California Real Estate Fraud Report

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Archive for the 'Loan Fraud' Category

Owner of eLender Escrow Pleads Guilty to Running Ponzi Scheme

August 15th, 2013 at 5:22pm

An Orange County man who was accused by the U.S. Attorney’s Office of running an unlicensed escrow company that diverted loans to himself (escrow fraud) and to operating a Ponzi scheme has admitted his crimes and pleaded guilty.

Russell Samuel Biszantz stood before U.S. District Court Judge David O. Carter and along with the guilty plea, agreed to provide restitution to the victims in answer to the judge’s question.  Assistant United States Attorney Greg Staples said the Ponzi scheme caused losses of over $2.44 million from the victims and that Biszantz, the owner of eLender Escrow, Inc. of Lake Forest, had continued to operate his business after losing his license in 2008.

Sentencing for Russell Biszantz is set for December 2013.

Read the original article in the OCWeekly.

Inland Empire Man Discovers Acquaintance May Have Bought House in His Name

August 14th, 2013 at 3:20pm

An unnamed man is the victim of a “friend” who allegedly befriended him in 2007, offered to help him qualify for a home loan and then according to authorities used the victim’s information to buy a home for himself (loan fraud, real estate fraud).

Ruben Oscar Palagonia, a 67-year-old San Bernardino resident, has been arrested and charged with identity theft, forgery and recording false documents.

According to Investigator Ed Nyberg with the San Bernardino County District Attorney’s Office, the investigation by the Real Estate Fraud Unit began when the victim filed a real estate fraud complaint against Palagonia.

In a press release, Nyberg said, “About two years later the victim tried to purchase a home and discovered he already owned one. When the victim was advised of the location of the home, he went by the location and discovered that Palagonia was living in the residence.”

Read the original article in the Press Enterprise.

Ohio Man Indicted for Short Sale Fraud

August 5th, 2013 at 4:18pm

Donald P. Landers, 42, aka Dante Brickman, has been named in a 24-count indictment that was sealed by a Franklin County judge, then unsealed after Landers/Brickman was arrested on a warrant in Las Vegas.  The charges he is facing include engaging in a pattern of corrupt activity, one count of theft, 11 counts of money laundering and 11 counts of receiving stolen property.

According to the indictment, Donald Landers skillfully negotiated short sales with lenders of properties that were in foreclosure. He allegedly acquired those properties at below-market rates by telling the lenders they were in poor condition or were located in bad locations (short sale fraud).

Once he acquired the properties and put them in his business Great American LLC, Landers then recruited straw buyers to purchase the properties at inflated values by falsifying their incomes and assets (loan fraud, mortgage fraud). Franklin County prosecutor Ron O’Brien said the scheme included 11 Franklin County properties, including two that belonged to Landers himself. It was the inflated bank loans that funded the kickbacks to the straw buyers and the down-payments for the properties they purchased, with the difference going to Great American LLC.

My question: where were the bank appraisals that should have been ordered and reviewed before approving the short sales and before approving the loans to the straw buyers, each of which would probably have shown the sales were not legitimate. Were the banks asleep at the wheel (again), lazy, apathetic or ???

Read the original article in the Columbus Dispatch.

Rancho Mirage Man Charged in Complex Mortgage Fraud Scheme against Ally Bank

August 5th, 2013 at 11:57am

Steven Pitchersky, 64, the operator of Nationwide Mortgage Concepts, was indicted on August 2 with one count of wire in what prosecutors say was an effort to defraud Ally Financial (formerly GMAC) out of $5.3 million (loan fraud).

The indicted charges Pitchersky of misrepresenting the business of Nationwide Mortgage Concepts in order to get a $10 million warehouse line of credit from Ally, which he used for his personal gain. He told Ally that his firm already had a $10 million warehouse line of credit through MPL, a company Pitchersky had created, but no such line of credit existed.

A warehouse line of credit is used to provide mortgage lenders with  money they can they lend to home buyers.

In the indictment, U.S. Attorney Zane Memeger (U.S. District Court in Pennsylvania) stated that in reliance of the MPL credit line, Ally advanced Nationwide Mortgage Concepts approximately $5.3 million from December 2010 to about January 2011 in order to pay off 23 first mortgages for Nationwide’s customers. But instead of paying off those mortgages, the funds were used to pay off different mortgages.

There’s much more to this story. Read the original article in the Press Enterprise.

Heritage Oaks Bank Settles with Investors on Paso Robles Development

July 31st, 2013 at 5:26pm

Plaintiffs who claimed in a civil lawsuit that Heritage Oaks Bank, Stewart Title and Cuesta Title knew that they were involved in a fraudulent scheme operated by Hurst Financial Corp., its owner James Hurst Miller, and developer Kelly Gearhart have reached a settlement with Heritage Oaks Bank.

The case against the bank and the two title companies was set to be heard in San Luis Obispo Superior Court next week. James Neudecker, attorney for Heritage Oaks Bank, did not disclose the settlement terms. The 500 investors/plaintiffs claimed that the bank was an active participant in the fraud – a Ponzi scheme – because it was “fully aware of, and assisted in, the fraudulent re-conveyances of the deeds of trust by Hurst.” They further claimed that “Gearhart helped Miller solicit about $73 million from private investors for 25 separate real estate developments, all of which eventually failed,” according to the court documents.

Heritage Oaks had loaned Kelly Gearhart approximately $1.5 million to develop the Vista Del Hombre project in Paso Robles.

Both Gearhart and Miller were charged criminally. Kelly Gearhart has been indicted on 16 counts of fraud and money laundering. James Hurst Miller has already pleaded guilty to four counts of fraud and money laundering.

Read the original article in the San Luis Obispo Tribune

Eight Arrested in Ventura County Fraudulent Mortgage Brokerage

July 31st, 2013 at 4:52pm

The following is a joint press release from the U.S. Attorney for the Central District of California and the Ventura County District Attorney’s Office:

   Federal and local authorities this morning arrested eight individuals linked to a mortgage fraud scheme that filed loan applications on behalf of lower-income, primarily Spanish-speaking individuals, generating substantial loan fees and commissions and causing lending institutions to suffer millions of dollars in losses when homes went into foreclosure.
   This morning’s arrests are the result of a grand jury indictment that charges the eight defendants in a conspiracy to commit bank fraud and wire fraud. The investigation, which was started by the Ventura County District Attorney’s Office, determined that members of the scheme generated dozens of mortgage loans for unqualified borrowers. The indictment specifically outlines a series of allegedly fraudulent loans worth more than $11 million.
   The federal investigation that resulted in the indictment unsealed this morning was conducted by the Federal Bureau of Investigation; the Federal Housing Finance Agency, Office of Inspector General; the U.S. Department of Housing and Urban Development, Office of the Inspector General; and the United States Secret Service.
   The indictment details a scheme led by Camarillo resident Jose Garcia and run out of an Oxnard-based company called New Concepts Home Loans (NCHL), where members of the alleged conspiracy prepared mortgage applications that contained false information about borrowers’ income, employment and assets. As part of the scheme, according to the indictment, Jose Garcia’s wife and others obtained bogus “CPA letters” from tax preparers that falsely stated the mortgage applicants were engaged in a particular business.
   The defendants in these cases generated huge commissions and fees through the mortgage application process – typically at least $10,000 per mortgage.
   The victim lenders who suffered losses as a result of the alleged scheme include Washington Mutual Bank, Wells Fargo Bank, Countrywide Bank, IndyMac Bank, SunTrust Bank, World Savings Bank and JPMorgan Chase Bank.
   “Jose Garcia and his cohorts are alleged to have lured unsophisticated borrowers with promises of putting them into homes they clearly could not afford,” said United States Attorney André
Birotte Jr. “But this American dream quickly turned into a nightmare for these borrowers when they realized they could not afford their new homes. All the while, real estate professionals like
Jose Garcia reaped huge profits from the fraudulent loans that they brokered.”
   District Attorney Gregory D. Totten stated: “These arrests for serious federal crimes illustrate the tenacity of state and federal law enforcement to continue our years-long effort to
bring to justice those who perpetrated real estate fraud-based crimes against unsuspecting, often monolingual, victims in our communities.”
   FBI Assistant Director in Charge Bill L. Lewis commented: “Mr. Garcia allegedly directed his workforce, including unlicensed individuals acting as realtors, to peddle the dream
of home ownership in the poorest neighborhoods of Oxnard, where they easily found people eager to buy. This case and others were made based on the cooperative relationship among
federal and local investigators working as a team to combat mortgage fraud in Ventura County.”

   The indictment charges:
Jose Bautista Garcia, 46, of Camarillo, a real estate broker who in addition to NCHL owned Century 21 Premier Realty, who allegedly directed agents to go door-to-door and “cold call” unqualified borrowers in Ventura County;
Lucy Ann Garcia, Jose Garcia’s wife, 46, also of Camarillo, who co-owned NCHL;
Jose Fernando Murguia, 47, of Oxnard, a loan officer at NCHL;
Sesilia Garcia, one of Jose Garcia’s sisters, 30, of Oxnard, a loan officer at NCHL;
Lili Ayala Hernandez, 41, of Oxnard, a loan officer at NCHL;
Lidubina “Lido” Mendoza Perez, 41, of Moreno Valley, a loan officer who worked at NCHL’s office in Bakersfield;
• Gregg Scott Quinn, 40, of Camarillo, a loan officer at NCHL; and
• Cesar Rodriguez Azamar, 36, of Santa Paula, an employee of NCHL.

   All of the defendants in this case face a statutory maximum sentence of 30 years in prison if they are convicted of the conspiracy count in the indictment.
   An indictment contains allegations that a defendant has committed a crime. Every defendant is presumed innocent until and unless proven guilty beyond a reasonable doubt.
   The defendants arrested today will begin making their initial court appearances this afternoon in United States District Court in Los Angeles.
   The investigation was conducted by the Federal Bureau of Investigation; the Ventura County District Attorney’s Bureau of Investigation; the Federal Housing Finance Agency, Office of Inspector General; the U.S. Department of Housing and Urban Development, Office of the Inspector General; and the United States Secret Service.

USAO News Release No. 13-098

Alameda County Real Estate Agent Arrested, Charged with Defrauding Couple

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.

 

Appraiser Kyle Grasso’s Conviction in Beverly Hills Mortgage Fraud Case Upheld

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.

Rancho Santa Fe Broker Arrested for Mortgage Fraud in San Diego Area

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.

California Man Sentenced to Prison for Double-Escrow Fraud in Las Vegas

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.

© Copyright 2007-2017 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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