California Real Estate Fraud Report

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Archive for the 'Short Sale Fraud' Category

Realtor® and Home Seller Plead Guilty in San Jose-area Short Sale Fraud

December 5th, 2014 at 9:26am

Two persons have pleaded guilty  has pleaded guilty in U.S. District Court in Fresno to conspiracy to commit bank fraud, announced U.S. Attorney Benjamin Wagner.

Minerva Sanchez, 48, of Fremont, was the real estate agent for the seller, Agustin Simon, 52.

Simon’s home was located in Patterson, California. According to court documents, he and Sanchez conspired to effect a short sale of his home to Sanchez’ son, who would act as a straw buyer and provided Simon with the hardship letter explaining why he was unable to afford his mortgage payments. Sanchez would later regain title to the property but at a reduced mortgage as a result of the short sale.

As part of her plea agreement, Minerva Sanchez admitted that the lenders lost over $316,000 from her criminal conduct.

Note: most, if not all, lending institutions require short sales to be arm’s-length, meaning that the parties to the transaction may not be known to each other. This is to prevent schemes such as resulted in this prosecution.

You can learn more about short sale fraud by reading my book “How to Commit Short Sale Fraud . . . and Get Away with It“.

Read the original article in the Central Valley Business Times.

 

Florida Man Gets Prison for Short Sale Fraud

October 16th, 2014 at 1:37pm

Douglas Edward Henderson, 52, of Fort Walton Beach, Florida, was sentenced to 15 months in prison by Chief U.S. District Court Judge M. Casey Rodgers.

Henderson, who was ordered by the court to pay over $1.2 million in restitution, pleaded guilty to five counts of submitting a false tax return, two counts of aiding in the preparation of a false tax return, one count of mail fraud, and one count of conspiracy to commit mail and wire fraud.

The sentence was announced by Pamela C. Marsh, United States Attorney for the Northern District of Florida.

Henderson admitted to many of the charges. But while being the subject of a federal grand jury investigation, he engaged in a fraudulent short sale of his condominium using a family trust and the cooperation of Henderson Electric’s then chief financial officer.

The charges were the result of an investigation by the Internal Revenue Service – Criminal Investigation and was prosecuted by Assistant U.S. Attorney Tiffany Eggers.

Read the original article in WTYV.

Northern California Real Estate Broker Charged in Short Sale Fraud Case

October 9th, 2014 at 3:21pm

This press release was copied from the website of U.S. Attorney Melinda Haag.

Anthony Keslinke was charged today by superseding indictment in a scheme involving short sale mortgage fraud (“short sale fraud“), announced U.S. Attorney Melinda Haag, Drug Enforcement Administration Special Agent in Charge Jay Fitzpatrick, and Internal Revenue Service, Criminal Investigation, Special Agent in Charge José M. Martinez.

According to the superseding indictment, Keslinke used straw buyers to purchase real estate throughout Northern California. Keslinke identified properties, including his own properties, that were potential candidates for a “short sale.” A “short sale” is a sale of real estate in which the sale proceeds are less than the balance owed on the mortgage loan pertaining to the property and often occurs when a borrower cannot pay the mortgage loan. In furtherance of the scheme, Keslinke allegedly submitted offers to the financial institutions on behalf of straw buyers. In order to induce a bank to accept a short sale offer, Keslinke would draft fraudulent financial hardship letters and submit them on behalf of the seller of a property. In addition, Keslinke often altered engineering and pest reports associated with the properties in order to give the appearance to the financial institutions that the properties were worth significantly less than true fair market value. Additionally, according to the superseding indictment, Keslinke often altered bank account documents to create the appearance that the straw buyers had sufficient funds to purchase the properties in cash. Once a financial institution accepted a particular property for a short sale, Keslinke used his own funds to purchase the property in the name of the straw buyer. After a short sale was completed on a particular property, Keslinke maintained control of the property and often sold the property for a significant financial gain. Keslinke is charged in the superseding indictment with using this mortgage fraud scheme to orchestrate the short sale of properties in Danville, California; Walnut Creek, California; and Kings Beach, California.

The indictment also alleges that between August of 2013 and February of 2014, Keslinke met with an undercover agent purporting to be a drug dealer on multiple occasions. On five separate occasions, Keslinke accepted a total of $550,000 from the undercover agent. In an attempt to conceal the true source of the funds, Keslinke repeatedly deposited the money received from the undercover agent into business bank accounts under Keslinke’s control. Keslinke then attempted to launder the money by wiring it from his business bank accounts to an account controlled by the undercover agent. During the investigation, Keslinke routinely kept 8-10% of the money provided to him from the undercover agent as a fee for his services.

Upon a conviction on any of the bank fraud or wire fraud charges, alleged in counts one through six, Keslinke shall forfeit any property, real or personal, which constitutes or is derived from proceeds traceable to the offense.

Upon a conviction of any of the money laundering charges, alleged in counts seven through twelve, Keslinke shall forfeit $320,000 cash seized from Keslinke’s residence, approximately $1.4 million from bank accounts, 500 American Silver Eagle coin, and a Tiffany diamond solitaire ring, all of which allegedly constitutes or is derived from the proceeds traceable to the offenses.

The maximum statutory penalty for each count of Conspiracy to Commit Bank Fraud and Bank Fraud, in violation of 18 U.S.C. § 1349 and 18 U.S.C. §§ 1344, is 30 years in prison and a $1,000,000 fine. The maximum statutory penalty for each count of Wire Fraud, in violation of 18 U.S.C. §§ 1343, is 20 years in prison and a $250,000 fine. The maximum statutory penalty for each count of Conspiracy to Commit Money Laundering and Money Laundering, in violation of 18 U.S.C. § 1956(h) and 18 U.S.C. § 1956(a)(3)(B), is 20 years in prison and a $250,000 fine.

Assistant U.S. Attorney Aaron Wegner is prosecuting the case with the assistance of Vanessa Vargas. The prosecution is the result of an investigation by the Drug Enforcement Administration and Internal Revenue Service. The Contra Costa Sheriff’s Office and Livermore Police Department have also provided assistance during the investigation. The investigation was conducted and funded by the Organized Crime Drug Enforcement Task Force, a multi-agency task force that coordinates long-term narcotics trafficking investigations.

Please note, an indictment contains only allegations. Therefore, as with all defendants, Anthony Keslinke must be presumed innocent unless and until proven guilty.

(Keslinke superseding indictment )

Short Sale Fraud Comes to Iowa

September 12th, 2014 at 12:33pm

An 11-page indictment from the U.S. Attorney for the Southern District of Iowa alleges that four men, including an attorney, defrauded financial institutions in the area in or around Des Moines, causing losses to the lenders of approximately $400,000.

The four defendants, who have been charged with bank fraud,  are attorney Jason Springer, property flippers Nathan Smith and Patrick Steven, real estate agent Rick Makohoniuk and mortgage broker Jerod Hogan.

The indictment charges that Smith and Steven negotiated short sales with the lenders on the behalf of the selling homeowners. Lenders require the purchasers of such properties to be arm’s-length buyers in order to ensure that the properties are sold at fair-market value and are not simply a ruse for the sellers to get their properties back at a reduced mortgage.  However, prosecutors allege that Smith and Steven purchased the homes without disclosing this to the lenders and that further, the selling prices were not fair-market value (short sale fraud). Note: Dear Banks: where were your appraisers when this happened?

Following the purchases, which involved 18 properties, Smith and Steven resold the homes for a profit, i.e., their true fair-market values. Attorney Springer is alleged to have participated by conducting the closings. Makohuniuk is alleged to have submitted false documents to a lender and Hogan alleged provided Smith and Steven with false documents they used to deceive the lenders.

The allged crimes occurred from approximately March 2009 to March 2011 and were investigated by both the FBI and the Office of Inspector General for the Department of Housing and Urban Development (HUD-OIG).

Publisher’s note: it is my observation that California has proportionately done less to investigate and prosecute short sale fraud than any other state, which probably explains why short sale fraud is as common as identity theft here.

Read the original article in the Algona Upper Des Moines.

To learn more about short sale fraud, read my book “How to Commit Short Sale Fraud . . . and Get Away with It.”

Real Estate Agents Accused by U.S. Attorney in Sacramento of Committing Short Sale Fraud

September 12th, 2014 at 11:41am

Real estate agents Michael Keatts and Lillian Marquez were indicted in November 2013 by a federal grand jury in Sacramento on charges of conspiring to commit mortgage fraud and mail fraud.

Keatts and Marquez operated Colonial Home and Business Services in Stockton from 2007 through 2012. While their business should have been helping people buy and sell homes, the U.S. Attorney for the Eastern District of California alleged that they used their clients as straw buyers, set the straw buyers up in business controlled by Keatts and Marquez and applied for mortgages by submitting this and other financial information they knew not to be true.

According to this article in the Sacramento Bee, Michael Keatts and Lillian Marquez have been accused of short sale fraud, in that they helped their clients to short sale their homes to straw buyers. The lending institutions were not made aware of this arrangement and that the sellers remained in their homes and received not only the benefits of new loans with reduced mortgages but also received tax forgiveness on the gains by both the Internal Revenue Service and the California Franchise Tax Board.

 

US DOJ Indicts Five Men for Short Sale Fraud / Property Flipping Scheme

August 22nd, 2014 at 9:25am

United States Attorney Nicholas A. Klinefeldt announced the indictment of five people for bank fraud based on their participation in a fraudulent property flipping scheme. The defendants are Nathan Smith, Patrick Steven, Jason Springer, Rick Makohoniuk, and Jerod Hogan.

The indictment alleges that the defendants engaged in a scheme to defraud financial institutions from approximately March 2009 to March 2011, in a scheme involving approximately eighteen homes in and around Des Moines, Iowa, and a loss of approximately $400,000.

According to the indictment, Smith and Steven were property flippers who negotiated short sales with lenders on behalf of homeowners. The indictment alleges that, without the lenders’ knowledge, Smith and Steven also purchased the homes in the short sales, and that they and the other defendants deceived the lenders into believing that the price Smith and Steven paid in the short sale was the fair market value. In fact, according to the indictment, without the lenders’ knowledge, Smith and Steven immediately resold the homes for a profit. Springer, a Des Moines attorney, is alleged to have furthered the scheme by conducting the fraudulent real estate closings and collecting a commission for his work. Makohoniuk, a realtor, is alleged to have submitted false documents to a lender with respect to one of the homes involved in the scheme, and Hogan, a mortgage broker, is alleged to have provided Smith and Steven with false documents that were used to deceive lenders.

Steven, Springer, Makohoniuk, and Hogan were arraigned today in federal court, and the trial has been scheduled for September 29, 2014. Smith’s arraignment is scheduled for August 29, 2014.

The investigation was conducted by the Department of Housing and Urban Development – Office of Inspector General (HUD-OIG) and Federal Bureau of Investigation.

In accordance with the Iowa Rules of Professional Conduct, the public is reminded that an indictment is merely accusations, and that the defendants are presumed innocent until and unless proven guilty. Additionally, because this matter is pending in the United States District Court, the United States Attorney’s Office does not anticipate making any further comment or statement at this time.

Press Release

Three People Charged in SoCal Short Sale Fraud Case

August 15th, 2014 at 10:28am

A common short sale scheme with a twist may land three people in a lot of trouble.

Prosecutors said Nelly Luz Rubiano, 57, of Ojai, and Orange County residents Sergio Sanchez Santibanez, 32, and Alejandra Rodriguez, 31, allegedly operated a foreclosure rescue program that may have incorporated short sale fraud into the business model.

The three worked for Foreclosure Legal Services in the city of Orange and were arrested on allegations they charged homeowners in distress upfront fees, which are illegal in California. They were alleged to have promised the homeowners to save their homes by offering to buy the homes in a short sale and then re-selling the properties to those homeowners at a discounted market value, courtesy of the lenders.

Prosecutors said that from 2011 to 2012, Rubiano, Santibanez and Rodriguez lured struggling homeowners in Ventura County with a promise to save their homes that were undergoing foreclosure. The three allegedly promised to buy the distressed properties in a short sale and said they would then sell the properties back to the homeowners at a reduced market value, prosecutors said.

Read the original article in the Ventura County Star.

FBI Investigation Gets Prison Time for Short Sale Fraud for Former BofA Employee

July 31st, 2014 at 12:59pm

A former Bank of America employee who admitted taking over $1.2 million in bribes to approve short sales at below-market values has received a sentence of 30 months in federal prison.

United States District Judge Otis D. Wright II sentenced Kevin Lauricella, 29, of Thousand Oaks,  and also ordered him to repay Bank of America $5.7 million and give up his home, which was purchased with some of Lauricella’s illegal earnings. As part of his plea, Lauricella admitted that he had approved short sales for at minimum nine properties for the low valuations so that the buyers could flip (re-sell) the properties quickly (short sale fraud). The sales, which occurred in 2010 and 2011, were entered at higher/false values in the bank’s computer system with the purpose of making it appear that Bank of America had approved the lower values.

Read the original article on the FBI website.

Virginia Settlement Officer Pleads Guilty in Short Sale Fraud Scheme

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.

Michigan Supreme Court Justice Who Committed Short Sale Fraud Wants Home Confinement

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.

© 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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