California Real Estate Fraud Report

Four men associated with 1st American Law Center have pleaded guilty to conspiracy charges in San Diego federal court of fleecing desperate homeowners of more than $11 million in a loan modification fraud.

Gary Michael Bobel, 59, Scott Thomas Spencer, 35, Mark Andrew Spencer, 32, and Travis Corey Iverson, 35, have entered their guilty please. A fifth employee, Roger Trent Jones, pleaded guilty last year and was sentenced to 21 months for his participation.

Gary Bobel opened up the loan modification business in 2008 with business partner Dean Chandler, who paid for the advertising. Homeowners were charged from $1,995 to $4,495 for loan modification “services” and were told, falsely, as it turned out, that a team of attorneys at the firm had a 98% success rate in getting homeowners the loan modifications they needed.

Read the original article in 10News.com. Click here to watch a video recording of the story on 10News.com. If you google “1st American Law Center” you will find many complaints about this business that have been posted.

Twin sisters and one of their associates have been arrested on multiple counts of operating a loan modification scam in Stockton.

Magdalena Salas, 42, the owner of Legacy Home Loans, her twin sister Angelina Mireles, 42, and Julissa Garcia, 36, were charged with 13 felonies and two misdemeanor, including conspiracy, grand theft and false advertising. The three are accused of circulating flyers in English and Spanish that guarantee to save the homes of distressed borrowers and promising a refund if the homeowner did not receive a loan modification. Homeowners were charged $5,000 upfront for these services, which is illegal in California.

The case was a cooperative investigation between the California Office of the Attorney General, the San Joaquin District Attorney’s Office, the Office of the Special Inspector General for the Troubled Asset Relief Program (SIGTARP), the California Department of Real Estate (DRE) and the Stockton Police Department. According to California AG Kamala Harris,

“These scam artists preyed on innocent homeowners who were simply trying to protect their homes and families from foreclosure. The mortgage crisis has caused tremendous damage to our state and to California families. There is nothing worse than those who seek to capitalize on this devastation by defrauding Californians who have already been victimized in this crisis.”

Salas operated not only Legacy Home Loans but also Salas Properties, Salas Estates, Peace and Freedom Legal Services and Divinity Legal Services. Magadalena Salas’ license to practice real estate was revoked in 2008, according to DRE records. Mireles and Garcia have real estate licenses but no broker affiliations, meaning they may not engage in services which require a license from the DRE.

Read the original press release by the California Office of the Attorney General.

A woman out on bail when she committed new crimes has been sentenced to five years for operating a mortgage rescue scam, according to a press release by Attorney General Kamala D. Harris.

Angeline Lisa Lizarrago, 69, soon to be formerly from Fremont, was sentenced today to five years for a foreclosure scam in which numerous homeowners in the Bay Area and Central Valley were victimized by her illegal foreclosure prevention business, Avemos Financial Group. She had been charged with 23 counts of felony fraud and theft.

Michael Douglas Young, 68, the general manager of Avemos, has also been charged and will be tried in January 2012.

Lizarrago and Young had a unique marketing tactic that included placing shrines of the Virgin Mary in the lobby of their business. As with many foreclosure fraud schemes, theirs included requiring the payment of upfront fees, which is illegal in California.

The case against Lizarrago resulted from the combined efforts of the California Attorney General, Alameda County District Attorney Nancy E. O’Malley, the California Department of Real Estate (DRE) and the Fremont Police Department.

Read the press release for the California Attorney General.

A judge has thrown the book at a 42-year-old Stockton man with a history of felony and misdemeanor convictions.

San Joaquin County Superior Court Judge Xapuri Villapudua imposed an eight-year prison sentence on Jonathan William Barker,  who was convicted of running an illegal loan modification scam. Barker was convicted after three of his victims testified that he cold-called them with promises to modify their loans. He charged them up to $1,750 for this illegal service and was also operating without a real estate license.

Barker was prosecuted by Deputy District Attorney James Lewis, of the Major Fraud and Real Estate Unit.

Read the original article in RecordNet.com.

Despite efforts by the California Department of Real Estate (DRE) to stop loan modification fraud – and even prosecutions by the California Office of the Attorney General to do the same – such activity is still occurring, especially in certain communities.

A recent article in California Watch highlights two such cases.

In the first, George Bolanos, who allegedly operates under multiple names and is unlicensed in real estate, was issued a cease-and-refrain letter by the DRE. Bolanos was advertising loan modification services to Spanish language media and requiring upfront fees, which are illegal in California.

Another recipient of a DRE cease-and-refrain letter is the firm JC Ruiz Capital Group, which also goes by the name Maxima Home Loans. The letter dates to 2009 but the owner is still operating his loan business. JC Ruiz drew the DRE’s attention also for charging upfront fees for loan modifications, which he runs through his other business, called First America Financial Consulting. The Better Business Bureau gives JC Ruiz Capital an “F” rating on its website due to the following reasons, which I copied from their information:

∙ BBB concerns with the industry in which this business operates
∙ Length of time business has been operating25 complaint(s) filed
  against business
∙ Failure to respond to 13 complaint(s) filed against business
∙ 2 complaint(s) filed against business that were not resolved
∙ 14 serious complaint(s) filed against businessOverall complaint
  history with BBB
∙ Government action(s) against business

Two men have been arrested and charged with 45 counts related to an alleged foreclosure rescue scam which prosecutors say cost $17 million in losses.

Stephan Andrew Easterly and Emanuel Percival were arrested at the offices of Fidelity Group Realty in Fontana. Fidelity has operated under dozens of DBAs according to the DRE‘s website. According to Deputy District Attorney Michael Fermin, most of the victims were in foreclosure and paid between $3,500 and $7,000 (loan modification fraud) to get either get their loans paid off (??) or monthly payments reduced.

Easterly and Percival are accused of holding themselves out as “authorized” bank representatives and signing and filing documents indicating the mortgages were paid off (title fraud). In addition, prosecutors said that Easterly made up his own checks to show the homeowners the loans were paid off.

Read the original article in National Mortgage News.

Ashik Ahmed Azeez, 50, of Sacramento, the owner of Turbo Mortgage Modification and Turbo Solutions, has pleaded no contest to three counts of mortgage fraud.

According to Sacramento County District Attorney Jan Scully, Azeez demanded upfront fees from seven people in exchange for providing loan modification services. Upfront fees are illegal in California.

Azeez has been sentenced to 90 days in county jail followed by three years of probation and must pay $8,250 in restitution to his victims. Azeez’ real estate license with the California Department of Real Estate  (DRE) shows no disciplinary action.

Read the original article in the Sacramento Business Journal.

Defaulting homeowners who thought they were out of options thought Stephen Easterly and Emanuel Percival were the answer to their dreams. Easterly,  who was employed by Fidelity Group Realty in Fontana, approached the homeowners in church and told them the banks had to prove they hadn’t done anything fraudulent with respect to the loans. He even paid up their back property taxes and other debts.

But Easterly and Percival were also charging the homeowners for their time. Charging upfront fees to help with loan modification or other mortgage assistance is illegal in California. They also gave the homeowners the impression that the banks had written down the principal, which would lower the homeowners’ monthly payments.

According to Lance Cantos lf San Bernardino County District Attorney’s Office, both Easterly and Percival are being held on bails of $1 million bail and $500,000 respectively.

Read the original article in KABC-TV Los Angeles.

The FBI has released a comprehensive report detailing the state of mortgage fraud in the country. According to their research, the states most affected by mortgage fraud and other real estate crimes are the same states where housing prices escalated rapidly during the mid-2000s: California, Florida, Michigan, Nevada, Arizona, Texas, New York, Illinois, Georgia and New Jersey.

The most prevalent mortgage fraud schemes reported by law enforcement agencies and private industry during fiscal year 2010 included loan fraud in the origination process, mortgage rescue fraud, real estate investment fraud, equity skimming, short sale fraud, illegal property flipping, title fraud, escrow fraud (incl. settlement), commercial loan fraud, builder bailout schemes, loan modification fraud and reverse mortgage fraud.

The FBI notes that short sale fraud has become so prevalent that organized crime committed by Asian, Armenian, Balkan, Eurasian, Russian and La Costra Nostra groups has infiltrated lending institutions in order to have access to financial information, mortgage origination software, notary seals and licensure information.

In other words, all forms of real estate fraud are alive and well and it is being committed by both licensed real estate professionals and unlicensed individuals and criminal organizations. Law enforcement is bailing water out of a ship that needs enormous reinforcements just to stay afloate.

This is an excellent report with a lot of detail and is well-worth reading.

Click here to read the report on the FBI’s website. There is also an excellent synopsis on Inman News.

Two Bay Area men who were convicted of one count of foreclosure consultant fraud are going to jail for 90 days each. They have already paid restitution of $40,000 to the 14 victims they scammed.

Cary Jay Silberman, 53,  and Robert Francis Childs, 44, ran a tag-team loan modification scam. Childs ran seminars for real estate agents in Santa Clara County and Contra Costa County in order to receive referrals for homeowners in distress. He then referred them to Silberman, who operated the loan modification business.

Silberman, who resigned from the California State Bar in 1997, was also convicted of one count of practicing law without a license, as he represented that he was a licensed attorney.

Read the original article in the San Jose Mercury News.