California Real Estate Fraud Report

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Archive for the 'Real Estate Crimes' Category

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?

Orange County Man Sentenced to Seven Years for Real Estate Fraud

November 7th, 2014 at 7:45am

The Orange County Register reported that  65-year-old Dinesh Valjeebhai Shah has been sentenced to seven years in prison. He pleaded guilty in October to five felony counts including conspiracy, forgery, identify theft and grand theft.

Prosecutors say Shah for conspired with family members in an complex real estate fraud scheme in which he and his defendants forged loan documents using straw buyers. Losses to Washington Mutual, aka WaMu, were over $16 million for the 15 properties purchased using fraudulent loan applications between 2006 and 2009.

 

Newport Beach Man Gets Seven Years for Mortgage Fraud

October 23rd, 2014 at 10:24pm

65-year-old Dinesh Valjeebhai Shah of Newport Beach pleaded guilty Friday to five felony counts of conspiracy to commit a crime, 13 felony counts of forgery, and other charges including identify theft and grand theft, said spokespersons with the Orange County District Attorney’s Office. He has now been sentenced to seven years in what prosecutors said was a conspiracy with his family member to commit real estate fraud by buying homes using straw buyers and submitting forged loan documents.

This all occurred between June 2006 and October 2009. Washington Mutual Bank approved all the loans and the total amount of the fraud was over $16 million.

The Shah family owned and operated New Age Realty, First Property Escrow, City First Realty, and Associates Investments Group, which were all at 13821 Newport Ave. in Tustin. One member owned and operated Vason Development, located at 1520 Warner Ave. in Santa Ana, which processed home loan applications.

Read the original article in the OC Register.

Associates of Donald Totten Plead Guilty to Mortgage Fraud

October 16th, 2014 at 8:37am

Real estate investor Grant McCollough, 38, and his 36-year-old wife, Marisa, pleaded guilty to conspiracy to commit wire fraud and defrauding the United States.

The McColloughs recruited investors to act as straw buyers and, according to the U.S. Attorney’s Office, arranged for erroneous information to be submitted to lenders to approve their loan applications. They also inflated the value of the homes (appraisal fraud) and disguised the source of the down payments in order to skim funds from the fraudulent transfer of property among their co-conspirators. And they hid their skimmed profits from the IRS.

Their associate, Donald Totten,  was a mortgage loan officer and broker operating out of Rancho Santa Fe who specialized in negative amortization loans. Totten pleaded guilty in February to mortgage fraud, bankruptcy fraud and filing a false tax return that failed to report more than $3 million in taxable income.

Grant McCollough and Marisa McCollough will be sentenced in January 2015 by U.S. District Judge Michael Anello.

Read the original article in Fox 5 San Diego.

 

Do Past Crimes Predict the Future for “America’s Leading House-Flipping Expert?”

October 8th, 2014 at 9:58am

David Lazarus of the Los Angeles Times has written a thought-provoking essay: do consumers have the right to know that the person with whom they are about to invest their money has previous convictions for white-collar crimes?

Lazarus’ article is about Lloyd Segal, 66, a former Los Angeles lawyer, who was convicted in state and federal courts of real estate-related fraud. Segal used the social security numbers of two strangers to lease properties in Bel-Air and Marina del Rey, but, according to prosecutors, never paid the rent. When the landlords began eviction proceedings, prosecutors said he filed for bankruptcy using the same stolen identities. For this, he was sentenced in L.A. Superior Court to over two years, which he served concurrently with a federal sentence of 18 months for filing false bankruptcy petitions.

At least one unhappy consumer has registered his/her thoughts about Lloyd Segal on RipoffReport.com.

Lloyd Segal resigned his attorney’s license with the California State Bar in 2003.

Read the original, illuminating article in the Los Angeles Times.

Julie Farmer, Crisp & Cole Defendant, Gets Prison and Hefty Fine

September 30th, 2014 at 8:27am

Crisp & Cole defendant Julie Farmer felt the full weight of the judicial system this past Monday.

Farmer, who was the Chief Operations Officer for the firm, was sentenced by United States District Judge Lawrence J. O’Neill to three years in prison, to be followed by five years of supervised release. Showing just how profitable mortgage fraud was for Farmer and the company, Judge O’Neill further ordered her to pay $2,914,331 in restitution and to forfeit $15 million. That’s not bad income for a scheme that ran for less than four years and saw lenders defrauded out of millions when she and principals David Crisp and Carl Cole used straw buyers to buy and sell residential properties at inflated prices, skimming non-existing equity to line their pockets. All the properties ultimately were foreclosed.

Farmer’s harsh punishment, according to the judge, resulted from her supervising some of her co-defendants in the mortgage fraud conspiracy and for testifying falsely at the trial.

Benjamin Wagner, U.S. Attorney for the Eastern District of California, announced that “Today’s sentencing is the result of a culture of greed and opportunism that saturated a Bakersfield real estate company.”

Read the original article in KERO-TV.

 

Real Estate Auctioneer Sentenced for Fraud

September 19th, 2014 at 7:16am

A short-lived scheme has resulted in a Huntington Beach woman being sentenced to state prison after she admitted to defrauding banks at real estate auctions she held.

Reyna Peinado, 48, and an associate ran auctions for Reliable Posting and Publishing (RPP) and conducted real estate auctions at the Orange County courthouse. According to an FBI investigation, Peinado contacted some of the winning bidders at her auctions and offered to reduce the sale price of the properties they had purchased from between $15,000 and $57,000 if they would pay her a $5,000 bribe.

The banks that held title to the foreclosed properties lost about $261,500 as a result of her crimes.

Read the original article in the Orange County Register the FBI’s press release.

 

Sentences Handed Out for $36 Million Ponzi Scheme in Sacramento

September 19th, 2014 at 6:43am

Three men have received heavy prison sentences for their roles in the Ponzi scheme they ran under the company known as Diversified Management Consultants (DMC).

After hearing victims’ testimonies and an FBI forensic accountant, U.S. States District Judge Troy Nunley sentenced Christopher Jackson, 46, of Elk Grove,  to 30 years in prison; Michael Bolden, 60, of Sacramento, to 20 years in prison; and Victor Alvarado, 53, of Sacramento, to 10 years in prison.

According to prosecutors from U.S. Attorney Benjamin Wagner‘s office, DMC ran various investment clubs between 2003 and 2009, convincing at least 240 people, including their own families, to invest with them. Very little of the money was actuall invested, going instead to pay phony returns to previous investors (the Ponzi scheme) and to buy jewelry, expensive clothes and trips and the requisite Lamborghini, Rolls Royce, BMW, and Range Rover.

Three more DMC principals await sentencing: Garry Bradford, Nicholo Arceo and Erica Arceo. Erica was the in-house-attorney but lost her law license with the California State Bar as a result of her involvement and guilty plea.

Read the original article in the Central Valley Business Times.

 

** Update: meanwhile, some of the investors/victims sued Stewart Title of Placer and Stone Canyon Mortgage, to try to recover some of their losses. According to the Sacramento Bee, the case was settled on Sept. 24 for $900,000.

© 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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