California Real Estate Fraud Report

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Archive for September, 2012

2nd Edition of “How to Commit Short Sale Fraud . . . and Get Away with It” is in the Works

September 28th, 2012 at 10:05am

Dear Readers,

I am working on the second edition of my ebook “How to Commit Short Sale Fraud . . . and Get Away with It” and am interested in adding new short sale fraud scenarios. The fraudsters are always one step ahead of us!

If you are a Realtor® or a bank auditor who would like to share a unique scenario of a short sale fraud you know of, please feel free to email me. The specific information (location, price, agents, how it was done) will remain confidential, as will you, just as the ones presented in my ebook are. Consider it your contribution to the small library of knowledge on this unprosecuted, risk-free crime.

DSNews (Default Servicing News), a well-known publication in the mortgage industry, recommended my ebook in their “Good Reads” section in the August 2012 issue.

Another milestone: today, the California Real Estate Fraud Report has reached the 900 articles/postings mark, proof that there is no shortage of real estate fraud occurring in California.

-Monique Bryher

Linden Man Indicted for Being Straw Buyer in Mortgage Fraud

September 27th, 2012 at 7:12pm

A Linden-area man named Kory Schmidli, 34, has been indicted along with eight other people by a federal grand jury  in a local mortgage fraud scheme.

Schmidli is alleged to have acted as a straw buyer, along with friends, family and employees of brothers Volodymyr Dubinsky and Leonid Doubinski. The brother were developers who used their associates, such as Schmidli, to purchase up to 19 residential properties for them. In addition to using the straw buyers’ good credit, their financial assets were embellished in order to obtain the loans (loan fraud).

Read the original article in RecordNet.com.

Murietta Husband & Wife Sentenced to Prison for Mortgage Fraud

September 27th, 2012 at 7:00pm

A small measure of justice has come to 21 homeowners who lost their homes due a husband-and-wife team of scammers.

According to the Internal Revenue Service (IRS) in a statement released September 21, Joe Daniel Cody, 43, was sentenced in U.S. District Court in Riverside to 63 months in prison and three years of supervised release in a mortgage fraud, equity-stripping scheme. His wife, Angela Lynette Cody, 43, got 48-months and three years supervised release. The pair was ordered to pay more than $1 million to their victims in restitution.

Although based in Murrieta, the Codys were employed by All Fund Mortgage, which was based in Tacoma, Washington. They targeted many homeowners in the hard-hit Riverside or San Bernardino counties, offering to refinance or sell their homes to third-party straw buyers temporarily. Instead of making the payments on the mortgages, the straw buyers stripped the equity and walked away, causing the original homeowners to lose the homes to foreclosure.

No word as to whether any of the straw buyers were prosecuted.

Read the original article in the Press Enterprise.

Premiere One Lending Owner Sentenced, Order to Pay Restitution in $30 Million Mortgage Fraud

September 26th, 2012 at 9:24am

The owner of a Pasadena mortgage brokerage firm was sentenced to nine years in prison by U.S. District Court Judge David O. Carter for operating an ambitious mortgage fraud scheme that victimized both lenders and borrowers.

According to U.S. Attorney Andre Birotte Jr., Eduardo Ruiz, 33, and his co-defendants, sister Gilma Ruiz, 36, and 26-year-old brother Francisco Ruiz, submitted fraudulent loan applications on behalf of borrowers, many of whom did not speak English. At least 20 of the borrowers subsequently lost their homes to foreclosure, homes they never could have purchased if the applications had been submitted containing truthful information. Gilma and Francisco each received 18 month sentences, but that’s not much considering up to $30 million of the loans were fraudulent and the restitution ordered by the court against Eduardo is $5.7 million.

Eduardo Ruiz and his employees in 2005 and 2006 falsely inflated the income of more than 100 borrowers seeking home loans, officials said. Many of them did not speak English and were unaware of the fraud.

According to Leslie P. DeMarco, Special Agent in Charge of the IRS – Criminal Investigations Los Angeles Office, “Eduardo Ruiz and his cohorts knew the borrowers never had a prayer of making their mortgage payments and that many of the loans would go into foreclosure. Mortgage fraud crimes drive buyers into foreclosure, leave lenders burdened with bad loans and leave neighborhoods with abandoned and deteriorating properties.”

Read the original article in the Pasadena Star News.

JSW Financial Defendant Sentenced to 18 Months

September 26th, 2012 at 9:04am

One of the defendants in the JSW Financial case, in which 200 investors were defrauded of millions of dollars in a real estate investment fraud was sentenced to 18 months in prison and three years of supervised release.

Richard Tipton, 62, provided assistance to federal prosecutors trying to determine exactly how much the investors were fleeced. The amount recovered could range from $7 million and as much as $20 million. His role in the scheme was as manager of the Blue Chip and Shoreline funds, which instead of distributing profits to the investors, generated monthly statements showing growth in the investments (securities fraud). This eventually attracted the attention of the Securities and Exchange Commission, which filed its own lawsuit.

Tipton was one of four men charged in the case. Jim Ward was the principal and owned Jim Ward & Associates, aka JSW Financial, based in Mountain View; he received a five-year prison sentence this August. The remaining co-defendants are Edward George Locker, 36, of Highland Heights, Ohio, and David Lin. Lin was sentenced to 28 months in federal prison; Locker is awaiting sentencing.

The victims were told their investment money would be used to make loans backed by residential real estate. The truth was that the defendants diverted the money to make unsecured, undocumented loans to their own entities, which made real estate investments and lost money.

Despite his criminal acts, 79 people wrote letters to the court asking for a lenient sentence for Richard Tipton. I’m assuming none of his supporters lost their financial shirts as a result of his, Ward’s or Lin’s actions.

Read the original article in Palo Alto Online.

Four Arrested, Charged in Alleged Grass Valley Ponzi Scheme

September 25th, 2012 at 10:16pm

Four Grass Valley residents affiliated with Gold Country Lenders have been arrested and charged with multiple counts of securities fraud, conspiracy and elder (financial) abuse. for allegedly operating a Ponzi scheme that bilked dozens of investors of more than $2.3 million, according to California Attorney General Kamala D. Harris.

The defendants are: Phillip Lester, 65, and Ellen Lester, 65, (Phillips’s wife), Susan Laferte, 58, (Phillip’s sister) and Jon Blinder. Phillip Lester was the CEO of Gold Country Lenders and Laferte was its CFO. The two alone are facing 66 charges.

According to AG Harris, the defendants took over $2.3 million from investors in what she characterized was a Ponzi scheme. “These defendants exploited their personal relationships with these victims and emptied their bank accounts,” she said. “Schemes that target the elderly are especially heinous, which is why prosecuting fraud and elder abuse needs to remain priorities for law enforcement.”

Ironically (or not), Jon Blinder is the interim executive director of the Nevada County Economic Resource Council (NCERC). He asserts his innocence.

Read the original article in The Union.

Granite Bay Man Indicted in $3 Million Mortgage Fraud

September 25th, 2012 at 9:59pm

A Granite Bay man has been charged with six counts of mail fraud, wire fraud and bank fraud for lying to lending institutions in order to buy expensive homes and a World War II airplane.

According to U.S. Attorney Benjamin Wagner, Ryan William Costo, 37, submitted fraudulent loan applications (loan fraud, mortgage fraud) to CitiMortgage Inc., Washington Mutual, and Bank of America for $1.95 million, $3 million and $1.35 million respectively. The first two loans were for homes in Granite Bay and the last was for a 1945 North American P-51 D Mustang. The fraud allegedly occurred when Mr. Costo “enhanced” his assets and income and produced fraudulent tax returns and other accounting statements in order to obtain loan approval.

Read the original article in the Central Valley Business Times.

Long Beach Mortgage Sales Executive Convicted in Mortgage Fraud

September 25th, 2012 at 9:44pm

This is yet another tale of a mortgage professional who has probably ruined his life by being greedy and getting caught.

Joel Blanford, 44, worked as a sales executive at Long Beach Mortgage, the subprime lending unit of Washington Mutual (WaMu). was found guilty on September 19 of six counts of mail fraud. Blanford bribed a loan coordinator (with cash and checks!) in exchange for the coordinator falsifying loan documents and looking the other way to fraudulent loan applications. For this, Blanford earned over $1 million in sales commissions from 2003-2005.

The case is U.S. v. Blanford, 08-00269, U.S. District Court, Eastern District of California (Sacramento) and it was prosecuted by the office of U.S. Attorney Benjamin Wagner. Joel Blanford’s attorney is Michael Cardoza.

Here is an eye-popping statistic: Long Beach Mortgage was forced to buy back $875 million of its non-performing “toxic” loans from investors in 2005 and an internal audit that same year revealed that 83% (4 out of 5) of the loans the Montebello office had approved were fraudulent (loan fraud, mortgage fraud).

No wonder WaMu went bankrupt in September 2008.

Read the original article in the Businessweek.

Deliberations for Additional Defendants in David Replogle Murder Trial of Palm Springs Man

September 21st, 2012 at 11:37am

Kaushal Niroula, 31, and Daniel Carlos Garcia, 30, who have both been the subject of multiple postings on the California Real Estate Fraud Report, are awaiting the jury’s verdict in a trial located in Indio for which both have been charged with murder and conspiracy, as well as other felony counts. Both men are representing themselves.

Attorney David Replogle was already convicted in January and sentenced to life in prison this past May in this case, which centers around the murder of 74-year old Palm Springs retiree Clifford Lambert. Miguel Bustamante was convicted along with Replogle and received the same prison sentence. Craig McCarthy, Bustamante’s roommate, pleaded guilty to voluntary manslaughter and will be sentenced next month. Art dealer Russell Manning pleaded guilty to fraud-related charges in the theft of Lambert’s art work and was sentenced to five years in prison.

Deputy District Attorney Lisa DiMaria said Daniel Garcia met Clifford Lambert online. He eventually sent Kaushal Niroula Lambert’s address and phone number. Soon thereafter, Replogle and Niroula flew together to Burbank airport from San Francisco, from which they then drove to Lambert’s home in Palm Springs on Dec. 1, 2008. Niroula falsely represented to Lambert that he was an attorney working for a family in New York that had left Lambert money or artwork in a will.

Four days later, while Niroula was at the house, he let McCarthy and Bustamante inside. According to McCarthy, Bustamante stabbed Lambert to death while McCarthy held him. They buried him in the desert (Lambert’s body has never been found), then stole his car and debit car and made use of both.

DiMaria alleged that on Dec. 10, Niroula opened a Wells Fargo bank account in David Replogle’s name. On Dec. 11, Replogle, pretending he was Lambert, went to art dealer Manning and gave him power of attorney over all Lambert’s accounts. Manning and Lambert then transferred $185,000 from the dead man’s Palm Springs bank account to Replogle’s new Wells Fargo account.

The following day, Replogle and Niroula went to see a notary and Replogle forged four power of attorney documents (title fraud, real estate fraud). Replogle and Manning then cleaned out the remainder of Lambert’s monies from his bank accounts.

Read the original article in Estate of Denial.

Jay Shah Convicted of Stealing 3 Condos on One Rincon Hill

September 21st, 2012 at 11:03am

In another case related to the David Replogle murder trial:

A jury has found Jay Shah, a telecommunications executive,  guilty on all 13 felony counts having to do with conspiring to steal three Rincon Hill exclusive condos. Prosecutrs had charged Shah forged grant deeds (title fraud) transferring the condos, owned by Shirley Hwang, to a storefront/bogus corporation, from he then took out loans.

For her part, Shirley Hwang is relieved. “The verdict speaks for itself and justice prevailed and I can move on with my life,” she said following the trial verdicts.

Tennis instructor Winston Lum was adjudged guilty of six counts including forgery, filing false deeds (title fraud), grand theft and attempted grand theft. He was found not guilty of filing false documents. Melvin Emerich, a real estate broker and attorney, was acquitted of charges of filing false grant deeds.

Read the original article in KGO-TV.

Update: SFGate reported on September 20 that Judge Charlene Padovani Kiesselbach had issued an arrest warrant for Jay Shah and forfeited his $1 million bail because he did not appear in court on the day guilty verdicts were entered against him and several of the other defendants.

© Copyright 2007-2017 Monique Bryher

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The information and notices contained on The California Real Estate Fraud Report are intended to summarize recent developments in real estate fraud, mortgage fraud, short sale fraud, REO fraud, appraisal fraud, loan modification scams, loan modification fraud and other real estate related crimes occurring in Los Angeles and California. The posts on this site are presented as general research and information and are expressly not intended, and should not be regarded, as legal advice. Much of the information on this site concerns allegations made in civil lawsuits and in criminal indictments. All persons are presumed innocent until convicted of a crime. Readers who have particular questions about real estate fraud, mortgage fraud and appraisal fraud matters or who believe they require legal counsel should seek the advice of an attorney.

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