California Real Estate Fraud Report

This blog exists to educate law enforcement and consumers as to the kinds of real estate crimes being committed in the state of California. I assemble timely news reports of real estate fraud, mortgage fraud, loan fraud, appraisal fraud, affinity fraud, loan modification scams and elder financial fraud in order to spotlight real estate professionals and businesses who are being prosecuted for real estate crimes -Monique Bryher

Archive for the 'Hard Money Loan Fraud' Category

Guilty plea for Hermosa Beach lender who defrauded investors

May 25th, 2010 at 6:00pm

Mary Elaine Perkins, owner of Carlton Financial Enterprises, Inc., has pleaded guilty to mail fraud after brazenly defrauding 90 investors out of $7 million in a real estate investment fraud scheme that was bound to be detected by authorities.

Perkins’ fraud was that she promised investors returns of 12% - 15% by using their money to make hard money loans to homeowners, using their properties as collateral instead of the homeowners’ credit scores. Instead, Perkins foreclosed on the borrowers’ homes in some cases and either sold their property to a company she owned or to members of her family. Apparently some of the early investors were repaid with monies she obtained from later investors, classic Ponzi scheme tactics.

Read the full article in the Los Angeles Times (LA Times).

Thomas Hastert faces victims in restitution hearing

April 23rd, 2010 at 9:20am

Thomas Hastert used to be a mortgage broker and owner of Loan Sense. In 2009, Hastert pleaded no contest to 63 counts of embezzlement and illegally selling real estate securities.

Forty-five victims of Hastert, who brokered more than 270 hard money loans totalling $20 million, showed up to attend the restitution hearing in Nevada County Superior Court Judge Robert Tamietti’s courtroom. They had submitted more than $2 million in claims for their losses. The restitution hearing could amount to little since Hastert claims to be broke.

Hastert faces six to 15 years in prison when he is sentenced, per his plea agreement.

You can search the California Real Estate Fraud Report for more articles about Thomas Hastert.

Read the full article in The Union.

Indictments in $100 Million Hard Money Loan Fraud

September 18th, 2009 at 12:26am

A pair of Monterey businessmen have been indicted by a federal grand jury on charges of conspiracy to commit mail and wire fraud, mail fraud, wire fraud and securities fraud.

David Arthur Nilsen, 58, surrendered to authorities in San Jose, but Manoel Antonio Errico, 55,  is currently a fugitive. They are accused of defrauding up to 1,000 investors in loans secured by deeds of trust, as well as a fund that invested in those same loans.

The indictment further alleges that the men defrauded investors in fractional interests in loans secured by deeds of trusts, and in Cedar Funding Mortgage Fund, LLC, by making materially false statements, failing to disclose material facts, and creating a materially deceptive and misleading scheme, plan and artifice to defraud.

The scheme consisted of two parts: in part one, Nilsen and Errico created a false impression that Cedar Funding was safely placing investors’ funds secured real estate loans, which they claimed offered high returns and safety of principal.

In part two, as the borrowers began defaulting on their loans, Nilsen and Errico extended the maturity dates of the loans and continued to lend more of the investors’ funds. And like a Ponzi scheme, some of the interest used to pay existing investors came not from profits but from the funds of newer investors.

Read the Full Article in the Californian. This article is also reprinted in Examiner.com by the L.A. Fraud Examiner.

More Real Estate Fraud in San Luis Obispo County

July 31st, 2009 at 11:16am

In yet another civil lawsuit, builder Fred Machado and hard money lender Don Vaughn have been accused of conspiring to commit fraud with malice.

San Miguel resident Lorraine Cagliero’s lawsuit accuses Vaughn, a president of Country Financial, of soliciting a $375,000 high-interest loan from her in 2005, which was to be used to construct a home on a property in Paso Robles. Cagliero contends that Vaughn failed to disclose that he was the owner of the property, which he then sold to Machado, who had spent the loan of Cagliero’s money given him by Vaughn.

Many hard money lenders in the North County region have been ensnared in lawsuits involving various forms of fraud. Amonth are Hurst Financial (use the Search feature to find articles in the California Real Estate Fraud Report), Estate Financial, 21st Century and Real Property Lenders. They and Country Financial made money by writing high-risk, high-interest loans, servicing loans and also selling securities that were fractional shares in promissory notes that were collateralized by real property deeds of trusts. On a small investor level, this is equivalent to the bundling, reselling and monetizing of mortgages in the hundreds or thousands by mega-lenders such as Countrywide, Washington Mutual, aka WaMu, Bank of America, Deutsche Bank, etc., many of which are now “toxic assets” that the taxpayers will be paying off for the next several generations.

Read the Full Article in the San Luis Obispo Tribune by Melanie Cleveland.

Accusations of Title Fraud Cause Cuesta Title to Close Doors

January 2nd, 2009 at 12:48pm

Cuesta Title, a long-time real estate title insurer in San Luis Obispo County, has closed at least one of its branches - Pismo Beach - as a result of its involvement with several lenders in the County who have been shut down as a result of hard money loan fraud accusations. Cuesta is owned by Stewart Title Guaranty, based in Houston, TX.  Still unconfirmed is if Cuesta Title’s San Luis Obispo branch on Tank Farm Road will close too.

Civil lawsuits by jilted investors alleging negligence and fraud in connected to Hurst Financial and developer Kelly Gearhart, are mounting.

Read the Full Article in the San Luis Obispo County Tribune.

For more history, read earlier articles posted on The California Real Estate Fraud Report.

© Copyright 2007-2010 Monique Bryher

Legal Disclaimer.

The information and notices contained on The California Real Estate Fraud Report are intended to summarize recent developments in real estate fraud, mortgage 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.