California Real Estate Fraud Report

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Archive for the 'Real Estate Crimes' Category

Seal Beach woman sentenced to prison for real estate fraud – and it’s not her first conviction

February 23rd, 2015 at 11:10am

Karen Hanover, 48, of Seal Beach, has been sentenced to almost three years in prison for tricking people to invest in a commercial real estate scheme she ran, according to Thom Mrozek, public affairs officer for the United States Attorney’s Office for the Central District of California.

The investors turned over $19,000 to $29,000 in exchange for Hanover’s promise  guaranteeing them a 100% return or a 100% refund if they didn’t have a commercial property within a year. The investments were pitched at real estate seminars held in Southern California, Las Vegas and Dallas using two Long Beach companies, Commercial Investment Education LLC and Kharmic Life Strategies Inc.

Karen Hanover received a six month sentence and a $5,000 fine in 2011 for impersonating an FBI agent in order to threaten clients who complained about a prior real estate scheme.

Read the original article in the OC Register and the Los Alamitos-Seal Beach Patch.

Joshua Clymer last defendant sentenced in Diamond Hill Financial mortgage fraud case

February 20th, 2015 at 11:15am

Joshua Clymer, 28, was sentenced to two years in prison for conspiracy to commit mail fraud in connection with a mortgage fraud scheme in which he an his co-defendants helped straw buyers purchase homes by submitting fraudulent loan applications containing lies about the purchasers’ income, assets, employment and intent to occupy the homes.

Clymer, the last of 14 defendants to be sentenced, pleaded guilty to what FBI news release stated was a “loan origination and property flipping mortgage fraud scheme” using the companies Diamond Hill Financial and Bay Area Real Estate Holdings.

Clymer’s co-defendants, who have already been sentenced in this and related cases include Leonard Williams, 87 months; Garret Gililland, 94 months; Niche Fortune, 57 months; Kesha Haynie, 46 months; Eric Clawson, 37 months; Anthony Symmes, 35 months; Carlos Chamorro, 27 months; Shane Burreson, 23 months; Christopher M. Chiavola, 22 months; William E. Baker, 18 months; Nicole Magpusao, 535 days; Brandon Resendez, nine months; and Remy Heng, six months home detention. Twelve of the defendants pleaded guilty, including Clymer. Juries convicted the two defendants who went to trial, Haynie and Williams.

The case resulted from an investigation by the Federal Bureau of Investigation; the Internal Revenue Service, Criminal Investigation; and the Butte County District Attorney’s Office’s Major Crimes Unit.

Read the original article in the Sacramento Bee.

Three L.A. Deputy Sheriffs charged in mortgage fraud scheme – and they’re brothers

February 6th, 2015 at 10:20am

Brothers Billy, Benny and Johnny Khounthavong are charged with conspiracy to make false statements to two banks in a mortgage fraud scheme known as a “buy-and-bail” that is being heard by a federal jury.

Federal prosecutors allege that the Khounthavongs submitted false reports to Flagstar Bank in order to purchase a 3,900 sq. ft. home in Corona. A second allegation is that the three lied to Bank of America and walked away from another property they owned in Chino in which they were underwater, causing losses of $340,000 from the unpaid mortgage.

The Khounthavong brothers are currently on leave from the Los Angeles Sheriff’s Department and are free on bond.

Read the original article in the Claremont-La Verne Patch.

Criminal defense attorney pleads to being a criminal in short sale fraud

February 4th, 2015 at 6:29pm

Luis Rojas, 38, has pleaded guilty in federal court to making false statements in connection with a fraudulent short sale of his property in Clark County, Nevada.

The U.S. Attorney’s Office for the Southern District of California reported that Rojas paid his brother-in-law cash to act as a straw buyer (non-arms-length buyer) for the short sale purchase of his $935,430 home in Henderson for $288,000. In other words, by completing the purchase, Luis Rojas and his wife, who remained in the house, now own it outright. He was so brazen that just one month after the “short sale”, the brother-in-law transferred the property back to Luis. All of these acts are against the agreements typically required by lenders to effect an acceptable, arms-length  short sale and are considered by lenders to be short sale fraud.

Even though he is a criminal defense attorney in Las Vegas – where there is no shortage of crime –  Luis Rojas told his lender GMAC he could not longer afford his mortgage payments, which he admitted in his pleading was untrue. He also hid from GMAC that he had liquid assets in a brokerage account valued at over $134,000 when he filed his financial disclosure form.

When he faces U.S. District Judge James C. Mahan on June 1, Luis Rojas faces a maximum sentence of five years in prison and a fine of up to $250,000.

No word as to whether Rojas’ brother-in-law is being prosecuted. And as of the date of this writing, the property is still in the name of Luis Rojas and his wife.

Read the original article in KLAS-TV.

Fidelity National Title fined by HUD for RESPA kickbacks; brokers face class-action lawsuits

February 4th, 2015 at 5:53pm

Two real estate businesses could be in hot water, according to this article in RE-Insider.

Fidelity National Title Insurance marketed their TransactionPoint program to brokers. This was a “pay-for-click” system that made it possible for brokers to generate revenues for settlement services.

The problem, according to HUD, is that this form of revenue enhancement falls under RESPA kickbacks violations and the agency just fined Fidelity $4.5 million. A second settlement was also reached between the California Department of Insurance and Fidelity National Title Insurance over allegations of illegal kickbacks that were paid out from 2003 to 2011.

RESPA is an abbreviation for the Real Estate Settlement Procedures Act. It is federal law and those found in violation could face stiff financial penalties, loss of their licenses to conduct their businesses and time in federal prison.

RE-Insider wanted to know if any of the money Fidelity made from these deal was used to indemnify brokers who participated in the TransactionPoint program and what the names of the brokers were.

Two of the brokers are now identified, as the La Jolla based law firm, Bottini & Bottini, filed two class action lawsuits on behalf of homeowners in the past month naming over ten individuals at Alain Pinel  and Pacific Pinnacle  for violation of California Civil code 1710 (3), California Business and Prof. Code 17200, fraud and others. Of course, there could be more names coming to the surface.

Moreno Valley Pastor gets 30 days for stealing $200,000 from elderly man

February 3rd, 2015 at 8:42am

This is not only an egregious case of elder financial abuse, it shows the failure of the justice system to treat these abuses harshly. Thirty days in jail for stealing $200,000: not bad for a few months’ “work”.

Pastor Matthew Taylor of the Moreno Valley First Apostolic Faith Church and the Pentecostal Assemblies of the World pleaded guilty to embezzlement, fraud of an elderly person by a caretaker, and admitted a sentencing enhancement of taking property from the now-deceased 87-year old Lawrence Fusha. He might not have been caught except for the vigilance of a bank employee.

Read the original article in the Press Enterprise.

Ranch Cucamonga Pair Charged for Selling Home They Didn’t Own

January 8th, 2015 at 8:48am

According to the San Bernardino County District Attorney’s Office, Emma Adel, 45, and Mazen Fazah, 39,  are facing 22 felong charges for selling a home they fraudulently acquired to an unsuspecting buyer.

The defendants, who own Upland-based business, Smart Edge Auto, forged both the name of the owner (title fraud) and a notary public (notary fraud) on a vacant house, transferred the property into a trust, then re-sold the home to the victims, according to Senior Investigator John Vega.

 

Eleven Northern California Real Estate Investors Indicted for Bid Rigging and Fraud at Public Foreclosure Auctions

November 25th, 2014 at 6:55am

The following is a press release by the U.S. Department of Justice:

A federal grand jury in San Francisco returned three multi-count indictments against eleven real estate investors for their role in bid rigging and fraud schemes at foreclosure auctions in Northern California, the Department of Justice announced.

The indictments, filed late yesterday in U.S. District Court for the Northern District of California in Oakland, California, charge Northern California real estate investors Michael Marr; Javier Sanchez; Gregory Casorso; Victor Marr; John Shiells; Miguel De Sanz; Alvin Florida Jr.; Robert A. Rasheed; John L. Berry III; Refugio Diaz; and Stephan A. Florida with participating in conspiracies to rig bids and schemes to defraud mortgage holders and others.  The indictments allege that the defendants agreed not to compete at public auctions in return for payoffs and diverted money to themselves and others that should have gone to mortgage holders and other beneficiaries.  All defendants were charged with bid rigging and fraud in Alameda County, California.  Marr, Sanchez, Shiells, and De Sanz were also charged with bid rigging and fraud in Contra Costa County, California.  Additionally, Shiells and De Sanz were charged with bid rigging and fraud in San Francisco County, California.

To date, 47 individuals have pleaded guilty to criminal charges as a result of the department’s ongoing antitrust investigations into bid rigging and fraud at public foreclosure auctions in Northern California.  On Oct. 22, 2014, a federal grand jury in San Francisco returned an eight-count indictment against five additional real estate investors for their role in bid rigging and fraud schemes at foreclosure auctions in San Mateo and San Francisco Counties, California.

“Collusion at the foreclosure auctions created an unfair playing field where conspirators pocketed illegal payoffs at the expense of lenders and distressed homeowners,” said Brent Snyder, Deputy Assistant Attorney for the Antitrust Division’s criminal enforcement program.  “The division will continue to investigate and prosecute local cartels that harm the competitive process.”

The indictments allege, among other things, that at various times between June 2007 and January 2011, the defendants conspired to rig bids to obtain numerous properties sold at foreclosure auctions in Alameda, Contra Costa, and San Francisco counties, negotiated payoffs for agreeing not to compete, held second, private auctions known as “rounds,” concealed those rounds and payoffs, and, in the process, defrauded mortgage holders and other beneficiaries.

“These charges demonstrate our continued commitment to investigate and prosecute individuals and organizations responsible for the corruption of the public foreclosure auction process,” said David J. Johnson, FBI Special Agent in Charge of the San Francisco Field Office.  “The FBI is committed to work these important cases and remains unwavering in our dedication to bring the members of these illegal conspiracies to justice.”

Each violation of the Sherman Act carries a maximum penalty of 10 years in prison and a $1 million fine for individuals.  Each count of mail fraud carries a maximum sentence of 20 years in prison and a $1 million fine.  The government can also seek to forfeit the proceeds earned from participating in the mail fraud schemes.  The maximum fine for the Sherman Act charges may be increased to twice the gain derived from the crime or twice the loss suffered by the victims if either amount is greater than $1 million.

These indictments are the latest charges filed by the department in its ongoing investigation into bid rigging and fraud at public real estate foreclosure auctions in San Francisco, San Mateo, Contra Costa, and Alameda counties, California.  These investigations are being conducted by the Antitrust Division’s San Francisco Office and the FBI’s San Francisco Office.  Anyone with information concerning bid rigging or fraud related to public real estate foreclosure auctions should contact the Antitrust Division’s San Francisco Office at 415-934-5300, or call the FBI tip line at 415-553-7400.

The charges were brought in connection with the President’s Financial Fraud Enforcement Task Force.  The task force was established to wage an aggressive, coordinated and proactive effort to investigate and prosecute financial crimes.  With more than 20 federal agencies, 94 U.S. attorneys’ offices and state and local partners, it’s the broadest coalition of law enforcement, investigatory and regulatory agencies ever assembled to combat fraud.  Since its formation, the task force has made great strides in facilitating increased investigation and prosecution of financial crimes; enhancing coordination and cooperation among federal, state and local authorities; addressing discrimination in the lending and financial markets and conducting outreach to the public, victims, financial institutions and other organizations.  Over the past three fiscal years, the Justice Department has filed nearly 10,000 financial fraud cases against nearly 15,000 defendants including more than 2,900 mortgage fraud defendants.  For more information on the task force, please visit www.StopFraud.gov.

Campbell Man Pleads Guilty to Real Estate Investment Fraud

November 21st, 2014 at 10:46am

The office of United States Attorney Melinda Haag has announced in a press release that Sam Stafford, 57, one of three partners who operated S3 Partners, pleaded guilty in October to conspiring with Melvin Russell “Rusty” Shields and Michael Sims to commit wire fraud, mail fraud and bank fraud.

Rusty Shields has been already sentenced to 78 months in prison and ordered to pay restitution of $7,225,904.73. Michael Sims received 30 months in prison and was ordered to re-pay $411,460.92.

Prosecutors showed evidence during Shields’ and Sims’ trials that they defrauded their victims who invested with their real estate projects from 2006-2009. Many of their victims were elderly investors (elder financial fraud, elder financial abuse).

The press release also stated that “evidence further showed that Shields and Stafford fraudulently obtained millions of dollars from banks by submitting forged and fraudulent invoices and loan closing documents.”

S3 Partners  had offices in San Jose and Campbell, in Hickory, North Carolina, and Valrico, Florida.

Is Eric Holder a Traitor to the People and a Shill to the Banks?

November 18th, 2014 at 9:49am

If you have time – maybe a long coffee break – you may want to read this fascinating article in Rolling Stone about the settlement between Attorney General Eric Holder, “his” Department of Justice and how time-after-time he has allowed banks that mislabeled and sold mortgage-backed securities to get off-the-hook by paying monetary fines.

This article shows that the upstart Occupy Movement has had some effect on President Obama, but still not enough to get meaningful justice for homeowners and institutional investors, both of which were financially beat-up by the banks. It reveals that the primary banker who is the focus of the article, Jamie Dimon of Chase Bank and much of upper-management, allegedly knew Chase was packaging subprime securities as “Alt-A” (a higher-quality category) and getting rid of them before the borrowers defaulted, saving Chase billions but again causing significant losses to the credit unions and small financial institutions that purchased them, not knowing these shoddy mortgages would blow-up in their faces.

Besides the research performed by Rolling Stone writer Matt Taibbi, much of the information comes from his interview with former Chase transaction manager Alayne Fleischman, an attorney by profession. Ms. Fleischman tells the actual story of how Jamie Dimon and Chase Bank wiggled out what she termed “criminal fraud” and how almost every government agency that should have investigated this and other mega-bank misdeeds (think: SEC) either dropped the ball, aided in the cover-up or dragged their feet to allow the statute of limitations to expire on prosecutions.  A reluctant whistleblower, Ms. Fleischman is the model for the ethical behavior so devoid in most of the banks and the government agencies charged with protecting Americans.

How much do you want to bet that Eric Holder is going to end up working for his banking friends?

© Copyright 2007-2015 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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