California Real Estate Fraud Report

Mark Alan Helsing, an Orange County-based hard money lender, has been sentenced to 15 years in state prison and three years of probation. Helsing, 53,  confessed earlier to ripping of $6.9 million from investors by operating a combined Ponzi scheme and real estate fraud scheme.

Helsing operated multiple companies: Sea View Investments, HLHS Financial Services, Inc., Foothill Realty, and Sea View Mortgage. He took investor money intended for use as hard money loans and embezzled most of the funds, using just enough to make interest payment to the investors, some of whom were his friends.

According to the OC Weekly, Helsing pleaded guilty to “55 felony counts of grand theft, seven felony counts of filing false recorded documents, six felony counts of elder financial exploitation, and sentencing enhancements for white collar crime over $500,000 and excessive taking over $1 million and $1.3 million.” He will also have to pay restitution to his victims.

A Tustin real estate broker who specialized in hard money lending has been convicted in by prosecutors in the Orange County District Attorney’s office of over four dozen counts of grand theft, filing false recorded documents and other felonies.

Mark Alan Helsing, 53, pleaded guilty to the above charges. Helsing operated several hard money businesses, which lend money for short terms at higher interest rates than the banks. Borrowers typically either need the funds for a “bridge loan” for construction or have bad credit. The victims were investors, whose money should have been used to pay off earlier investors instead of being used to make the loans, which indicates a Ponzi scheme, real estate investment fraud and hard money fraud.

The names of Helsing’s companies were Sea View Investments, HLHS Financial Services, Inc., Foothill Realty, and Sea View Mortgage.

Read the original article in the Los Angeles Times and OC Weekly.

James Hurst Miller, 63, president of defunct hard money lender Hurst Financial Inc., has been charged by the U.S. attorney in Los Angeles with federal fraud and money laundering.

The allegations are with respect to several projects Hurst and developer Kelly Gearhart  proposed to build, into a large golf course. The 1,200 Central Coast people who put money into the project in what prosecutors claim was a $100 million real estate investment fraud. Specifically, Hurst is facing four counts of wire fraud, mail fraud, money laundering, making a false statement to a bank and assisting Kelly Gearhart in fraudulently obtaining funding for his construction project. Prosecutors allege that the investment money was diverted to pay for prior loans his business made (hard money loan fraud).

Miller used Cuesta Title, also no longer in business, to clear title on some of the projects by stating falsely that the loans had been repaid (title fraud). He would then take out subsequent loans using his investors’ money

The projects for which Miller solicited investors were in the Beacon Road and Vista Del Hombre real estate development projects in Paso Robles and the Salinas River real estate development project in Templeton.

Many of James Miller’s investors, including elderly investors (elder financial fraud) have lost their life’s savings and homes. One is a 68 year old Cambria woman who suffers from multiple sclerosis and now lives in an assisted care facility because she was unable to keep her home because of her investments with Miller.

Read the full article in the CalCoastNews.

Scott Stober, a Nevada County mortgage broker whose California real estate broker’s license was revoked by the DRE in 2010, is now a subject in two prosecutions involving hard money loans.

Stober procured investors Richard and Minta Cramer for Robert St. Germain’s Granite Hill Court project. A civil suit by the Cramers against St. Germain and Stober alleges that Stober knew that the project was underfunded and that contractors and subcontractors were not paid. In addition, the Nevada County District Attorney’s Office has refiled a previous charge of misappropriating funds against Robert St. Germain.

In a second hard money loan case, Scott Stober was the broker who found investors for Leo Wheeler, a contractor who has been charged in a federal fraud case in Lake County. Investors for Wheeler’s residential development project claim $1.5 million in losses.

No criminal charges have been filed against Scott Stober to date.

Read the original article in the Union of Grass Valley.

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 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.

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.

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.