California Real Estate Fraud Report

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Archive for the 'Loan Fraud' Category

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.

Consumer Financial Protection Bureau Gets New Director – Moves Aggressively to Protect Consumers

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.

New Fraud Program at Freddie Mac Gets Results

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.

Interthinx Releases Q1 2013 Mortgage Fraud Risk Report

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.

© 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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