California Real Estate Fraud Report

Mark Alan Abrams, 49, one of the central players in the Beverly Hills mortgage fraud conspiracy that consisted of real estate agents, appraisers, straw buyers, mortgage brokers and probably more, pleaded guilty to conspiracy, bank fraud and other loan fraud-related charges.

For the tens of millions that Abrams helped to steal, prosecutors are seeking a seven year (at most) sentence from U.S. District Judge Dean D. Pregerson. Assuming Abrams behaves himself, he could end up serving about half that time. Taxpayers, on the other hand, will be paying back his thievery and that of his eight fellow-convicted conspirators, for years via TARP (Troubled Assets Relief Program).

Lehman Brother Bank was misled by Abrams and his co-conspirators to fund over 80 loans in expensive Westside neighborhoods. As part of their sentences, the guilty have been ordered to pay their share of the $46 million restitution.

Read the full article in the Los Angeles Daily News. You can search the California Real Estate Fraud Report for earlier articles about the Beverly Hills mortgage fraud gang.

To no one’s surprise, Angelo Mozilo ran Countrywide Home Loans as if it were his private piggy bank, handing out risky high dollar volume loans to his friends that even other executives thought careless.

According to testimony by Chief Risk Officer John P. McMurray at an SEC lawsuit, loans that fell well outside Countrywide’s standards – known as exception loans – were routinely given desk approval by Mozilo. Any objections by management such as McMurray or former Countrywide President Stanley Kurland were routinely dismissed by Mozilo in emails that reflected his ire that anyone would question large loans with little equity in the property or unusually small down-payments. Entertainer Ed McMahon was one of the recipients of Mozilo’s largesse and McMahon later defaulted on his loan.

Read the full article by Scott Reckard in the Los Angeles Times.

Mortgage fraud isn’t something most people would think a bookkeeping firm would be involved in. But federal prosecutors say that Aguilera’s Bookkeeping & Income Tax, located on South Santa Fe Avenue in Vista, was at the heart of a mortgage fraud scheme. By fabricating W-2 forms and manufacturing pay stubs for almost two dozen real estate agents and loan officers (note: DRE, are you investigating these agents?), Aguilera’s played a central role in a $55 million loan fraud business that victimized lending institutions in both San Diego County and the San Francisco Bay Area between 2002 and 2008.

Owner Roberto Aguilera is an enrolled tax agent with the IRS as well as a real estate agent licensed through the California Department of Real Estate (DRE). For as little as $75 per letter, Aguilera would allegedly falsify documents for real estate agents, such as Mylene Funk of Oceanside, who, according to court documents, faxed a letter to Aguilera on May 12, 2005, requesting that he fabricate tax returns for one of her borrowers. “Okey Robert, use your imagination”, Ms. Funk is purported to have written. Funk has pleaded not guilty after being indicted for her role in the scheme.

Read the full article in SignOn San Diego, the San Diego Union Tribune, written by Greg Moran.

The U.S. Department of Justice has indicted eight Californians for real estate fraud, including Ken Sarna of Vallejo.

Sarna and the other defendants were charged with committing wire and mail fraud in connection with a real estate investment fraud scheme that ultimately resulted in losses of more than $11.4 million to the victims. The company where the alleged fraud occured was called Heaven Investments Holding Co., of which Ken Sarna was the director of operations. Heaven Investments filed for bankruptcy in 2008, was liquidated in 2009 and appears to have been little more than a Ponzi scheme.

Others charged in the indictment are:

Akbar Bhamani, 56, of Carmichael, CEO, Heaven Investments
Aly Khan Bhamani, 28, of Carmichael, Vice President, Heaven Investments
Zainulabidin Akbar Bhamani, 30, of Sherman Oaks, Vice President, Heaven Investments
Laila Bhamani, 57, of Tracy, Finance Department, Heaven Investments
Feroza Bhamani, 55, of Carmichael, Finance Department, Heaven Investments
John Pierre Quintana, 30, of Dixon, Director of Marketing, Heaven Investments
Shaun Bhamani, 26, of Valencia, Loan Officer, Global Financial & Assets Inc.

Read the full article in the Vallejo Times-Herald written by Rachel Raskin-Zrihen. See also the article published in 7th Space Interactive.

The Federal Trade Commission is trying to show consumers there’s no such thing as a free ride. If something is too good to be true, it almost always is.

The FTC’s Division of Consumer and Business Education recently set up a web site called Esteemed Lending Services, a fictitious lending company, that trumpets to borrowers that “We guarantee a loan to fit every situation.” In just 60 days, Esteemed Lending Services received 3,500 hits on its website. Apparently, there are still a lot of consumers who think that there are financial services companies that can bail them out from deep debt.

Read the full article in the Los Angeles Times, written by Lew Sichelman.

In a case that allegedly includes victims in four states as well as overseas, two men have been charged with stealing $200 million in a real estate fraud that targeted Orthodox Jews.

Eliyahu Weinstein of New Jersey and Vladimir Siforov of New York represented themselves as real estate investors. Their angle was to seek out victims in various Orthodox Jewish communities whose customs and social structure were familiar to Weinstein and Siforov. New Jersey, New York, Florida and California were the U.S. states in which the victims lived. Instead of investing their money, Weinstein used it to purchase  art, jewelry and Judaica. According to the prosecutors from the U.S. Attorney’s office in Newark, Weinstein’s collection includes manuscripts and antique Judaica items valued at $6.2 million; a jewelry and clock collection that cost $7.6 million; and jewelry and watches worth $6.2 million.

Read the full article in the Wall Street Journal.

Analytics firm CoreLogic has completed a study of short sale fraud and is warning consumers of its findings:

• 1.9% of all U.S. short sales over the past two years — roughly 15,000 nationwide — are fraudulent. That’s one out of every 53 deals.
• That banks and other lenders incur about $310 million in “unnecessary losses” each year because of short sale fraud.

Short sale fraud can take many forms. One type, explained in the CoreLogic study, occurs when a dishontest listing agent colludes with a buyer to purchase a home below the market value. Usually this means failing to present higher offers to the lender for its approval. After the short sale is approved, the agent and buyer resell the property to a buyer who had made a higher offer.

Note: if lenders are doing their due diligence, a property evaluation by a licensed appraiser should raise a red flag about the low offer.

Read the full article in the Orange County Register / OC Register.

Raul Altamirano, 53, a former real estate agent who surrendered his license in 2004, has pleaded guilty to one count of grant theft. He further admitted an allegation that he stole more than $150,000 from his victim.

For his crimes, Altamirano will serve four years in prison. Los Angeles Superior Court Judge James Bianco ordered him to make restitution of $301,470 in restitution to the victim, who had asked Altamirano to assist her in taking $100,000 equity from her home. Instead, Altamirano stripped the entire equity out of her home by taking out two loans totaling $429,000.

Read the full article in the Downey Patriot.

The San Joaquin County D.A.’s Office has completed a three year investigation into a Tracy, California brokerage, resulting in the arrests of the firm’s chief executive and a second person.

Ward Real Estate Brokerage & Foreclosure Services Inc., no longer in business, was the focus of multiple complaints. Authorities believe $4.5 million was stolen from investors through a house-flipping scheme that promised high returns but failed when the real estate market turned sour.

Leesa Marie Ward, 45, of Lodi, was arraigned on a 46-count felony indictment by a criminal grand jury, which charged her with tax evasion, grand theft and securities fraud. Alison Ann Jensen, 45, of Pleasanton turned herself in and was booked on identical charges. Bail for each licensed real estate broker is set at $3 million. Jensen’s broker’s license has expired, but Ward’s is still active with the California DRE.

Some of the victim’s of this alleged investment scam were elderly.

Read the full article in RecordNet.com