short Sale Fraud . . . and Get Away with It.”
September 12th, 2014 at 11:46am
The U.S. Attorney’s Office for the District of Nevada has announced that Granada Hills accountant, Carmen Denise Mosley will be reporting to federal prison on November 3, 2014. Mosley was sentenced to 57 months after being convicted by a jury on one count of conspiracy to commit bank and wire fraud and two counts of bank fraud. She was ordered by the court to pay restitution of $1.1 million to the lenders that were victimized.
The evidence presented at trial proved to the jury that Mosley, from November 2006 to November 2007, Mosley, 43 used her position as a certified public accountant (CPA) to assist loan officer Zulfiya Karimova, a Cupertino woman, California, by providing false financial documentation so that buyers could obtain mortgage loans. The misled lending institutions funded three home purchases in Las Vegas but lost over $1 million after the buyers defaulted.
Zulfiya Karimova, 33, avoided trial by pleading guilty to conspiracy to commit bank fraud and wire fraud and to bank fraud. Her sentence is unknown.
Read the original article on the FBI’s website.
September 12th, 2014 at 11:41am
Real estate agents Michael Keatts and Lillian Marquez were indicted in November 2013 by a federal grand jury in Sacramento on charges of conspiring to commit mortgage fraud and mail fraud.
Keatts and Marquez operated Colonial Home and Business Services in Stockton from 2007 through 2012. While their business should have been helping people buy and sell homes, the U.S. Attorney for the Eastern District of California alleged that they used their clients as straw buyers, set the straw buyers up in business controlled by Keatts and Marquez and applied for mortgages by submitting this and other financial information they knew not to be true.
According to this article in the Sacramento Bee, Michael Keatts and Lillian Marquez have been accused of short sale fraud, in that they helped their clients to short sale their homes to straw buyers. The lending institutions were not made aware of this arrangement and that the sellers remained in their homes and received not only the benefits of new loans with reduced mortgages but also received tax forgiveness on the gains by both the Internal Revenue Service and the California Franchise Tax Board.
September 12th, 2014 at 11:23am
An article in the OC Register tells the case of Costa Mesa resident Daniel Gallimore, who was arrested by Huntington Beach police and accused of the fraudulent sale of a house in Huntington Beach.
Somehow, Gallimore, 52, managed to convince the buyers that he was the real estate agent for the property. However, according to the police, he is not licensed as a real estate agent and had neither a connection to the property nor the authority to sell it.
Authorities aren’t speaking, but the Huntington Beach police Bunco/Forgery Unit, along with the Orange County District Attorney’s Office Major Fraud/Real Estate Unit and the United States Secret Service also executed a search warrant in Costa Mesa related to the case that turned up additional evidence.
September 12th, 2014 at 11:15am
Charles Head, 40, the former CEO of Head Financial Services, Creative Loans and other brokerage and financial companies, was sentenced by U.S. District Judge Kimberly J. Mueller to 35 years in prison for operating foreclosure rescue scams.
Instead of helping homeowners who came to him for help in avoiding foreclosure of their homes, Head substituted straw buyers on the victims’ property titles without their knowledge (title fraud). straw buyers then applied for mortgages and sucked out whatever equity existed. The victims lost their homes and suffered damage to their credit ratings.
According to prosecutors, Charles Head‘s foreclosure fraud began in Los Angeles and Orange Counties and then expanded to a nationwide operation. In all, he and his co-conspirators obtained over $90 million in loans, caused losses of over $50 million and stole the title to more than 300 homes. He was caught only because one of his victims in Sacramento contacted an FBI economic crimes agent on a complaint line.
Read the original article in the Sacramento Bee.
September 3rd, 2014 at 5:25pm
Anna Sorokina Kuzmenko, 33, a Sacramento-area woman, was found guilty of two counts of wire fraud related to mortgage fraud scheme in which she was a participant.
According to the court documents and evidence presented during the trial, she acted as a straw buyer for a house in Carmichael, applying for two loans to cover the entire purchase. She falsely claimed she was an orthodontist (she is not) earning $36,000 per month (she does not), had $42,000 in her bank account (she had very little), said she was a U.S. citizen (she is not) and never lived in the house, although she stated she would reside there.
The bank had been told the price of the home was $1 million but the seller accepted $800,000 and gave the overage back to the participants, which included Anna Kuzmenko‘s husband and other family members.
The house was ultimately foreclosed on by the bank after Ms. Kuzmenko defaulted on the mortgage.
No word on what the final (HUD-1) settlement statement looked like from escrow or how the scheme was detected.
Anna Kuzmenko was prosecuted by U.S. Attorney Benjamin B. Wagner’s Office. “Mortgage fraud cases can be very challenging, but this office has developed considerable expertise in prosecuting them,” stated U.S. Attorney Wagner. “We are pleased that the jury held Ms. Kuzmenko accountable for her crime, and we will continue our efforts to hold accountable those who enriched themselves through fraud, and who contributed to the financial meltdown that hit our communities so hard.”
Read the original article in the CelebrityExaminer.
August 29th, 2014 at 11:18am
Four people who were charged in a mortgage fraud case were acquitted at trial after defense attorneys convinced jurors that the lenders were not victims and that the loans would have been approved anyway.
It’s a huge loss for U.S. Attorney Benjamin Wagner, who is not accustomed to losing prosecutions in the U.S. Attorney’s Office for the Eastern District of California.
The defendants – Yevgenity Charikov, Vitaliy Tuzman, Nadia Talybov and Juliet Romanishin – had been accused of using straw buyers to purchase properties and then reselling them to different straw buyers at inflated prices using fraudulent loan documentation. Defense counsel had successfully argued via expert witness William Black that it was the “elite bankers” who were responsible for the mortgage crisis.
Read the original article in the Sacramento Bee.
Addendum to this posting, which I cross-posted on LinkedIn under my account:
There is a lot of “buzz” about the acquittal of 4 people of mortgage fraud in Sacramento. The successful defense was that the banks underwrote loans they knew were probably fraudulent; hence, the banks aren’t victims. This is guaranteed to be a new defense in almost every future prosecution of mortgage fraud. What is left out in this analysis is that almost all of the no doc, subprime loans were sold off to Fannie/Freddie. They banks made their money upfront from points and fees, but the GSEs and taxpayers were left with the losses.
August 29th, 2014 at 10:59am
Delbert Joe Modlin, 63, has been practicing law since 1987. Earlier this week, he was arraigned on felony charges of financial elder abuse, grand theft and securities fraud in the case of a 90-year old and and his 66-year old daughter.
Court papers show that Modlin became their estate planner last year. He allegedly told the father to liquidate all his investments and convinced the daughter to invest $120,000 in a new cat litter box Modlin allegedly had invented.
What he didn’t tell either of them was that he is awaiting felony charges in Placer County after being accused of defrauding an elderly Auburn couple and selling their real estate and other assets without their approval. Modlin also didn’t disclose he had a a “severe gambling problem” and that in 2004 and 2012 he had filed bankruptcy, information that an investigator from the State had determined a “reasonable prudent investor would consider significant.”
The criminal cases were filed by he California Attorney General’s Bureau of Medi-Cal Fraud and Elder Abuse and are being prosecuted by Steven Muni.
Read the original article in the Sacramento Bee.
August 29th, 2014 at 10:38am
Bank of America‘s historic settlement with the U.S. Department of Justice shows a pattern of misrepresentations by both itself and the predecessors it purchased, according to an article published in National Mortgage News.
The US DOJ released a Statement of Facts that showed Countrywide had a “Structure Loan Program” for loans that failed to meet its normal underwriting criteria. Loans referred to this department were subjected to looser “shadow guidelines” designed to be able to prove more loans.
Regarding Merrill Lynch‘s underwriting practices, “Due diligence providers conducting compliance and credit reviews found as much as 50% of loan samples were not compliant with laws and regulations or applicable underwriting guidelines, lacked the sufficient offsetting compensating factors, or had a loan file missing a key piece of documentation.”
Investors for the three lending institutions were never clearly informed that underwriting standards had changed dramatically, according to the Statement of Facts.
Read the earlier article on the settlement on the California Real Estate Fraud Report.
August 22nd, 2014 at 9:45am
DS News (Default Servicing News) reports that former Countrywide Financial CEO and co-founder Angelo Mozilo may soon be on the receiving end of a civil lawsuit by the U.S. Attorney’s Office in Los Angeles.
Bloomberg also reports on the speculation and includes a video in which Nobel Laureate Robert Shiller and others are interviewed on StreetSmart about federal reserve policy and the civil lawsuit against Mozilo, who, according to compensation-research firm Equilar Inc., earned $535 billion between 1999 and 2008 and received another $4 billion from the sale of Countrywide to Bank of America in 2008.