California Real Estate Fraud Report

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01
May

Phony Broker Pleads Guilty to Mortgage Fraud, Costing Lenders & Taxpayers $20 Million

A San Diego woman who brazenly brokered loans without possessing the necessary license has pleaded guilty to operating a a loan origination fraud scheme that included kickbacks.

According to the U.S. Attorney’s Office, Mary Armstrong, 51, wrote over $100 million in fraudulent loans (mortgage fraud, loan fraud) and skimmed $14.5 million from it (equity skimming). Armstrong confessed to selling $100 million of real estate around the country at puffed-up prices (appraisal fraud) and took the overpayments for herself. Her admitted crimes included fabricating loan applications for her straw buyers and  getting supporting fraudulent documents from her co-conspirators.

Prior to Armstrong’s guilty pleas, the following co-conspirators also pled guilty:

Teresa Rose, a Ramona real estate agent

Audrey Yeboah, Mary Armstrong’s accountant

– Seattle businessman Justin Mensen

Still awaiting their turn to face the scales of justice are John Allen, 44, of Laguna Hills, and William Fountain, 57, of Los Angeles.

Prosecutors said that the straw buyers were recruited in Southern California and other states by the defendants advertising on the Internet and placing ads in the Los Angeles Times seeking “investors.” The straw buyers were paid $10,000 for each property they “purchased.” Taking advantage of greed by institutional lenders to capture more loan business, the straw buyers were able to obtain 100% financing, relieving them of the risk to make down-payments, as occurred back in the good old days of prudent underwriting. When the straw buyers defaulted, the originators and their secondary market victims, e.g., Fannie Mae and Freddie Mac, lost upwards of $20 million.

My pet peeve with prosecutors is their consistent lack of interest in prosecuting the straw buyers in mortgage fraud cases. Let’s see if this case is any different.

Read the original article in Courthouse News. You can also read earlier postings about these defendants by using the Search tool on the left side of the California Real Estate Fraud Report.

© Copyright 2007-2017 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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