California Real Estate Fraud Report

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Sisters Convicted At Trial For Bakersfield Mortgage Fraud Scheme

November 25th, 2014 at 7:10am

The following is a press release from the U.S. Attorneys Office for the Eastern District of California:

FRESNO, Calif. — A federal jury in Fresno stayed late into the evening on Friday, November 21, and returned guilty verdicts on all counts in the trial of Evelyn Brigget Sanchez, 32, and Darling Arlette Montalvo, 33, both of Bakersfield, United States Attorney Benjamin B. Wagner announced. The case against the two sisters focused on their involvement in an extensive mortgage fraud scheme that ran from October 2005 to May 2007.

Sanchez and Montalvo were both convicted of conspiracy to commit mail fraud, wire fraud, and bank fraud. Sanchez was also convicted of 11 counts of mail fraud. Montalvo was also convicted of 10 counts of mail fraud and one count of money laundering.

According to court documents, between October 2005 and May 2007, Sanchez and Montalvo conspired with co-defendants Eric Hernandez, Monica Hernandez, and Patricia King to defraud mortgage lenders by submitting false loan applications and fraudulent supporting documentation, causing the lenders to fund mortgage loans for the defendants’ benefit on the basis of false and misleading information. During this time, Eric Hernandez and Evelyn Sanchez were employed at mortgage brokerages in Bakersfield. The defendants submitted loan applications to lenders that included material misstatements concerning the borrowers’ income, assets, and employment, and false statements concerning the borrowers’ intent to reside in the properties as owner-occupiers, among other false statements. The defendants also fabricated false supporting documentation and submitted it to lenders in support of the loan applications. The total losses in the scheme were approximately $6 million.

Co-defendants Eric Hernandez, Monica Hernandez, and Patricia King previously pleaded guilty for their roles in the scheme. Eric Hernandez was sentenced on Sept. 16, 2013, to 10 years and 10 months in prison. King was sentenced on April 23, 2012, to three years and one month in prison. Monica Hernandez is scheduled to be sentenced on January 5, 2015.

This case is the product of an investigation by the Internal Revenue Service – Criminal Investigation and the Federal Bureau of Investigation. Assistant U.S. Attorneys Kirk Sherriff and Henry Carbajal III are prosecuting the case.

Sanchez and Montalvo are to be sentenced on February 2, 2015, by United States District Judge Anthony W. Ishii. The maximum statutory penalty for conspiracy to commit mail fraud, wire fraud, and bank fraud is 30 years in prison and a $1 million fine. The maximum statutory penalty for one count of mail fraud is 30 years in prison and a $1 million fine, and for money laundering is 10 years in prison and a $250,000 fine. The actual sentences, however, will be determined at the discretion of the court after consideration of any applicable statutory factors and the Federal Sentencing Guidelines, which take into account a number of variables.

This case was investigated and prosecuted in coordination with the President’s Financial Fraud Enforcement Task Force. The task force was established to wage an aggressive, coordinated and proactive effort to investigate and prosecute financial crimes. With more than 20 federal agencies, 94 U.S. attorneys’ offices and state and local partners, it is the broadest coalition of law enforcement, investigatory and regulatory agencies ever assembled to combat fraud. For more information on the task force, please visit www.StopFraud.gov.

Eleven Northern California Real Estate Investors Indicted for Bid Rigging and Fraud at Public Foreclosure Auctions

November 25th, 2014 at 6:55am

The following is a press release by the U.S. Department of Justice:

A federal grand jury in San Francisco returned three multi-count indictments against eleven real estate investors for their role in bid rigging and fraud schemes at foreclosure auctions in Northern California, the Department of Justice announced.

The indictments, filed late yesterday in U.S. District Court for the Northern District of California in Oakland, California, charge Northern California real estate investors Michael Marr; Javier Sanchez; Gregory Casorso; Victor Marr; John Shiells; Miguel De Sanz; Alvin Florida Jr.; Robert A. Rasheed; John L. Berry III; Refugio Diaz; and Stephan A. Florida with participating in conspiracies to rig bids and schemes to defraud mortgage holders and others.  The indictments allege that the defendants agreed not to compete at public auctions in return for payoffs and diverted money to themselves and others that should have gone to mortgage holders and other beneficiaries.  All defendants were charged with bid rigging and fraud in Alameda County, California.  Marr, Sanchez, Shiells, and De Sanz were also charged with bid rigging and fraud in Contra Costa County, California.  Additionally, Shiells and De Sanz were charged with bid rigging and fraud in San Francisco County, California.

To date, 47 individuals have pleaded guilty to criminal charges as a result of the department’s ongoing antitrust investigations into bid rigging and fraud at public foreclosure auctions in Northern California.  On Oct. 22, 2014, a federal grand jury in San Francisco returned an eight-count indictment against five additional real estate investors for their role in bid rigging and fraud schemes at foreclosure auctions in San Mateo and San Francisco Counties, California.

“Collusion at the foreclosure auctions created an unfair playing field where conspirators pocketed illegal payoffs at the expense of lenders and distressed homeowners,” said Brent Snyder, Deputy Assistant Attorney for the Antitrust Division’s criminal enforcement program.  “The division will continue to investigate and prosecute local cartels that harm the competitive process.”

The indictments allege, among other things, that at various times between June 2007 and January 2011, the defendants conspired to rig bids to obtain numerous properties sold at foreclosure auctions in Alameda, Contra Costa, and San Francisco counties, negotiated payoffs for agreeing not to compete, held second, private auctions known as “rounds,” concealed those rounds and payoffs, and, in the process, defrauded mortgage holders and other beneficiaries.

“These charges demonstrate our continued commitment to investigate and prosecute individuals and organizations responsible for the corruption of the public foreclosure auction process,” said David J. Johnson, FBI Special Agent in Charge of the San Francisco Field Office.  “The FBI is committed to work these important cases and remains unwavering in our dedication to bring the members of these illegal conspiracies to justice.”

Each violation of the Sherman Act carries a maximum penalty of 10 years in prison and a $1 million fine for individuals.  Each count of mail fraud carries a maximum sentence of 20 years in prison and a $1 million fine.  The government can also seek to forfeit the proceeds earned from participating in the mail fraud schemes.  The maximum fine for the Sherman Act charges may be increased to twice the gain derived from the crime or twice the loss suffered by the victims if either amount is greater than $1 million.

These indictments are the latest charges filed by the department in its ongoing investigation into bid rigging and fraud at public real estate foreclosure auctions in San Francisco, San Mateo, Contra Costa, and Alameda counties, California.  These investigations are being conducted by the Antitrust Division’s San Francisco Office and the FBI’s San Francisco Office.  Anyone with information concerning bid rigging or fraud related to public real estate foreclosure auctions should contact the Antitrust Division’s San Francisco Office at 415-934-5300, or call the FBI tip line at 415-553-7400.

The charges were brought in connection with the President’s Financial Fraud Enforcement Task Force.  The task force was established to wage an aggressive, coordinated and proactive effort to investigate and prosecute financial crimes.  With more than 20 federal agencies, 94 U.S. attorneys’ offices and state and local partners, it’s the broadest coalition of law enforcement, investigatory and regulatory agencies ever assembled to combat fraud.  Since its formation, the task force has made great strides in facilitating increased investigation and prosecution of financial crimes; enhancing coordination and cooperation among federal, state and local authorities; addressing discrimination in the lending and financial markets and conducting outreach to the public, victims, financial institutions and other organizations.  Over the past three fiscal years, the Justice Department has filed nearly 10,000 financial fraud cases against nearly 15,000 defendants including more than 2,900 mortgage fraud defendants.  For more information on the task force, please visit www.StopFraud.gov.

Campbell Man Pleads Guilty to Real Estate Investment Fraud

November 21st, 2014 at 10:46am

The office of United States Attorney Melinda Haag has announced in a press release that Sam Stafford, 57, one of three partners who operated S3 Partners, pleaded guilty in October to conspiring with Melvin Russell “Rusty” Shields and Michael Sims to commit wire fraud, mail fraud and bank fraud.

Rusty Shields has been already sentenced to 78 months in prison and ordered to pay restitution of $7,225,904.73. Michael Sims received 30 months in prison and was ordered to re-pay $411,460.92.

Prosecutors showed evidence during Shields’ and Sims’ trials that they defrauded their victims who invested with their real estate projects from 2006-2009. Many of their victims were elderly investors (elder financial fraud, elder financial abuse).

The press release also stated that “evidence further showed that Shields and Stafford fraudulently obtained millions of dollars from banks by submitting forged and fraudulent invoices and loan closing documents.”

S3 Partners  had offices in San Jose and Campbell, in Hickory, North Carolina, and Valrico, Florida.

Crisp & Cole Office Manager Sentenced

November 21st, 2014 at 10:26am

Crisp & Cole Office Manager Sneha Ramesh Mohammadi has been sentenced to 18 months in prison for her participation the mortgage fraud case that shook the Bakersfield real estate market.

According to U.S. Attorney Benjamin Wagner, Mohammadi , 52, will also be serving five years of supervised release. She is the latest of the defendants to be sentenced, all of whom have been ordered by U.S. District Judge Lawrence O’Neill to pay restitution of $10,747,073 to the lending institutions.

David Crisp and Carl Cole were the principals who owned and ran Crisp & Cole Real Estate (CCRE) and Tower Lending, their affiliated mortgage brokerage. Prosecutors said that from January 2004 and September 2007, the two men and a number of their employees and relatives operated a mortgage fraud scheme by using straw buyers to purchase properties for which they submitted false information on the loan applications.

Here is a summary of the rest of the prison and probation sentences:

David Crisp – 17 years, seven months

Carl Cole – 17 years, seven months

CCRE Chief Operations Officer Julie Farmer – three years

Loan officer Jayson Peter Costa –  six years and six months

Real estate agent Michael Munoz – two years. Munoz allowed his real estate license with the California Bureau of Real Estate to expire.

Caleb Cole – five months

Christopher Lance Stovall – one year

Kevin Patrick Sluga – 20 months

Robinson Nguyen – 27 months (already served)

Jennifer Crisp – five months (probation)

Megan Balod – 36 months (probation)

Leslie Sluga – three years (probation)

Jerald Allen Teixeira will receive his sentence in February, 2015. The sentences for the other defendants are:

Read the original article in the Central Valley Business Times.

Co-Owner of Irvine-Based Real Estate Investment Firm Pleads Guilty in Ponzi Scheme

November 21st, 2014 at 9:57am

One of two owners of Irvine-based Pacific Property Assets pleaded guilty in federal court to mail fraud in answer to charges by prosecutors that his once-legitimate business turned into a Ponzi scheme when the housing market collapsed.

John Packard, 64, of Long Beach could receive 20 years in prison when he is sentenced by U.S. District Judge Cormac Carney next May.

Packard co-owed Pacific Property Assets with Michael Stewart, of Phoenix, whose trial is set for April 2015.

Prosecutors allege that the business, which raised money to buy, renovate and re-sell apartment buildings in Southern California and Arizona, was initially legitimate and amassed a portfolio of over 100 buildings in a 10-year period. But when the real estate market reversed course in the mid-2000s, they turned to raising money from new investors in order to stay current on their loans to their first investors. At the time they filed for bankruptcy in 2009, they were in debt to banks for $100 million and another $91 million to almost 650 individual investors. The private investors lost all of their money but the banks only lost about 25% of their investment.

Read the original article in the Daily Pilot.

Commercial Developer Sentenced in $50 Million Securities Fraud

November 21st, 2014 at 9:40am

Commercial real estate developer and mortgage broker Bradley Holcom was sentenced to 10 years in federal prison.

Holcom, 57, pleaded guilty in July 2014 to committing wire fraud. He had sold approximately $50 million worth of promissory notes over 150 investors across the U.S., many of whom lost millions, through his Trust Deed Investment Program.

Holcom admitted that he had falsely promised the investors who purchased his notes that they would receive first liens on properties he was developing when he instead conveyed to them a lesser, weaker interest.

Read the original article in the Times of San Diego.

 

Is Eric Holder a Traitor to the People and a Shill to the Banks?

November 18th, 2014 at 9:49am

If you have time – maybe a long coffee break – you may want to read this fascinating article in Rolling Stone about the settlement between Attorney General Eric Holder, “his” Department of Justice and how time-after-time he has allowed banks that mislabeled and sold mortgage-backed securities to get off-the-hook by paying monetary fines.

This article shows that the upstart Occupy Movement has had some effect on President Obama, but still not enough to get meaningful justice for homeowners and institutional investors, both of which were financially beat-up by the banks. It reveals that the primary banker who is the focus of the article, Jamie Dimon of Chase Bank and much of upper-management, allegedly knew Chase was packaging subprime securities as “Alt-A” (a higher-quality category) and getting rid of them before the borrowers defaulted, saving Chase billions but again causing significant losses to the credit unions and small financial institutions that purchased them, not knowing these shoddy mortgages would blow-up in their faces.

Besides the research performed by Rolling Stone writer Matt Taibbi, much of the information comes from his interview with former Chase transaction manager Alayne Fleischman, an attorney by profession. Ms. Fleischman tells the actual story of how Jamie Dimon and Chase Bank wiggled out what she termed “criminal fraud” and how almost every government agency that should have investigated this and other mega-bank misdeeds (think: SEC) either dropped the ball, aided in the cover-up or dragged their feet to allow the statute of limitations to expire on prosecutions.  A reluctant whistleblower, Ms. Fleischman is the model for the ethical behavior so devoid in most of the banks and the government agencies charged with protecting Americans.

How much do you want to bet that Eric Holder is going to end up working for his banking friends?

How Bank of America’s Lending Standards Will Affect the Housing Market.

November 18th, 2014 at 8:53am

After being stung by billions in penalties and judgments related to the subprime lending standards of its Countrywide Financial acquisition, Bank of America CEO Brian Moynihan bluntly stated that people without at least a 10% down-payment should consider renting instead of purchasing. This may infuriate Realtors and mortgage brokers, but once-upon-a-time, underwriters wouldn’t consider 10% loans.

And the housing market was stable. . .

Read the original article in Bloomberg.  I also posted this article on LinkedIn.

CFPB a Target of New Republican Majority

November 10th, 2014 at 7:45am

As a result of the election, Republicans have indicated that they want to curtail the power of the Consumer Financial Protection Bureau and replace Richard Cordray, its head. If successful, this would be a huge step backwards for consumers who need the government to step-in and help when their banks and loan servicers are either unresponsive or commit fraud.

The CFPB was created in 2011 as part of the Dodd-Frank Act.

Read the article in DSNews.

Zillow Sued by Top Agent Network for Theft of Its Trade Secrets

November 7th, 2014 at 8:10am

Top Agent Network, Inc. (TAN) has filed a lawsuit against giant  online real estate company Zillow, accusing Zillow of theft of its proprietary trade secrets in the creation of the highly-promoted  “Coming Soon” feature. The Top Agent Network lawsuit alleges that Zillow was able to learn exactly how TAN’s confidential program worked by pretending to have interest in investing in it and that this was simply a ploy to gain access and launch a competing product.

TAN CEO David Faudman said, “TAN is based on the principle that collaboration among trusted participants is the key to success and we approached this transaction in that spirit. We believe that Zillow broke this trust by misusing trade secrets that we spent years developing and perfecting.” Faudman further said “We are filing this lawsuit to hold Zillow accountable for its actions.”

According to an article in BusinessWireTop Agent Network “is a private, member-only online community where the verified top 10% of real estate agents in local markets collaborate and exchange information. TAN agents exchange information relating to a broad range of real estate issues, including upcoming listings (commonly referred to as “pre-MLS” or “Coming Soon” listings), buyer needs, service provider recommendations, agent referrals and other industry matters. TAN has a wide reach within the industry, as their agents typically sell between 75% and 90% of the homes in their areas. TAN’s collaborative model increases the flow of information, benefiting informed sellers by ensuring that their properties get broad pre-MLS exposure and leading to smoother transactions and better prices for clients. TAN is a national leader in this type of exchange.”

 

© Copyright 2007-2014 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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