California Real Estate Fraud Report

Two con artists who targeted Spanish-speaking and Southeast Asian homeowners in foreclosure are being arraigned today for felony fraud and theft at their Fresno-area business.

Angeline Lisa Lizarrago, 68, of Fremont and Michael Douglas Young, 67, of Los Gatos, the respective owner and general manager of Avemos Financial Group, are accused by California Attorney General Edmund G. Brown’s office of charging upfront fees to distressed homeowners in return from stopping lenders from foreclosing on their homes.  The waiting room of Avemos was adorned with figurines of the Virgin Mary, apparently used as a prop to convince the homeowners of Lizarrago’s and Young’s sincerity.

Among the victims of Lizarrago and Young were an 89-year-old man and his wife, who lost $25,000 to the pair after they promised to find them a home in Fremont but failed to do so and did not return their money.

wanted to move away from Stockton, that she owned 51 properties, many of which had been foreclosed upon, and she could find them a home in Fremont. She asked for an up-front fee, which she promised to return with interest once the purchase was made. In a series of payments, the couple gave Lizarrago $25,000. She never found them a home, nor returned their money.

The case was investigated and prosecuted jointly by the Attorney General and the Alameda County District Attorney. They were assisted in the investigation by the California Department of Real Estate and the Fremont Police Department.

Read the press release by the California Office of the Attorney General.

Juan Rangel, 46, the owner of Financial Plus Investments, has been indicted by a federal grand jury of targeting Latinos through Spanish language television, radio and print media to advertise his business that allegedly ripped off the victims for more than $20 million.

Rangel was convicted last year of bribing a bank manager at Bank of America (Dony Gonzalez), a crime for which he could face 95 years in federal prison once he is sentenced. The new charges could add up to 232 years in prison if he is convicted. Rangel is accused of using his investors’ monies to purchase a Lamborghini, a limousine, cocaine and payments his $3 million home in a Ponzi scheme. With some of his victims, Rangel is alleged to have taken title to their homes in foreclosures, removing whatever equity existed and reselling them to straw buyers using fraudulent loan documents.

Dear Feds: start prosecuting the straw buyers.

Read the full article in the Los Angeles Times and the Downey Patriot.

In a case that allegedly includes victims in four states as well as overseas, two men have been charged with stealing $200 million in a real estate fraud that targeted Orthodox Jews.

Eliyahu Weinstein of New Jersey and Vladimir Siforov of New York represented themselves as real estate investors. Their angle was to seek out victims in various Orthodox Jewish communities whose customs and social structure were familiar to Weinstein and Siforov. New Jersey, New York, Florida and California were the U.S. states in which the victims lived. Instead of investing their money, Weinstein used it to purchase  art, jewelry and Judaica. According to the prosecutors from the U.S. Attorney’s office in Newark, Weinstein’s collection includes manuscripts and antique Judaica items valued at $6.2 million; a jewelry and clock collection that cost $7.6 million; and jewelry and watches worth $6.2 million.

Read the full article in the Wall Street Journal.

Milton Retana, 45, a subject of several previous articles in the California Real Estate Fraud Report, is facing 27 years in prison. That’s what federal prosecutors are probably going to ask a judge to impose on Retana, who ripped off more than 2,000 investors out of more than $62 million in a real estate fraud crime spree.

Retana targeted fellow Latinos in a case that could be described as ethnic fraud or affinity fraud, which occurs when the perpetrator seeks victims of a similar demographic group. He found his victims by advertising in Spanish-language publications and by holding seminars. In the end, Retana did little more than operate a Ponzi scheme, paying early investors using money he raised from later ones.

According to Thom Mrozek, a spokesman for the U.S. Attorney’s Office in Los Angeles, Retana operated a Ponzi scheme using Best Diamond Funding, his own firm, to promise investors unbelievable returns of up to 84 percent per year. Many took out second mortgages so that they could buy in, according to prosecutors.

Retana’s wife owned a religious bookstore called Libreria del Exito Mundo, which is located next door to Best Diamond Funding. When postal inspectors and FBI agents raided Best Diamond Funding and Libreria del Exito Mundo, they found almost $4 million in cash in the two buildings.

*** Note: after this writing, Milton Retana was sentenced to 25 years in prison.

Read the full article in the Daily Breeze and Businessweek.

The Securities and Exchange Commission (SEC) has filed a complaint in federal court in Los Angeles charges that Diversity Capital, its Mexican affiliate Diversity Capital Bancorp de Mexico, Strong Capital Investments of Chula Vista and San Diego-based The Optimus Fund scammed churchgoing Latinos in Southern California counties out of more than $14 million in what was nothing more than a Ponzi scheme.

The SEC complaint in Los Angeles federal court alleges that none of the three men charged with securities fraud registered the securities they were selling, and none had registered themselves with the SEC as required.

Diversity Capital Investments is a Chula Vista firm that pitched monthly returns of 4 to 8.25 percent with low risk. Why did people fall for this?

The chief prosecutor, SEC attorney David van Havermaat, refers to these kind of Investment frauds as affinity scams because people of a certain background are targeted based on cultural, language or faith ties are commonly victims. [Note: another phrase for affinity scams is affinity fraud.] Says Van Havermaat,  “You’ve got someone who is trusted because they share some common characteristics with the victim, be it religion or ethnicity. Second, because of that trust, when the situation goes south, the victim is more likely to work things out with the ‘fraudster’ rather than go to the authorities.”

The victims in this sordid tale invested their life’s savings, insurance proceeds or in the case of one person, her real estate commission. As a result of the Ponzi scheme, many lost their homes and everything they owned.

Read the full article in the San Diego Tribune.

The Monterey County District Attorney‘s Office has won a civil judgment of $315,000 against the corporate officers and employees of Ed Veronick Mortgage Loans for illegal business dealings and conspiracy. The investigation was conducted by the D.A.’s Real Estate Fraud Unit for activities that occurred between June 2004 and June 2007.

Some of the employees lost their real estate licenses. Another employee, Ronnie Esparza, who is unlicensed, received money from business that was marketed to Latino residents in the firm’s Salinas office, and was found by the judge to have committed fraud.

Read the full article in the Californian.

Attorneys with the Asian Pacific American Legal Center are accusing a Los Angeles law firm of defrauding several dozen Korean immigrants by promising to help them save their homes from foreclosure.

The Center has filed a lawsuit against Trinity Law Associates, Inc. and attorney Timothy D. Thurman. The complaint alleges that Thurman used Korean-speaking real estate agents to find homeowners in distress, after which Thurman and his associates charged retainers in the $7,000 range for services that were not rendered, according to the legal complaint. The Center’s attorney, Yungsuhn Park, said that most of the victims did not speak well and counted on the assistance of Trinity Law Associates to help them save their homes.

Read the full article in the Los Angeles Times.