California Real Estate Fraud Report

A woman out on bail when she committed new crimes has been sentenced to five years for operating a mortgage rescue scam, according to a press release by Attorney General Kamala D. Harris.

Angeline Lisa Lizarrago, 69, soon to be formerly from Fremont, was sentenced today to five years for a foreclosure scam in which numerous homeowners in the Bay Area and Central Valley were victimized by her illegal foreclosure prevention business, Avemos Financial Group. She had been charged with 23 counts of felony fraud and theft.

Michael Douglas Young, 68, the general manager of Avemos, has also been charged and will be tried in January 2012.

Lizarrago and Young had a unique marketing tactic that included placing shrines of the Virgin Mary in the lobby of their business. As with many foreclosure fraud schemes, theirs included requiring the payment of upfront fees, which is illegal in California.

The case against Lizarrago resulted from the combined efforts of the California Attorney General, Alameda County District Attorney Nancy E. O’Malley, the California Department of Real Estate (DRE) and the Fremont Police Department.

Read the press release for the California Attorney General.

The owner of a Newbury Park firm that promised to help property owners in foreclosure stay in their homes has been arrested and charged with 10 counts of mail fraud.

John Marcus Desenberg, 44, was arrested by the FBI after its investigation into the practices of his business Creative Lending Solutions, which focused on distressed homeowners in Merced and Placer Counties. Desenberg allegedly solicited these homeowners to sell their homes to “investors,” who would allow the homeowners to remain in their homes while the investors made the mortgage payments. After a year of purportedly rebuilding their credit, the homeowners would be allowed to purchase their homes.

In reality, Desenberg, according to the indictment, did not monitor either the payments by the investors or the credit of the homeowners and their homes fell into foreclosure (real estate fraud, foreclosure fraud).

Read the original article in the Central Valley Business Times.

The office of California Attorney General Kamala Harris has served subpoenas to Bank of America regarding the sale of mortgage-backed securities (MBS) to institutions done by Countrywide Financial, which BofA purchased in 2008.

California’s AG, which was in talks with the attorneys general of all 50 states to negotiate settlements with all the large banks (BofA, Wells Fargo, JP Morgan Chase, et. al.) with respect to the banks’ foreclosure practices, left those talks when Harris determined the settlement amounts were insufficient.

Harris’ pursuit of BofA could be costly to the banking giant: under California’s False Claims Act, defrauding the state via any of its institutional investors such as pension or other funds, could result in awards of three times the amount of the claim. If any employees of Bank of America step forward with solid evidence, they could be entitled to a percentage of those damages as a whistleblower.

Read the original article in the Los Angeles Times.

Two men have been arrested and charged with 45 counts related to an alleged foreclosure rescue scam which prosecutors say cost $17 million in losses.

Stephan Andrew Easterly and Emanuel Percival were arrested at the offices of Fidelity Group Realty in Fontana. Fidelity has operated under dozens of DBAs according to the DRE‘s website. According to Deputy District Attorney Michael Fermin, most of the victims were in foreclosure and paid between $3,500 and $7,000 (loan modification fraud) to get either get their loans paid off (??) or monthly payments reduced.

Easterly and Percival are accused of holding themselves out as “authorized” bank representatives and signing and filing documents indicating the mortgages were paid off (title fraud). In addition, prosecutors said that Easterly made up his own checks to show the homeowners the loans were paid off.

Read the original article in National Mortgage News.

Defaulting homeowners who thought they were out of options thought Stephen Easterly and Emanuel Percival were the answer to their dreams. Easterly,  who was employed by Fidelity Group Realty in Fontana, approached the homeowners in church and told them the banks had to prove they hadn’t done anything fraudulent with respect to the loans. He even paid up their back property taxes and other debts.

But Easterly and Percival were also charging the homeowners for their time. Charging upfront fees to help with loan modification or other mortgage assistance is illegal in California. They also gave the homeowners the impression that the banks had written down the principal, which would lower the homeowners’ monthly payments.

According to Lance Cantos lf San Bernardino County District Attorney’s Office, both Easterly and Percival are being held on bails of $1 million bail and $500,000 respectively.

Read the original article in KABC-TV Los Angeles.

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.

California Attorney General Kamala Harris announced today that her office has filed suit against three law firms, four attorneys and 14 businesses that had preyed on distressed borrowers trying to save their homes.

Now that California has cracked down on loan modification fraud by forbidding firms from charging upfront fees in exchange for helping borrowers, that type of real estate fraud is fading. According to Harris, the workaround scam is to get the victims to part with up to $10,000 in order to participate in “mass joinder” lawsuits against the banks.

Among the defendants are attorney Philip Kramer and his Calabasas-based law firm Kramer and Kaslow; Encino attorney Christopher Van Son; Paul Peterson and Costa Mesa based Mesa Law Group Corp; and Mitchell Stein and his law firm Mitchell J. Stein & Associates, based in Agoura Hills.

Kramer’s firm and has been placed into receivership. In addition, the California DOJ has seized the practices of the following non-attorney defendants:
Attorneys Processing Center, LLC; Data Management, LLC; Gary DiGirolamo; Bill Stephenson; Mitigation Professionals, LLC; Glen Reneau; Pate Marier & Associates, Inc.; James Pate; Ryan Marier; Home Retention Division; Michael Tapia; Lewis Marketing Corp.; Clarence Butt; and Thomas Phanco.

This is the first action taken by the Attorney General’s Mortgage Fraud Task Force to protect consumers.

Since this network of attorneys and businesses is alleged to have operated nationwide, other states have reports and investigations of their activities.  Read this report by the Washington State Department of Financial Institutions. The defendants have also been discussed in RipoffReport.com.

Read more about this in the California Attorney General’s press release and Reuters.

Two Bay Area men who were convicted of one count of foreclosure consultant fraud are going to jail for 90 days each. They have already paid restitution of $40,000 to the 14 victims they scammed.

Cary Jay Silberman, 53,  and Robert Francis Childs, 44, ran a tag-team loan modification scam. Childs ran seminars for real estate agents in Santa Clara County and Contra Costa County in order to receive referrals for homeowners in distress. He then referred them to Silberman, who operated the loan modification business.

Silberman, who resigned from the California State Bar in 1997, was also convicted of one count of practicing law without a license, as he represented that he was a licensed attorney.

Read the original article in the San Jose Mercury News.

If you’re a criminal engaged in loan modification fraud, don’t do it in Santa Clara County. The Santa Clara District Attorney’s Office will make you pay dearly for scamming people.

Amir Rashidifar, 28, and Mary Margaret Delvecchio, 30, have been convicted of two felony counts of Foreclosure Consultant Fraud. The pair were each sentenced to three years, eight months in prison and order to pay restitution of $312,450 to their 80 victims.

Rashidifar and Delvecchio operated Legal Support Services until complaints by former employees and victims were reported to and investigated by the San Jose Police Department. They were charging upfront fees of $3,100 to help people but providing no services. According to Civil Code Section 2945.4(g), they were practicing Foreclosure Consultant Fraud (loan modification fraud).

Read the press release by the Santa Clara County District Attorney’s Office.

In a turnabout that’s poetic justice, a Florida couple served foreclosure papers on Bank of America.

Maurenn Nyergers and her husband had not only never had a mortgage with Bank of America, they had paid cash for their house. But that didn’t stop the mega-giant from filing foreclosure against them. The couple hired attorney Todd Allen, took Bank of America to court – and won a judgment against it for legal fees.

Five months later, Bank of America had still made no effort to satisfy the court’s order. So Allen called sheriff’s deputies in North Carolina, where Bank of America is based, and instructed them to remove cash from the teller’s drawer, computers and file cabinets. An hour after the “foreclosure”, the branch manager appeared with a check for the judgment.

Sweet.

Read the original article on Digtriad.com