October 26th, 2008 at 9:51am
Although many jilted investors have cheered at the recent arrests of the mother-and-son leaders of the bankrupt Paso Robles-based Estate Financial, they are only one group of a growing number of investors in the Central Coast who have had troubles with mortgage and lending firms.
Besides Estate Financial, other hard money lenders who are biting the dust are:
– Atascadero-based Hurst Financial, which had at least $86 million in investments last year, has had its license revoked by the California Department of Corporations and has been accused of fraud in September in filings by the Department of Real Estate. Hurst Financial has been the subject of several posts in the California Real Estate Fraud Report.
– Real Property Lenders of Paso Robles had its license revoked by the Department of Corporations in May. It had about $55 million in loans as of 2007,
– 21st Century Mortgage, also of Paso Robles, closed down abruptly about a year ago with no notice to its investors. Other firms eventually bought most of the loans.
Estate Financial is still the king of fraud allegations at the time of this writing. Their $170-million in loans were frozen and put under court control after the state revoked its license to sell real estate investments. On October 16, Estate Financial’s President, Karen Guth, and her son Joshua Yaguda were arrested at their Paso Robles ranch by investigators from the SLO County District Attorney’s Office.
Read the Full Article in the San Luis Obispo New Times.
October 26th, 2008 at 9:34am
The Federal Bureau of Investigation (FBI) has published its latest statistics on mortgage fraud across the country.
Quick snapshots: California ranks 4th in the country (behind Florida, Nevada and Michigan) in “significant” reports of mortgage fraud in 2008; total estimated losses to mortgage fraud in 2008 – $4 – $5 billion; and in 2008: 523 indictments, 282 convictions.
Click here to read the full compilation of FBI statistics on mortgage fraud.
October 24th, 2008 at 12:47pm
Would you want a loan from a lender with the email address “firstname.lastname@example.org”?
That was Garrett Gililland’s email address was, and the former (unlicensed) mortgage broker had plenty of customers before the long arm of the law came after him. According to federal authorities, Gililland is the subject of an international manhunt after being indicted on fraud charges and is part of one of the biggest current mortgage cons in the country.
Read the Full Article in The Chico Enterprise Record.
October 23rd, 2008 at 7:40pm
James Hurst Miller, President of Hurst Financial, along with his daughter Courtney Brard, have surrendered their real estate licenses rather than fight allegations of fraud against their investors.
The California Department of Real Estate has advised investors that their only recourse to getting their money back is to file a civil suit against Atascadero-based Hurst Financial or obtain a criminal restitution order from a judge.
Read the Full Article on KSBY Action News.
October 23rd, 2008 at 7:07pm
Two Milpitas mortgage brokers who used telemarketing to find and prey on fellow Latinos have been convicted of multiple counts of grand theft and forgery in a subprime mortgage scheme that amounted to $10 million.
Esperanza Valverde, 41, and Herman Covarrubias, 40, of Summit Mortgage One were accused of telling homeowners they qualified for low-interest refinance loans. However, they failed to disclose the amount of the commissions they charge (3-5 percent!), did not explain to the borrowers that the fixed rate interest was for 2 years only, and did not give borrowers copies of the loan documents until after the loans had closed, according to Santa Clara County Deputy District Attorney Yen Dang.
Read the Full Article in The Silicon Valley Mercury News.
October 23rd, 2008 at 6:58pm
After a six-month investigation, local prosecutors have charged Karen guth and her son Joshua Yaguda of Estate Financial with 26 felony counts of fraud. The investigation included agents from the FBI, the Internal Revenue Service, the San Luis Obispo County District Attorney’s Office, the California State Department of Corporations and the California Department of Real Estate.
Estate Financial was a hard-money lender that solicited money from investors to make high-interest/high-risk loans to developers. At the time of the company’s collapse, it is reported that they had funded hundreds of millions in housing and condominium subdivisions, hotels and winery developments in San Luis Obispo County. Their war chest of $340 million real estate portfolio was built with money from more than 3,000 investors, almost 30% of whom lived locally.
Read the Full Article in The San Luis Obispo Tribune.
October 14th, 2008 at 11:55am
At least three Northern California residents have lost their homes after dealings with Wesley Fort, the senior pastor of the Hollister Newlife Family Worship Center Church of God in Christ International. Fort, who no doubt has the longest church name on record, has been charged with 13 felony counts of real estate fraud in Santa Clara County. He is also being investigated by the FBI as being part of a scam with a mortgage broker and escrow officer at New Century Title Company that resulted in the victims’ names being replaced on their homes’ titles by Fort.
Read more about how Pastor Fort is doing God’s work in the Pinnacle News.
October 2nd, 2008 at 11:30pm
A group of predators who scammed more than 100 homeowners and lenders in Southern California are facing Judgment Day in U.S. District Court in Los Angeles for a $12 million foreclosure scheme.
Martha Rodriguez, 35, of Downey, is also awaiting sentencing after pleading guilty to defrauding the Department of Housing and Urban Development in another loan scheme. In 2006, the California Department of Real Estate issued an order to desist and refrain to the entrepreneurial Rodriguez from the California Department of Real Estate for conducting herself as a licensed real estate broker and providing residential, mortgage loan, and escrow services without ever having had a real estate license.
Here crew included Edward Seung OK, of Torrance; Cynthia Valenzuela, 23, of Downey; Vladimir Stefanovic, 35, of Lancaster; and Maria G. Juarez, 36, of Reseda. Rodriguez operated Silvernet Properties in Downey and Bellasi Escrow in Seal Beach. Victims in foreclosure were promised by Rodriguez and her co-defendants that they would save their houses and restore their credit, then used straw buyers to purchase the homes at inflated prices. They then skimmed the profits and allowed the homes to be foreclosed and the victims evicted.
This story is reminiscent of the upcoming trials of Beverly Hills Prudential California Realtors Joseph Babajian, Kyle Grasso, developers Mark Alan Abrams and his partner Charles Elliot Fitzgerald, appraisers Lila Rizk and Scott Robinson and others, who are accused of similar schemes that left Lehman Brothers Bank out tens of millions of dollars while failing to explain why they ignored the warns of potential fraud by Keller Williams broker Christian Stevens. A good summary is on the Los Angeles FBI website.
Read the Full Article in the Downey Patriot.
October 2nd, 2008 at 9:13am
Greed and stupidity are going to land a Hickman-area man and his wife up to three years and eight months in state prison.
A jury convicted Jason Huber, 38, and his wife, Angie, 37, guilty of forgery and procurement of a false document at a public office, according to Carol Shipley, assistant Stanislaus County district attorney.
Lester and Kathy Henslee learned of the forgery and title fraud when they tried to sell their property but were told by a real estate agent that title was not in their name. They confronted their daughter Angie Huber, who signed a quit claim to deed the property back. That might have been the end of the story, except that Jason Huber refused to sign the quit claim.
Read the Full Article in the Modesto Bee.
October 2nd, 2008 at 8:58am
At a legal forum held for real estate agents by the Silicon Valley Association of Realtors / Los Altos/Mountain View District, real estate attorneys cautioned agents and discussed issues ranging from ethics, disclosure and liquidated damages.
Attorney Stan Smith noted that the number of litigation cases is rising and that agents need to adhere to best practices. “When markets are good, we’re busy. When markets are bad, we’re really busy,” he said.
I have quoted directly from the Article in the Los Altos Crier for the benefit both of real estate professionals and consumers:
• Attribute and disclaim. Attribute where you get your information. If you didn’t verify the information, say so and cite the source of your information.
• Document, document, document. Once in litigation, people make up stories, so make sure you document everything, even telephone conversations. E-mail works best for this and is easy to confirm.
• Disclose, disclose, disclose. There is no harm in over-disclosing.
• Intentional failure to disclose is fraud.
• Keep files as long as possible.
• Be careful and knowledgeable about REO (real-estate-owned) properties. An REO is a property that goes back to the mortgage company after an unsuccessful foreclosure auction.