California Real Estate Fraud Report

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Archive for the 'Short Sale Fraud' Category

Former Gophers Basketball Star Sam Jacobson Charged in Short Sale Fraud

August 25th, 2016 at 12:31pm

Former Gophers basketball star Sam Jacobson once owned a home in Apple Valley, Minnesota.

In 2011, Jacobson sold his home in a short sale to his then-girlfriend, Traci Quam. He was supposed to move out per the lender’s requirements that the sale be arm’s-length, but Quam admitted he did not, in an interview with the Minnesota Commerce Fraud Bureau.

Traci Quam resold the home four months later for $538,000 and pocketed $176,000 in profit. She then used the money to purchase another home in Apply Valley. According to the complaint filed again both of them, “The day she closed on the Cobblestone Lake home, July 20, 2012, Sam Jacobson proposed to her.”

Sam Jacobson and Traci Quam have each been charged with one count of theft by false representation and one count of theft by swindle.

Prosecutors: why wasn’t the listing agent charged?

Read the original article in KMSP-TV and the Minnesota Star Tribune.

 

Anthony Keslinke Sentenced to 4 Years in Real Estate Fraud, Drug Money Scheme

April 29th, 2016 at 12:48pm

Danville businessman Anthony Keslinke, 47, was sentenced to four years in prison by Judge Jon Tigar in the U.S. District Court in Oakland after previously pleading guilty to real estate fraud and money laundering schemes.

Keslinke’s sentence arose out of a guilty plea last year in which he admitted to devising schemes to short-sell properties and for accepting what he thought was drug money from an undercover Internal Revenue Service agent. He must also pay almost $1.3 million in restitution to his victims and to forfeit approximately $3 million in assets.

Read the original article in the Mercury News.

Read the article in the Antioch Herald to learn more about Anthony Keslinke‘s fraudulent short sales (short sale fraud) and the profits he made from it.

San Diego Brothers Sentenced to Prison for “Debt Elimination” Scheme, Short Sale Fraud

March 28th, 2016 at 5:53pm

Brothers and former real estate agents Adel and Atef Afkarian were sentenced to prison terms for operating a fraudulent “debt elimination” scheme as well as a complicated short sale fraud that ripped off lenders in the San Diego area.

Adel Afkarian was sentenced  to 18 months by U.S. District Judge John Houston and Atef Afkarian received 13 months. The judge ordered the brothers to pay more than $5.5 million in restitution to their victims. Their licenses had previously been revoked by the California Bureau of Real Estate.

After identifying underwater homeowners (including themselves), the Afkarians recorded fraudulent deeds (title fraud) that showed the loans on the properties had been extinguished. They then sold the properties to unaware buyers. The original mortgage lenders, who did not know about the fraudulent title documents, were not paid. This included their own $1.4 million mortgage.

At the same time, the Afkarians conspired to transact fraudulent short sales for underwater clients through a simultaneous “double escrow” scheme involving the use of straw buyers.

Read the original article in Fox 5 News.

Former FDIC Attorney Sentenced Prison for Bank Fraud (Short Sale Fraud)

February 23rd, 2016 at 4:51pm

The following is a press release from the U.S. Attorney for the Eastern District of Virginia:

ALEXANDRIA, Va. – Michelle M. Borzillo, 59, of Bristow, was sentenced today to 12 months and one day in prison, followed by two years of supervised release, for defrauding Wells Fargo Bank in connection with the sham short sale of her home to her live-in boyfriend.  She was also ordered to pay $288,497 in restitution and to forfeit the proceeds of her offense.

Borzillo pleaded guilty on Nov. 17, 2015 to committing bank fraud.  According to court documents, the defendant was a senior attorney at the Federal Deposit Insurance Corporation (FDIC) until September 2014.  In 2007, she purchased a home in Nokesville for $850,000, with mortgages totaling $807,500 from Wells Fargo Bank.  In 2013, she engineered the short sale of her Nokesville home to her boyfriend, who had been living with her at the property for several years.

In order to induce Wells Fargo Bank to approve the short sale and relieve the defendant of her mortgage obligations, the defendant falsely represented to her lender that the sale of the property was an arm’s-length transaction to someone with whom she had no close personal relationship. She also falsely certified that she was moving out of the property, and claimed she was suffering a financial hardship due to the then-federal pay freeze.  In reality, as the defendant has admitted, she had no intention of moving out of the property, despite accepting $3,000 in relocation assistance in connection with a federal program designed to assist financially distressed short sellers.  As a senior FDIC employee, the defendant also had not been subject to the federal pay freeze, and her base annual pay had steadily increased during the time she owned the home, to $230,000 at the time of the short sale.  As a result of the fraudulent short sale transaction, Wells Fargo Bank was required to write off nearly $300,000 in losses.

Dana J. Boente, U.S. Attorney for the Eastern District of Virginia; Fred Gibson, Acting Inspector General of the FDIC; and Rene Febles, Deputy Inspector General for Investigations, Office of the Inspector General for the Federal Housing Finance Agency, made the announcement after sentencing by U.S. District Judge Claude M. Hilton.  Assistant U.S. Attorneys Samantha P. Bateman and Paul J. Nathanson prosecuted the case.

A copy of this press release may be found on the website of the U.S. Attorney’s Office for the Eastern District of Virginia.  Related court documents and information may be found on the website of the District Court for the Eastern District of Virginia or on PACER by searching for Case No. 1:15-cr-135.

Short sale fraud of his Florida ranch earns man a prison sentence

November 20th, 2015 at 10:12am

Jaime Olaya, 53, thought he outsmarted his bank in the short sale of his 10-acre property.

Olaya bought the property in 2005 and in 2008, quit-claimed half of it to a company he controlled. He later completed a short sale on the half that was retained in his name, selling the home to a straw buyer relative using his Olaya’s own funds from Colombia.

How he was caught remains a mystery. On top of the 2 1/2 years in federal prison he’s going to serve, he agreed to forfeit the entire property.

Read the original article in the Sun Sentinel.

 

Methuen Executive Convicted in Short Sale Fraud Conspiracy

November 20th, 2015 at 9:55am

The following is a press release from the United States Attorney’s Office for the District of Massachusetts:

BOSTON – A Methuen business executive pleaded guilty today to participating in a conspiracy to defraud banks and mortgage companies by engaging in sham “short” sales of residential properties in the Merrimack Valley of Massachusetts.

Dahianara Moran, 40, pleaded guilty to one count of conspiracy to commit bank fraud.  U.S. District Court Judge Rya W. Zobel scheduled sentencing for Feb. 17, 2016.

Moran conspired with others – including a Methuen loan officer and a Haverhill real estate agent who were not identified in the charging document – to defraud various banks via bogus short sales of homes in Haverhill, Lawrence and Methuen.  A short sale is a sale of real estate for less than the value of any mortgage debt on the property.  Short sales are an alternative to foreclosure that typically occur only with the consent of the mortgage lender, and that generally result in the lender absorbing a loss on the loan and releasing the borrower from the unpaid balance.  By their very nature, short sales are intended to be arms-length transactions in which the buyers and sellers are unrelated, and in which the sellers cede their control of the subject properties in exchange for the short-selling bank’s agreement to release them from their unpaid debt.

The conspiracy began in approximately August 2007 and continued through June 2010, a period that included the height of the financial crisis and its aftermath.  Home values in Massachusetts and across the nation declined precipitously, and many homeowners found themselves suddenly “underwater,” with their homes worth less than the mortgage debt they owed.  As part of the scheme, Moran and her co-conspirators submitted materially false and misleading documents to numerous banks in an effort to induce them to permit the short-sales – and thereby to release the purported sellers from their unpaid mortgage debts – while simultaneously inducing the purported buyers’ banks to provide financing for the deals.  In fact, the purported sellers simply stayed in the homes, with their debt substantially reduced.  In some cases, the conspirators then re-sold the properties in genuine arms-length transactions for a profit.  Meanwhile, the short-selling banks lost millions of dollars.

As part of the conspiracy:

  • The conspirators falsely led banks to believe that the sales were arms-length transactions between unrelated parties, when in fact, the transactions were not arms-length, and the sellers retained control of (and frequently continued to live in) the properties after the sale. For example, Moran purported to sell two properties she owned to third parties who were, in fact, her close relatives, while actually maintaining control of both properties.
  • The conspirators submitted phony earnings statements that Moran prepared in support of loan applications that they submitted to banks in order to obtain financing for the purported sales.
  • The conspirators submitted phony HUD-1 Settlement Statements to banks, as well as to the Federal Housing Administration, that did not accurately reflect the disbursement of funds in the transactions. (A HUD-1 Settlement Statement is a standard form, developed by the U.S. Department of Housing and Urban Development, that is used to document the flow of funds in real estate transactions.HUD-1 Settlement Statements are required for all transactions involving federally related mortgage loans, including all mortgages insured by the Federal Housing Administration.)

Hayacinth Bellerose, a real estate attorney from Dunstable, Mass., pleaded guilty last month to the same charge and is scheduled to be sentenced on Feb. 4, 2016.

The charge of conspiracy to commit bank fraud provides for a sentence of no greater than 30 years in prison, three years of supervised release and a fine of $1 million.  Actual sentences for federal crimes are typically less than the maximum penalties. Sentences are imposed by a federal district court judge based upon the U.S. Sentencing Guidelines and other statutory factors.

United States Attorney Carmen M. Ortiz; Christina Scaringi, Special Agent in Charge of the Department of Housing and Urban Development, Office of Inspector General, New York Field Office; and Christy Goldsmith Romero, the Special Inspector General of the Troubled Asset Relief Program, made the announcement today.  The case is being prosecuted by Assistant U.S. Attorney Stephen E. Frank, Deputy Chief of Ortiz’s Economic Crimes Unit.

Massachusetts attorney pleads guilty in short sale fraud conspiracy

November 11th, 2015 at 10:08am

Hyacinth Bellerose, 50, a Dunstable, Massachusetts real estate attorney, pleaded guilty to one count of conspiracy to commit bank fraud in federal court.

Bellerose, who was prosecuted by the office of United States Attorney Carmen M. Ortiz, colluded with a Methuen loan officer and a Haverhill real estate agent to defraud lenders from 2007-2010 by orchestrating a number of phony short sales. Bellerose and her co-conspirators submitted false and misleading documents to the banks to convince them to permit the short sales while at the same time inducing the buyers’ banks to finance purchases. The home sellers, though, stayed in their homes with their mortgages “substantially reduced” (mortgage laundering) while the conspirators made money from the transactions. Some of the homeowners then later sold their homes at a profit.

Read the original press release on the website of the U.S. Attorney for the District of Massachusetts.

California Bureau of Real Estate (BRE) Summary of Enforcement Actions – September 2015

October 16th, 2015 at 10:12am

Here is the monthly summary of enforcement actions the BRE has taken against licensees.

Note that for all the good work the BRE does in trying to discipline or remove bad agents and brokers, it has not filed any actions against licensees for involvement in short sale fraud schemes for almost 2 years!

 

Nevada Attorney General Laxalt indicts American Equity Foundation owners in short sale fraud case

September 25th, 2015 at 9:20am

The following is a press release from the Office of Nevada Attorney General Laxalt:

Nevada Attorney General Adam Paul Laxalt announced that Christopher Nelson, 46, of Henderson and Niket Kulkarni, 38, of Los Angeles, CA were indicted by the Clark County Grand Jury on charges of pattern of mortgage lending fraud and racketeering, among others. The defendants operated their business, the American Equity Foundation, between July 2012 and May 2013.

According to the indictment, the defendants are accused of soliciting customers to participate in a short sale program associated with the federal government called the Neighborhood Stabilization Plan. Defendants falsely represented to their clients that their business could facilitate the short sales of customers’ homes to investors. Clients were also told that they could then lease their homes from the investors for a period of time, before having the opportunity to repurchase those homes at a cost of 90-100% of the home’s market value. Through these representations, the defendants are alleged to have unlawfully obtained more than $133,000 from their clients.

“Indictments such as these set a precedent that fraudulent behavior will not be tolerated and will be aggressively pursued,” said Laxalt. “Mortgage fraud can have devastating effects on homeowners and the economy, and my office will hold accountable those who unlawfully collect fees from homeowners using false promises of solutions.”

Special Agent in Charge James Todak of the Housing and Urban Development’s Office of the Inspector General (HUD-OIG) added, “Our office continues to be vigilant in protecting FHA insured borrowers from those in the mortgage industry willing to defraud them through foreclosure rescue schemes. This prosecution with the Nevada Attorney General’s Office demonstrates our commitment to protecting HUD’s important work in providing affordable home ownership.”

Nelson and Kulkarni are scheduled for initial appearances before the Eighth Judicial District Court on October 5, 2015.

This case was investigated by the HUD-OIG and the Office of the Special Inspector General for the Troubled Asset Relief Program (SIGTARP). Senior Deputy Attorney General Raya Swift and Deputy Attorney General Michael Kovac are prosecuting the case. An indictment is merely a charging document; every defendant is presumed innocent until and unless proven guilty in a court of law.

To read the criminal indictments for Nelson and Kulkarni, click on their respective links. To file a complaint about someone suspected of committing a fraud, click here.

Father and son charged in short sale fraud of their properties

September 4th, 2015 at 8:24am

Two New Jersey men have been charged with bank fraud for allegedly setting up fraudulent short sales of their own properties in Emerson and Park Ridge.

George Bussanich Sr., 56, of Park Ridge, and George Bussanich Jr., 35, of Upper Saddle River, were charged with one count of conspiracy to commit bank fraud and two counts of bank fraud.

Bussanich Sr. is alleged to have sold the Emerson and Park Ridge properties as short sales to straw buyers, for which he provided the purchase money. He later re-purchased the properties from the straw buyers. His son is alleged to have lied to one of the mortgage servicers about one of the properties.

The intended outcome of selling one’s own properties to a straw buyer and then re-taking ownership is to get a write-down in the principal owed on the property, at the expense of the original lender.

 

In 2014, the Bussaniches agreed to pay to pay $5.5 million – including $4 million in restitution – to settle allegations that they defrauded more than 30 investors and spent the money on Maseratis, a Ferrari and expensive homes, charges which they denied.

Read the original article in NorthJersey.com

© Copyright 2007-2016 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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