California Real Estate Fraud Report

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Imprisoned Attorney Loses Suit, Must Pay Litigation Costs in Mortgage Fraud Case

February 12th, 2016 at 12:00pm

Attorney Mitchell Stein, already serving a 17-year prison sentence in Florida on multiple fraud, money laundering and conspiracy charges, has lost his case in which the State of California is seeking court costs.

Los Angeles County Superior Court Judge Jane L. Johnson ruled that the mortgage fraud lawsuit filed by Attorney General Kamala Harris in 2011 against multiple entities entitled California to collect costs. Stein and other were accused of fraudulently taking millions of dollars from thousands of homeowners who thought they would receive help with their mortgages.

The case is The People of the State of California v. The Law Offices of Kramer and Kaslow PLC et al., case number LC094571, in the Superior Court of the State of California, County of Los Angeles.

Here is a press release about Mitchell J. Stein.

Read the original article in Law360.

Operator of Excel Investments “Builder Bailout” Case Convicted

February 12th, 2016 at 11:45am

A Huntington Beach man suspected of running what authorities described as a “builder bailout” real estate scheme was convicted Friday of fraudulently buying more than 100 condominium units across the country.

Momoud Aref Abaji, 34, of Huntington Beach was found guilty by a federal grand jury of multiple felony counts of bank fraud, wire fraud and tax evasion in relation to a “builder bailout” scheme that resulted in foreclosures that caused losses of $9 million to lenders.

Prosecutors from the U.S. Attorney’s Office for the Central District of California accused Abaji and others affiliated to Excel Investments and related companies in Santa Ana and Irvine to a scheme in which they purchased struggling condominium developments from the developers in exchange for “hefty commissions.” Up to 100 condominium units were involved in these purchases, which Abaji and other defendants sold to straw buyers by utilizing altered bank statements, pay stubs and other documents.

“Abaji’s fraud cost these financial institutions millions of dollars and put taxpayer funds at risk,” said United States Attorney Eileen M. Decker.

Read the original article in the OC Register.

There is also an earlier article about Momoud Aref Abaji and Excel Investments  in the California Real Estate Fraud Report.

Morgan Stanley Agrees to Pay $3.2 Billion to Resolve Toxic MBS Claims

February 11th, 2016 at 12:46pm

Morgan Stanley is the latest firm to settle federal and state probes concerning its “deceptive” handling of mortgage-backed securities (MBS).

Exactly one year ago, Morgan Stanley entered into a settlement with the Justice Department for $2.6 billion to settle claims that it packaged and sold toxic MBS to institutional investors, a prelude contributing to the housing market collapse.

Read the original article in DSNews.

Attorney General Kamala D. Harris Reaches $470 Million Joint State-Federal Settlement with HSBC to Address Mortgage Loan Origination, Servicing, and Foreclosure Abuses

February 5th, 2016 at 10:21am
Thursday, February 4, 2016
Contact: (415) 703-5837, agpressoffice@doj.ca.gov

Agreement to provide certain California borrowers with loan modifications; foreclosed HSBC loans may be eligible for payments for past abuse 

SAN FRANCISCO – Today Attorney General Kamala D. Harris announced that California will join the U.S. Department of Justice, Department of Housing and Urban Development, and 48 other states in entering into a consent judgment with mortgage lender and servicer HSBC over its mortgage faulty servicing practices. This ruling will address mortgage origination, servicing, and foreclosure abuses perpetuated by HSBC.

“California homeowners worked hard and played by the rules to stay in their homes during the housing crisis, but for too many, their struggle and sacrifice was met by abusive mortgage servicing practices,” said Attorney General Harris. “This settlement holds HSBC accountable for its abusive practices that manipulated people fighting to stay in their homes. I encourage eligible borrowers who receive a claim form and feel they were a victim of HSBC’s practices to file a claim immediately.”

Under the terms of the agreement, HSBC will pay $100 million in cash, of which $59.3 million will be used to distribute payments to borrowers whose homes were foreclosed upon between 2008 and 2013, and $40.5 million will be paid to the federal government. The agreement also requires HSBC to provide $370 million in other consumer relief, such as loan modifications, principal reductions, and loan refinancing.

Based on foreclosure numbers, it is estimated that California borrowers are eligible for about 10% of the $59.3 million fund for payments to foreclosed borrowers.

This agreement is very similar to the National Mortgage Settlement of 2012, in which Attorney General Harris secured a historic $20 billion for California homeowners affected by the mortgage crisis. In 2014, Attorney General Harris announced several multimillion dollar settlements regarding mortgage fraud crime, including a national settlement with SunTrust Mortgage that provided $40 million in payments and $500 million in consumer relief nationwide; a national settlement with Bank of America in which California recovered $300 million in damages and $500 million in consumer relief credits; and a national settlement with Citigroup in which California recovered $102.7 million in damages and $90 million in consumer relief.

Additional information concerning today’s announcement is listed below.

Loan Modifications

The HSBC agreement requires the company to provide certain California borrowers with loan modifications or other relief. The modifications, which HSBC chooses through an extensive list of options, include principal reductions and refinancing for underwater mortgages. HSBC decides how many loans and which loans to modify, but must meet certain minimum targets. Because HSBC receives only partial settlement credit for many types of loan modifications, the settlement will provide relief to borrowers that will exceed the overall minimum amount.

Payments to Borrowers

Approximately 7,526 eligible California borrowers whose loans were serviced by HSBC and who lost their home to foreclosure from January 1, 2008 through December 31, 2012 and encountered servicing abuse will be eligible for a payment from the national $59.3 million fund for payments to borrowers. The borrower payment amount will depend on how many borrowers file claims.

Eligible borrowers will be contacted about how to qualify for payments.

Mortgage Servicing Standards

The settlement requires HSBC to substantially change how it services mortgage loans, handles foreclosures, and ensures the accuracy of information provided in federal bankruptcy court.

The terms will prevent past foreclosure abuses, such as robo-signing, improper documentation, and lost paperwork.

The settlement’s consumer protections and standards include:

  • Making foreclosure a last resort by first requiring HSBC to evaluate homeowners for other loss mitigation options;
  • Restricting foreclosure while the homeowner is being considered for a loan modification;
  • Procedures and timelines for reviewing loan modification applications;
  • Giving homeowners the right to appeal denials; and

Requiring a single point of contact for borrowers seeking information about their loans and maintaining adequate staff to handle calls.

Independent Monitor

The National Mortgage Settlement’s independent monitor, Joseph A. Smith Jr., will oversee HSBC agreement compliance for one year. Smith served as the North Carolina Commissioner of Banks from 2002 until 2012, and is also the former Chairman of the Conference of State Banks Supervisors (CSBS). Smith will oversee implementation of the servicing standards required by the agreement and issue public reports that identify whether HSBC complied or fell short of the standards imposed by the settlement. If HSBC is alleged to have violated terms of the agreement, the states and federal agencies can seek relief through the court.

Additional Terms

The agreement resolves potential violations of civil law based on HSBC’s deficient mortgage loan origination and servicing activities. The agreement does not prevent state or federal authorities from pursuing criminal enforcement actions related to this or other conduct by HSBC, or from punishing wrongful securitization conduct that is the focus of the Residential Mortgage-Backed Securities Working Group. Additionally, the agreement does not prevent any action by individual borrowers who wish to bring their own lawsuits.

The agreement will be filed as a consent judgment in the U.S. District Court for the District of Columbia. 

For more information on how to file a claim against a business/company, visit:https://oag.ca.gov/contact/consumer-complaint-against-business-or-company

Wells Fargo reaches $1.2 billion settlement in fraud mortgage case

February 5th, 2016 at 9:38am

Wells Fargo and Company (WFC),  has agreed to pay $1.2 billion to resolve civil claims filed against it by the federal government relating to its Federal Housing Administration (FHA) lending program during the period from 2001-2010. Federal regulators brought a civil fraud lawsuit against Wells Fargo in 2012, accusing it of engaging in “reckless” underwriting that resulted in thousands of government-backed loans defaulting and hundreds of millions of dollars in insurance payments.

The FHA program gives lenders authority to certify that mortgages they underwrite meet requirements for federal insurance but if any of those federally-backed mortgage defaults, the US Department of Housing and Urban Development (HUD) must make insurance payouts to the holder of the loan. In other words, taxpayers are on the hook, not the banks, for the bad lending practices of banks.

The agencies with which Wells Fargo has reached agreement are the United States Department of Justice, the United States Attorney’s Office for the Southern District of New York, the United States Attorney’s Office for the Northern District of California, and the United States Department of Housing and Urban Development.

Read the original article in Big News Network.

 

Assemblywoman Young Kim introduces AB 1718 to protect elderly from financial abuse crimes

February 5th, 2016 at 9:25am

Assemblywoman Young Kim (R-Fullerton) introduced AB 1718 to strengthen seniors’ protections against financial abuse by giving judges the option to sentence criminals convicted of felony financial elder abuse to state prison instead of the current option of only county jail.

“We have an obligation to protect the most vulnerable in our society, and our senior citizens are regularly targeted for financial abuse,” said Kim. “By sending these criminals to state prison, we send a message that we have zero tolerance for these crimes and that we are serious about bringing these people to justice and about protecting our seniors.”

Since the state enacted Governor Jerry Brown’s prison reform, also known as Realignment, county jails have seen an influx of inmates who previously would have served their terms in state prison. This has led to overcrowding and, in some cases, early release of inmates who still pose a danger to society.

“I’m committed to fighting to improve public safety and protect California’s seniors,” said Kim. “By sending these criminals to prison, we can end slap-on-the wrist punishments for doing the unconscionable – preying on the savings of seniors.”

Kim represents the 65th Assembly District, which includes the communities of Anaheim, Buena Park, Cypress, Fullerton, La Palma, and Stanton.

This article was released by the Office of Assemblywoman Young Kim.

Orange County Residents Arrested, Indicted in Connecticut for Loan Modification Fraud

February 5th, 2016 at 9:19am

Seven Orange County, California residents have been accused of running a boiler-room operation that targeted homeowners around the country in what prosecutors say was a loan modification scam.

The individuals indicted by a federal grand jury are as follows:

Aria Maleki, 33, Santa Ana;

Serj Geuttsoyan, aka Anthony Kirk, 33, Santa Ana;

Mehdi Moarefian, aka Michael Miller, 36, Irvine;

Daniel Shiau, aka Scott Decker, 30, Irvine;

Kowit Yuktanon, aka Eric Cannon, 31, Huntington Beach;

Michelle Lefaoseu, aka Michelle Bennett, 41, Huntington Beach; and

Cuong Huy King, aka James Nolan and Jimmy, 32, Westminster.

In addition to the arrests, federal agents seized $350,000 from bank accounts, $362,000 from a bitcoin account, a $100,000 cashier’s check and a 2013 Ferrari 458 Italia.

All seven are charged with conspiracy to commit mail and wire fraud; several of the defendants have additional charges filed against them.

Prosecutors believe that the defendants were cold-called and promised loan modifications if they paid upfront/advance fees of $2,500 to $4,300. They allegedly used false names, changed their business names and provided false and misleading documents to the homeowners indicating the latter would receive government help from Troubled Assets Relief Program and the Home Affordable Modification Program.

 

Read the original article in the OC Register.

Al Moriarty Our of Jail, Denies He Defrauded Victims in Ponzi Scheme

February 5th, 2016 at 9:06am

Former Grover Beach financier Al Moriarty, 82, is out of jail after pleading no contest to seven felony fraud charges in August 2014. Prosecutors accused the owner of Moriarty Enterprises of operating a Ponzi scheme that promised his victims he would invest their funds in gold and real estate, yet the money ended up in his personal bank account.

Losses to the 170 individual investors totaled over $10 million.

Read the original article in the San Luis Obispo Tribune.

Employee of Star Reliable Mortgage Pleads Not Guilty in Foreclosure Fraud Scheme

January 29th, 2016 at 11:56am

Martin Calzada, 28, a former employee for Star Reliable Mortgage has pleaded not guilty in federal court after being charged by the Department of Justice with conspiracy to commit mail fraud and mail fraud.

Calzada is accused of charging homeowners facing foreclosure upfront fees between $2,500 to $4,500 in what the feds call a “loan elimination” scheme. He and other employees are alleged to have filed phony documents with the County Recorder’s office, replacing the homeowners’ names with trusts linked to himself and the company. The homeowners/clients were also told to stop making their mortgage payments, resulting in foreclosure actions.

Read the original article in the Visalia Times-Delta.

Newport Beach Man Convicted in Real Estate Fraud Ponzi Scheme

January 29th, 2016 at 11:42am

Thomas Franklin Tarbutton, 56, of Newport Beach, has been convicted of almost 40 felony counts, after being tried for grand theft and securities fraud. The 11 victims lost over $3 million, according to Senior Deputy District Attorney Pete Pierce of the Orange County District Attorney’s Office.

Tarbutton operated Irvine-based Villa Capital Inc. from 2004-2010 and funded private loans using monies he received from investors. He fled to Panama but was extradited to Orange County in December 2013.

Read the original article in The Patch.

© Copyright 2007-2016 Monique Bryher

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The information and notices contained on The California Real Estate Fraud Report are intended to summarize recent developments in real estate fraud, mortgage fraud, short sale fraud, REO fraud, appraisal fraud, loan modification scams, loan modification fraud and other real estate related crimes occurring in Los Angeles and California. The posts on this site are presented as general research and information and are expressly not intended, and should not be regarded, as legal advice. Much of the information on this site concerns allegations made in civil lawsuits and in criminal indictments. All persons are presumed innocent until convicted of a crime. Readers who have particular questions about real estate fraud, mortgage fraud and appraisal fraud matters or who believe they require legal counsel should seek the advice of an attorney.

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