July 31st, 2009 at 12:59pm
Speaking at a foreclosure prevention workshop last week, Orange County District Attorney Tony Rackauckas and Assistant District Attorney Elizabeth Henderson, made it clear that their latest mission is to crack-down on real estate fraud.
Once the epicenter of of the subprime industry, Orange County is suffering record foreclosures like most regions of California. Says Henderson, “The only thing worse is being the epicenter of an earthquake”. She said that real estate fraud cases comprise 30% of the D.A.’s major fraud unit investigations, up from 10% before the collapse of the mortgage industry. The D.A. has two prosecutors and a paralegal devoted to real estate fraud now, and Henderson said bluntly “We want to send people to jail”.
Henderson and Rackauckas are also intensely focused on mortgage foreclosure rescue scams, aka loan modification scams. They have been co-participants in the investigations by Attorney General Edmund G. Brown’s office that have resulted in numerous arrests and shut-downs of such businesses (see previous articles on the California Real Estate Fraud Report) and are warning scammers that they will even look to prosecute the smaller players that are scamming desperate homeowners. Many of these people not only lose the $2,000 – $3,500 they pay the foreclosure rescue firms, they lose their house because these firms do little or nothing to keep the homeowner’s firm out of foreclosure.
Read the Full Article in the Orange County Register by Mathew Padilla.
July 31st, 2009 at 11:44am
Why would a real estate professional risk their license and their freedom to make literally, a few dollars?
Apparently that’s what Christi Fry, aka Christi Martin, might have done. Fry, of West Covina, was arrested at Seller’s Choice Escrow earlier this week and charged by the San Bernardino County District Attorney’s Office, just one day short of the statute of limitations expiring, according to investigator Martin Landrum. She and her alleged co-conspirator, Omar Paz, of Rancho Cucamonga, are being held in lieu of $450,000 and $850,000 bonds respectively.
The events leading to the arrests began when Omar Paz and his wife divorced. Paz sold his home and Fry handled both the escrow and notary duties for the sale. Paz later transferred most of the money from the joint account he held with his wife that were the profits from the sale into an account he alone held. The fraud was discovered during the divorce proceedings, when Paz’ ex-wife noticed that her name had been forged on disclosure forms, escrow instructions and the grant deed to the new buyers.
Notarizing a document as containing an original signature requires the presence of the signer and positive identification. Probably because she overlooked that not-so-minor detail, Fry’s notary license was revoked after a separate investigation by the California Secretary of State’s Office.
Read the Full Article in the San Bernardino Sun by Frank C. Girardot.
July 31st, 2009 at 11:16am
In yet another civil lawsuit, builder Fred Machado and hard money lender Don Vaughn have been accused of conspiring to commit fraud with malice.
San Miguel resident Lorraine Cagliero’s lawsuit accuses Vaughn, a president of Country Financial, of soliciting a $375,000 high-interest loan from her in 2005, which was to be used to construct a home on a property in Paso Robles. Cagliero contends that Vaughn failed to disclose that he was the owner of the property, which he then sold to Machado, who had spent the loan of Cagliero’s money given him by Vaughn.
Many hard money lenders in the North County region have been ensnared in lawsuits involving various forms of fraud. Amonth are Hurst Financial (use the Search feature to find articles in the California Real Estate Fraud Report), Estate Financial, 21st Century and Real Property Lenders. They and Country Financial made money by writing high-risk, high-interest loans, servicing loans and also selling securities that were fractional shares in promissory notes that were collateralized by real property deeds of trusts. On a small investor level, this is equivalent to the bundling, reselling and monetizing of mortgages in the hundreds or thousands by mega-lenders such as Countrywide, Washington Mutual, aka WaMu, Bank of America, Deutsche Bank, etc., many of which are now “toxic assets” that the taxpayers will be paying off for the next several generations.
Read the Full Article in the San Luis Obispo Tribune by Melanie Cleveland.
July 16th, 2009 at 11:49pm
Keeping his promise to deal harshly with those who operate loan modification scams, California Attorney General Edmund G. Brown announced that his office is taking legal action against 21 individuals and 14 companies who have victimized desperate homeowners who sought their existence.
If successful, Brown’s legal action will result in millions of dollars in civil penalties against the defendants, restitution to the victims, and permanent injunctions to prevent the defendants from returning to the mortgage “rescue” business.
Read the Full Article on the California Office of the Attorney General website or Examiner.com.
July 16th, 2009 at 10:56pm
Harry Markopolos is the accountant and Certified Fraud Examiner (CFE) who uncovered the largest Ponzi scheme in history, and as a result Bernie Madoff is sitting in prison for 150 years. But Markopolos, who spoke on July 14 at the 20th annual conference of the Association of Certified Fraud Examiners (ACFE), isn’t rubbing his hands together with glee; instead, he said the case was “gut-wrenching” and he feels “tremendous sadness for the victims”, who count charities and other non-profits, institutional investors, foreign investors and individuals in their ranks, some of whom lost most or all of their financial holdings.
Monique Bryher covered Mr. Markopolos’ speech at the ACFE’s conference in Las Vegas July 12-17.
If you want to learn who the “Devil” is, read the article by Monique Bryher on Examiner.com
Photo: Assn. of Certified Fraud Examiners
July 15th, 2009 at 3:45pm
Both the FBI and the U.S. Office of Inspector General for the Housing and Urban Department (HUD-OIG) are alerting senior citizens to be on the look-out for scams when they are acquiring reverse mortgages. Reverse mortgages began to gain popularity between 1999 and 2008, opening up a potential new “market” for purveyors of fraud.
Read the Full Article about the scams and how you can protect yourself and your loved ones.
July 2nd, 2009 at 10:18pm
In an article published today on its website, the Association of Certified Fraud Examiners’ chairman questions what the best way to prevent fraud is, and whether our society can do more to prevent fraud than it is doing currently.
Joseph T. Wells is a former FBI agent and CPA who specialized in fraud cases before he founded the Association of Fraud Examiners (ACFE) and developed the rigorous training program that can result in professionals earning the CFE – Certified Fraud Examiner certification.
Published on the ACFE’s website today, Wells’ article first reviews how Bernard Madoff created the largest Ponzi scheme ever recorded, then describes the mathematical impossibility of Madoff’s scheme and that it was bound to unravel. All Ponzi schemes depend on earlier groups of investors being paid off by later, larger groups. Eventually it becomes exhausting for the person operating the Ponzi scheme to keep the fraud going; we all know the rest.
All that being the case, what is most surprising is that ten years ago, a CFE named Harry Markopolos, hired by a Madoff rival to reverse-engineer Madoff’s successful strategy, determined that Madoff was most likely operating a Ponzi scheme, yet Markopolos’ verbal and written reports to authorities such as the SEC (Securities and Exchange Commission) were rebuffed. All those early investors were laughing all the way to the bank and future wannabe investors plus Madoff’s many friends in the federal government, had their collective ears and eyes wide shut.
Joseph Wells argues that in addition to the prison sentence handed out to Bernard Madoff, Madoff also should be required to educate consumers from the confines of his prison cell about how he conceived and carried out his Ponzi scheme for so long. This, argues Wells, is one of the best ways to prevent fraud: by educating and deterring.
But in the case of Bernard Madoff, it is not clear whether the public being educated would have had much, if any, impact or a deterrence effect upon Madoff. As noted, Madoff never advertised his services or successes, so there was essentially a wall of ignorance separating each investor group from the other. It was this inability to see the forest through the trees, as well as most investors trusting their investment managers to have knowledge of the true abilities of the world’s Madoffs, that allowed Madoff to operate freely and without concern of being detected for so long.
Click here to read the editorial by Joseph Wells on the ACFE website.
