California Real Estate Fraud Report

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Archive for the 'Real Estate Crimes' Category

Nevada Attorney General Laxalt indicts American Equity Foundation owners in short sale fraud case

September 25th, 2015 at 9:20am

The following is a press release from the Office of Nevada Attorney General Laxalt:

Nevada Attorney General Adam Paul Laxalt announced that Christopher Nelson, 46, of Henderson and Niket Kulkarni, 38, of Los Angeles, CA were indicted by the Clark County Grand Jury on charges of pattern of mortgage lending fraud and racketeering, among others. The defendants operated their business, the American Equity Foundation, between July 2012 and May 2013.

According to the indictment, the defendants are accused of soliciting customers to participate in a short sale program associated with the federal government called the Neighborhood Stabilization Plan. Defendants falsely represented to their clients that their business could facilitate the short sales of customers’ homes to investors. Clients were also told that they could then lease their homes from the investors for a period of time, before having the opportunity to repurchase those homes at a cost of 90-100% of the home’s market value. Through these representations, the defendants are alleged to have unlawfully obtained more than $133,000 from their clients.

“Indictments such as these set a precedent that fraudulent behavior will not be tolerated and will be aggressively pursued,” said Laxalt. “Mortgage fraud can have devastating effects on homeowners and the economy, and my office will hold accountable those who unlawfully collect fees from homeowners using false promises of solutions.”

Special Agent in Charge James Todak of the Housing and Urban Development’s Office of the Inspector General (HUD-OIG) added, “Our office continues to be vigilant in protecting FHA insured borrowers from those in the mortgage industry willing to defraud them through foreclosure rescue schemes. This prosecution with the Nevada Attorney General’s Office demonstrates our commitment to protecting HUD’s important work in providing affordable home ownership.”

Nelson and Kulkarni are scheduled for initial appearances before the Eighth Judicial District Court on October 5, 2015.

This case was investigated by the HUD-OIG and the Office of the Special Inspector General for the Troubled Asset Relief Program (SIGTARP). Senior Deputy Attorney General Raya Swift and Deputy Attorney General Michael Kovac are prosecuting the case. An indictment is merely a charging document; every defendant is presumed innocent until and unless proven guilty in a court of law.

To read the criminal indictments for Nelson and Kulkarni, click on their respective links. To file a complaint about someone suspected of committing a fraud, click here.

Archbishop of Nevada City Spiritual Organization and Six Others Indicted in $8 Million Mortgage Fraud Conspiracy

September 25th, 2015 at 9:01am

The following is a press release from the U.S. Attorney’s Office for the Eastern District of California:

SACRAMENTO, Calif. — Three persons were arrested today on felony charges contained in a 42-count indictment returned by a federal grand jury in Sacramento on September 10, 2015, United States Attorney Benjamin B. Wagner announced.

The indictment, unsealed today, charges John Michael DiChiara, 57, of Nevada City; James C. Castle, 51, formerly of Santa Rosa; Remus A. Kirkpatrick, 58, formerly of Oceanside; George B. Larsen, 54, formerly of San Rafael; Laura Pezzi, 59, of Roseville; Larry Todt, 63, formerly of Malibu; and Michael Romano, 68, of Benicia, charging them with conspiracy, bank fraud, false making of documents, and money laundering. Tisha Trites, 49, and Todd Smith, 44, both of San Diego, pleaded guilty to related charges before U.S. District Judge Garland E. Burrell Jr. on September 4, 2015.

DiChiara was arrested today in Cool, and Pezzi and Romano were arrested at their homes. The other four defendants listed in the indictment have yet to be arrested.

According to the indictment, DiChiara held himself out as the Archbishop of a spiritual organization named Shon-te-East-a, Walks With Spirit, the mission of which was to help individuals spiritually by alleviating them of their home mortgages. DiChiara and Castle (along with Trites who pleaded guilty to a related charge) are alleged to have orchestrated a mortgage-elimination program that fraudulently altered the chain of title on residential properties, selling the properties, and receiving the sales proceeds. Kirkpatrick, Larsen, Todt, Romano, and others allegedly recruited homeowners into the program with the promise of relief from foreclosure and a share of the sales proceeds. DiChiara and others used Shon-te-East to control the sale of the properties.

The indictment alleges that, once the homeowners were enrolled in the program, Pezzi and others created fictitious deeds of trust, a falsely made deed of reconveyance, and, where necessary, a falsely made notice of rescission of notice of default. The fictitious deed of trust was recorded at the county recorder’s office, and gave the appearance that the homeowner had refinanced the mortgage with a new lender. Todd Smith (who pleaded guilty to one count of conspiracy) or an entity controlled by the defendants was listed as the new lender, ensuring that when the properties were sold, the defendants would receive the sales proceeds. The defendants then caused to be recorded at the county recorder’s office a falsely made deed of reconveyance, indicating that the mortgage debt had been repaid to the financial institution holding the mortgage and reconveying title back to the homeowner. With these fraudulent documents on file at the county recorder’s office, a title search on the property would give the impression that the homeowner had refinanced, and no other debt was owing on the property. When the defendants caused the sale of these properties, they were able to divert the sale proceeds away from the lending institutions to their own benefit.

The defendants are alleged to have sold 37 properties through the mortgage elimination program, and attempted to sell at least an additional 97 properties, obtaining profits in excess of $8 million. They attempted to extinguish in excess of $60 million in legitimate mortgage loans.

This case is the product of an investigation by the Federal Bureau of Investigation. Assistant United States Attorney Audrey Hemesath is prosecuting the case.

If convicted of the conspiracy count, the defendants face a maximum penalty of five years in prison and a $250,000 fine. The maximum penalty for bank fraud is 30 years and a $1 million fine. The maximum penalty for false making of documents is 10 years and a $250,000 fine. The maximum penalty for money laundering is 10 years and an additional fine. Any sentence, however, would be determined at the discretion of the court after consideration of any applicable statutory factors and the Federal Sentencing Guidelines, which take into account a number of variables. The charges are only allegations; the defendants are presumed innocent until and unless proven guilty beyond a reasonable doubt.

Newman man operating phony real estate investment program ordered to prison

September 22nd, 2015 at 8:17am

Sixty-three-year-old Ralph Leyva has been sentenced to four years in prison after pleading no contest to charges related to conducting a real estate scam.

According to prosecutors in the  Stanislaus County District Attorney’s Office, Leyva defrauded his investors by promising them he would sell them bulk REO (foreclosed) properties from Fannie Mae and Freddie Mac at a 30% discount, when in fact he was transferring the money from his phony businesses to a personal account. As a result, the court ordered him to pay restitution to his victims.

Ralph Leyva’s case was investigated by the Stanislaus County District Attorney’s Office real estate fraud unit and the Federal Housing Finance Agency-Office of Inspector General.

Read the original article in the Modesto Bee.

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

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.

© 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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