April 25th, 2013 at 11:25am
Sentencing for Hendrix Montecastro and his mother Helen Pedrino, who were both convicted in what prosecutors said was a massive real estate and securities investment scam and Ponzi scheme that spanned several states, has been delayed until June.
Montecastro, 40, who acted as his own attorney, was convicted of over 100 felony charges, has a new attorney hired by his family to review approximately 8,000 in court documents, obviously looking for a procedural error that could cause the attorney to file a motion for a new trial. If his attorney, Daniel Greenberg, fails, Montecastro could receive a state prison sentence of 124 years.
Helen Pedrino, who was characterized as the recruiter of the victims, who lost their homes, savings and good credit standing, faces 17 years in state prison if her new court-appointed attorney cannot find something in the court transcripts to warrant a new trial.
Chief Deputy District Attorney Vicki Hightower was the prosecutor and the case was heard before Riverside County Superior Court Judge Jeffrey Prevost. Judge Prevost struck down 13 of the guilty verdicts, saying they were not in proper form, which Hightower attributed to clerical errors.
Read the original article in the Press Enterprise.
September 25th, 2012 at 10:16pm
Four Grass Valley residents affiliated with Gold Country Lenders have been arrested and charged with multiple counts of securities fraud, conspiracy and elder (financial) abuse. for allegedly operating a Ponzi scheme that bilked dozens of investors of more than $2.3 million, according to California Attorney General Kamala D. Harris.
The defendants are: Phillip Lester, 65, and Ellen Lester, 65, (Phillips’s wife), Susan Laferte, 58, (Phillip’s sister) and Jon Blinder. Phillip Lester was the CEO of Gold Country Lenders and Laferte was its CFO. The two alone are facing 66 charges.
According to AG Harris, the defendants took over $2.3 million from investors in what she characterized was a Ponzi scheme. “These defendants exploited their personal relationships with these victims and emptied their bank accounts,” she said. “Schemes that target the elderly are especially heinous, which is why prosecuting fraud and elder abuse needs to remain priorities for law enforcement.”
Ironically (or not), Jon Blinder is the interim executive director of the Nevada County Economic Resource Council (NCERC). He asserts his innocence.
Read the original article in The Union.
July 27th, 2012 at 9:06am
The $142 million mortgage fraud and securities fraud trial for Hendrix Montecastro and his mother Helen Pedrino have been moved to October 9.
Hendrix Montecastro and Helen Pedrino were arrested in 2009 on charges they were part of a real estate investment fraud conspiracy headed by James Duncan. The real outcome was that many investors lost their savings, retirement accounts and even their homes as a result of alleged false promises to earn large returns.
James Duncan and defendants Maurice McLeod, Charlie Sung Choi, Thuan Nhan Du and Cindi Gayle Kelly have already pleaded guilty.
Read the original article in the Press Enterprise. There are also several earlier postings on Hendrix Montecastro and Helen Pedrino in the California Real Estate Fraud Report. Use the Search feature on the left side of this blog to find those articles.
February 8th, 2012 at 9:28pm
Banking giant Wells Fargo and international law firm Greenberg Traurig are defendants in a lawsuit by an investor who claims the two firms concocted a scheme to hide the shaky financial status of a loan brokerage.
Investor David Nolan claims in his lawsuit, filed in Alameda County, that the loan broker – RE Loans, LLC, failed to disclose its poor liquidity status. Greenberg Traurig, RE Loans’ outside counsel, is accused of conspiring with Wells Fargo to conceal its shortage of capital by getting Wells to extend the broker $50 million worth of credit. This is despite the fact that both firms knew that RE Loans was forbidden in its investor agreements from taking on third party debt.
As a result of the deception, Nolan alleges that he lost about $665,000 that he had invested with RE Loans. His causes of action against Greenberg Traurig include aiding and abetting breach of fiduciary duty, fraud by misrepresentation, fraud by concealment, and secondary liability for securities fraud.
Read the original article in American Lawyer.
December 23rd, 2011 at 10:04am
A Southern California man who prosecutors say fleeced investors out of $228 million in a real estate investment fraud, including many in Los Angeles, is fighting extradition from France, where he fled after his scheme unraveled.
Bruce Fred Friedman, 61, operated Diversified Lending Group out of swanky offices in Sherman Oaks until the Securities and Exchange Commission (SEC) shut his business down through a court order. Friedman then fled to Cannes, France.
A federal grand jury indicted Friedman on 23 charges related to what prosecutors for the U.S. attorney’s office in Los Angeles called a Ponzi scheme arising out of real estate loans (real estate fraud, real estate investment fraud). Prosecutors say that Friedman’s scheme worked because it was believable – he offered reasonable returns to his investors, many of whom moved their retirement funds into his fund.
Although the French courts have authorized his extradition, the final decision to do so is in the hands of the French government.
Read the original article in the Los Angeles Times.
October 21st, 2011 at 8:27am
This blog usually concerns itself with arrests, prosecutions and convictions for real estate fraud and mortgage fraud.
Today, I’m happy to write that eight investigators with the SEC have been honored with the 2011 Award for Excellence in Investigations by the Council of the Inspectors General on Integrity and Efficiency (CIGIE).
In 2009, Colonial BancGroup Inc. and Taylor, Bean & Whitaker Mortgage Corp. both collapsed due to the fraud committed by former Taylor, Bean & Whitaker chairman Lee B. Farkas and four others. Farkas and his co-conspirators scammed the taxpayers’ via the Troubled Asset Relief Program (TARP) by selling $1 billion of worthless mortgage assets to Colonial, which was later seized by the U.S. government and sold to BB&T Corporation. Farkas was sentenced to 30 years in prison.
Since the original arrests, the former CEO of Taylor, Bean & Whitaker has also been charged, as well as a C-suite executive and supervisor of Colonial.
In addition to the SEC investigators, staff at the following agencies were honored as was the Eastern District Court of Virginia:
Department of Housing and Urban Development (HUD) - Office of Inspector General
Federal Deposit Insurance Corp. (FDIC) - Office of Inspector General
Federal Housing Finance Agency (FHA) – Office of Inspector General
Office of the Special Inspector General for the Troubled Asset Relief Program (SIGTARP)
Federal Bureau of Investigation (FBI)
Department of Justice (DOJ)
Read the original article in LoanSafe.
October 13th, 2011 at 1:36pm
A man identified by the Riverside County District Attorney’s Office as “second in command” in a staggering $142 million mortgage fraud and securities fraud prosecution may not be competent to stand trial.
Dave Wohl, the fourth attorney to represent Hendrix Montecastro, has petitioned Riverside County Superior Court Judge Richard T. Fields to have Montecastro mentally evaluated by two court-appointed medical professionals.
James B. Duncan, Montecastro’s co-defendant and the accused leader of the mortgage fraud, has already pleaded guilty, as have all the other defendants excepting Montecastro and his mother, Helen Moreno Pedrino.
Henrix Montecastro was charged with 249 felony counts relating to 201 properties that went into foreclosure in Riverside County, causing financial ruin to many of the investors.
Read the original article in the Press Enterprise.
October 6th, 2011 at 12:40pm
Bank of America, Wells Fargo and JP Morgan Chase may soon face a tidal wave of debt if claims they make to the FHA (Federal Housing Authority) are rejected.
The FHA insures loans made by bank and private lenders and did so increasingly after the subprime market disappeared. Claims made by the megabanks to cover some of their losses from bad loans are being closely scrutinized by the FHA, which has sued Deutsche Bank for $1 billion, accusing the bank of lying to it in order to get mortgage insurance.
Stock values for all Bank of America, Wells Fargo and JP Morgan Chase have fallen 59%, 25% and 32% respectively this year.
Read the original article on Bloomberg News.
October 6th, 2011 at 12:20pm
Lauren Baumann, 43, a Downey woman, has pleaded guilty to one count of felony wire fraud in U.S. District Court.
Baumann solicited investors for her business called Stewardship Estates LLC, which purportedly was a “Christian” investment company. Investors were told their money would be used to promote Christian rock bands and to purchase foreclosed homes. Instead, she appropriated the investors’ $1 million for herself, rent the historic Rives Mansion in Downey, pay for private school tuition for her children and repay earlier investors – a sure sign of a Ponzi scheme.
Lauren Baumann failed to mention to her investors that she has been the subject of court action in the past, first being convicted in federal court of securities fraud in 1999 and being sued and found liable for the civil action of that same case by the Securities and Exchange Commission.
Read the original article in the Long Beach Press Telegram.
August 8th, 2011 at 9:14pm
Wells Fargo Bank and accounting firm KPMG have agreed to pay $590 million and $37 million respectively to settle a class action lawsuit over the “pick-a-pay” loans underwritten by World Savings that were later acquired by Wachovia and then Wells Fargo.
Plaintiffs’ attorney Darren Robbins of San Diego stated that this was the largest so far of any of the securities class action lawsuits resulting from the housing crisis.
Wells Fargo, which reported the settlement in its quarterly filing with the Securities and Exchange Commission, made the statement that it had already set aside the funds to pay and that it was settling in order to save court costs but admitting no wrongdoing.
Read the original article in the Los Angeles Times.
