California Real Estate Fraud Report

Stressing that Wachovia did not fail, but that its buy-out by Joe Taxpayer and Citigroup was accomplished with “government assistance” (a new euphemism for corporate welfare), FDIC Chairman Sheila Bair announced the latest takeover.

Citigroup will acquire the bulk of Wachovia’s assets and liabilities while assuming senior and subordinated debt. Under the agreement, Citigroup will take the first $42 billion of losses on Wachovia’s $312 billion mortgage portfolio. The FDIC (middle- and working class taxpayers) will absorb losses beyond the first $42 billion (my emphasis). To compensate the FDIC for the risk, Citigroup will pay the agency $12 billion in preferred shares and warrants.

Read the Full Article in the Mortgage News Daily.

Garrett Griffith Gililland III, 27, is being sought by federal authorities for his activities as an unlicensed mortgage broker.  On August 14, Gililland was indicted on three counts of making false statements on loan applications and another for engaging in a monetary transaction with cash derived from unlawful activity.

Butte County District Attorney Mike Ramsey stated that Gililland is accused of making real estate purchases using “straw” buyers after submitting real estate appraisals that inflated the value of the properties. After the loans closed, he then allowed the mortgages to default.

Read the Full Article in the Chico Enterprise Record.

A nationwide manhunt is being conducted for a Chico man who was indicted by a federal grand jury in August for making false statements on loan applications  and engaging in a monetary transaction with cash derived from an unlawful activity.

Garret Griffith Gililland III, described in the indictment as “an unlicensed mortgage broker” has ties to Loomis Wealth Solutions, a Roseville-based company that holds itself out as a financial planner and claims that is (paid-)subscriber members cash flow on properties purchased in 2008.

The Web site scam.com has postings by Loomis members who claim otherwise.

Read the Full Article in the Sacramento Bee to learn why the Internal Revenue Service and FBI agents raided Loomis’ Roseville last month.

Galloping in after the gate was closed:  the Associated Press reports that the FBI is investigating Fannie Mae, Freddie Mac, Lehman Brothers and insurance giant AIG (American International Group, Inc.). According to FBI Director Robert Mueller, they and up to two dozen other large financial companies are also under investigation to determine whether any of them have misrepresented their assets.

Also under the FBI’s microscope are failed bank IndyMac Bancorp Inc. and Countrywide Financial Corp.

Read the Full Article published on Yahoo News

Mirroring the $700 billion bail-out of failed AIG and possibly WaMu proposed by the Bush Administration, now Marin County taxpayers are on the hook for $2.5 million loan to prop up a low-income housing program reflective of the incompetent and even fraudulent lending practices that are drowning the United States in a red ink deficit.

But if taxpayers are having to bail-out the low-income, subsidized housing program overseen by the Marin Housing Authority, who owns the homes in question – taxpayers or the lenders?

Read the Full Article in the Marin Independent Journal.

Vijay and Supriti Soni  were prosecuted in 2003 by Doug Brannan, a deputy Orange County District Attorney. Now he says “Unfortunately, we are back looking at these characters again.”

The Sonis and their family members took out 43 mortgages worth at least $24.5 million beginning in 2007. While home prices in Santa Ana, where the Sonis operated, peaked in 2006 and have fallen over 40% since, the Sonis flipped more than 22 properties and never sold for a loss.

WaMu of course denies any responsibility for not checking into the criminal background of its applicants like the Sonis or others who have a record of real estate fraud or mortgage fraud.  Says spokeswoman Sara Gaugl, ”We have extensive controls in place to protect the integrity of our portfolio and loan processes. We are continually enhancing our efforts to identify and prevent any potential illegal activity.“

Paul Leonard of the Center for Responsible Lending’s California office has a different view. “This is a quality control problem,” he said.  ”It certainly is curious WaMu’s fraud detection system didn’t pick this up. It looks very bad and it is bad. The question is how widespread it is.”

Read the Full Article  (extensive and well-written) in the Orange County Register.

Two days after his license was revoked by the California Department of Real Estate (DRE), broker and developer Scott Webb was found dead in a motel in the Fresno area.

Webb and his business partner Tom O’Meara of Carmel, developers of the failed Running Horse golf club project in southwest Fresno, did not challenge accusations brought to the DRE that they had defrauded 10 investors, including some Monterey Peninsula residents, of about $6 million in Running Horse, a high-profile project that billionaire developer Donald Trump once showed interest in purchasing.

Read the Full Article in the Monterey Herald.

A Sacramento area prune farmer and his daughter have been indicted on conspiracy and fraud charges after she purchased property as a “straw buyer” and allowed her father, who had declared bankruptcy, to refinance the property and draw equity from it.

Gavrilo Spaich is charged in a 13-count indictment in the U.S. District Court of Sacramento of making a $165,000 gift to his daughter, Jeanne Spaich, of Marina Del Rey. Ms. Spaich used the money to buy a property in Mission Viejo property in Orange County.

Read the Full Article in the Appeal Democrat.

Hockey star Luc Robitaille is the latest to sue bankrupt San Jose investor William “Boots” Del Biaggio’s for fraud. Robitaille is alleging that Del Biaggio defrauded him in a bank loan that was used partly to finance Del Biaggio’s extravagant lifestyle.

Before Del Biaggio’s business collapsed amid allegations of loan fraud, he and Robitaille invested together in several business ventures, including the purchase of a share of the Lancers hockey team of Omaha, Nebraska, an oil exploration company in Canada. They also received a $2 million credit line from Pacific Capital Bank to invest in real estate and other ventures, which Robitaille is accusing Del Biaggio of maxing out and leaving Robitaille holding the bag.

Read the Full Article in the San Jose Mercury News.

Real estate fraud is still alive and well in San Bernardino, according to Larry Roberts.

Roberts, the lead deputy district attorney of the San Bernardino County District Attorney’s real estate fraud unit says “There’s still money to be made in it, with comparatively low risk.” In this article, he explains the difficulties in prosecuting real estate fraud, as well as the new industry of foreclosure fraud.

Read the Full Article in the San Bernardino County Sun.