California Real Estate Fraud Report

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Archive for the 'Hard Money Loan Fraud' Category

Attorney in Kelly Gearhart / Jay Miller Civil Trial Accuses Escrow Companies

October 4th, 2013 at 11:46am

David Noonan, an attorney for eight of the investors who lost everything by putting their faith and savings into builder Kelly Gearhart and lender Jay Miller argued last week in court that the three escrow companies were essential to the men’s real estate investment fraud scheme.

In referring to Cuesta Title, Stewart Title and Stewart Title Guaranty, Noonan said, “They are joined at the hip. They were all mutually interested in maximizing their returns.”

Gerard Kelly, the attorney representing Stewart Title of California, said his clients did nothing except to close escrows as they always had done and that “There wasn’t a single trace of a paper trail to suggest any misconduct in this case.”

Mack Staton, Cuesta’s attorney, pointed the finger of blame to Gearhart and Miller as being the sole individuals who committed the fraud. Gearhart and Miller have declared bankruptcy and are neither parties nor witnesses to this $3.9 million trial.

Jay Miller, the former principal of Hurst Financial, has been convicted of fraud. Kelly Gearhart has pleaded not guilty to the federal fraud charges against him and has not yet been tried.

Read the original article in the San Luis Obispo Tribune.  There are also numerous articles about Kelly Gearhart, Jay Miller and Hurst Financial that can be found by searching the California Real Estate Fraud Report.

President of Paso Robles Lending Company Sentenced for Securities Fraud

September 25th, 2013 at 8:09am

Candy Wells, the former president of Heritage Lending in Paso Robles, has been sentenced  to five years in state prison.

Last August, Wells pleaded no contest to five felony counts of securities fraud for soliciting investors and selling hard money loans for real estate projects (real estate investment fraud, hard money fraud). Her husband, Ronald Wells, received an already-served sentence of 88 days and five years of felony probation after pleading no contest to being an accessory after the fact to the securities fraud and also embezzlement.

The losses to victims totaled over $1.3 million. The restitution hearing is set for December.

You can read the history and background to this prosecution by going to this link on the San Luis Obispo County District Attorney’s Office website.

Former President of Heritage Lending Pleads

August 29th, 2013 at 7:35pm

Candy Wells, the former president of Paso Robles-based Heritage Lending, pleading no contest this week to five felony counts of securities fraud. She could receive five years in prison when she is sentenced.

Heritage Lending was a hard money lender for real estate projects. Wells and her husband, Ronald Wells, 63, closed the business in October 2009. Shortly thereafter, the California Department of Corporations and the San Luis Obispo District Attorney’s Office investigated their operation, ultimately determining that Ms. Wells’ investors lost $1.3 million, which she has been ordered to return.

Ronald Wells previously pleaded no contest to a felony charge of being an accessory after the fact and will likely be sentenced to five years of felony probation and three months in San Luis Obispo County Jail.

Read the original article in The Tribune.

Woman Who Co-Owned Heritage Lending Goes on Trial Aug. 27

August 8th, 2013 at 12:28pm

Candy Lee Wells, 59, the former co-owner of Paso Robles-based Heritage Lending, has been charged with six felonies in what investigators say is a hard money loan fraud case.

Her husband Ronald Wells, 63,  pleaded no contest this past June to being an accessory after the fact to charges of securities fraud and embezzlement but his sentencing has been postponed.

Candy Lee Wells and Ronald Wells were investigated by the Department of Corporations

Read the original article in the San Luis Obispo Tribune.

SLO Judge Denies Motion to Dismiss Lawsuit against Cuesta Title, Stewart Title

July 16th, 2013 at 2:37pm

It’s been a long time coming but the investors who sued Cuesta Title,  Stewart Title  and Heritage Oaks Bank for their participation in the scheme perpetrated by Hurst Financial Corp., its owner James Hurst Miller, and real estate developer Kelly Gearhart, are finally going to trial July 29.

The stakes are huge: the 500 investors are trying to recover about $80 million they say Kelly Gearhart and James Miller solicited from them to develop 25 real estate projects between 2004 and 2008, none of which came to fruition.

San Luis Obispo Judge Charles Crandall, who denied motions to dismiss by all three defendant companies, noted: “The court repeats what it said in denying earlier motions for summary judgment: A serious fraud has plainly been perpetrated on a wide group of investors, which is reflected in the indictment and/or conviction of several key players.”

The investors allege that employees at Stewart Title and Cuesta Title helped facilitate wrongdoing by Hurst Financial, Gearhart and Miller by “misdirecting funds out of escrow that were specifically loaned for real estate construction, moving forward with questionable escrows containing contradictory instructions and eliminating valid liens through doubtful business practices,” this according to documents. Heritage Oaks Bank is part of the civil suit because the investors allege the bank also was a participant in the fraud because it was “fully aware of, and assisted in, the fraudulent re-conveyances of the deeds of trust by Hurst.”

James Miller has already pleaded guilty to four counts of money laundering and fraud. For his role, Gearhart has been indicted on 16 counts of fraud and money laundering.

Read the original articles in the San Luis Obispo Tribune and Cal Coast News.  You can also search the California Real Estate Fraud Report to read the many previous postings about this case.

Paso Robles Lender Pleads No Contest in Loan Fraud Prosecution

November 21st, 2012 at 1:21pm

The San Luis Obispo County District Attorney’s Office announced that on November 6, Linda Ann Kennedy, who was president of 21st Century Financial Resources, Inc., pleaded no contest in a hard money loan fraud case.

Kennedy, 49, was originally charged with four felony counts and 10 special allegations related to fraudulent practices involving hard money loans and sale of securities. The Honorable Judge Barry T. LaBarbera accepted her plea, which has the effect in criminal cases as a guilty plea. The losses to her investors/victims occurred between 2006-2007 and totaled over $1.3 million.

Judge Barry LaBarbera will sentence Kennedy on December 3, which will likely result in a prison stretch for five years. In the meantime, her assets have been frozen.

Read the press release on this prosecution at the SLO D.A.’s website.

JSW Financial Defendant Sentenced to Prison for Real Estate Investment Fraud

October 19th, 2012 at 11:09am

Edward G. Locker, 37, one of the defendants in the JSW Financial Inc. real estate fraud prosecution, was sentenced to 30 months in prison for his role in defrauding investors.

Co-defendants Richard F. Tipton, 62, was sentenced last month to 18 months in prison and James W. Ward, the principal defendant, got 5 years.

David Lin, 44, the only person charged who went to trial, was found guilty on 17 counts by a jury and sentenced to 28 months in prison.

Mountain View-based JSW Financial (formerly known as Jim Ward & Associates Inc. (JWA)) was a hard money lender that solicited money from people to purchase fractional interests in loans they made to borrowers to build residential homes. Investors were also given the “opportunity” to invest in the Blue Chip Realty Fund LLC (Blue Chip) and Shoreline Investment Fund LLC (Shoreline).

All the defendants had been charged with 18 counts alleging conspiracy to commit mail and wire fraud, mail fraud, and wire fraud, in violation of 18 U.S.C. §§ 1349, 1341, and 1343. For the three that had entered guilty please, they admitted that their representations to investors that JWA and JSW generated claiming that Blue Chip and Shoreline wrote and invested in loans that were secured by deeds of trust on real property were completely false.

 Read the press release on the FBI.gov.

Redding Man Pleads Guilty to Real Estate Investment Fraud

September 6th, 2012 at 9:54pm

Robert Rosenau, a Redding-area man who ran  Rosenau Investments Inc., pleaded guilty in Sacramento federal court  to one count of mail fraud.

Rosenau Investments Inc., was a hard money lender that made short-term loans for the purpose of rehabbing residential real estate. It pooled money from its investors using the properties as collateral and told the investors that it had a first-position lien on the properties. According to prosecutors, Rosenau Investments did not always have liens on the properties and in some cases was soliciting money from the investors on properties it had already foreclosed on due to the borrower failing to make loan obligations (hard money loan fraud). One of the loans was even for a property Robert Rosenau owned through another company and which was highly over-leveraged. None of these facts was disclosed to the investors (real estate investment fraud).

U.S. District Judge William B. Shubb will be sentencing Robert Rosenau in December.

Read the original article in the Sacramento Bee.

San Jose Woman Arrested While Out on Bond for New Title Fraud, Forgery Charges

September 6th, 2012 at 9:42pm

In a novel and very creative form of real estate fraud, a woman out on bail for felony charges who was wearing an electronic monitoring anklet was arrested a second time on charges of elder theft, forgery of deed documents, recording false instruments and grand theft.

Mai Vu, 53, was arraigned today after a Campbell police investigator traced her following a report by an elderly couple that somebody had forged real estate documents (probably a grant deed) that transferred title out of their names (title fraud). In the meantime, investigators with a different agency – the Santa Clara County District Attorney’s Office - found an elderly Milpitas couple had also had their property transferred to Vu. She defrauded an investor out of $250,000 (loan fraud) when she used the Milpitas home as collateral in order to secure the loan, then transferred title back to the lawful owners (title fraud).

Mai Vu’s first run-in with the law occurred in August 2011, when she was charged with defrauding four victims and had her bail set at $10 million.

Investigators may be reached at 408-808-3787.

Read the original article in the Mercury News.

President of 21st Century Financial Resources in Paso Robles Charged

August 31st, 2012 at 10:55am

Linda Kennedy, 49, of Paso Robles woman, has been charged with four felonies in connection with an alleged real estate investment fraud that involved hard money loans in the amount of $1.3 million. She has pleaded not guilty.

Kennedy was arrested this past July. She was president of 21st Century Financial Resources Inc., which pooled investors’ monies into securites collateralized by real estate deeds. Her firm has been under investigation by state agencies since 2005, when an audit by the California Department of Real Estate found accounting discrepancies.

Linda Kennedy’s real estate broker’s license was revoked by the DRE in 2006.

Read the original article in the San Luis Obispo Tribune.

© Copyright 2007-2014 Monique Bryher

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

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