California Real Estate Fraud Report

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Archive for August, 2013

Riverside County Proactive in Fight against Foreclosure Fraud

August 29th, 2013 at 7:43pm

Riverside County officials are taking extra steps to ensure that homeowners in default do not become the victims of real estate fraud.

The offices of District Attorney Paul Zellerbach and Assessor-County Clerk-Recorder Larry Ward will send out advisory letters to homeowners who are receiving a Notice of Default (NOD). The letters will be a further notification that the NOD was recorded and to warn homeowners to watch out for loan modification scammers, especially those that demand payment in advance, a practice that was outlawed in 2009.

Read the full article in the Press Enterprise.

Former President of Heritage Lending Pleads

August 29th, 2013 at 7:35pm

Candy Wells, the former president of Paso Robles-based Heritage Lending, pleading no contest this week to five felony counts of securities fraud. She could receive five years in prison when she is sentenced.

Heritage Lending was a hard money lender for real estate projects. Wells and her husband, Ronald Wells, 63, closed the business in October 2009. Shortly thereafter, the California Department of Corporations and the San Luis Obispo District Attorney’s Office investigated their operation, ultimately determining that Ms. Wells’ investors lost $1.3 million, which she has been ordered to return.

Ronald Wells previously pleaded no contest to a felony charge of being an accessory after the fact and will likely be sentenced to five years of felony probation and three months in San Luis Obispo County Jail.

Read the original article in The Tribune.

Why the Obama Administration Doesn’t Prosecute Banks: a Hypothesis (Parts 1 and 2)

August 23rd, 2013 at 11:06am

William K. Black, J.D., Ph.D. is an Associate Professor of Law and Economics at the University of Missouri-Kansas City. According to his website Financial Sense, Dr. Black was the “litigation director of the Federal Home Loan Bank Board, deputy director of the FSLIC, SVP and General Counsel of the Federal Home Loan Bank of San Francisco, and Senior Deputy Chief Counsel, Office of Thrift Supervision. He was deputy director of the National Commission on Financial Institution Reform, Recovery and Enforcement.”

Recently, Dr. Black has written a 3-series set of essays that center around the theme that President Obama and his Attorney General Eric Holder refuse to prosecute “elite banksters,” a decision that follows the policy of the previous Bush Administration.

For your reference, please go to this link on the FBI’s website to read the “2010 Mortgage Fraud Report: Year in Review.” You will notice immediately when you enter the FBI’s website that it issued Mortgage Fraud Reports for five consecutive years, from 2006 through 2010, but has been awkwardly silent for almost three years.

This report can also be found, and is discussed, in my book “How to Commit Short Sale Fraud . . . and Get Away with It,” albeit from a different perspective. My own inquiry to the FBI confirmed that there have been no mortgage fraud reports by the agency since the 2010 report and the FBI apparently has no plans to publish any future similar reports. This fact alone gives credence to Dr. Black’s accusation that the Obama Administration, including the Department of Justice, has no interest in holding the banks accountable for the bulk of the mortgage crisis.

The first of Dr. Black’s articles is titled “The FBI’s 2010 Mortgage Fraud Report Reveals Why the Banksters Love Holder” and is published on New Economic Perspectives. I will attempt to summarize the key points of this first article, as follows:

– Both the Bush II and Obama administrations have had a hands-off policy with respect to prosecuting C-suite bankers for their role in precipitating the mortgage crisis, i.e., making subprime loans and “Liar’s Loans” not only possible but ubiquitous;

– Both administrations are adherents to the “cult of the Virgin Crisis” – that is, the mortgage crisis emanating from throwing caution to the wind and revising centuries-old tried-and-true underwriting practices was unforseeable, which many of us in the real estate and mortgage industries find incomprehensibly naive;

– As such, “the rule of law no longer applies to wide ranges of life and that crony capitalism will continue to reign.”;

– The Federal Reserve, the FDIC, the OCC (Office of the Comptroller of the Currency), and OTS (Office of Thrift Supervision) are all banking regulatory agencies, yet none of them contributed information regarding reporting of mortgage fraud to the FBI. Nor has the SEC proven to be anything short of worthless in protecting American citizens and residents from abuses (“control fraud“) by the banks;

– Honest appraisers and white-collar criminologists who approached the above agencies, including the FBI, to warn of post-Enron control fraud by banks were ignored.

MARI, the Mortgage Asset Research Institute, “had warned the entire mortgage industry (and the FBI) that the incidence of fraud in liar’s loans was 90 percent.”

Benjamin Wagner, the U.S. Attorney for the Eastern District of California, does not prosecute bank executives because he apparently doesn’t believe banks would deliberately underwrite fraudulent loans. “It doesn’t make any sense to me that they would be deliberately defrauding themselves,” says Wagner, quoted in Dr. Black’s article.

In his second article,  “The Incredible Con the Banksters Pulled on the FBI,” Dr. Black states what is obvious to all except state and federal prosecuting agencies: “banks will not make criminal referrals against their own CEOs.” Obviously, then, “criminal referrals have virtually vanished against the ‘accounting control frauds’ that drive our recurrent, intensifying financial crises. ” To prove his point, he cites the investigative reporting of Huffington Post report David Heath, as well as the 1993 article by George Akerlof and Paul Romer called “Looting: The Economic Underworld of Bankruptcy for Profit”. The sum of all three writers is that since there is no required reporting by banks of criminal activity of their executives, criminal behavior by bankers (aka “banksters”) is now “epidemic.”

Dr. Black posits that the above named federal regulatory agencies failed to provide the FBI with evidentiary findings of fraud, leaving the FBI dependent on either the non-existent self-reporting or that of whistleblowers. I can personally confirm that at least one of the offices of the California Department of Justice (California Attorney General) claims to be interested in prosecuting banksters to the exclusion of what they consider to be minor crimes, such as the expanding epidemic short sale fraud, but astoundingly thinks they are going to get evidence of said crimes from “insiders,” meaning whistleblowers. As evidence of the logic of their thinking, not a banker in California has been criminally prosecuted, to my knowledge.

So, with $25 million in its pocket from its 50-state settlement with the largest banks, what is the Office of the California Attorney General doing to protect homeowners by punishing banksters? As far as I can tell, very, very little.

And the FBI? According to William Black, the FBI got “conned” by the  Mortgage Bankers Association (MBA) – the trade association of the “perps,” by convincing the feds to “partner” with them on posters and alerts to warn lenders about how lenders are “victimized” by borrowers submitting fraudulent loan applications. In other words, if an individual borrower lies on a loan, this is a crime against the banks, but both sides were comatose in discussing the other side of the issue: that the banks engaged in robosigning, “lost” paperwork on homeowners’ loan applications, fraudulently foreclosed on homeowners and lied to investors about the toxic assets sold to institutional buyers. And certainly not a single sentence about control fraud committed by the banks, aka accounting fraud.

Coming: more reporting on William K. Black’s series of articles describing how state and federal government has abandoned homeowners by permitting control fraud by bank executives.

 

 

 

 

Hemet Man Goes to State Prison for Novel Ponzi Scheme

August 22nd, 2013 at 10:34am

A 56-year old Hemet man who concocted a novel and elaborate Ponzi scheme that defrauded his investors of more than $12 million has been sentenced to 15 years in state prison and order to pay full restitution to his victims.

Ralph John Solis pleaded guilty to four counts of grand theft and operating a business for the purpose of committing securities fraud. The 15 years includes a sentencing enhancement for committing an aggravated white-collar crime.

Solis’ scheme was to find mortgages held either by private parties, e.g., relatives, or non-mainstream lenders, getting copies of the deeds of trust and adding his name as the beneficiary (title fraud). The phony deeds of trust were then sold to unsuspecting buyers and included first, as well as junior, liens.

The victims resided in all Southern California counties in addition to Texas and Arkansas. In keeping with the Ponzi scheme mentality, Ralph Solis spent the money on himself.

Read the original article in the Los Angeles Times.

AB 381 to Protect Seniors signed by Governor Brown

August 17th, 2013 at 12:05pm

California Governor Jerry Brown has signed Assembly Bill 381 into law, which will provide greater protection to the elderly who are ripped off.

Prior to the enactment of AB 381, double damages could be awarded to seniors who became victims to professionals, relatives, “friends” and acquaintance who committed elder financial abuse the misappropriating, embezzling, stealing or misusing the power of attorney. Yet even that was no always enough to recoup the costs to sue and recover whatever the value of what was stolen.

Now the victim or his/her representative will be able to recover their attorney’s fees and other legal costs if the lawsuit is successful.

Assemblyman Ed Chau was the author of AB 381. In a recent press release, Assemblyman Chau said “Each year in California, elder and dependent adults are devastated by the loss of property taken from them through financial scams. This bill makes certain that seniors who are victims of financial elder abuse will no longer have to worry about the cost of seeking justice.”

I hope this bill also acts as a deterrent to those criminals who contemplate elder financial fraud against a vulnerable person.

Read the original article in the Sacramento Business Journal.

Elk Grove Real Estate Broker Sentenced to 10 Years for Mortgage Fraud

August 16th, 2013 at 9:20am

Hoda Samuel, a California licensed real estate broker, was sentenced today to 10 years in prison in Sacramento federal court for operating a mortgage fraud scheme that caused the victims/lenders over $5.5 million in losses.

U.S. Attorney Benjamin B. Wagner made the announcement and said the following in a press release:

“Taking fraudsters out of the residential real estate industry and sending them to prison has been one of this office’s top priorities. Today’s sentence is another success in our fight against the mortgage fraud schemes perpetrated by Hoda Samuel and her co-defendants that wreaked havoc in this region.”

Comments by other law enforcement officials regarding Samuels’ crimes are below:

“Greed-based crimes such as these can undermine the stability of our financial institutions and the economy, resulting in devastating consequences for homeowners, businesses, and communities in which the properties are located,” said Special Agent in Charge Monica M. Miller of the Sacramento Division of the FBI. “The FBI continues to be committed to identifying and investigating mortgage fraud schemes, such as those committed by Hoda Samuel and her associates.”

“Today’s sentencing of Ms. Samuel is a warning to those who abuse their position of trust to unjustly enrich themselves, the consequences can be severe,” said José M. Martínez, Special Agent in Charge, IRS-Criminal Investigation. “Mortgage fraud has hurt so many people and so many of our communities. This sentencing highlights the ongoing commitment of IRS-CI to hold accountable those involved in these types of crimes.”

At trial, evidence was presented by prosecutors Assistant U.S. Attorneys Philip A. Ferrari and Todd A. Pickles that Samuel, 62, owned and operated real estate agency Liberty Real Estate & Investment Company and Liberty Mortgage Company. The prosecutors showed that between April 5, 2006 and February 26, 2007 there were 30 real estate transactions for which Samuel was the real estate agent for the buyer in 29 of the home sales and also represented the seller in 15 of those sales (dual agency). Income statements for the borrowers were falsified in order to convince the lenders that said borrowers were qualified to make the home purchases (loan fraud, mortgage fraud). As a result, all of the properties were foreclosed eventually.

Read the original article in Mortgage Daily.

New Citizen Who Defrauded Marin County Realtor® Pleads Out

August 16th, 2013 at 9:04am

A Marin County Realtor® and his girlfriend who were defrauded out of $1.6 million by a man claiming to be the son of the president of the Democratic Republic of the Congo are receiving a measure of justice.

Blessed Marvelous Herve, the ersatz royalty, was orginally supposed to appear before Judge Jon S. Tigar in San Francisco federal court last week on wire fraud charges. Instead, Ethan Balogh, Herve’s attorney, and Assistant U.S. Attorney Hallie Hoffman were able to inform the court that the prosecution had presented an agreement that is acceptable to Herve, according to court documents.

According to U.S. Attorney Melinda Haag, Herve could have received up to 20 years in prison if he had been convicted. Thus far, the terms of the plea agreement have not been released.

Herve originally contacted the real estate agent, identified only by the initials “BE” in court documents, in response to an ad the agent had run for a property. The FBI alleged in court documents that Herve defrauded “BE” and his girlfriend out $1.6 million using a variation of the “Nigerian Prince scheme,” in which the criminal pretends he has a relationship to a wealthy foreigner in order to defraud the victim.

Herve only became a U.S. citizen in March 2013 but was arrested just one month later on the wire fraud charges, which date back to the origin of the scheme in 2005.

There is an earlier article about Blessed Marvelous Herve and his victims that you can be directed to by clicking on the link California Real Estate Fraud Report.

Read the original article in the Mill Valley Herald.

Owner of eLender Escrow Pleads Guilty to Running Ponzi Scheme

August 15th, 2013 at 5:22pm

An Orange County man who was accused by the U.S. Attorney’s Office of running an unlicensed escrow company that diverted loans to himself (escrow fraud) and to operating a Ponzi scheme has admitted his crimes and pleaded guilty.

Russell Samuel Biszantz stood before U.S. District Court Judge David O. Carter and along with the guilty plea, agreed to provide restitution to the victims in answer to the judge’s question.  Assistant United States Attorney Greg Staples said the Ponzi scheme caused losses of over $2.44 million from the victims and that Biszantz, the owner of eLender Escrow, Inc. of Lake Forest, had continued to operate his business after losing his license in 2008.

Sentencing for Russell Biszantz is set for December 2013.

Read the original article in the OCWeekly.

Former Michigan Supreme Court Justice Diane Hathaway Begins to Serve Sentence for Short Sale Fraud

August 14th, 2013 at 4:04pm

The bigger they are . . .

Former Michigan Supreme Court Justice Diane Hathaway, who pleaded guilty in January 2013 to one count of felony bank fraud, has begun serving her one-year, one-day sentence for committing short sale fraud.

According to Wikipedia, Justice Hathaway “was the first sitting Michigan Supreme Court Justice to be charged with a crime in nearly 40 years.”

Hathaway, 59, resigned her esteemed position from the bench eight days after entering her plea, is now an inmate at “Camp Cupcake,” the federal prison in Alderson, West Virginia. The prison earned its derisive name because the inmates enjoy the privileges of washers, dryers, microwave ovens, hair dryers, curling irons, manicures and pedicures.

Previous well-known inmates have included former Detroit Councilwoman Monica Conyers; Martha Stewart and the two women who tried to assassinate President Gerald Ford: Sara Jane Moore and Charles Manson follower Lynette “Squeaky” Fromme.

In their complaint against her, prosecutors accused Diane Hathaway of hiding assets worth more than $1 million and lying to lender ING Direct about it in order to obtain a short sale approval.

Defense lawyer Steve Fishman argued that Hathaway and her husband Michael Kingsley actually saved the bank money by accepting the short sale rather than allowing it to be taken to foreclosure auction.

If you want to read in more detail the allegations prosecutors made against Diane Hathaway and conclude for yourself why she pleaded guilty, use the search bar at the left of this blog to find them

Read the original article for this post in the Detroit News.

California State Bar Court Orders Attorney to Stop Practicing Law

August 14th, 2013 at 3:42pm

Ignoring California law has become very costly for a man who has only been practicing law in California for four years.

Stephen Siringoringo, of the Siringoringo Law Firm, was ordered by the California State Bar Court on July 29 to stop practicing law. He was classified as “ineligible to practice law” by the court because he took advance fees from clients to do mortgage modification work for them. Taking  advance fees has been illegal since 2009 and was a law sought and passed as Senate Bill 94 (SB94) by former California Attorney Edmund G. Brown, now the state’s governor.

Siringoringo’s law firm found clients by advertising in Southern California. According to judge Richard Honn, the firm obtained over 4,300 loan modifications. Some of the testimony heard by Judge Honn included declarations from 14 forms clients of the Siringoringo Law Firm. The upfront fees charged ranged from $3,500 to $8,490 according to the state bar’s investigation.

Read the original article in the Press Enterprise.

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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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