California Real Estate Fraud Report

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Archive for the 'Short Sale Fraud' Category

Seven charged by U.S. Attorney for defrauding TARP banks

June 26th, 2015 at 2:52pm

Below is a press release from SIGTARP:

Christy Romero, Special Inspector General for the Troubled Asset Relief Program (SIGTARP); Benjamin B. Wagner, United States Attorney for the Eastern District of California; Wade Walters, Special Agent in Charge of the Federal Deposit Insurance Corporation Office of Inspector General (FDIC-OIG); Birgit Fladager, Stanislaus County (Calif.) District Attorney; and Leslie DeMarco, Special Agent in Charge of the Federal Housing Finance Agency Office of Inspector General (FHFA-OIG), today announced that a federal grand jury returned a 15-count indictment on June 25, 2015, against seven residents of California, charging them with conspiracy to commit mail fraud and bank fraud, mail fraud and aiding and abetting, and making false statements to a bank in a mortgage fraud scheme.

Jyoteshna Karan, 43, and Praveen Singh, 36, were arrested this morning at their home in Modesto. Mahendra Prasad, 53, was arrested this morning at his home in Fremont. The remaining defendants each received a summons to appear for arraignment: Phul Singh, 79, and Sunita Singh, 60, both of Modesto; Nani Isaac, 69, of Ceres; and Martin Bahrami, 42, of Turlock.

According to court documents, the defendants conspired to defraud mortgage lending companies and financial institutions by making false statements on loan applications and short-sale applications in order to obtain properties under their names and the names of others. The false statements included statements relating to the defendants’ employment, their familial relationship, income, and their intent to occupy the home as their primary residence.

According to the indictment, the conspiracy encompassed at least 25 properties from Sacramento to Modesto. As a result of the scheme, lenders lost in excess of $3 million. “Early this morning, SIGTARP agents and our law enforcement partners arrested or served summons on seven individuals who stand charged with operating a fraud scheme that cost financial institutions, including multiple TARP banks, millions of dollars in losses,” said Christy Romero, Special Inspector General for TARP. “The seven allegedly conspired to falsify information on mortgage loan and short-sale applications submitted to multiple financial institutions in order to obtain properties across Eastern California. SIGTARP and our law enforcement partners will aggressively investigate allegations of fraud perpetrated at the expense of taxpayers’ TARP bank investments and bring accountability to those who engage in these schemes.” Jyoteshna Karan and Praveen Singh are scheduled to appear for arraignment in U.S. District Court in Fresno, on Friday, June 26, 2015, before U.S. Magistrate Judge Gary Austin. Phul Singh, Sunita Singh, Nani Isaac, and Martin Bahrami are scheduled to appear for arraignment in U.S. District Court in Fresno, on Wednesday, July 1, 2015, before U.S. Magistrate Judge Gary Austin. Mahendra Prasad is scheduled to appear in U.S. District Court in San Jose, on June 26, 2015, for arraignment.

If convicted, each defendant faces a maximum statutory penalty of 30 years in prison and a $1 million fine per count. Any sentence, however, would be determined at the discretion of the court after consideration of any applicable statutory factors and the Federal Sentencing Guidelines, which take into account a number of variables. The charges are only allegations; the defendants are presumed innocent until and unless proven guilty beyond a reasonable doubt.

This case is the product of an investigation by SIGTARP, the Stanislaus County District Attorney’s Office, the Federal Bureau of Investigation, FHFA-OIG, and FDIC-OIG. Assistant United States Attorneys Mark E. Cullers and Patrick Delahunty are prosecuting the case.

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, visit www.StopFraud.gov.

About SIGTARP

The Office of the Special Inspector General for the Troubled Asset Relief Program investigates fraud, waste, and abuse in connection with TARP.

To report suspected illicit activity involving TARP, dial SIGTARP at 1-877-SIG-2009 (1-877-744-2009) or visit www.SIGTARP.gov/Pages/crimetips.aspx.

To receive alerts about quarterly reports, new audits, and media releases issued by SIGTARP, sign up at www.SIGTARP.gov/pages/press.aspx. Follow SIGTARP on Twitter @SIGTARP.

Modest attorney indicted for short sale fraud of his own property

June 23rd, 2015 at 9:47am

Robert Farrace, 51, a Modesto real estate attorney, has been indicted by a federal grand jury for allegedly completing a short sale fraud of one of his properties by setting up an LLC to purchase it.

Farrace has been charged with three counts of wire fraud, according the U.S. Attorney’s Office for the Eastern District of California. Federal prosecutors say he created Dignitas LLC but used a friend’s name as the LLC’s registered agent in order to hide his interest and control. The alleged purpose was to launder his higher mortgage through the company via a short sale in order to obtain a lower one. This could only be accomplished by misleading the lenders.

Prosecutors say that after defaulting on the mortgage payments to his two properties, Farrace created Dignitas LLC, which served as a straw buyer to purchase the home. The lenders did not know that Farrace controlled Dignitas LLC. The first short sale, of his Roseburg property, was approved; however the short sale for the Scenic Drive home was halted after law enforcement became aware of the alleged scheme and notified the lenders.

Read the original article in the Modesto Bee.

 

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.

© 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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