May 30th, 2014 at 8:07am
Jose Marinay, a 52-year old man who operated Virginia Smart Choice Settlements (which is now called SCS Title & Escrow) has pleaded guilty to conspiracy to commit wire fraud for his involvement in a short sale fraud conspiracy.
According to Dana J. Boente, United States Attorney for the Eastern District of Virginia, Marinay prepared settlement statements containing false information about liens, Realtor® commissions, title search fees, attorneys’ fees, title insurance, recording fees, and taxes, which he then sent to the mortgage lenders. The purpose of submitting the fraudulent information was to obtain approval from the lenders to approve the short sales.
Read the original article in InsuranceNewsNet.
May 23rd, 2014 at 8:55am
Former Michigan Supreme Court Justice Diane Hathaway, who resigned her post on the bench after pleading guilty to one count of bank fraud, is apparently eligible for home confinement.
Hathaway was sentenced to 12 months and one day in prison, plus two years probation, by U.S. District Judge John Corbett O’Meara in May 2013. Hathaway transferred her home in Windermere, Florida to a relative so that she could qualify for a short sale of her home in Grosse Point Park in Michigan. After the short sale, the Florida home was transferred back into Hathaway’s name, which of course was not disclosed to the lender approving the short sale (short sale fraud).
There are previous, more detailed, articles about Justice Hathaway that you can find by using the search tool on the California Real Estate Fraud Report.
Read the original article in the Detroit Free Press.
May 16th, 2014 at 9:31am
Jason Hidalgo and Brian Duggan have done the public a great service by the extensive article they recently published in the Reno Gazette Journal concerning short sale fraud and the devastating consequences it has had for homeowners in Las Vegas.
Entitled Sold Short, the writers did an extensive analysis into the short sale market in Las Vegas, establishing not only how a legitimate short sale works but what profiteering real estate agents do to take advantage of the homeowners in distress but also to suck every drop of equity from the property, which should rightfully belong to either the bank, or perhaps, partially to the homeowner.
Note: I am unsympathetic to the notion that banks are victims in short sale fraud. Proper auditing, checks-and-balances and due diligence can stop most short sale fraud in its tracks, making the banks incompetent and guilty of failing to protect their assets and investors but certainly not victims. And that doesn’t take into consideration the banks that knowingly approve fraudulent short sales.
Do I know of such cases? Of course I do – you bank with them.
I also know that law enforcement and prosecutors have completely and utterly failed to protect the public from this pernicious crime. As a result, short sale fraud flourishes, for which I again place the blame on law enforcement and prosecutors. In case anyone is asking, that would be California Attorney General Kamala Harris (who has prosecuted ZERO short sale frauds to my knowledge) and the various U.S. Attorneys General Offices in California, who among them have prosecuted at most three or four such cases. You can read a more in-depth analysis of short sale fraud in my e-book, How to Commit Short Sale Fraud . . . and Get Away with It.
May 9th, 2014 at 7:15am
U.S. Attorney Paul J. Fishman has announced via a press release that Delio Coutinho, 71, had admitted his role in a short sale fraud by pleading guilty in a Newark, New Jersey federal court to conspiracy to commit wire fraud.
Coutinho was formerly a loan officer at a mortgage brokerage who submitted fraudulent loan documents as part of his role in the scheme. According to documents filed with the court by prosecutors, Coutinho and his co-defendants obtained approximately $2 million in ill-gotten gains by allegedly releasing liens on already-encumbered properties by first arranging illegal short sales (short sale fraud) and then obtain new loans from other lenders on the properties. His co-defendants, whose legal statuses are unknown, are Jose Luis Salguero Bedoya, 37, a real estate investor, Bedoya’s girlfriend, Yazmin Soto-Cruz, 33, who allegedly bankrolled the operation, and Christopher Ju, 28, who was the short sale “negotiator.”
Read the original article in MyCentralNewJersey.com
April 4th, 2014 at 8:30am
Rejecting the recommendations of Assistant U.S. Attorney Gregory Damm, U.S. District Judge Jennifer Dorsey gave two former real estate agents only one day in custody of the U.S. Marshals Service and ordered them to pay restitution to the lenders they conned in a short sale fraud. Judge Dorsey did “sentence” Cynthia Hosbrook, 41, and Robert Hosbrook, 52, to five years of supervised release and ordered them to pay fines of $10,000 each.
The losers here are taxpayers, who footed a trial that probably cost several hundred thousand dollars.
The Holbrooks lied to Wells Fargo and Fannie Mae, claiming they needed to do a short sale of their home due to hardship. They “sold” the Las Vegas house to Cynthia Hosbrook‘s mother for cash and continued to live in it, causing a $170,000 loss to the lenders. Unmentioned is that they got a write-down of their mortgage and a reduced property tax basis, so their fraud still appears to have paid-off.
In their plea agreement last November to one count of bank fraud each, they admitted they had committed short sale fraud in the sale of two other Las Vegas homes in 2008 and 2009.
Read the original article in the Las Vegas Review Journal.
March 12th, 2014 at 9:38am
Kevin Lauricella, 28, a former Bank of America employee, has pleaded not guilty after being accused of falsifying bank records, according to a 28-count grand jury indictment.
Bank of America fired Lauricella in 2011 after learning that he had allegedly taken bribes of more than $1 million to approve short sales in Southern California at below-market values.
Read the original article in the Los Angeles Times.
March 12th, 2014 at 9:14am
Timothy William Barnes, 37, a man who spent most of his working life in real estate, surrendered his real estate broker’s license after pleading guilty to committing bank fraud. Barnes owned and operated Apex Properties Real Estate Brokerage in San Luis Obispo.
Barnes’ office was raided in 2012 by the FBI, after they and the Federal Housing Finance Agency’s Office of Inspector General began investigating him for illegally flipping. His scheme was to understate the value of homes for which he was asking the lenders to approve short sales, concealing higher offers from other bidders and simultaneously buying and reselling the homes to the higher bidders. The properties were located in San Luis Obispo, Paso Robles, Pismo Beach and other Central Coast cities.
Read the original article in CalCoastNews.com
February 19th, 2014 at 7:35am
Continuing its mission to prosecute those who engage in short sale fraud, the U.S. Attorney for the District of Connecticut announced that attorney Christopher Brecciano, 35, waived his right to indictment and decided to plead guilty to participating and a widespread mortgage fraud scam that occurred in Fairfield County and included numerous properties.
Below is the remainder of the FBI‘s press release:
“According to court documents and statements made in court, between 2006 and 2010, Brecciano, while working as an associate at a Stamford law firm, participated in mortgage fraud conspiracy that involved the purchase of numerous single and multi-family properties, primarily in Bridgeport, Norwalk, and Stamford. Brecciano acted as a closing attorney for at least 50 mortgage loan transactions in which materially false information was provided to mortgage lenders by Brecciano or his co-conspirators. The fraudulent information included false verifications of down payments for real estate transactions, false deeds, and false HUD-1 Forms. In many of the transactions, Brecciano knew that the borrower was a straw buyer and that other individuals intended to control the property and collect rent from the property. In many transactions, Brecciano distributed mortgage loan funds to the straw buyer and other co-conspirators at the closing.
Many of these properties ended up in foreclosure or in short sale transactions. In pleading guilty, Brecciano admitted that he was also involved in many short sale transactions in which he knew that the buyer and seller were working together to retain control of the property while representing to the lender that the sale was an arm’s length transaction. (Note by Monique: this is a class example of short sale fraud).
Through this scheme, lenders suffered losses of more than $7 million.
Brecciano pleaded guilty to one count of conspiracy to commit wire fraud and bank fraud. He is scheduled to be sentenced by Chief U.S. District Judge Janet C. Hall on May 7, 2014, and faces a maximum term of imprisonment of 30 years.
This ongoing investigation is being conducted by the Federal Bureau of Investigation. The case is being prosecuted by Assistant U.S. Attorney Ann M. Nevins and Special Assistant U.S. Attorney John McReynolds.”
January 24th, 2014 at 6:00am
A Fremont real estate agent was arrested this week after being indicted by a federal grand jury in connection with helping a man commit short sale fraud in the sale of his home.
Minerva Sanchez, 47, was arrested and arraigned in San Jose federal court, where she pleaded not guilty to conspiring to commit bank fraud.
In a case dating back to March 2010 in which authorities allege lender Tri Counties Bank and Freddie Mac collectively lost over $350,000 Sanchez represented Agustin Simon, 52, in the short sale of his home located in Patterson. Sanchez is accused of recommending that he use her son as a straw buyer to purchase the home in a short sale. The idea was that Simon would eventually take title back to his home.
Before a lender approves a short sale, the seller must submit a letter detailing financial hardship and both the seller and his agent must sign an “arm’s length” affidavit affirming the sale is to a buyer unrelated to the seller by relation, business or acquaintance. Prosecutors said both Simon and Sanchez fraudulently signed the arm’s-length affidavit and both misrepresented his ownership of other real estate assets. Simon allegedly had enough money that he was able to give $355,000 to Sanchez’ son to effect the purchase. Both lenders ultimately approved the short sale.
In addition to receiving commission for representing Simon, Minerva Sanchez also received 75% of the commission paid to her son’s real estate agent.
It is not known whether Sanchez’ son is being charged in this case.
In June 2013, Agustin Simon pleaded guilty to conspiring to commit bank fraud in connection.
December 5th, 2013 at 9:04pm
Two Stockton Realtors have been arrested by federal agents and charged with operating a unique mortgage fraud-short sale fraud business, according to U.S. Attorney Benjamin Wagner.
Lillian Marquez, 38, and Michael Keatts, 56, were charged in a federal grand jury indictment with conspiring to commit mortgage fraud and with nine counts of mail fraud.
According to the indictment, both defendants enjoyed a long run: from February 2006 through August 2012 or later, both Marquez and Keatts submitted loan applications in which fraudulent pay stubs and tax documents were submitted to lenders.
The other side to the defendants’ business was that they allegedly facilitated short sale fraud. In a classic short sale fraud scheme, they would assist the homeowners in default with selling their homes to straw buyers. The “sellers,” however, would remain in their homes at much-reduced mortgages and lowered property taxes. Of course, they would also be relieved of paying taxes on the gains they received by not having to pay either the IRS or Franchise Tax Board (FTB) on their loan foregivenes. Both agencies are completely asleep-at-the-wheel when it comes to short sale fraud, as is most of law enforcement.
Even if these defendants are convicted, I doubt either of the above agencies will lift a finger to prosecute them, the straw buyers or the “sellers,” including putting a lien on the houses. The feds, including the Department of Justice, are too busy pretending to prosecute crooked bankers.
Read the original article in the Central Valley Business Times.