California Real Estate Fraud Report

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Archive for the 'Short Sale Fraud' Category

New York Attorney General arrests man in Wells Fargo short sale fraud case

May 28th, 2015 at 9:34am

The office of New York State Attorney General Eric T. Schneiderman has announced that Fedlaire Aristide of Freeport, N.Y. has been arrested in an alleged short sale fraud.

According to the indicment, Aristide is alleged to have submitted or assisted in the submission of documents that were forged and contained fraudulent information to Wells Fargo for the purposes of purchasing a home in Brooklyn at under-market value. He was also charged with taking thousands of dollars from a Brooklyn couple towards the purchase of that home. Aristide would have made a quick profit by “flopping” the home to the couple if the bank had approved the short sale. He refused to return their money when Wells Fargo rejected the sale.

“We have zero tolerance for anyone who steals from hard-working New Yorkers, especially those who use the promise of homeownership to do so,” said AG Schneiderman. “My office will continue to pursue justice against anyone who attempts to profit from mortgage fraud.”

 

Read the original story in National Mortgage Professional.

Two plead guilty to short sale fraud in Virginia

May 28th, 2015 at 9:06am

The following is a press release from the FBI:

WASHINGTON—An Ashburn, Virginia resident was convicted today by a federal jury on 13 charges related to mortgage fraud, passing fictitious financial instruments, and tax fraud, the Department of Justice announced.

Charise Stone, 46, was indicted on April 15, 2014. According to court records and evidence at trial, Stone targeted distressed homeowners from 2007 to 2010 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 http://www.justice.gov/usao-edva/pr/head-annandale-settlement-company-pleads-guilty-over-2-million-short-sale-mortgage 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. Marinay destroyed some of the incriminating documents after closings. Financial institutions suffered losses of at least $2.2 million from the scheme. Stone profited more than $700,000 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.

Stone faces a maximum penalty of 20 years in prison for each of the wire fraud and wire-fraud conspiracy charges, 30 years in prison for the charges of false statements to a bank, 25 years in prison for the fictitious obligation charges, three years for the charge of corruptly impeding the internal revenue laws, and one year for each count of willful failure to file a tax return at her Aug. 14 sentencing.

Acting Assistant Attorney General Caroline D. Ciraolo of the Justice Department’s Tax Division, U.S. Attorney Dana J. Boente, of the Eastern District of Virginia, Assistant Director in Charge Andrew G. McCabe of the FBI’S Washington Field Office and Special Agent in Charge Thomas J. Kelly, of the Internal Revenue Service -Criminal Investigation (IRS-CI) Washington, D.C. Field Office, made the announcement after the verdict was accepted by U.S. District Judge Claude M. Hilton.

This case was investigated by the FBI’s Washington Field Office and IRS-C I. Assistant U.S. Attorney Uzo Asonye and Assistant Chief Todd Ellinwood of the Tax Division are prosecuting the case.

Related court documents and information may be found on the website of the District Courthttp://www.vaed.uscourts.gov for the Eastern District of Virginia or on PACERhttps://pcl.uscourts.gov by searching for Case No. 1:14-CR-127.

Additional information about the Tax Division and its enforcement efforts may be found on the division’s website http://www.justice.gov/tax/.

Punishment for Nevada real estate broker in short sale fraud seen as light

May 15th, 2015 at 5:13am

The Reno Gazette-Journal has published a lengthy essay that highlights the weak punishment meted out to real estate licensees who facilitate short sale fraud.

In this case, real estate broker Kyle Krch of Krch Realty and his agent Michael Harding were fined by the Nevada Real Estate Commission. For 39 violations, Krch was fined $102,000 plus over $10,000 in fees for failing to “represent his distressed sellers and provide them a written disclosure about his financial interest with the investment group buying their properties.” Michael Harding has to pay $23,000 plus $3,167 in costs.

The article suggests that the punishment was not enough because neither licensee will have his license suspended.

So far, there is no indication that Washoe County District Attorney’s office or the Nevada Attorney General have any interest in prosecuting.

 

 

Monique Bryher speaks at ACFE chapter meeting

May 1st, 2015 at 10:21am

This past week, I was invited by the L.A. Chapter of the Association of Certified Fraud Examiners to be one of the key speakers at their monthly meeting.

My topic was short sale fraud and real estate fraud in general and the impact it has on neighborhoods, the community at-large, jobs and public services. I was told that the attendees (CPAs, auditors, fraud investigators and prosecutors) enjoyed this look at the dark side of real estate, which was indicated by the many thoughtful questions they asked.

Former bank president pleads guilty in short sale fraud case

March 17th, 2015 at 4:42pm

The following is a press release from SIGTARP:

WASHINGTON, DC – Christy Romero, Special Inspector General for the Troubled Asset Relief Program (SIGTARP), and Pamela C. Marsh, United States Attorney for the Northern District of Florida, today announced that Michael “Sean” Davis, 43, of Crestview, Fla., pleaded guilty on March 13, 2015, to conspiracy to commit bank fraud and mail fraud; conspiracy to commit money laundering; making false statements to a federally insured institution; and fraudulently benefitting from a loan by a federally insured institution.

Between January 2006 and January 2011, while the president of Premier Community Bank of the Emerald Coast, Davis devised a scheme to defraud Premier Community Bank, Bank of America, and Beach Community Bank. As a part of the scheme, Davis solicited a straw buyer to submit false documents to purchase real properties via short sales from Bank of America. At Davis’ direction, the straw buyer then sold the properties the same day to third-party buyers. Davis authorized and approved loans from Premier Community Bank to these third-party buyers for the purchase of two of these properties from Davis’ straw buyer. As a result of these loans, Davis received approximately $297,408 through his company, MSD Investments. Through this scheme, Davis discharged approximately $743,425 in debt he owed to Bank of America for mortgage loans issued to Davis personally.

Sentencing is scheduled for May 28, 2015, before Chief United States District Judge M. Casey Rodgers at the United States Courthouse in Pensacola, Fla.

The case was investigated by Internal Revenue Service – Criminal Investigation with assistance from SIGTARP, the Federal Deposit Insurance Corporation Office of Inspector General, and the Okaloosa County Sheriff’s Office as part of the Northwest Florida Financial Crimes Task Force.

This case is being prosecuted by Assistant United States Attorney Tiffany H. Eggers.

This prosecution was brought in coordination with President Barack Obama’s Financial Fraud Enforcement Task Force, which was established to wage an aggressive and coordinated effort to investigate and prosecute financial crimes. SIGTARP is a member of the task force and co-chairs the Rescue Fraud Working Group. To learn more about the President’s Financial Fraud Enforcement Task Force, please visit www.StopFraud.gov.

Patterson man sentenced in short sale fraud case

March 5th, 2015 at 8:53am

Agustin Simon, 53, was sentenced to 15 months in federal prison after pleading guilty to conspiring to commit bank fraud with his former real estate agent on a short sale fraud of his property five years ago. Minerva Sanchez, the Realtor®, is already in prison serving a 21-month sentence.

The goal of the short sale fraud was for Simon to keep his home. In 2010, Sanchez recommended that Simon sell his home to Sanchez’ son in a short sale transaction. Simon gave the son $355,000 to make the purchase, which they falsely described was “arm’s length” and that Simon would not be regaining ownership. Sanchez wrote the hardship letter on Simon’s behalf, which was submitted to lenders Tri Counties Bank and Freddie Mac, stating falsely that Simon was unable to make his mortgage and concealing Simon’s other assets and real estate.

In addition to his prison sentence, Agustin Simon, was ordered to pay $421,000 in restitution to the two lenders.

Read the original article in the Modesto Bee.

Fremont real estate agent sentenced in short sale fraud

February 25th, 2015 at 6:10pm

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

FRESNO, Calif. —Minerva Sanchez, 48, of Fremont, was sentenced today by Senior U.S. District Judge Anthony W. Ishii to 21 months in prison for conspiring to commit bank fraud, United States Attorney Benjamin B. Wagner announced.  Sanchez also was ordered to pay restitution to financial institutions in the amount of $421,372.

According to court documents, Sanchez was a licensed real estate agent who, beginning in or around March 2010, represented the seller of a home in Patterson, California.  Sanchez recommended that the seller undertake a short-sale of his home using Sanchez’s son as the straw buyer.  The seller, acting on Sanchez’s advice, submitted to Tri Counties Bank and Freddie Mac false and fraudulent short-sale applications, and caused these financial institutions to approve the charge-off of funds for the short-sale of the seller’s home.

With Sanchez’s knowledge, the seller provided the straw buyer with the full purchase price of the home ($355,000).  Sanchez provided the seller with a “hardship letter” for him to use in connection with the short-sale application, which misrepresented the seller’s inability to make his monthly mortgage payments.  In fact, Sanchez knew that the seller could make his monthly mortgage payments with proceeds from a pending sale of other real property he owned.

Sanchez, along with the seller and straw buyer, made other misrepresentations to the financial institutions in connection with the short-sale, including false statements that the transaction was “arm’s length,” and false statements concerning the parties’ hidden agreement that the seller would provide the straw buyer with the purchase money for the short-sale and ultimately regain ownership of his home following the short-sale.  In her plea agreement, Sanchez admitted that her criminal conduct caused the financial institutions to lose more than $316,000.

This case was the product of an investigation by the Federal Housing Finance Agency-Office of Inspector General and the Internal Revenue Service-Criminal Investigation.  Assistant United States Attorney Christopher Baker prosecuted the case.

On June 10, 2013, the seller of the Patterson property, Agustin Simon, 52, of Gustine, pleaded guilty to conspiring to commit bank fraud in connection with this scheme.  He is scheduled to be sentenced on February 23, 2015, before U.S. District Judge Lawrence J. O’Neill.

Iowa Realtor®, Attorney convicted in short sale fraud case

February 19th, 2015 at 1:38pm

Below is the press release from the office of the United States Attorney’s Office for the Southern District of Iowa:

A Des Moines area attorney and real estate agent were both convicted of bank fraud after an eight-day jury trial, announced United States Attorney Nicholas A. Klinefeldt. Attorney Jason Springer was convicted of seven counts of bank fraud, and real estate agent Rick Makohoniuk was convicted of one count of bank fraud, in connection with a property flipping scheme. Bank fraud carries a maximum penalty of up to 30 years in prison, a fine not to exceed $1,000,000, or both. The court also will be authorized to impose orders of restitution. United States District Judge John A. Jarvey will schedule a sentencing date at a later time.

Springer, Makohoniuk, and three other men were charged with engaging in a scheme to defraud financial institutions from approximately March 2009 to March 2011, involving approximately eighteen homes in and around Des Moines, Iowa, and a loss of approximately $400,000. Two of the other men, Nathan Smith and Patrick Steven, with the assistance of Springer and others, negotiated short sales with lenders on behalf of homeowners. Smith and Steven also purchased the homes in the short sales while deceiving the lenders into believing that the price Smith and Steven paid in the short sale was the fair market value. In fact, Smith and Steven resold the homes for a higher price the same day they purchased the home in the short sale or soon after, all without the lenders’ knowledge. Springer furthered the scheme by conducting many of the fraudulent real estate closings, including signing and submitting false HUD-1 settlement statements that stated that Smith and Steven paid cash at closing for the short sales. In some cases, Smith and Steven brought no money to closing, whereas in other cases, Smith and Steven provided checks, but there were not sufficient funds in Smith and Steven’s bank account to cover the checks they brought to closings. Springer used the proceeds of the resale to fund the short sale. Makohoniuk, a realtor, is alleged to have submitted false documents to a lender with respect to one of the homes involved in the scheme.

The three following defendants charged in the indictment each entered guilty pleas; and are scheduled to be sentenced on May 14, 2015:

Nathan Smith and Patrick Steven both pleaded guilty to one count of bank fraud; and

Jerod Hogan, a Des Moines area mortgage broker, pleaded guilty to one count of conspiracy to make a false statement to a financial institution.

This case was investigated by the Federal Bureau of Investigation and the United States Department of Housing and Urban Development-Office of Inspector General, and was prosecuted by the United States Attorney’s Office for the Southern District of Iowa.

Real estate agent who committed short sale fraud gets prison

February 11th, 2015 at 9:51am

Yeon Han, 53, the owner/operator of Pacific Realty in Annandale, Virginia, was sentenced to 30 months in prison and three years of supervised release for her role in mortgage fraud, short sale fraud and tax fraud conspiracies, according to the FBI. She was also ordered to pay $1,022,143.95 in restitution to the victims of her crimes, according to the FBI.

Han pleaded guilty to two counts of conspiracy to commit wire fraud in May 2013.

The first scheme was a short sale fraud, in which Han and her-conspirators inflated the costs required to convey clear title for a short sale transaction, then convinced the (stupid) lender that the costs were legitimate. After gaining approval, the conspirators falsified the HUD-1 settlement statement. When the property closed escrow, the inflated portion was distributed among the conspirators.

The second scheme was a tax fraud conspiracy with James Sohn and was not real estate-related.

Read the FBI press release.

Criminal defense attorney pleads to being a criminal in short sale fraud of his home

February 4th, 2015 at 6:29pm

Luis Rojas, 38, has pleaded guilty in federal court to making false statements in connection with a fraudulent short sale of his property in Clark County, Nevada.

The U.S. Attorney’s Office for the Southern District of California reported that Rojas paid his brother-in-law cash to act as a straw buyer (non-arms-length buyer) for the short sale purchase of his $935,430 home in Henderson for $288,000. In other words, by completing the purchase, Luis Rojas and his wife, who remained in the house, now own it outright. He was so brazen that just one month after the “short sale”, the brother-in-law transferred the property back to Luis. All of these acts are against the agreements typically required by lenders to effect an acceptable, arms-length  short sale and are considered by lenders to be short sale fraud.

Even though he is a criminal defense attorney in Las Vegas – where there is no shortage of crime –  Luis Rojas told his lender GMAC he could not longer afford his mortgage payments, which he admitted in his pleading was untrue. He also hid from GMAC that he had liquid assets in a brokerage account valued at over $134,000 when he filed his financial disclosure form.

When he faces U.S. District Judge James C. Mahan on June 1, Luis Rojas faces a maximum sentence of five years in prison and a fine of up to $250,000.

No word as to whether Rojas’ brother-in-law is being prosecuted. And as of the date of this writing, the property is still in the name of Luis Rojas and his wife.

Read the original article in KLAS-TV.

© 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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