California Real Estate Fraud Report

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Archive for the 'Short Sale Fraud' Category

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

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.

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.

Note: Minerva Sanchez was sentenced to 21 months in prison on February 17, 2015, according to the Modesto Bee.

 

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.”

© 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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