California Real Estate Fraud Report

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Archive for the 'Loan Fraud' Category

San Diego Realtor® Arrested on Mortgage Fraud Charges

May 3rd, 2013 at 10:13am

San Diego Realtor® Kathryn Sylvester has been arrested by the FBI and now faces charges of operating a $5 million mortgage fraud conspiracy.

According to the U.S. Attorney’s Office, Sylvester, 43, was charged with 10 counts of wire fraud, two counts of bank fraud and conspiracy with regard to submitting fraudulent loan applications on behalf of straw buyers whom she allegedly recruited. Twenty-eight of the 80 properties that were purchased went into foreclosure, causing losses to lenders of over $5 million.

Straw buyers are rarely prosecuted and almost never see jail time, but three of them in this case have pleaded guilty and are awaiting their sentences: Claudia Montes, Tad Lent and Roderick Michener.

Read the original article in Courthouse News.

Phony Broker Pleads Guilty to Mortgage Fraud, Costing Lenders & Taxpayers $20 Million

May 1st, 2013 at 10:39am

A San Diego woman who brazenly brokered loans without possessing the necessary license has pleaded guilty to operating a a loan origination fraud scheme that included kickbacks.

According to the U.S. Attorney’s Office, Mary Armstrong, 51, wrote over $100 million in fraudulent loans (mortgage fraud, loan fraud) and skimmed $14.5 million from it (equity skimming). Armstrong confessed to selling $100 million of real estate around the country at puffed-up prices (appraisal fraud) and took the overpayments for herself. Her admitted crimes included fabricating loan applications for her straw buyers and  getting supporting fraudulent documents from her co-conspirators.

Prior to Armstrong’s guilty pleas, the following co-conspirators also pled guilty:

Teresa Rose, a Ramona real estate agent

Audrey Yeboah, Mary Armstrong’s accountant

– Seattle businessman Justin Mensen

Still awaiting their turn to face the scales of justice are John Allen, 44, of Laguna Hills, and William Fountain, 57, of Los Angeles.

Prosecutors said that the straw buyers were recruited in Southern California and other states by the defendants advertising on the Internet and placing ads in the Los Angeles Times seeking “investors.” The straw buyers were paid $10,000 for each property they “purchased.” Taking advantage of greed by institutional lenders to capture more loan business, the straw buyers were able to obtain 100% financing, relieving them of the risk to make down-payments, as occurred back in the good old days of prudent underwriting. When the straw buyers defaulted, the originators and their secondary market victims, e.g., Fannie Mae and Freddie Mac, lost upwards of $20 million.

My pet peeve with prosecutors is their consistent lack of interest in prosecuting the straw buyers in mortgage fraud cases. Let’s see if this case is any different.

Read the original article in Courthouse News. You can also read earlier postings about these defendants by using the Search tool on the left side of the California Real Estate Fraud Report.

Sacramento Brothers Plead Guilty in Mortgage Fraud Case

April 17th, 2013 at 1:27pm

Two men, brothers Andrey Andreyev, 37, of Sacramento, and Vitaliy Andreyev, 30, of Antelope, entered guilty please to wire fraud with respect to a mortgage fraud scheme.

U.S. Attorney Benjamin Wagner said the two were recruited to act as straw buyers by Vera Kuzmenko, the owner of VK Tax Services, to buy properties. Andrey bought one for $850,000 and Vitaliy purchased another for $1.2 million. Kuzmenko allegedly prepared the loan documents and promised the men money for their “services.”

Vera Kuzmenko knew the statements on the loan applications were false because she was their tax preparer. Kuzmenko has been charged with wire fraud, mail fraud, money laundering, and witness tampering in connection but has not been to trial yet.

Read the original article in the Central Valley Business Times.

Seven Persons Indicted for Mortgage Fraud Scheme

April 4th, 2013 at 9:41am

Benjamin Wagner, U.S. attorney for the Eastern District of California, announced that a federal grand jury has returned indictments against seven men and women, who have been charged with mail fraud, wire fraud and making false statements involving the purchase of at least 23 homes in a mortgage fraud conspiracy.

Readers of the California Real Estate Fraud Report recognize that Wagner is by far the most aggressive federal prosecutor for his district in California.

The defendants are Jannice Riddick, aka Jannice Frazier, 30, of Sacramento; Aleksandr Kovalev, 50, of Rocklin; Arthur Chang Menefee, 42, of Stockton; Adil Qayyum, 31, of Rosele, Ill.; Elsie Pamela Fuller, 38, of Richmond; Leona Yeargin, 46, of San Pablo; and Florence Francisco, 62, of Houston, Texas.

Elsie Pamela Fuller and Leona Yeargin were additionally charged with aggravated identify theft because they allegedly used stolen identification to purchase one or more of the homes.

Read the original article in the Sacramento Bee.

 

Hendrix Montecastro, Helen Pedrino Convicted in $142 Million Ponzi Scheme in Riverside

April 1st, 2013 at 12:30pm

Hendrix Montecastro, 40, of Maryland, was convicted on March 25 of 304 counts in a complex real estate fraud case that prosecutors say cost the victims $142 million in total. According to Riverside County Chief Deputy District Attorney Vicki Hightower, the jury convicted Montecastro on charges that included grand theft, destruction of evidence and felony fraud against 26 of 27 named victims — with asset losses totaling $3.6 millions.

He faces a prison sentence of more than 100 years.

Helen Pedrino, 61, of Murrieta – the mother of Hendrix Montecastro, was found guilty of 54 felonies based on her recruitment of five victim investors. When she is sentenced, she could spend up to 30 years in prison.

James Benjamin Duncan, who orchestrated the fraud, testified against Montecastro and Pedrino after making a deal with prosecutors. He is going to be sentenced for his crimes this month, along with Maurice McLeod, who also played a prominent role. A third man, Christopher Oetting, hanged himself on February 16, 2010 in his home, after admitting he to charges of conspiracy, money laundering and multiple counts of filing fraudulent tax returns.

The remaining defendants: Charlie Choi, Cindy Kelly and Thuan Nhan Du pleaded guilty to selling securities without a license and received probation.

As with all Ponzi schemes, this one worked well because friends and relatives convinced each other that the defendants’ “real estate investment” program was profitable. Good judgment was suspended and people refinanced their homes to draw out equity, cashed in their retirement plants and charged up their credit cards. Almost all of the victims were completely ruined as no monies have been recovered.

In a nutshell, the real estate investment fraud worked by the use of two companies set up by the defendants: Jovane Investments and Stonewood Consulting. The investors placed their money into Jovane, a shell company. The investors paid the seller the asking price or close to it and Jovane Investments funded the loans, but at 20-25% more than the appraised value.

The investors were unaware that Stonewood would locate the properties, also arrange financing and do so also at inflated values.

To understand the depth of this real estate fraud, refer to the article published in the Press Enterprise.

Part of Hendrix Montecastro’s defense was that he was a victim of James Benjamin Duncan too, but Prosecutor Hightower showed that Montecastro was anything but poor, spending $500,000 just before the Ponzi scheme collapsed on a non-profit called the Biocybernaut Institute.

Irvine Man Indicted for Mortgage Fraud Using Straw Buyers

March 27th, 2013 at 10:04am

Alexander Romaniolis, 48, of Irvine, was arrested in a mortgage fraud case involving residential properties.

Romaniolis was arrested in Huntington Beach after a federal grand jury in Sacramento returned a three-count indictment for mail fraud. The indictment charges that he recruited five straw buyers to purchase the residential properties in Rocklin, Roseville and San Clemente and used his position as a real estate licensee to help them falsify their income, employment and other financial information to the lenders (loan fraud, mortgage fraud).

The value of the loans was over $5 million and the losses due to the resulting foreclosures amounted to more than $2 million.

The case was jointly investigated by the California Attorney General’s Mortgage Fraud Strike Force and the FBI.

Read the original article in the Sacramento Bee and the Sacramento Business Journal.

Tracy Man Pleads Guilty in Mortgage Fraud Case

March 27th, 2013 at 9:25am

Reginald Dodson Sr., 42, of Tracy, California, pleaded guily on Mar 18  to mail fraud charges for his role in a mortgage fraud conspiracy.

Dodson was a loan office for W.B. Financial and assisted the real estate agents in getting financing for three properties, for which kickbacks were received without the knowledge of the lending institutions.

According to prosecutors, Sacramento real estate agent Buena Marshall allegedly used Temika Reed, 32 of Bay Point, to act as a straw buyer to purchase seven properties. Another woman, Suisun City real estate agent Deborah Loudermilk, 55, was an agent on two of the real estate sales.

The scheme involved inflating the sale prices of the properties (appraisal fraud), using 100% percent financing (never a bright idea for lenders), with the extra money being allocated supposedly as cash back to the buyer (Reed).

Read the original article in the Stockton Record.

Judge Throws the Book at Defendant Who Was Part of Rincon Hill Gang Real Estate Fraud

March 20th, 2013 at 9:09am

One of the principal defendants in the real estate fraud that almost cost a woman her multi-million dollar condominium in San Francisco, is going to to prison for a long time, thanks to the jury that convicted him and the judge who pronounced his sentence.

Jay Shah, 48, was convicted last September of more than a dozen felony charges, along with former tennis instructor Winston Lum. They and others attempted to steal the luxury condo belonging to Shirley Hwang located at One Rincon Hill. Hwang herself discovered the scam when she was mistakenly sent title and other documents sent to her other address and alerted authorities immediately.

San Francisco Superior Court Judge Charlene Kiesselbach prounounced a sentence of 20 years on Jay Shah and further ordered him to pay $14.1 million – double the amount purportedly stolen.

San Francisco prosecutors, including Assistant District Attorney Sandip Patel, said Shah and Lum conspired with others to create fraudulent real estate documents (title fraud) in order to transfer expensive properties in the names of co-conspirators. They would then drain all of the equity from the properties by taking out loans (loan fraud, mortgage fraud) and deposit it through their shell companies (money laundering).

Another of the co-defendants in this case was Kaushal Niroula, who was convicted in this scam as well as the murder of Clifford Lambert. Both he and defrocked attorney David Replogle are serving life sentences for that crime, after both were convicted.

Read the original article in KTVU.com and the San Francisco Examiner.

There are also many postings on the California Real Estate Fraud Report about the inception of this crime as well as the trials of David Replogle and Kaushal Niroula, which you can locate by using the search tool on the left side of the page.

Bay Area Real Estate Agent, Two Others, Indicted in Real Estate Fraud Case

March 15th, 2013 at 11:33am

Back to fraud committed by “the little people” (see posting preceding this post).

A father, his son and a third person have been indicted by a federal grand jury with committing mail fraud, bank fraud and false statements on a loan and credit application (loan fraud).

Charged are real estate agent Rajeshwar Singh, 38, of Pleasanton; his father Surjit Singh, 66, of Dublin; and Anita Sharma, 51, of Gilroy. If they are convicted, they could receive sentences of up to 30 years in prison (doubtful) and a $1 million fine (also doubtful).

The indictment accuses Surjit Singh of recruiting persons with good credit to act as straw buyers for homes his family or friends owned. The Singhs are alleged to have received more than $2.1 million in residential loans as a result of falsifying the buyers’ financial statements. Anita Sharma is alleged to have been one of the straw buyers of the properties, all of which went into foreclosure.

Read the original article in The Oakland Tribune.

Owner of All Ways Financial Services Goes to Prison for Mortgage Fraud

February 27th, 2013 at 11:52am

Cynthia Suratos Lorica, a Hayward woman, is off to prison after preading guilty to mortgage fraud and tax evasion.

Lorica, 51, also was ordered by Chief U.S. District Court Judge Claudia Wilken to pay more than $1 million in restitution, according to U.S. Attorney Melinda Haag.

Under the plea deal, Lorica, who was the owner and CEO of  All Ways Financial Services Inc., admitted she schemed to obtain money from Washington Mutual Bank in 2006 and 2007 by making false statements in her loan applications (loan fraud). At the same time she was an officer of Absolute Value Financial Inc., also a financial services company.

Read the original article in the Mercury News.

© Copyright 2007-2016 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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