California Real Estate Fraud Report

You have just entered the #1 private-sector resource on the Internet for real estate fraud. In doing so, you have voluntarily left the dimension of the conventional real estate world and crossed over to the Dark Side, the realm where greed, dishonesty and evil are the order of the day. Sign up for a free subscription to this comprehensive news resource and receive weekly, timely news reports about real estate fraud, mortgage fraud, short sale fraud, REO fraud, title fraud, loan fraud, appraisal fraud, affinity fraud, loan modification scams, securities fraud and elder financial fraud.

Archive for the 'Real Estate Crimes' Category

Orange County “home flipper” pleads guilty to defrauding investors

August 28th, 2015 at 9:18am

William Yotty, a self-proclaimed real estate investor of foreclosed homes that he “flipped” has pleaded guilty to mail fraud and wire fraud, both federal felonies.

Yotty lured his 240 investors by promising, through his former company Fortuno Inc., insane profits. A brochure distributed by Fortuno claimed it could show the investors “how to take $400 and turn it into $25,000 in the next 30 days.” The investors, who in total lost $14 million, said instead that Yotty purchased the foreclosed homes by himself and resold them to the investors at inflated prices.

The case was prosecuted the U.S. Attorney’s Office for the Central District of California.

Read the press release on the U.S. Attorney’s website.

Virginia woman sentenced to 60 months for short sale fraud

August 17th, 2015 at 9:45am

The following is a press release from the FBI website:

ALEXANDRIA, VA—Charise Stone, 46, of Ashburn, Virginia, was sentenced today to 60 months in prison, followed by three years of supervised release for her role in a real estate short sale scheme that included tax and mortgage fraud, and passing fraudulent financial documents. Stone was also ordered to forfeit $721,552, and ordered to pay restitution of $2,441,174 to the victim financial institutions and the IRS.

Stone was found guilty by a federal jury on May 27, 2015. According to court documents, from 2007 to 2010 Stone targeted distressed homeowners who owed more on their mortgage loan than the market value of the home with false promises of financial recovery. Stone acquired distressed homeowners’ properties in her own name or under entities she controlled, made false representations to mortgage lenders in order to induce approval of the short sales, and then re-sold the properties—often the same day or the next—to new buyers at a price above the short sale amount, in violation of agreements made with mortgage lenders.

Jose Marinay owned a settlement company that closed every short sale transaction for Stone. Marinay pleaded guilty to wire-fraud conspiracy on May 27, 2014. At his and Stone’s direction, fraudulent HUD-1 settlement statements were prepared to facilitate the transactions, and Stone destroyed some of the incriminating documents after closings. Financial institutions suffered losses of at least $2.2 million from the scheme, while Stone profited more than $720,000 from these transactions but failed to file individual income tax returns. She also sent fictitious bonds to the IRS in an attempt to pay off her tax liability, and she sent fake international promissory notes to creditors purporting to satisfy her credit card debt as well as her mortgage loan.

Dana J. Boente, U.S. Attorney for the Eastern District of Virginia; Caroline D. Ciraolo, Acting Assistant Attorney General of the Justice Department’s Tax Division; Andrew G. McCabe, Assistant Director in Charge of the FBI’s Washington Field Office; and Thomas Jankowski, Special Agent in Charge of IRS-Criminal Investigation’s (IRS-CI) Washington, D.C. Field Office, made the announcement after sentencing by U.S. District Judge Claude M. Hilton.

This case was investigated by the FBI’s Washington Field Office and IRS–CI. Assistant U.S. Attorney Uzo Asonye and Assistant Chief Todd Ellinwood of the Justice Department’s Tax Division are prosecuting the case.

A copy of this press release may be found on the website of the U.S. Attorney’s Office for the Eastern District of Virginia. Related court documents and information may be found on the website of the District Court for the Eastern District of Virginia or on PACER by searching for Case No. 1:14-cr-127.

New Jersey loan officer gets prison for role in short sale fraud scheme

August 13th, 2015 at 9:44am

Middlesex County resident Delio Coutinho, 73, has been sentenced to 36 months in prison for his part in a mortgage fraud scheme that caused millions of dollars in losses, U.S. Attorney Paul J. Fishman said in a news release.

Coutinho, who pleaded guilty before U.S. District Judge Susan D. Wigenton to conspiracy to commit wire fraud, admitted conspiring with others to release liens on properties by conducting fraudulent short sales. Following the short sales, which included submitting false income, loan and closing documents to the lenders, Coutinho and other then submitted new fraudulent loan documents in order to obtain about $2 million in illegal proceeds from subsequent lenders.

Judge Wigenton also ordered Delio Coutinho to serve three years of supervised release and pay more than $1.3 million in restitution.

Read the original article in MyCentralNewJersey.com

CFPB signals end to wink-and-nod kickbacks between lenders, brokerages, title companies

August 4th, 2015 at 9:26am

Thanks to mortgage broker Dan Dobbs for the following important consumer article.

An article in HousingWire reports that due to recent interpretations of the Real Estate Settlement Practices Act (RESPA) by the Consumer Financial Protection Bureau (CFPB), two large lenders have decided to exit the MSA market. The Lenders are Wells Fargo and Prospect Mortgage.

MSAs are Marketing Service Agreements whereby brokerages encourage their agents to use the services of affiliated businesses, such as title companies or lenders, in which the brokerages either have an ownership or other financial arrangement.

The feds believe that many of these MSAs involve kickbacks and fee-splitting between the various companies and are therefore not in the interests of consumers.

Earlier this year, Wells Fargo and JPMorgan Chase were collectively fined $37.5 million for operating an illegal kickback scheme with now-defunct Genuine Title.

Other lenders are expected to join the MSA exodus. The biggest fear is that the CFPB may go back in time and claw-back exchanges of money for referrals it believes are violations of RESPA.

 

 

Ponzi scheme or real estate investment gone bad?

July 29th, 2015 at 5:19pm

Just a few short months after soliciting investors by mail, the CEO of Pacific Property Assets (PPA) in Irvine filed bankruptcy.

Now, Michael J. Stewart is standing trial on 11 counts of fraud after his “Opportunity Fund,” which took in $91 million from 650 investors collapsed. Investors were lured in by mailers telling them their money would be used to acquire apartment buildings a bit over half their replacement costs.

Stewart, 68, argued that PPA failed as a result of the housing and economic recession, but prosecutors say otherwise, saying PPA made money from the appreciation of the 50 apartment buildings it owned in Long Beach, Riverside and Arizona, which it refinanced. When the economy stalled in 2008, lenders stopped refinancing and, according to U.S. Attorney Joshua Robbins, the company turned to funding by individual investors, whose money was used to pay back previous investors, as well as salaries and expenses for Stewart and John J. Packard, 65, his partner.

The lenders lost about $24 million when the apartment buildings defaulted on the mortgages.

Read the original article in the Orange County Register.

 

Danville real estate agent pleads guilty to short sale fraud of his own properties

July 22nd, 2015 at 4:18pm

Anthony Keslinke, 47, a Danville real estate broker, pleaded guilty to two conspiracy charges as part of a plea agreement with the U.S. Attorney’s Office for the Northern District of California.

Keslinke was arrested in February 2014 and charged with 12 counts of fraud, money laundering, and conspiracy dating from between February 2011 and March 2014, when he falsified documents to lenders in order to short-sell his own East Bay properties.  He sold his properties in Danville and Walnut Creek by using straw buyers in order to retain control of the properties, both of which he later sold at a profit.

Prosecutors also said that Keslinke met with an undercover federal agent posing as a drug dealer and accepted a total of $550,000 from the man.

Read the original article in the Mercury News.

Same jury awards damages to some plaintiffs, nothing to others in Kelly Gearhart Ponzi scheme

July 9th, 2015 at 8:44am

Inexplicably, a jury that awarded ex-fighting champ Chuck Liddell and Usman Iqbal and Umer Iqbal damages against Cuesta Title, Stewart Title of California and Stewart Title Guaranty for their roles in the Kelly Gearhart Ponzi scheme, refused to award damages against five other plaintiffs.

Kelly Gearhart was a developer who raised millions for his projects in the Central Coast but who also diverted millions for his private use and to repay previous investors. Although he pleaded guilty to money laundering and wire fraud and received a sentence of 14 years in prison, he has now decided to appeal his guilty plea, according to CalCoastNews.

The jury apparently made its decision based on the close relationship between Kelly Gearhart, his wife and Melanie Schneider, an escrow officer of Cuesta Title. Schneider was not only friends with the Gearharts and traveled with them, she lived in their guest house and dated Gearhart’s brother. The jury said that the Iqbal brothers had introduced Chuck Liddell to Gearhart and that an unnamed Cuesta Title employee helped Gearhart commit fraud against the Iqbals. They jury saw no such connection with respect to the remaining five plaintiffs.

Read the original article in the Tribune.

Developer Kelly Gearhart gets 14 years in real estate fraud case

July 3rd, 2015 at 5:13am

Once honored as an Atascadero “Citizen of the Year,”  real estate developer Kelly Gearhart, 53, was sentenced to the maximum 14 years in prison for defrauding investors who lost over $15 million on his development projects.

Federal Los Angeles Judge Otis Wright imposed a harsher sentence than the government had requested for Gearhart, who pleaded guilty last year to wire fraud and money laundering. The judge noted that many were elderly investors who had lost everything due to Gearhart’s “sheer greed.”

In his plea agreement with prosecutors, Gearhart admitted selling the same lots to multiple investors doing the same to get bank financing.

Read the original story in the San Luis Obispo Tribune.

Law firm sues J. Rockcliff brokerage for kickbacks on TransactionPoint program

June 12th, 2015 at 2:09pm

La Jolla-based law firm Bottini & Bottini has filed suit against J. Rockcliff, Inc. and Jeffrey W. Sposito for violation of California Civil code 1710 (3), California Business and Prof. Code 17200, fraud and others. The plaintiffs (“Class”) hired J. Rockcliff in the purchase or sale of residences in California between July 1, 2007 and July 11, 2011 and the defendants (the agents or owners) received payments related to Fidelity National Financial‘s TransactionPoint software.

Read the complaint by clicking here.

This lawsuit comes on the heels of similar class action lawsuits against Alain Pinel and Pacific Pinnacle, also filed by Bottini & Bottini.

Fidelity has already settled charges brought by HUD having to do with the TransactionPoint program, by agreeing to pay HUD $4.5 million for alleged violations of RESPA kickbacks.

In the current lawsuit, the plaintiffs are accusing the defendants of accepting undisclosed payments from steering business to one another as real estate agents and other services without disclosing this to the plaintiffs. If true, the various complaints: breaches of fiduciary duties, fraudulent concealment, violation of California’s unfair competition law, constructive fraud and unjust enrichment, could cost the defendants to have to return their full commissions to the plaintiffs.

 

Read the original article in RE-Insider.

Woman pleads guilty in Oxnard title fraud case

June 2nd, 2015 at 9:17am

Gina Marie Hernandez, 37, has pleaded guilty to recording a false document in order to help a friend make bail.

According to the Ventura County District Attorney’s Office, recording a fraudulent document that encumbered an Oxnard residence as collateral for her friend Hayser Scarlett Lopez, 46. Lopez fled the country once she was granted bail but returned later.

Peggy Ann Soto, 55, was recruited by Hernandez to execute a phony power of attorney and to impersonate the Oxnard homeowner at Lopez’ bail hearing in Kern County Superior Court.

Read the original article in the Ventura County Star.

 

© Copyright 2007-2015 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.

ALL RIGHTS RESERVED. No part of this publication may be reproduced or transmitted in any form or by any means, electronic or mechanical, including photocopying, recording or by any information storage and retrieval system, without written permission from the author, except for the inclusion of BRIEF QUOTATIONS in a review.

BLOG POWERED BY SHARP BIZ IMAGE

Copy Protected by Chetan's WP-Copyprotect.