California Real Estate Fraud Report

The FBI has released a comprehensive report detailing the state of mortgage fraud in the country. According to their research, the states most affected by mortgage fraud and other real estate crimes are the same states where housing prices escalated rapidly during the mid-2000s: California, Florida, Michigan, Nevada, Arizona, Texas, New York, Illinois, Georgia and New Jersey.

The most prevalent mortgage fraud schemes reported by law enforcement agencies and private industry during fiscal year 2010 included loan fraud in the origination process, mortgage rescue fraud, real estate investment fraud, equity skimming, short sale fraud, illegal property flipping, title fraud, escrow fraud (incl. settlement), commercial loan fraud, builder bailout schemes, loan modification fraud and reverse mortgage fraud.

The FBI notes that short sale fraud has become so prevalent that organized crime committed by Asian, Armenian, Balkan, Eurasian, Russian and La Costra Nostra groups has infiltrated lending institutions in order to have access to financial information, mortgage origination software, notary seals and licensure information.

In other words, all forms of real estate fraud are alive and well and it is being committed by both licensed real estate professionals and unlicensed individuals and criminal organizations. Law enforcement is bailing water out of a ship that needs enormous reinforcements just to stay afloate.

This is an excellent report with a lot of detail and is well-worth reading.

Click here to read the report on the FBI’s website. There is also an excellent synopsis on Inman News.

William E. Baker, owner of Baker & Baker Construction, has pleaded guilty in federal court to one count of mail fraud for his part in a multimillion dollar scheme to defraud banks (loan fraud, mortgage fraud).

Baker, 65, confessed to conspiring with Garret Griffith Gililland III, 30 to inflate the prices of homes he built (appraisal fraud) by, among other things, lying about improvements. After escrow closed, he would rebate some of the profit from the fraud to companies owned by Gililland.

Garret Gililland has already pleaded guilty in this complex real estate fraud case. You can read about him in earlier articles in the California Real Estate Fraud Report by entering his name in the search box.

Read the original article in the Sacramento Bee and the Chico Enterprise Record.

Brothers Henrik Sardariani, 43, and Hamlet Sardariani, 41,  and Wanda Kenney, 65, also known as Lavana Hamer, have pleaded not guilty to multiple counts of wire fraud, identity theft, conspiracy and unlawful monetary transactions in connection with an alleged $6 million loan fraud.

The Sardarianis are accused of creating fraudulent deeds of trusts to properties they did not own, along with forged corporate and financial documents, according to the federal indictment. They did this in order to show equity in the properties so that they could obtain large loans from the lenders. Wanda Kenney and Axcess Escrow are accused of processing the paperwork (escrow fraud). The stamps of the notaries public were phony (notary fraud).

Once the monies were received from the banks, at least several million was allegedly transferred to an account in Hong Kong by Henrik Sardariani.

U.S. District Judge Jacqueline H. Nguyen will hear the case on September 20.

Read the original article in the Los Angeles Daily News and the Beverly Hills Courier.

Six residents of Los Angeles County have been charged in a $4 million mortgage fraud scam. The accused include two now-former employees of banks, a mortgage broker, a now-former escrow officer and a loan officer. In total, the lenders lost approximately $4 million due to the mortgage fraud.

Anthony Lewis, 38, of the San Fernando Valley, is alleged to have been in charge of finding homes for sale and submitting false loan applications (loan fraud) on behalf of straw buyers.

Lewis is alleged to have submitted the phony loan applications to Deon Jackson, 36, a mortgage broker from Gardena, and Jennifer Le, 29, a loan processor from the South Bay. Jackson and Le in turn are alleged to have reviewed the loan applications to make sure they would pass muster and then submitted them to Matthew Balsz, a 31-year-old former U.S. Bank employee and 34-year-old Freddy Lentz, a former Bank of America employee.

Balsz and Lentz have been charged with taking bribes.

Once the loans were underwritten, the loan money was wired to Diamond Clear Escrow in Granada Hills, where defendant Maria Arriaza disbursed the funds according to Lewis’ instructions after allegedly constructing false HUD-1 settlement statements (escrow fraud).

Read more in the Patch, the Beverly Hills Courier and the press release by the US Attorney’s Office.  

Sparks, 50, admitted he forged bank documents with phony escrow companies (escrow fraud) and made up progress reports that showed the victims’ investments were profitable.

The California Department of Real Estate’s website shows that David Sparks’ real estate license is still valid.

Read the original article in the Orange County Register / OC Register.

Two licensed real estate agents have been arrested and charged with six counts of grand theft, including allegations of fraud and embezzlement, according to the Los Angeles County District Attorney’s Office. They are accused of stealing up to $1 million from people wanting to purchase homes.

Leroy M. Sennette, 80, of Granada Hills, a licensed broker, and Neelam “Nancy” Bhatia, 50, of Porter Ranch, a licensed real estate agent and owner of Click and List Realty Inc. are alleged to have taken the victims’ money for their own use that should have been deposited into escrow or other trust accounts.

Bhatia also owned Home Club International, Inc. in Granada Hills, with her husband.

Leroy Sennette’s real estate broker license has been revoked, as has the real estate license of Neelam Bhatia.

Read the original article in the Contra Costa Times.

A real estate broker who was formerly a member of the Irvine Planning Commission is being sued by a married couple, a high school friend and a father and son who say he solicited money from them for real estate investments he never made.

David R. Sparks, 50, is a long-time broker and owns Irvine-based firm Sparks Realty & Investment Inc. The couple, Marc Vaccaro and Astrid Vanzon, say Sparks flew out to Wisconsin to meet them and “talked about his religious faith, and shared values in a Christian tradition, which added to (their) belief in defendant’s trustworthiness,” according to their federal lawsuit, which accuses Sparks of  forging bank and government documents and using nonexistent escrow companies to commit fraud. They are claiming $1.6 million in damages.

Robert Edwin Anslow of Santa Ana is the now-former friend who is suing David Sparks. Gary Schultz and his father Gerhard Schultz have also filed suit against Sparks. All the parties claim that Sparks solicited money from them for real estate investments that were not made (real estate investment fraud).

Here is David Spark’s website for Sparks Realty & Investments, Inc.

Note: the California Department of Real Estate (DRE) does not show any actions taken against David Spark’s real estate license.

Read the original article in the OCRegister / Orange County Register.

A Fresno attorney, his wife and a third person have been convicted in a scheme that covered multiple areas of real estate fraud: title fraud, escrow fraud and use of straw buyers to commit mortgage fraud.

In a joint announcement, U.S. Attorney José Angel Moreno, FBI Special Agent in Charge Richard C. Powers and Internal Revenue Service-Criminal Investigations Special Agent in Charge Rodney E. Clarke, said that a jury in U.S. District Judge Sim Lake’s Courtroom found Vincent Wallace Aldridge, Tori Elyse Aldridge and Gilbert Barry Isgar guilty of multiple charges of wire fraud and money laundering.

Vincent Aldridge is a former fee attorney for First Southwestern Title Company and attorney for Aldridge and Associates. Tori Elyse Aldridge worked for First Southwestern Title Company and Gilbert Barry Isgar, a co-owner of Waterford Homes.

The sophisticated real estate fraud began with Isgar inflating the prices of the homes he was selling and Vincent Aldridge recruiting straw buyers for a so-called property investments. He submitted false loan applications to lenders and promised $10,000 to the straw buyers for the use of their credit after escrow closed on the homes. Both Aldridges controlled First Southwestern Title, which they used to fabricate additional attorney’s fee and contractor work (on new homes!) as part of an agreement between themselves and Gilbert Isgar. They then laundered the money to Aldridge’s law firm. None of the illegal proceeds were reported on the HUD Settlement Statements, so lenders were unaware of them.

Read the full article in Fort Bend Now.