California Real Estate Fraud Report

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Archive for the 'Real Estate Investment Fraud' Category

Tustin Broker Convicted in Multimillion Dollar Ponzi Scheme

October 6th, 2011 at 10:23am

A Tustin real estate broker who specialized in hard money lending has been convicted in by prosecutors in the Orange County District Attorney’s office of over four dozen counts of grand theft, filing false recorded documents and other felonies.

Mark Alan Helsing, 53, pleaded guilty to the above charges. Helsing operated several hard money businesses, which lend money for short terms at higher interest rates than the banks. Borrowers typically either need the funds for a “bridge loan” for construction or have bad credit. The victims were investors, whose money should have been used to pay off earlier investors instead of being used to make the loans, which indicates a Ponzi scheme, real estate investment fraud and hard money fraud.

The names of Helsing’s companies were Sea View Investments, HLHS Financial Services, Inc., Foothill Realty, and Sea View Mortgage.

Read the original article in the Los Angeles Times and OC Weekly.

Roseville Ponzi Scheme Relied on Escrow Fraud

October 6th, 2011 at 8:46am

A Roseville man who has been sentenced to prison admitted in his plea agreement that his real estate fraud was little more than a Ponzi scheme which required the services of an escrow company to distribute the ill-gotten gains (escrow fraud).

Royce Lee Newcomb, 49, will have to serve five years and 10 months in prison for soliciting several dozen investors to give him almost $3,000,000 which he told them he was using to invest in foreclosed properties. Instead, he instructed Barry Winnett of Contour Escrow Services to disburse those monies to himself, Winnett and earlier investors. Winnett does not have a license to carry out escrow services.

Barry Winnett pleaded guilty to wire fraud in January but is still awaiting sentencing.

Read more about Royce Newcomb in the Roseville Press Tribune.

Sacramento Ponzi Scheme Costs Investors Dearly

September 20th, 2011 at 1:52pm

Five Sacramento-area residents have been charged by a federal grand jury for ripping off 180 investors to the tune of $26 million in what appears to be a Ponzi scheme.

Alleged ringleader, Michael Bolden, 57, is no stranger to law enforcement. Back in 1994, the former air traffic controller was sentenced to 21 months for falsifying tax documents in order to qualify for home loans (loan fraud).

Bolden ran Diversified Management Consultants Inc., or DMC, a firm that acted as an umbrella organization over half a dozen investment clubs. Many of the investors pulled equity out of their homes and some have had to file bankruptcy. Much of the investment money was used, according to the grand jury, by Bolden to buy luxury cars and pay for improvements to his home.

The other defendants are Christopher Jackson, 43; Victor Alvarado, 50; and Nicholo Arceo, 38, and his wife Erica Arceo, 43. Gary Bradford, 62, a sixth defendant who ran one of the investment clubs, has already pleaded guilty to six counts of fraud and will be sentenced in April 2012.

Read the original article in the Sacramento Bee.

Seal Beach Real Estate Agent Arrested

September 9th, 2011 at 9:03am

Real estate agent John Wesley Martynec is awaiting trial after been charged by the Orange County District Attorney’s Office on 34 counts that include elder abuse and grand theft.

Martynec is accused of operating a real estate investment fraud business in which he solicited money from investors and promised them profits from purchasing foreclosed homes and flipping them.

Read the original article in the Downey Patriot and the OC Register.

“Ken and Katie” Radio Hosts Arrested in Real Estate Fraud

September 2nd, 2011 at 9:43am

Kenneth Powell, 58, Kathryn Rose, 62, the former California radio hosts the “The Ken & Katie Shows”, a weekend series of radio infomercial shows hosted by Ventura radio station KVTA, are having their own money problems.

Powell, Rose and Paul Charles Lascola, 68, are all being held on $1 million bail after being accused of running a Ponzi scheme in a number of land deals. Investors were solicited at real estate investment seminars and promised returns of 12-14% if they placed their money in the construction of vacant lots in the city of Taft in the Central Valley. No building ever occurred and in fact there were either liens or the lots had been sold to other investors (real estate investment fraud).

Read the original articles in the Ventura County Star and the Silicon Valley Mercury News.

IRS Catches Roseville Contractor in Real Estate Fraud

September 1st, 2011 at 11:47am

An interview with an IRS agent has resulted in a Roseville man pleading guilty to real estate investment fraud after the man admitted he faked invoices.

Leo Wheeler, 56, pleaded guilty to one count of mail fraud in U.S. District Court. He had solicited investors to build a subdivision called Creekside Oaks Estates near Middletown by presenting 85 phony invoices for construction work he claimed he had done. Wheeler promised an 11% return and six months of prepaid interest to the investors but ran his operation using three non-existent businesses called Kenneth Gutman Trucking, SNC Solutions and California Maintenance.

The case was heard before United States District Judge Garland E. Burrell Jr.  and prosecuted by United States Attorney Benjamin B. Wagner.

Read the original article in the Lake County News.

Hurst Financial President Charged with Real Estate Investment Fraud by Feds

August 26th, 2011 at 6:34am

James Hurst Miller, 63, president of defunct hard money lender Hurst Financial Inc., has been charged by the U.S. attorney in Los Angeles with federal fraud and money laundering.

The allegations are with respect to several projects Hurst and developer Kelly Gearhart  proposed to build, into a large golf course. The 1,200 Central Coast people who put money into the project in what prosecutors claim was a $100 million real estate investment fraud. Specifically, Hurst is facing four counts of wire fraud, mail fraud, money laundering, making a false statement to a bank and assisting Kelly Gearhart in fraudulently obtaining funding for his construction project. Prosecutors allege that the investment money was diverted to pay for prior loans his business made (hard money loan fraud).

Miller used Cuesta Title, also no longer in business, to clear title on some of the projects by stating falsely that the loans had been repaid (title fraud). He would then take out subsequent loans using his investors’ money

The projects for which Miller solicited investors were in the Beacon Road and Vista Del Hombre real estate development projects in Paso Robles and the Salinas River real estate development project in Templeton.

Many of James Miller’s investors, including elderly investors (elder financial fraud) have lost their life’s savings and homes. One is a 68 year old Cambria woman who suffers from multiple sclerosis and now lives in an assisted care facility because she was unable to keep her home because of her investments with Miller.

Read the full article in the CalCoastNews.

FBI Release 2010 Retrospective Mortgage Fraud Report

August 18th, 2011 at 7:53pm

The FBI has released a comprehensive report detailing the state of mortgage fraud in the country. According to their research, the states most affected by mortgage fraud and other real estate crimes are the same states where housing prices escalated rapidly during the mid-2000s: California, Florida, Michigan, Nevada, Arizona, Texas, New York, Illinois, Georgia and New Jersey.

The most prevalent mortgage fraud schemes reported by law enforcement agencies and private industry during fiscal year 2010 included loan fraud in the origination process, mortgage rescue fraud, real estate investment fraud, equity skimming, short sale fraud, illegal property flipping, title fraud, escrow fraud (incl. settlement), commercial loan fraud, builder bailout schemes, loan modification fraud and reverse mortgage fraud.

The FBI notes that short sale fraud has become so prevalent that organized crime committed by Asian, Armenian, Balkan, Eurasian, Russian and La Costra Nostra groups has infiltrated lending institutions in order to have access to financial information, mortgage origination software, notary seals and licensure information.

In other words, all forms of real estate fraud are alive and well and it is being committed by both licensed real estate professionals and unlicensed individuals and criminal organizations. Law enforcement is bailing water out of a ship that needs enormous reinforcements just to stay afloate.

This is an excellent report with a lot of detail and is well-worth reading.

Click here to read the report on the FBI’s website. There is also an excellent synopsis on Inman News.

President of Real Estate Investment Club Pleads Guilty to Ponzi Scheme

August 18th, 2011 at 5:22pm

The president of a real estate investment “club” that took in $2.2 million from investors has pleaded guilty to running a Ponzi scheme.

Garry Bradford, 62, ran the  Millenium Capital Group in the Sacramento area between 2004 and 2008, purportedly to invest in commercial real estate. He admitted that the money he took in from investors was used to repay earlier investors. Many of the victims had pulled equity from their homes or cashed in their retirement plans in order to invest with Bradford, who promised 18% returns.

The case was prosecuted by the office of U.S. Attorney Benjamin Wagner and heard by U.S. District Judge Garland Burrell Jr.

Bradford could receive 20 years for each of the four counts of federal wire fraud for which he pleaded guilty and a $250,000 fine.

Read the original article in the Sacramento Bee.

Cupertino Man Gets 5 Years for Real Estate Fraud

August 4th, 2011 at 9:29am

Gary Mountain, a Cupertino-based real estate agent, is going to prison for five years for a real estate fraud in which he cheated investors out of $1.2 million.

The Santa Clara County District Attorney’s Office prosecuted Mountain, 61, who pleaded no content to five charge of securities fraud, all felonies. Prosecutor David Ezgar said the DA will ask the court to require Mountain to pay restitution to his victims.

Gary Mountain is alleged to have gained title to properties that were either in very poor structural condition or that had large balloon payments. He then convinced people to invest in the properties without disclosing these conditions.

Among those Mountain ripped off was Sheila Hagey, 68, and now deceased. After meeting him in church, Mountain convinced Ms. Hagey that her home was worth significantly less than it was (elder financial fraud) and to sell it to him at a steep discount, including real estate commission fees. He then talked her into investing $200,000 into one of his phony property “investments.”

Read the original article in the San Jose Mercury News.

© 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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