California Real Estate Fraud Report

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Archive for the 'Real Estate Crimes' Category

Real Estate Developer, Attorney and Bankers Indicted for Loan Fraud

April 18th, 2014 at 5:32am

Four men have been indicted by the office of U.S. Attorney Melinda Haag for loan fraud involving failed Sonoma Valley Bank.

Bijan Madjlessi, 58, of Mill Valley; attorney David Lonich, 59, of Santa Rosa; former Sonoma Valley Bank President Sean Cutting, 44, of Sonoma; and former Chief Loan Officer Brian Melland, 45, of Santa Rosa were arrested and later freed on $250,000 bond each.

Madjlessi is a real estate developer who defaulted on a $30 million loan he obtained from a different financial institution for his development called Park Lane Villas East in Santa Rosa. After defaulting, he and Lonich are alleged to have applied for a loan with Sonoma Valley Bank under a false name. According to the indictment, Cutting and Melland knew the loan was being submitted using a straw buyer name and still urged SVB’s loan committee to approve the loan, the purpose of which was for Madjlessi to buy back his defaulted loan.

The four men are charged with 22 counts, including one count of conspiracy to commit wire and bank fraud, one count of bank fraud, six counts of wire fraud, one count of conspiring to make false statements to a bank, one count of conspiring to launder money and 12 counts of money laundering. U.S. District Judge Susan Illston will be the trial judge.

Read the original article in CBS Local.

Former Fannie Mae Employee Convicted of Soliciting Kickbacks for Foreclosure Assignments

March 20th, 2014 at 9:36pm

Any person who pays attention to the real estate market knows that fraud in the assignment of foreclosed “REO” properties and short sales is much too common.

Last Friday, one of the few prosecutions for REO fraud closed as Armando Granillo, a former employee of Fannie Mae, was convicting of soliciting kickbacks from a real estate broker. His offer to broker Angus “Gus” Maughan, which was to steer foreclosed home listings to Maughan in exchange for 20% of the sales commission, failed simply because Maughan is honest and called federal agents to report Granillo.

Granillo, who was convicted by a jury in less than two hours of three counts of fraud, offered the defense that he was only intending to cheat the real estate agent (Maughan), not Fannie Mae.

During a sting at a Mexican restaurant in Tucson, Arizona, in which Gus Maughan was wearing a button camcorder, Granillo claimed that he could help the broker ”put other Realtors in Tucson out of business.” He also suggested that kickbacks were common at Fannie Mae and that he needed the extra money to pay for treatment for his daughter’s autism. Referring to his colleagues at Fannie Mae, he said ”I think they’re a bunch of crooks.”

Whether or not kickbacks and dishonesty at Fannie Mae are common may come out in litigation between Fannie Mae and Karen Frisone, a real estate broker in Colorado. Information on that case can be found be clicking on this link.

Armando Granillo was prosecuted by Asst. U.S. Atty. Stephen I. Goorvitch.

Read the original story in the Los Angeles Times.

Petaluma Man Pleads No Contest in Ponzi Scheme, Elder Financial Fraud

March 19th, 2014 at 6:01pm

A Petaluma man was pleading no contest in Sonoma County Superior Court Wednesday morning to bilking dozens of investors of $20 million through a Ponzi scheme.

Aldo Baccala, 73, a former real estate agent, has pleaded no contest to 141 charges of making false statements to sell securities, grand theft, and elder financial abuse and dependent financial abuse. He entered his plea in front of Sonoma County Superior Court Judge Gary Medvigy, who indicated he would sentence Baccala to 20 years or less of prison time in exchange for making his plea.

Baccala was charged with defrauding over 50 investors, many of them elderly, of over $20 million in a Ponzi scheme that promised returns for investing in assisted living facilities, a car wash and other businesses in California, South Carolina and other states. His company was called Baccala Realty and was based in Petaluma.

Instead of investing his victims’ money as promised he spent it on risky stock market investments, including covering margin calls.

Read the original article in KTVU.com

Tustin Woman Sentenced to Prison for Defrauding San Diego Nuns

March 19th, 2014 at 5:32pm

An Orange County woman who was found guilty in November 2012 of cheating a group of San Diego nuns out of $285,000 has been sentenced to three years in federal prison and ordered to repay the nuns.

Linda Rose Gagnon, 59, of Tustin had approached the nuns from the U.S. Province of the Religious of Jesus and Mary Inc. about purchasing the retirement home in San Diego. After she convinced them to give her the $285,000 she spent the money on herself instead of making the purchase.

Assistant U.S. Attorney Rob Keenan said Gagnon does not possess either a real estate salesperson’s or broker’s license.

Gagnon must surrender on or before June 13 to begin serving her 37-month sentence.

There are two earlier postings on the California Real Estate Fraud Report about this case, which you can find by using the Search feature on the left side of the blog.

Read the original article in San Diego 6.

Connecticut Prosecutes Another Short Sale Fraud Successfully

February 19th, 2014 at 7:35am

Continuing its mission to prosecute those who engage in short sale fraud, the U.S. Attorney for the District of Connecticut announced that attorney Christopher Brecciano, 35, waived his right to indictment and decided to plead guilty to participating and a widespread mortgage fraud scam that occurred in Fairfield County and included numerous properties.

Below is the remainder of the FBI‘s press release:

“According to court documents and statements made in court, between 2006 and 2010, Brecciano, while working as an associate at a Stamford law firm, participated in mortgage fraud conspiracy that involved the purchase of numerous single and multi-family properties, primarily in Bridgeport, Norwalk, and Stamford. Brecciano acted as a closing attorney for at least 50 mortgage loan transactions in which materially false information was provided to mortgage lenders by Brecciano or his co-conspirators. The fraudulent information included false verifications of down payments for real estate transactions, false deeds, and false HUD-1 Forms. In many of the transactions, Brecciano knew that the borrower was a straw buyer and that other individuals intended to control the property and collect rent from the property. In many transactions, Brecciano distributed mortgage loan funds to the straw buyer and other co-conspirators at the closing.

Many of these properties ended up in foreclosure or in short sale transactions. In pleading guilty, Brecciano admitted that he was also involved in many short sale transactions in which he knew that the buyer and seller were working together to retain control of the property while representing to the lender that the sale was an arm’s length transaction. (Note by Monique: this is a class example of short sale fraud).

Through this scheme, lenders suffered losses of more than $7 million.

Brecciano pleaded guilty to one count of conspiracy to commit wire fraud and bank fraud. He is scheduled to be sentenced by Chief U.S. District Judge Janet C. Hall on May 7, 2014, and faces a maximum term of imprisonment of 30 years.

This ongoing investigation is being conducted by the Federal Bureau of Investigation. The case is being prosecuted by Assistant U.S. Attorney Ann M. Nevins and Special Assistant U.S. Attorney John McReynolds.”

Financial Times Publishes Lengthy Story about Crisp & Cole Mortgage Fraud

February 12th, 2014 at 8:40am

Many, many articles have been posted in the California Real Estate Fraud Report about David Crisp, Carl Cole and the business they ran in the mid-2000s in Bakersfield that conned banks out of millions.

Now, Financial Times has published an extensive, compelling story that is an intense personal look at both David Crisp and Carl Cole. Writer Gary Silverman looks at their early lives, Cole’s fervent religious beliefs, how the two men came together and how their dishonest practices brought down the real estate market in Bakersfield and perhaps other areas. They and their biblically-named Tower Lending not only fell along with the market, but so did some of their close relatives and employees.

They may have gotten away with their crimes longer if not for the dogged efforts of appraiser Gary Crabtree, who is the real and only true hero of this sordid story.

Silverman correctly notes that “Banks that cheat people pay fines, but people who cheat banks do time.” Prosecutors rarely go after banks, especially in California, and when they do, they take the safe and easy path of seeking financial penalties. Regardless of how wealthy they became, David Crisp, Carl Cole and their associates were neither too big to fail nor too big to prosecute.

Elk Grove Man Convicted in Real Estate Investment Fraud

January 30th, 2014 at 6:40pm

The man known as a “closer” among his fellow defendants was found guilty by a federal jury today a real estate investment fraud scheme that cost investors almost $37 million.

Christopher Jackson, 46, was part of a company known as Diversified Management Consultants, or DMC. Court documents indicated that between 2003 and 2009, DMC operated purportedly to help people save their homes from being foreclosed and also was a real estate investment company. Jackson’s company, Genesis Innovations, induced the 80 or so investors it recruited to invest over $10 million, whether from savings, IRAs or cash-out loans against their residential mortgages.

As with many failed real estate investments, some of the money was returned to earlier investors and other money was used to finance expensive cars, vacations and other luxury items. In Jackson’s case, only about 25% was actually spent on developing real estate.

U.S. District Judge Troy L. Nunley ordered Jackson remanded into custody immediately after the jury’s verdict. Jackson is to be sentenced April 10.

Jackson’s co-defendants, Michael Bolden, 60; Victor Alvarado, 52; Nicholo Arceo, 40; Erica Arceo, 45; and Garry Bradford, 65, all of Sacramento, previously pleaded guilty to charges of conspiracy, wire fraud and false statements and are waiting to be sentenced.

Read the original article in the Sacramento Bee.

 

 

Attorneys and Others Arrested in Fresno Adverse Possession Scheme

January 30th, 2014 at 9:30am

According to a press release by the California Department of Justice, five individuals were arrested in mid-January and charged with allegedly running a statewide housing scheme by using adverse possession laws to fraudulently take control of at least 23 homes in nine counties,  Fresno, Kern, Los Angeles, Madera, Merced, Santa Barbara, San Mateo, Sonoma and Tulare.The

Sandra Elaine Barton, 30, Christopher Spencer Barton, 31, Daniel Paul Vedenoff, 29, Sheldon W. Feigel, 50, and Craig Merrill Mortensen, 60, all of Fresno, were arrested and charged with 288 felony counts including perjury, filing false court records and preparing false evidence. A sixth defendant, Cambria Lisa Barton, 21, turned herself in to authorities last week and entered a general time waiver.

Mortensen and Feigel are attorneys. According to the filing by the AG’s office, the non-attorneys were alleged to have identified abandoned homes and then filed for adverse possession with the courts in order to obtain title, after which the property would be sold or rented.

Under California law (Code of Civil Procedure 325), an individual can claim adverse possession of real property if he or she has occupied or claimed it continuously for at least five years and paid property taxes for that period of time, among other requirements.

The scheme unraveled when Nancy Zelepsky, the actual owner of a home in Santa Barbara County, contacted a title company to see if there were any liens against her property before applying for a home equity loan in 2010. The title company informed her that Sandra Barton was listed as the deed holder that same year and that the documents had been filed by Craig Mortensen.

Zelepsky received assistance from the Legal Aid Foundation of Santa Barbara County and her property was restored to her after the court found that Sandra Barton’s claim was fraudulent. The court then contacted the California State Bar regarding Craig Mortensen and the California Attorney General’s office opened its own investigation in June 2011.

If found guilty, the defendants all face long prison sentences.

The Attorney General’s Office was assisted in this case by the State Bar of California, Santa Barbara County District Attorney’s Office, Kern County Sheriff’s Department, Clovis Police Department and Fresno Police Department.

Following his arrest, Sheldon Feigel’s attorney held a press conference denying the charges filed against his client. He has since filed a lawsuit against the State of California seeking $1 million in damages for unreasonable search and seizure, being denied access to his attorney and for emotional distress inflicted on his children.

Read a copy of the felony complaint by clicking here.

Long Beach Man Sentenced for QuitClaim Fraud

December 17th, 2013 at 10:39am

A Long Beach man whose business model was to determine whether residential properties were vacant so that he could record false quitclaim deeds has been sentenced to four years.

Blair Christopher Hanloh, 50, who owned and operated Blair Hanloh Trustee of Diversified Management Trust (Diversified Management), was convicted in October 2013 of five felony counts of recording false and forged instruments.

Hanloh scouted properties from Orange County to Dana Point and if they were vacant or in foreclosure, he recorded the quitclaims to fraudulently transfer the ownership of the properties from the legal owners to Diversified Management (title fraud). He then changed the locks and rented the properties to unknowing victims-tenants.

“I would like to congratulate Orange County District Attorney Tony Rackauckas and his department on a job well done. Our office has been working closely with the District Attorney’s Real Estate Fraud Unit to find ways to prevent these crimes from happening in the future,” said Orange County Clerk-Recorder Hugh Nguyen.

Senior Deputy District Attorney Pete Pierce of the Major Fraud Unit prosecuted this case.

Read the original article in the Orange County Breeze.

 

James Duncan Sentenced to 19 Years, Restitution for Orchestrating $142 Million Real Estate Fraud

December 16th, 2013 at 9:34am

James Duncan, who both masterminded the $142 million real estate and investment fraud that rocked Riverside County and who then cooperated with prosecutors to obtain convictions against his former colleagues, has had this plea-bargain sentence imposed.

Riverside County Superior Court Judge Michele Levine ordered Duncan to serve 19 years and eight months in state prison after accepting the recommendation of Chief Deputy District Attorney Vicki Hightower.

Duncan must also pay $3.4 million in restitution to 33 victims, who lived in several states.

James Duncan acted as a central witness in the trials of his former business partner Hendrix Montecastro and Montecastro’s mother Helen Pedrino in what prosecutors described was a massive Ponzi scheme. Montecastro and Pedrino have filed motions for new trials following their convictions.

Previous guilty pleas and sentences have been imposed on Maurice McLeod, a top associate, Charlie Sung Choi, Cindi Grace Kelly and Thuan Nhan Du.

Read the original article in the Press Enterprise.

© Copyright 2007-2014 Monique Bryher

Legal Disclaimer.

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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