California Real Estate Fraud Report

JP Morgan Chase, holding not only its own but tens of thousands of loans from defunct Washington Mutual, fka WaMu, has suspended proceeding on more than 50,000 foreclosures pending a review of documents in the foreclosures. The bank has admitted that at times its employees signed affidavits with respect to loan documents without having reviewed the files.

GMAC was ordered last week by California Attorney General Jerry Brown to suspend its foreclosures if it could not comply with California state foreclosure laws. See the earlier article in the California Real Estate Fraud Report about GMAC.

August 2010 showed more foreclosures than any other month since the real estate market collapsed according to RealtyTrac Inc.

Read the press release issued by the Office of the Attorney General with respect to GMAC/Ally Financial.

Hot off the press: Attorney General Brown has sent JP Morgan Chase a similar letter as GMAC, ordering it to comply with state foreclosure laws or cease foreclosures. Read the press release here.

The mother-daughter team of Alice Kantin (aka Alice Meyer), 69, and Dawn Kantin, 38, is headed off to prison for two and five years respectively for their parts in a real estate fraud case, according to Kern County District Attorney Gorden Isen, who said the pair plead out. The two pleaded no contest to one count of conspiracy to defraud their clients and Dawn Kantin pleaded no contest to falsely acting as a notary. They have also been ordered to pay restitution to their victims.

The daughter’s application to become a notary was denied by the Secretary of State’s office due to a “substantial and material misstatement or omission in the application,” according to a prosecution declaration in the case.

Originally, Alice Kantin and Dawn Kantin were each charged with 44 felonies of conspiracy, embezzlement, theft, notary fraud and forgery in connection with real estate transactions that occurred between 2007 and 2009. Their scheme involved pairing distressed homeowners with renters who were given an option to buy the homes. The homeowners and renters lost everything, while Alice Kantin lined her bank account with $290,000.

Read the full article in the Bakersfield Californian.

The owner and broker of Century 21 Apollo Realty in Modesto, along with his roommate, have been indicted by a federal grand jury of multiple counts of mail fraud.

According to U.S. Attorney Benjamin Wagner and Stanislaus County District Attorney Birgit Fladager, James Lee Lankford, 71, the broker and Jon Vance McDade, 46, targeted elderly persons who wanted to sell their properties but had not listed the homes yet. The pair convinced the elderly victims to accept interest-only payments for 5 to 10 years, promising to return the principal at that time (assuming the victims were still alive!). Lankford and McDade then refinanced the homes with Countrywide, World Savings Bank, GreenPoint, Wachovia, Seaforth Mortgage, Aegis, Sierra Pacific, and Alliance Bancorp without informing the banks that there was seller financing in place on the properties.

Not content to siphon the equity out of the homes, James Lankford is alleged to have allowed many of them to go into foreclosure or to be sold in a short sale, earning a commission fee for Lankford’s Century 21 brokerage.

The California Department of Real Estate (DRE) shows no action to date against the real estate license of James Lankford.

Read the full article in the Central Valley Business Times and the Modesto Bee.

Former investors in Pacific Property Assets a now-bankrupt real estate company, are suing the founders of the company and two of their employess for luring them into what amount to a Ponzi scheme.

Pacific Property Assets, based in Irvine, solicited investors to purchase, renovate and sell apartment buildings at a promised 15% per year return. Carlsbad attorney Kent van der Schuit is representing several investors who put $1.3 million into PPA. Many of the victims were elderly persons.

The defendants Pacific Property Assets’ co-founders Michael Stewart and John Packard, their family trusts and employees Natasha Ginnaty and Chandra Gibson.

In all, PPA received $91 million from nearly 700 investors. Attorneys and a court official estimated that PPA lost at least $80 million, predicting that investors will lose most, if not all, of their money.

Read the full article in the Orange County Register, aka OC Register.

Ally Financial, Inc., previously known as GMAC, has been ordered by California Attorney General Edmund G. Brown Jr. to show immediately that it is complying with state foreclosure laws or to cease and desist from foreclosing on California homeowners.

“I’m taking this action to protect California homeowners facing the tragedy of foreclosure,” Brown said. “They are clearly in jeopardy since an Ally Financial official admitted his review of thousands of critical foreclosure documents was really a sham.”

“Prior to resuming foreclosures here, the company must prove that it’s following the letter of the law,” Brown added.

Under California law, lenders may not record record notices of default on mortgages made between January 1, 2003 and December 31, 2007, unless, with limited exceptions, the lender “contacts or tries diligently to contact the borrower to determine eligibility for a loan modification.” According the Attorney General Brown’s press release, “a notice of default must include a declaration of compliance with California law.”

The head of Ally Financial’s document processing team has admitted that he “routinely approved and signed foreclosure documents without confirming they were accurate and legally sufficient”, which his is required by law to do.

Ally Financial, aka GMAC is the fourth large home lending institution in the United States.

Read the Attorney General’s press release here. Click here to read the Attorney General’s letter to Steven Abreu, the head of Ally Financial’s Mortgage Operations.

The man who was once known as “Mr. Ventura” because of his prolific abilities to attract investors and develop large properties, is now awaiting trial for real estate fraud by the Ventura County District Attorney’s Office, apparently broke since he is being represented by a public defender.

James “Jimmy” Mesa has been charged with felony grand theft in excess of $150,000 in connection with a real estate fraud complaint filed by Skyler Ditschfield in April 2009. Dominic Kardum is the lead prosecutor in the case.

Jimmy Mesa could take credit for developing and renovating parts of Ventura; some of the properties he was associated with were the Bank of Italy building, Oasis Garden and Patio, Capriccio, the Livery Theater, Café Fiore, Palermo and the Westside Cellar.

After the real estate market soured, so did Mesa’s business. “When it got bad, you’d expect him to tuck it under and brace for the fall. But this guy started one Ponzi scheme after another. He started borrowing money on properties, taking it out of one LLC and putting it on another,” said Dan McHugh, who is a retired real estate broker and CPA. McHugh loaned $165,000 for a real estate development project that never materialized and for which his funds may be unrecoverable.

Read the full article in the Ventura County Reporter.

Los Angeles real estate businessman Ezri Namvar has been indicted on five counts of wire charges by a federal grand jury for diverting the investment money of five of his clients without their permission.

Namvar’s firm Namco Financial Exchange Corpo. was supposed to hold the clients’ money, which they had earned from the sale of real estate, until new purchases were made in order to shelter the money from income taxes. His other prominent holdings were the Marriott in Downtown Los Angeles and the Cal Neva resort located in Lake Tahoe.

Namvar raised very large sums of private money, mostly from the local Iranian Jewish community, through Namco Capital Group Inc., which then invested it in commercial real estate. He was forced into bankruptcy in 2008 after suffering significant losses. The court-appointed bankruptcy trustee accused him of using the investors’ money “as his personal family piggy bank” and the investors’ attorney, A. David Youssefyeh, said that many of his clients lost their entire savings as a result of their association with Namvar.

Hamid Tabatabai, Namco Financial’s controller and vice president, was also charged in the indictment.

The Los Angeles bureau of the FBI is still investigating the case, according to a spokesperson.

Read the full article in the Los Angeles Times. A second article in the Los Angeles Times that names some of the investors and their feelings about the prosecution can be read here.

Salinas Sergeant Jay Malispina is accused of stealing more than $40,000 from his own mother, Kay Malispina in court hearings. Prosecutor Gerry Davis claimed that Malispina deceived his mother into signing power of attorney to him.

Davis said that Malispina used the 11 checks to improve his home and to purchase Sharks tickets.

Read the full article in the Central Coast News.

Cedar Funding was a Central Coast real estate investment firm that the bankruptcy trustee says was run like a Ponzi scheme. Now some of its creditors are objecting to the large amount fees some of the trustee’s attorneys are seeking in the proposed settlement.

About $950,000 of a proposed $2.85 million settlement with the Salinas accounting firm of Hayashi & Wayland Accounting would go to two law firms for Cedar Funding, which has been in Chapter 11 since May 2008. 

Cedar Funding has been in Chapter 11 proceedings since May 2008 after the company owned by mortgage broker David Nilson imploded and left about 1,600 investors in the lurch. Investors, many of them Central Coast residents, had sunk an estimated $160 million into Cedar Funding real estate investments. James Hicks, a Pebble Beach resident, referred to the proposed settlement as “a sweetheart, back-room deal” for the attorneys and Aron Oliner, the attorney for the creditors committee, said that the two firms should receive only $296,000 for their work.

Mortgage broker David Nilsen is charged with 31 counts of fraud and conspiracy in a federal criminal case that saw 1,600 Central Coast investors lose close to $160 million from 2003 to 2008.

Read the full article in the Silicon Valley Mercury News.

Ray Gross, 46, has been arrested by San Bernardino County Sheriff’s deputies on suspicion he engaged in identity theft in order to get $600,000 worth of real estate loans. His alleged co-conspirators, Freddie Gross, 52, of Fontana, Lyall Alexander, 42, of Victorville, and Barbara Kimberling, 46, of Riverside have already been arrested.

The San Bernardino County District Attorney’s office charges that Gross and his fellow defendants used the identities of three victims in order to carry out their crimes.

Read the full article in the Victorville Daily Press.