April 18th, 2014 at 5:32am
Four men have been indicted by the office of U.S. Attorney Melinda Haag for loan fraud involving failed Sonoma Valley Bank.
Bijan Madjlessi, 58, of Mill Valley; attorney David Lonich, 59, of Santa Rosa; former Sonoma Valley Bank President Sean Cutting, 44, of Sonoma; and former Chief Loan Officer Brian Melland, 45, of Santa Rosa were arrested and later freed on $250,000 bond each.
Madjlessi is a real estate developer who defaulted on a $30 million loan he obtained from a different financial institution for his development called Park Lane Villas East in Santa Rosa. After defaulting, he and Lonich are alleged to have applied for a loan with Sonoma Valley Bank under a false name. According to the indictment, Cutting and Melland knew the loan was being submitted using a straw buyer name and still urged SVB’s loan committee to approve the loan, the purpose of which was for Madjlessi to buy back his defaulted loan.
The four men are charged with 22 counts, including one count of conspiracy to commit wire and bank fraud, one count of bank fraud, six counts of wire fraud, one count of conspiring to make false statements to a bank, one count of conspiring to launder money and 12 counts of money laundering. U.S. District Judge Susan Illston will be the trial judge.
Read the original article in CBS Local.
April 8th, 2014 at 9:04am
The Office of the Inspector General (OIG) for the Federal Housing Finance Authority (FHFA) says the two agencies allowed fraud in the inspections of its foreclosed properties (REO fraud).
The OIG noted that both Fannie Mae and Freddie Mac did not provide proper oversight of the vendors conducting inspections. It sited once instance where an inspection report appears to have been copied from another one. Other red flags were property photos that did not match property descriptions and blurry photos.
My simple (and obvious) solution to the vendors engaging in fraud: a permanent ban from REO property assignments and a claw-back of the fees they earned by dishonesty. It will never happen, of course, just as the Fannie Mae and Freddie Mac employees in charge of oversight will keep their jobs and move on to new promotions without so much as a mark on their personnel records.
Read the original article on HousingWire.
April 4th, 2014 at 8:50am
Benny Chetcuti Jr. was indicted last week by a federal grand jury on two counts of wire fraud, according to the office for U.S. Attorney for Northern California Melinda Haag.
Chetcuti’s business, which began in 1998, was buyer, renovating and reselling homes. He financed his business by obtaining private loans from investors. According to prosecutors, however, he defrauded the investors by overstating how much debt was secured by the properties. He also in some cases did not record deeds of trust on the properties, which would have protected the interests of the investors in those properties.
Read the original article in the San Ramon Express.
April 4th, 2014 at 8:30am
Rejecting the recommendations of Assistant U.S. Attorney Gregory Damm, U.S. District Judge Jennifer Dorsey gave two former real estate agents only one day in custody of the U.S. Marshals Service and ordered them to pay restitution to the lenders they conned in a short sale fraud. Judge Dorsey did “sentence” Cynthia Hosbrook, 41, and Robert Hosbrook, 52, to five years of supervised release and ordered them to pay fines of $10,000 each.
The losers here are taxpayers, who footed a trial that probably cost several hundred thousand dollars.
The Holbrooks lied to Wells Fargo and Fannie Mae, claiming they needed to do a short sale of their home due to hardship. They “sold” the Las Vegas house to Cynthia Hosbrook‘s mother for cash and continued to live in it, causing a $170,000 loss to the lenders. Unmentioned is that they got a write-down of their mortgage and a reduced property tax basis, so their fraud still appears to have paid-off.
In their plea agreement last November to one count of bank fraud each, they admitted they had committed short sale fraud in the sale of two other Las Vegas homes in 2008 and 2009.
Read the original article in the Las Vegas Review Journal.
April 4th, 2014 at 8:12am
David Crisp, the figurehead in the largest mortgage fraud conspiracy in Bakersfield’s history, has been sentenced to 17 1/2 years in federal prison. He had pleaded guilty in December 2013 to conspiracy to commit mail, wire and bank fraud.
Just prior to sentencing Crisp, the judge called him a “fiscal predator.” The judge did show mercy to Crisp’s wife, Jennifer Crisp, who despite admitting to mail fraud and wire fraud, received only five years probation because the judge didn’t want their 10 year-old son to have both parents in prison.
David Crisp‘s business partner, Carl Cole, also received the same sentence in February and most of the defendants, who were relatives and employees, have been sentenced.
The only defendant to have not accepted a plea deal is Julie Farmer, who is awaiting trial. She began her career as Crisp & Cole’s bookkeeper and eventually became the operations manager.
Read the full article on Bakersfield Now.
A synopsis of all the players in this case can be found by clicking on this link of an earlier article on Bakersfield Now.
April 3rd, 2014 at 9:28am
Charles Keating, the banker who became one of the symbols of the last great mortgage crisis, has died at age 90.
Keating bought Irvine-based Lincoln Savings & Loan in 1984. It and other savings and loan institutions went bust in the late 1980s following the policies of President Reagan, who strongly advocated deregulation and letting the “free market” work. As with the banking crisis of the past eight years, the “free market” was anything but free, costing homeowners and stock investors billions in losses in the devastating savings-and-loan crisis. It also stuck taxpayers with $500 billion in bail-out costs.
Long after the damage was done, federal regulators pursued a $1.1 billion civil racketeering and fraud lawsuit against Keating. Among other things, they accused him of using the money from Lincoln’s depositors for himself and his family and to finance his failed political campaigns. Ultimately, he was sentenced to 12 years in seven months in prison but lucked out after his conviction was overturned on a technicality and served only 50 months of the sentence.
Charles Keating‘s involvement in politics exposed the relationship between bankers and politicians as Senator John McCain and former Senator Dennis DeConcini, both of Arizona, were accused along with three more senators of improperly acting on his behalf by intervening with the federal regulators. Those senators became known as the “Keating Five“.
Another famous family was caught up in the S&L scandal: Neil Bush and Jeb Bush, sons of President George H. W. Bush. Click here to read about their roles.
Read the original article in USA Today.
March 28th, 2014 at 10:12am
A married couple who worked in the loan industry received sentences of three years and five months for participating in a multimillion dollar mortgage fraud.
Eric Elegado and Charmagne Elegado pleaded guilty in October 2013 to conspiracy to commit wire fraud in a mortgage sche. The Elegados, both 49 and well-known in the Filipino community were very successful in San Diego real estate. Eric was on the flamboyant side, putting his face on bus benches and billboards and parking Bentleys, Ferraris and Rolls Royce cars he owned outside his real estate seminars.
According to the prosecution, the Elegado’s crimes occurred from December 2005 to February 2007, when Charmagne was working for New Century Mortgage. New Century Mortgage, based in Irvine, was considered by some experts to be the Ground Zero for the housing bubble, with its novel subprime loans, aka “liar’s loans”, where borrowers could get a mortgage on stated income, meaning no documentation was required. The prosecution had contended that not only had the couple procured loans for unqualified buyers, they also obtained some mortgages for the borrowers that were higher than the actual price of the homes. The excess was skimmed and then run through shell corporations.
The couple’s defense was that they were just trying to help the borrowers buy homes.
According to the FBI, the couple earned $3.5 million on over 100 fraudulent loan transactions and the losses to lenders amounted to approximately $10.4 million.
Read the original article in UT-San Diego.
March 28th, 2014 at 9:52am
A Southern California man has been sentenced to prison for his role in a mortgage fraud scheme that involved residential properties in Rocklin, Roseville and San Clemente.
Alexander Romaniolis, 48, an Irvine man, has been sentenced to 30 months in prison by U.S. District Judge Troy R. Nunley to 30 months in prison. Judge Nunley also fined Romaniolis $17,500 and ordered him to forfeit over $400,000 for his part in a mortgage fraud case.
According to the prosecution, Romaniolis was responsible for recruiting straw buyers to purchase homes in Rocklin, Roseville and San Clemente. His role in the fraud was to help the straw buyers with falsifying their income, asset and employment information that was submitted to lenders. The losses to the lenders was over $2 million, since all the properties were eventually foreclosed.
The case was investigated by the FBI and California Department of Justice.
Read the original article in the Sacramento Bee.
March 28th, 2014 at 9:37am
U.S. Attorney Benjamin Wagner announced that Antonio Perez-Marcial, 41, a Bakersfield man, has entered guilty pleas to conspiracy to commit bank fraud, mail fraud, and wire fraud in a large mortgage fraud conspiracy case in Bakersfield.
In this case, Perez-Marcial admitted conspiring with other persons to procure straw buyers to purchase Bakersfield homes developed by Jara Brothers Investments and Pershing Partners LLC. Jara Brothers is owned by Eliseo Jara and Sergio Jara and Pershing Partners is owned by Lucia Chavez, all of whom are defendants who have pleaded not guilty.
According to Perez-Marcial, he was paid a “consulting fee” of $20,000 to $30,000 for finding the straw buyers and funding their down-payments, which, along with false income and asset information, was used to obtain loans. He admitted his role cost the lenders approximately $3,455,250 in losses.
Read the original article in the Central Valley Business Times.
March 28th, 2014 at 9:20am
Jayson Peter Costa, 41, of Bakersfield, who was a loan officer in the largest mortgage fraud prosecution in Bakersfield, was sentenced to 78 months in federal prison.
Costa worked for David Crisp and Carl Cole at their Tower Lending mortgage brokerage. He admitted in his plea agreement that he submitted fraudulent loan applications for his co-conspirators and straw buyers and for himself acting as a straw buyer. He also admitted that the frauds he committed resulted in losses to the lenders of at least $7,580,019.
The mortgage fraud conspiracy operated from January 2004 to September 2007.
You can read many articles about the Crisp & Cole mortgage fraud conspiracy, which was prosecuted by the office of U.S. Attorney Benjamin Wagner, by searching for them on the California Real Estate Fraud Report.
Read the original article in the Central Valley Business Times.