California Real Estate Fraud Report

Mark Alan Abrams, 49, one of the central players in the Beverly Hills mortgage fraud conspiracy that consisted of real estate agents, appraisers, straw buyers, mortgage brokers and probably more, pleaded guilty to conspiracy, bank fraud and other loan fraud-related charges.

For the tens of millions that Abrams helped to steal, prosecutors are seeking a seven year (at most) sentence from U.S. District Judge Dean D. Pregerson. Assuming Abrams behaves himself, he could end up serving about half that time. Taxpayers, on the other hand, will be paying back his thievery and that of his eight fellow-convicted conspirators, for years via TARP (Troubled Assets Relief Program).

Lehman Brother Bank was misled by Abrams and his co-conspirators to fund over 80 loans in expensive Westside neighborhoods. As part of their sentences, the guilty have been ordered to pay their share of the $46 million restitution.

Read the full article in the Los Angeles Daily News. You can search the California Real Estate Fraud Report for earlier articles about the Beverly Hills mortgage fraud gang.

Guadalupe Ramirez, a former Bakersfield real estate agent who was wanted on a $1 million arrest warrant in alleged mortgage fraud crimes, has been arrested in Las Vegas after trying to find work as a Realtor there. Ramirez’ father, Augustine, aka Agustin, is also wanted on a $1 million arrest warrant and remains a fugitive.

The father-daughter team are being prosecuted by the Kern County District Attorney’s Office for mortgage fraud, in their case for taking kickbacks on $4.1 million of fraudulent loans that defaulted almost as soon as they were funded. Inflated appraisals were also said to be part of the fraud.

The daughter had taken a job about two weeks ago with Exit United Realty in Las Vegas. Apparently, her new employer was unaware their employee was a wanted woman, according to broker Pablo Covarrubias.

Read the full article in the Bakersfield Californian.

San Diego District Attorney Bonnie Dumanis told her audience during a recent public safety meeting that her office has almost doubled its caseload real estate fraud related cases. Her office filed 39 real estate fraud cases in 2009, compared to 20 cases in 2008.

The number of defendants, however, has practically tripled due to the focus on foreclosure fraud and loan modification fraud cases, which tend to have both more victims and more defendants.

Read estate fraud includes not only fraud in the purchase/sale of a home, such as intentionally failing to disclose material facts, but mortgage and loan fraud, appraisal fraud, foreclosure fraud, title fraud, escrow fraud, and now short sale fraud and REO fraud. The latter two crimes typically happen when the listing agent does not submit all offers to the bank or servicing company so that the offer of the agent’s own buyer becomes the highest or best offer. Expect to see many of these cases in the news in the near future.

Read the full article in the Voice of San Diego.

Kirksey J. “Mark” Newton Jr., the appraiser who performed valuations for defunct Crisp and Cole, has reached a tentative settlement agreement with subprime lender Fremont Investment & Loan - now Fremont Reorganizing Corp. over his appraisals. Fremont Newton, owner of San Joaquin Appraisals Inc., at valuations it now believes were much higher than the properties were worth and claims it has lost $8.56 million as a result.

This March, an administrative law judge ruled that Newton could keep his license despite finding errors and omissions in his work. Newton faired much better than his former associates David Crisp and Carl Cole, both of whom lost their real estate licenses in 2008. Crisp, Cole and a number of their relatives and associates were investigated by federal authorities for their roles in a mortgage fraud case in which loans were taken out on at least 88 properties that were purchased and later foreclosed.

Read the full article in the Bakersfield Californian.

In a plot that has been repeated many times in the California Real Estate Fraud Report, a gang member pled guilty in federal court to operating a mortgage fraud ring that included at least 24 people. It entailed straw buyers, phony appraisals, fraudulent applications for mortgages and falsified escrow documents as well as the services of a real estate broker, Stanley Gentry, who allegedly sold access to the MLS for $10,000 / month. Estimates of the losses for the over 100 properties in San Diego County range between $20 million and $50 million.

Darnell Bell pled guilty to participating in a racketeering conspiracy involving bank fraud, money laundering and other crimes, for which he faces up to 20 years in prison. His co-conspirator, Michael Ivy, owned the Real Estate Center in La Mesa. Ivy pled guilty earlier to conspiracy and is awaiting his sentence.

Read the full story in the San Diego Union Tribune.

A real estate agent and her father are accused of money laundering, conspiracy and grand theft in Bakersfield and are wanted on outstanding arrest warrants of $1 million each.

Augustine Ramirez applied for loans for five homes in less than two months, indicating on each loan application that the homes were to be his principal residence, according to prosecutors in the District Attorney’s Office. The sellers paid Ramirez kickbacks for purchasing the homes at inflated rates, which he then allowed to go into foreclosure without ever making a payment. One of the homes Ramirez purchased was originally bought by ex-Realtor Carl Cole and his wife Rebecca for $361,500 in September 2004. The Coles sold the home to Crisp and Cole Real Estate within a few months, then to Crisp and Cole agent Justin Eddleman, who re-sold it to Ramirez for $949,000 in December 2006.

As should be obvious, the buy-and-flip schemes that Ramirez and others accused in real estate fraud and mortgage fraud were made possible by questionable property value appraisals.

Although only Augustine Ramirez’ name appears on loan documents, it is alleged his daughter was present at the time the loan documents were submitted and they both received the proceeds.

Read the full article in KGET TV 17, Bakersfield Now and the Bakersfield Californian.

Despite evidence to the contrary, appraiser Kirksey J. “Mark” Newton Jr. will not lose his appraiser’s license as the result of complaints against him to the California Office of Real Estate Appraisers (OREA).

Newton had been an appraiser for the now-defunct Crisp and Cole real estate brokerage in Bakersfield and their mortgage brokerage business, Tower Lending. Crisp and Cole is still under federal investigation for possible mortgage fraud, and both David Crisp and Carl Cole had their real estate licenses revoked by the California Department of Real Estate (DRE) in 2008.

Appraisers Gary Crabtree and his son-in-law James Henderson had filed complaints against Newton with OREA, citing multiple instances of appraisals in which Newton had ignored close comparable sales in favor of ones farther away from the subject property, allegedly to be able to manipulate the valuations. The two whistleblowing appraisers indicated disappointment that Administrative Law Judge Samuel Reyes allowed Newton to keep his license even though Real indicated there were “multiple violations of USPAP (Uniform Standards for Professional Appraisal Practice) rules and requirements, including repeated violation of some of the provisions.”

Per Crabtree: “The judge ruled there were multiple violations … including competency, ethics and multiple violations of standards, and in spite of the fact that the respondent has been appraising for over 16 years,” he must learn the “very basics” of real estate appraisal”.

Anyone new to this story can read more on the California Real Estate Fraud Report by searching for “Crisp” or “Cole” in the search box.

Read the full article in the Bakersfield Californian.

Two men operating a real estate fraud scam together may have lost everything with one being charged with murdering the other.

Reginald Robinson is accused of murdering his business partner, mortgage lender Kasmir Billon, in order to avoid having to split the spoils of their combined real estate fraud and mortgage fraud. Prosecutors allege that Billon and Robinson schemed to over-appraise townhouses that would be sold to straw buyers using loans written by Kasmir Billon. Billon was found shot to death, a bullet in his heart, in his BMW 745 in April 2008.

Read the full article in the Silicon Valley Mercury News.

Kyle Grasso, a central figure in the Beverly Hills real estate fraud and mortgage fraud conspiracy that captured headlines and temporarily resulted in his enrichment at the expense of Westside property owners as well as contributing to the fall of Lehman Brothers Bank, received a sentence of only a year and a day in jail. Grasso was also ordered to repay a portion of the $13 million restitution that was determined to be the losses for the crimes he and his co-conspirators committed. Grasso was convicted of conspiracy, bank fraud, loan fraud and money laundering.

U.S. District Judge Dean D. Pregerson imposed the sentence. Inexplicable to me is how Judge Pregerson could refer to the sentencing as “difficult” because “Mr. Grasso is fundamentally a decent person. Sometimes people make stupid decisions.” Yes, Judge, but fundamentally decent persons don’t conspire to steal $13 million. It is only logical to assume that Grasso and his mortgage fraud gang would have stolen more if they hadn’t gotten caught.

No wonder there is so much real estate fraud and mortgage fraud: judges feel badly about sentencing criminals but not for the havoc their crimes wreaked on the local real estate market.

** Now for a truly macabre twist: Syd Leibovitch, owner of Los Angeles-based Rodeo Realty, sent out an announcement to Realtors two days ago that he has hired Joseph Babajian, the former partner and real estate agent who was also charged in the Beverly Hills mortgage fraud but was the only one who was acquitted of the approximately dozen charged. Why anyone would want to brag about hiring Babajian or even think it is a good idea has many of us who have remained scandal-free scratching our heads.

Read the full article on CBS News.

Sentencing is scheduled next week for former real estate agent Kyle Grasso, who was convicted for his role in a massive multi-million dollar fraud, much of which has been documented in earlier postings on the California Real Estate Fraud Report.

Grasso was convicted of criminal conspiracy, bank fraud, multiple counts of loan fraud and money laundering. Inexplicable, the U.S. District Attorney’s Office in Los Angeles is only recommending three years in prison, according, to its spokesman Thom Mrozek.

One of Lyle Grasso’s partners in crime was former appraiser Lila Rizk, who recently received a 3 year sentence.

Read the full article in the Beverly Hills Courier.