California Real Estate Fraud Report

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Archive for the 'Real Estate Investment Fraud' Category

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.

 

Bankruptcy trustee sues developers for money lost in Ponzi scheme

July 9th, 2015 at 9:47am

Beverly McFarland, the trustee handling the bankruptcy of IMG, Inc.,  is suing two of the local real estate developers who lost money in the Ponzi scheme for which  IMG’s principal Deepal Wannakuwatte was imprisoned.

McFarland’s view is contrary to authorities, who say Jack Sweigart and Larry Carter were among the 100 investors who lost $150 million in the fraud by Wannakuwatte, who is serving 20 years in prison. She claims that Sweigart and Carter “knew or at least should have known” of the fraud and is seeking a court order forcing them to return some of the monies they received from IMG, whose business was selling surgical gloves to the U.S. government.

Read the original article in the Sacramento Business Journal.

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.

Man who pleaded guilty to real estate fraud charged with same offense

May 22nd, 2015 at 8:54am

A Modesto  who pleaded guilty to stealing over $1 million from investors in California and Texas has been arrested and charged with two felony counts of grand theft.

In the newest case, Xue Heu, 37, is accused of using the same tactics to scam another victim out of $6,000.

Xue Heu defies the court order and continues to defraud victims,” wrote  Glenn Gulley, an investigator with the district attorney’s real estate fraud unit in a document filed in Stanislaus Superior Court.

Read the original article in the Modesto Bee.

Fighter Chuck Liddell suing title, escrow companies in failed Vista del Hombre development

May 22nd, 2015 at 7:55am

Former fighting champion Chuck Liddell  is suing Cuesta Title Company, Stewart Title of California and Stewart Title Guaranty for the losses he suffered in the failed $24 million golf course development known as Vista del Hombre.

Liddell’s friend Kelly Gearhart, the developer of the project and a former Atascadero Citizen of the Year, is awaiting sentencing on federal fraud charges June 1. Because he filed bankruptcy, 500 of the investors are suing the title companies, claiming they were part of Gearhart’s Ponzi scheme.

Defense counsel for Cuesta Title is claiming that it knew nothing about the fraud or Ponzi scheme orchestrated by Gearhart and that it did its job as an escrow company.

Read the original article in The Tribune.

Note: there are many earlier articles about Kelly Gearhart, which you can find by searching this blog.

 

Walnut Creek man sentenced for $21 million real estate investment fraud

April 23rd, 2015 at 3:14pm

Sixty-year-old Benny Chetcuti Jr. has been sentenced to more than four years in prison for operating a real estate investment fraud scheme. He must also pay over $21.8 million in restitution for the losses he caused.

Chetcuti convinced investors to loan money to his firm, Chetcuti & Associates, telling them their investments were backed by properties. Although the firm’s business was to buy, renovate and re-sell homes (“flipping”), he did so by forging deeds purportedly written by lenders and title company officers.

Read the original article in the Contra Costa Times and the office of U.S. Attorney Melinda Haag.

Modesto man pleads guilty to Guatemalan real estate investment scam

April 22nd, 2015 at 7:26am

Modesto resident Kenneth Manuel Martin, 66, pleaded guilty to one count of wire fraud.

According to the offices of United States Attorney Benjamin B. Wagner, Martin convinced individuals to invest money with him, telling them their monies would be used to fund mortgage loans to home buyers in Guatemala. Their investments were to be secured by grant deeds secured by Guatemalan real estate. The inducement was high interest rates of return.

This case was investigated jointly by the Federal Bureau of Investigation and the Social Security Administration, Office of Inspector General. Assistant United States Attorneys Henry Z. Carbajal III and Grant B. Rabenn are prosecuting the case.

Read the original article in the Imperial Valley News.

Modesto man pleads guilty to real estate investment fraud

April 22nd, 2015 at 7:11am

The law has caught up with Ralph Leyva, 62, who just pleaded guilty to fraud and will be sentenced to four years in prison.

Leyva defrauded investors out of $350,000 in 2011 whom he conned into buying six properties in San Diego through a company called California REO Services LLC.

A Modesto man who swindled at least $350,000 from real estate investors pleaded guilty Tuesday to fraud charges in exchange for a four-year prison sentence.

Leyva, who used the aliases of George Anderson and Andrew Taylor, was investigated by the Stanislaus County District Attorney’s Office real estate fraud unit in cooperation with the Federal Housing Finance Agency, which oversees fraud claims involving Fannie Mae and Freddie Mac.

Read the original article in the Modesto Bee.

Marin County mortgage broker pleads guilty in investment fraud

April 8th, 2015 at 8:33am

A Marin County, California, mortgage broker pleaded guilty last month to 14 federal counts related to a $2.4 million scheme to defraud investors.

Paul Sloane Davis, a 75-year old mortgage broker, pleaded guilty in March to 14 federal counts in relation to a $2.4 million real estate investment fraud.

Davis operated D.M. Financial along with Diane Cobb, 57, who pleaded guilty in July 2014.  U.S. Attorney Melinda Haag said the pair diverted investor funds for their own use or to make interest payments to prior investors (Ponzi schemes). The investment opportunity was to provide short-term financing to borrowers for their real estate transactions.

Read the original article in Inman.com

© 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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