July 31st, 2013 at 3:50pm
A long-time estate agent is in hot water with authorities for allegedly defrauding a couple out of $270,000 in a real estate fraud scheme.
Judy T. Gong, 53, was arrested and charged with two counts of grand theft by embezzlement, two counts of forgery, fraudulent filing of a tax return, failure to file a legitimate return, and perjury after a Lafayette couple filed a complaint with the Contra Costa District Attorney’s Office. After conducting their initial investigation the DA’s office contacted the state Franchise Tax Board, which initiated its own investigation.
Gong is accused of twice convincing the couple to take out a home equity line of credit (HELOC), from which she then allegedly siphoned the funds after forging their names on bank documents.
The Franchise Tax Board’s investigation found that Gong underreported her income by over $500,000 in 2008 and failed to report $418,000 of bank deposits in 2009.
Contra Costa District Attorney Mark A. Peterson was quoted in his office’s press release as saying, “This office will prosecute anyone who robs victims of their hard-earned money in a real estate fraud scheme. Swindlers and con-artists will not be tolerated and will continue to be prosecuted to the fullest extent of the law.”
Read the original article in the Mercury News.
July 29th, 2013 at 12:02pm
A three-judge panel of the U.S. 9th Circuit Court of Appeals in Pasadena has refused to overturn the convictions of a real estate appraiser for his role in a multimillion-dollar Westside of Los Angeles mortgage fraud ring.
Kyle Grasso was convicted in 2009 of multiple charges of bank fraud, conspiracy, money laundering and loan fraud in a case that prosecutors said cost lenders over $40 million from loans of over $142 million. Grasso’s sentence was one year in federal prison and five years of supervised release. He was also ordered to pay a share of $13 million in restitution.
Rejecting Grasso’s claim that the government presented insufficient evidence to prove money laundering, Judge Sandra S. Ikuta, writing the opinion for the federal appellate panel, said that “We conclude that the evidence (presented) at trial, taken in the light most favorable to the government, was adequate to enable a rational trier of fact to find the essential elements of each conviction.”
There are numerous articles in the California Real Estate Fraud Report regarding this fascinating true story of greed and corruption, which involved, real estate agents, developers, appraisers and loan processors. Use the search bar at the left of this blog to find and read those articles.
Read the original article in the Beverly Hills Courier. The BH Courier also has earlier articles on this topic.
July 29th, 2013 at 11:14am
A mortgage broker has been arrested and charged by the U.S. Attorney’s Office in San Diego for allegedly operating a scheme that defrauded lenders, including Fannie Mae and Freddie Mac.
Donald V. Totten, 56, now a resident of Oakland, operated Integrated Home Loans, Integrated Lending, Money World, Island Financial and Little Angels Living Trust.
According to prosecutors, between 2002 and 2007 Donald Totten allegedly received $2.2 million in loans by falsifying the loan applicatons of a straw buyer, including inflating income and assets. He used the same straw buyer to purchase four homes simultaneously, so that each lender was not aware that the buyer was purchasing multiple properties. After the escrows closed, he then allegedly had the straw buyer sign over the deeds into a trust that he controlled. All four properties eventually were foreclosed, causing losses to the lenders.
This case was investigated jointly by the FBI, Internal Revenue Service and Federal Housing Finance Agency / Office of Inspector General.
Read the original article in the Rancho Santa Fe Review.
July 29th, 2013 at 9:59am
A California man who operated what authorities said was a double-escrow fraud scheme has been sentenced to 5 1/2 years in federal prison after pleading guilty to commit wire fraud.
George Anderson, 55, of Copperopolis, California, admitted he sold his Henderson and Las Vegas properties to straw buyers and recruited a co-defendant Andrew Swan to buy the houses back in exchange for a kick-back.
U.S. Attorney Daniel Bogden said that loan applications to Anderson Financial Group and Swan’s firm Creative Capital Group contained deliberately false information in order to receive funding for the loans (mortgage fraud).
Swan, 38, pleaded guilty in January 2013 to wire fraud and conspiracy and was sentenced this June to 2 1/2 years in prison.
Anderson and Swan were ordered by U.S. District Judge Roger Hunt to provide resitution ot $3.5 million to the lenders they defrauded.
Read the original article in Businessweek.
July 25th, 2013 at 11:15am
Only two years old now, the Consumer Financial Protection Bureau (CFPB) is already very active in bank regulating. With Richard Cordray being confirmed on July 16 as its director, many expect CFPB to become more aggressive on behalf of consumers by keeping an eagle-eye on the practices of banks and mortgage-related businesses.
High on the CFPB’s list is to simplify the current mind-boggling mortgage disclosures home borrowers must sign and to plow through and implement more provisions in the Dodd-Frank Act.
According to Alan Kaplinsky, chief of the consumer financial services group at Ballard Spahr, “There’s a lot going on with the CFPB’s enforcement but about 95% of it has been behind the scenes. “Now with Cordray’s position being secure, I expect we will see a lot more enforcement activity.”
Long overdue is the Qualified Mortgage rule (QM) that shockingly requires that lenders actually analyze a borrower’s ability to pay their mortgages. When QM goes into effect, the compliant lenders will get safe harbor protection in exchange for meeting certain benchmark standards, including a maximum debt-to-income (DTI) ratio of 43% or less.
Regarding simplification of mortgage disclosures, real estate agents and their brokers should take particular note that the CFPB intends to consolidate redundancy between the Truth in Lending Act and the Real Estate Settlement Procedures (RESPA).
Read the full article in National Mortgage News.
July 12th, 2013 at 8:30am
Better late than never . . .
Since Freddie Mac added a new chapter to its Seller / Servicer Guide about two and a half years ago, reports from lender about potential mortgage fraud are up significantly.
Joan Ferenczy,Vice President, Financial Instrument Fraud Officer at Freddie Mac says that the new Chapter 7 of the Guide is entitled “Mortgage Fraud Detection, Prevention and Reporting.” Providing regular fraud reports to the agency is now a contractual obligation of the lenders. One of the requirements, which is a red flag for mortgage fraud, is reporting instances where the first payment was not made – a default from the start.
The hotline number to report mortgage fraud on a Freddie Mac-backed loan is 1-800-4FRAUD-8.
Read the original article on Executive Perspectives Blog.
June 14th, 2013 at 10:54am
Mortgage fraud risk increased slightly in the first quarter of 2013, according to the latest quarterly Mortgage Fraud Risk Report published by Interthinx.
Interthinx prepares its reports using an internal team of fraud experts who analyze more than 12 million loan applications.
California was the riskiest state in the nation, but essentially tied with Nevada and Florida. Its mortgage fraud risk index is 125. Additionally, California has four of the top 10 riskiest ZIP codes and five of the top 10 riskiest metropolitan statistical areas (MSAs)—including Santa Barbara-Santa Maria-Goleta.
Read the original article in DSNews.
June 11th, 2013 at 2:44pm
United States Attorney Benjamin B. Wagner announced that Eric Ray Hernandez, 37, and his wife Monica Marie Hernandez, 32, have pleaded guilty to conspiracy to commit mail fraud, wire fraud, and bank fraud.
According to court documents, between October 2005 and May 2007, the Bakersfield couple conspired with three other defendants to defraud lenders by submitting false and fraudulent loan applications to the lenders in order to obtain mortgages, ultimately causing losses of approximately $6,037,541. Eric Hernandez was employed at a mortgage brokerage during the period when the crimes occurred.
Both defendants face length prison terms when they are sentenced this fall – up to 30 years in prison, a $1 million fine, and five years of supervised release.
One of their co-defendants, Patricia King, has already pleaded guilty to three counts of mail fraud and been sentenced to three years and one month in prison. The remaining co-defendants Evelyn Sanchez and Darling Montalvo have pleaded not guilty and are awaiting their trials on August 13, 2013.
Read the original article in KERO-TV 23 and the Central Valley Business Times.
May 24th, 2013 at 11:18am
The sales manager for Discovery Sales, Inc. for the period of 2006-2009 has pleaded guilty in federal court in San Francisco today to paying bribes to a Bank of America loan officer for approving loans for unqualified home buyers.
According to United States Attorney Melinda Haag, Jason Sterlino, 34, was managed home sales for the Monte Vista Estates and Monte Vista Villas residential developments in Oakland. As part of his plea agreement, Sterlino confessed that he had an arrangement to pay kick-backs to a mortgage broker who facilitated loan referrals to the Bank of America loan officer, who received part of the kick-back money, as did Sterlino. Under the federal Real Estate Settlement Practices Act (RESPA), kick-backs and/or undisclosed referral fees are illegal – not that this doesn’t happen every day in real estate. Sterlino admitted that he personally received about $100,000 in cash as a result of this conspiracy, for which Bank of America funded approximately 20 loans.
Jason Sterlino was charged with one count of bank bribery in violation of 18 U.S.C. § 215(a) to which he pleaded guilty. He will be sentenced by Judge Jeffrey White in San Francisco on October 24, 2013, at which time his cooperation in the FBI’s ongoing investigation will be taken into consideration of the U.S. Sentencing Guidelines and the federal statute governing the imposition of a sentence, 18 U.S.C. § 3553.
Read the original article in LoanSafe.
May 24th, 2013 at 9:35am
Safieh Fard, 52, of Escondido, has an upcoming five year engagement in federal prison as a result of being convicted for conspiring with her family to commit bank fraud and tax fraud.
Fard, her sister Sedigheh Bahramian and her sons Mohsen Kikalaye and Ahmad Kikalaye began their elaborate and profitable mortgage fraud scheme starting in 1997, when they were given loans after overstating their income and assets to lenders (loan fraud, mortgage fraud). They leveraged the monies to buy homes in Newport Beach, which they at first sold back-and-forth to each other and then eventually to third-parties, pocketing almost $4 million in profits. They might not have been caught had they not wired money to and from their accounts and if they had reported and paid taxes on their gains.
The U.S. District judge in Los Angeles who sentenced Safieh Fard also ordered her to pay $549,000 to the IRS for unpaid taxes. No word if the California Franchise Tax Board feels it is owed taxes too.
The investigating agencies were the IRS and U.S. Department of Homeland Security. The case was prosecutd by the U.S. Attorney’s Office in Santa Ana.
Read the original article in the San Diego Union Tribune.
You can read an earlier article in the California Real Estate Fraud Report about Safieh Fard, Sedigheh Bahramian, Mohsen Kikalaye and Ahmad Kikalaye by clicking here.