California Real Estate Fraud Report

One of two brothers who committed $6 million worth of foreclosure fraud by stealing the identities of notaries (notary fraud) and forging scores of grant deeds (title fraud) is going to prison for 12 years.

John Zepeda, 60, pleaded guilty to rent skimming, forgery, identity theft and conspiracy to commit grand theft. Zepeda apparently did not spend all his ill-gotten gains, as he has agreed to pay restitution to his victims.

A woman who tried to fraudulently erase the mortgage (title fraud) owned by her parents has been caught and is expected to be returned to face charges.

Monica Lynne Whitten, 44, fled the United States to Central America after she was arrested in July 2009. When she tried to re-enter the country, her flight to Atlanta was detected by U.S. marshals and she was arrested by the local police.

Whitten as originally arrested after an eagle-eye employee in the county recorder’s office called a fraud investigor to report the suspicious filing.

Read the original article in the Modesto Bee.

Two men have been arrested and charged with 45 counts related to an alleged foreclosure rescue scam which prosecutors say cost $17 million in losses.

Stephan Andrew Easterly and Emanuel Percival were arrested at the offices of Fidelity Group Realty in Fontana. Fidelity has operated under dozens of DBAs according to the DRE‘s website. According to Deputy District Attorney Michael Fermin, most of the victims were in foreclosure and paid between $3,500 and $7,000 (loan modification fraud) to get either get their loans paid off (??) or monthly payments reduced.

Easterly and Percival are accused of holding themselves out as “authorized” bank representatives and signing and filing documents indicating the mortgages were paid off (title fraud). In addition, prosecutors said that Easterly made up his own checks to show the homeowners the loans were paid off.

Read the original article in National Mortgage News.

A Glendale man who still holds a valid real estate license from the California Department of Real Estate (DRE) is serving a 2-year prison sentence after pleading no contest to two counts of forgery.

Gregor Tevan had helped his brother purchase several rental properties. Because of that, Tevan had all of the paperwork to the properties. When he couldn’t pay off his gambling debts, he forged several documents to show he was the owner of one of the properties (title fraud), used a notarized stamp (notary fraud) and sold the property to another man.

Tevan’s brother was able to regain possession of his property but the title company lost money on the deal.

James Hurst Miller, 63, president of defunct hard money lender Hurst Financial Inc., has been charged by the U.S. attorney in Los Angeles with federal fraud and money laundering.

The allegations are with respect to several projects Hurst and developer Kelly Gearhart  proposed to build, into a large golf course. The 1,200 Central Coast people who put money into the project in what prosecutors claim was a $100 million real estate investment fraud. Specifically, Hurst is facing four counts of wire fraud, mail fraud, money laundering, making a false statement to a bank and assisting Kelly Gearhart in fraudulently obtaining funding for his construction project. Prosecutors allege that the investment money was diverted to pay for prior loans his business made (hard money loan fraud).

Miller used Cuesta Title, also no longer in business, to clear title on some of the projects by stating falsely that the loans had been repaid (title fraud). He would then take out subsequent loans using his investors’ money

The projects for which Miller solicited investors were in the Beacon Road and Vista Del Hombre real estate development projects in Paso Robles and the Salinas River real estate development project in Templeton.

Many of James Miller’s investors, including elderly investors (elder financial fraud) have lost their life’s savings and homes. One is a 68 year old Cambria woman who suffers from multiple sclerosis and now lives in an assisted care facility because she was unable to keep her home because of her investments with Miller.

Read the full article in the CalCoastNews.

The FBI has released a comprehensive report detailing the state of mortgage fraud in the country. According to their research, the states most affected by mortgage fraud and other real estate crimes are the same states where housing prices escalated rapidly during the mid-2000s: California, Florida, Michigan, Nevada, Arizona, Texas, New York, Illinois, Georgia and New Jersey.

The most prevalent mortgage fraud schemes reported by law enforcement agencies and private industry during fiscal year 2010 included loan fraud in the origination process, mortgage rescue fraud, real estate investment fraud, equity skimming, short sale fraud, illegal property flipping, title fraud, escrow fraud (incl. settlement), commercial loan fraud, builder bailout schemes, loan modification fraud and reverse mortgage fraud.

The FBI notes that short sale fraud has become so prevalent that organized crime committed by Asian, Armenian, Balkan, Eurasian, Russian and La Costra Nostra groups has infiltrated lending institutions in order to have access to financial information, mortgage origination software, notary seals and licensure information.

In other words, all forms of real estate fraud are alive and well and it is being committed by both licensed real estate professionals and unlicensed individuals and criminal organizations. Law enforcement is bailing water out of a ship that needs enormous reinforcements just to stay afloate.

This is an excellent report with a lot of detail and is well-worth reading.

Click here to read the report on the FBI’s website. There is also an excellent synopsis on Inman News.

A developer in Stanislaus County with an ambitious plan to build a “lifestyle center” replete with movie theaters, Sheraton Hotel, restaurants and shops near a Kaiser hospital is being sued by lenders for loan fraud.

Aruna Chopra and her family of real estate developers are accused by the lenders of concealing that Chopra owed the previous owner of her property $6.4 million. She then leveraged the land in order to obtain $2.5 million from a lender. The accusations are that a forged document was recorded to show a partial reconveyance of the property. The attorney for one of the lenders says that another forged document was recorded that rescinded the first forged document (title fraud, if proven).

In addition to the civil action, the lenders notified the Sheriff’s Department and the FBI.

Read the original article in the Modesto Bee.

Philip Sotelo, a Modesto-based real estate agent, wanted to save his home from foreclosure. He found an internet website claiming that lenders don’t have the legal right to foreclosure and paid them $197, purportedly to get his loan “eliminated.”

Sotelo deeded his home to his own private corporation and then filed the documents with the county recorder (title fraud). He has been arrested and charged with mortgage fraud.

Philip Sotelo’s real estate license with the California Department of real estate is in good standing.

Read the original article in the Modesto Bee.

Brothers Henrik Sardariani, 43, and Hamlet Sardariani, 41,  and Wanda Kenney, 65, also known as Lavana Hamer, have pleaded not guilty to multiple counts of wire fraud, identity theft, conspiracy and unlawful monetary transactions in connection with an alleged $6 million loan fraud.

The Sardarianis are accused of creating fraudulent deeds of trusts to properties they did not own, along with forged corporate and financial documents, according to the federal indictment. They did this in order to show equity in the properties so that they could obtain large loans from the lenders. Wanda Kenney and Axcess Escrow are accused of processing the paperwork (escrow fraud). The stamps of the notaries public were phony (notary fraud).

Once the monies were received from the banks, at least several million was allegedly transferred to an account in Hong Kong by Henrik Sardariani.

U.S. District Judge Jacqueline H. Nguyen will hear the case on September 20.

Read the original article in the Los Angeles Daily News and the Beverly Hills Courier.

In a case that could have far-reaching effects, attorneys for a woman charged with a mortgage fraud case in Colorado, as well as the Electronic Frontier Foundation, are fighting a demand from the U.S. Department of Justice that would force her to turn over the password to her laptop.

In an amicus brief filed with the U.S. District Court for the District of Colorado, the Electronic Frontier Foundation  (EFF) claims that requiring Ramona Fricosu, a defendant in a real estate fraud prosecution, to provide her encryption codes or passwords would be a violation by the government against the Fifth Amendment to the U.S. Constitution, the right against self-incrimination.

If the reasoning of the EFF is upheld, any defendant charged with a crime could oppose a search of his or her encrypted or password-protected computer on constitutional grounds. This includes defendants charged with murder, possession and/or distribution of child pornography, drug possession, money laundering, embezzlement and white-collar crimes.

As a recent example, the search of Casey Anthony’s computer, in which forensic computer examiners found searches for the term “chloroform” and other terms related to death and killing, would never have been performed. Casey Anthony was charged with killing her 2-year old daughter Caylee Anthony but was acquitted by a Florida jury this July.

Ramona Fricosu has been charged with 22 counts of bank fraud, four counts of wire fraud, five counts of making false statements to a financial institution, and seven counts of money laundering in an attempt to take title to foreclosed homes (title fraud).

Read more about this case in DigitalTrends.