California Real Estate Fraud Report

Five men have been arrested and charged with loan modification fraud for demanding upfront fees (illegal in California since 2009) for helping property owners trying to avoid foreclosure.

The defendants were investigated by the Office of the Special Inspector General for the Troubled Asset Relief Program (SIG-TARP),  the Orange County Sheriff’s Department, Huntington Beach Police Department, the California Department of Real Estate and other local policing agencies.

After their arrests this week, the men were charged with at least seven counts of felony grand theft and various other charges including conspiracy to commit forgery and money laundering.

Jacob J. Cunningham, 24, of Irvine; Justin D. Koelle, 23, of Costa Mesa; Andrew M. Phalen, 25, of Mission Viejo; Dominic A. Nolan, 30, of Irvine; and John D. Silva, 27, of Irvine are now facing multiple counts of conspiracy to commit forgery and money laundering.

The businesses they operated to commit their alleged loan modification scams were CSFA Home Solutions, Mortgage Solution Specialists, Inc., CS & Associates and National Mortgage Relieve Center. If prosecutors are right, Cunningham, Nolan and Silva operated an addition scam in which they forged the logos from major lenders and sent out “conditional approval” letters to their victims.

Read the original article in The Republic and the Orange County Breeze.

An unnamed employee in the Stanislaus County Recorder’s Office is the hero in discovering an alleged foreclosure rescue fraud perpetrated on up to 1,000 victims.

Suspicious fillings to a company called Pacifica Group 49-II caused the Recorder’s Office to contact the Stanislaus County District Attorney’s Office. Investigator Glenn Gulley says that possibly 30 victims have been found in Stanislaus County but further digging found victims outside of the area.

The indictees include  Brent Medearis, 45, the CEO of Modesto-based VIP Financial Services; Jewell L. Hinkles, 61, aka Cydney Sanchez; Bernadette Guidry, 43; Jesse Wheeler, 34; and Cynthia Corn, 58. All five defendants have been charged with multiple counts of bankruptcy fraud; two are also facing mail fraud charges.

The 2 1/2 year investigation was undertaken cooperatively by the FBI, the U.S. Postal Service and other federal agencies, in addition to the Stanislaus County District Attorney’s Office.

Read the original article in the Modesto Bee.

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.

The owner of a Newbury Park firm that promised to help property owners in foreclosure stay in their homes has been arrested and charged with 10 counts of mail fraud.

John Marcus Desenberg, 44, was arrested by the FBI after its investigation into the practices of his business Creative Lending Solutions, which focused on distressed homeowners in Merced and Placer Counties. Desenberg allegedly solicited these homeowners to sell their homes to “investors,” who would allow the homeowners to remain in their homes while the investors made the mortgage payments. After a year of purportedly rebuilding their credit, the homeowners would be allowed to purchase their homes.

In reality, Desenberg, according to the indictment, did not monitor either the payments by the investors or the credit of the homeowners and their homes fell into foreclosure (real estate fraud, foreclosure fraud).

Read the original article in the Central Valley Business Times.

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.

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.

A Las Vegas man has been sentenced to six years and nine months in prison after pleading guilty to mortgage fraud charges and operating a mortgage rescue fraud operation that scammed homeowners in foreclosure.

George Eggleston, 65, was also ordered by U.S. District Judge Lawrence O’Neill to forfeit $364,899, and to pay restitution to his victims.

Eggleston’s two businesses, Nexxus and Global Legal Associates and their websites, solicited homeowners in foreclosure by telling them they used attorneys to file lawsuits against banks for violating federal and state laws. Nexxus also claimed it could reverse completed or pending foreclosures.

Read the full article in the Central Valley Business Times.

A Las Vegas man has been indicted in the East Bay county of Alameda for fleecing distressed homeowners in a mortgage rescue fraud that was unbelievable but still snared customers.

Alan David Tikal’s alleged mortgage rescue scam was to promise that he could “reduce the specific debts by 75 percent” of the borrower’s mortgage using his firm KATN Trust. KATN Trust would pay off the mortgage and refinance the home at a savings of 75 percent. He charged upfront fees of anywhere from $1,000 – $2,000 for this “service.”

In the case of one borrower, Tikal recorded that the home had been paid off in Los Angeles County but the lender refused to accept the document. In another case Tikal is alleged to have not paid off the mortgage.

Tikal recruited real estate agents from several states to find his alleged victims.

Alan David Tikal has been charged with conspiring to commit real estate fraud, mortgage security fraud and filing false documents.

Read the original article on 7 On Your Side.