California Real Estate Fraud Report

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Archive for September, 2013

SEC Accuses California Man of Real Estate Investment Fraud of 500 Investors

September 27th, 2013 at 4:19am

The U.S. Securities and Exchange Commission (SEC) has settled a case in which it accused Larry Polhill, a California man, of defrauding almost 500 investors through a private equity real estate firm.

Polhill, 61, sold his investors unregistered notes promising to yield annual returns of 5 percent to 17 percent. According to the SEC, there was no collateral to back his investments, which were either not made or were impaired (real estate investment fraud). He sold his “investments” through San Bernardino-based American Pacific Financial Corp., which eventually went bankrupt and named unsecured creditors who it owed $160 million.

Although the settlement is still subject to approval by U.S. District Court for the Central District of California, Polhill agreed to be barred from acting as an officer or director of a public company.

Michael Quinn, K&L Gates LLP, is Larry Polhill’s attorney.

In the meantime, there is no word as to where the $160 million can be found.

Read the original article in the Press Enterprise.

Elk Grove Attorney in Hoda Samuel Case Sentenced to Prison

September 27th, 2013 at 4:07am

An attorney from Elk Grove who pleaded guilty to intentionally verifying inflated income statements made by borrowers to induce lenders to underwrite loans is going to federal prison for 2 1/2 years. His guilty pleas were to conspiracy and make false statements.

Sean Patrick Gjerde, 37, worked for Hoda Samuel, the owner/operator of Liberty Real Estate & Investment Company  and Liberty Mortgage Company. Samuel stood trial, was convicted and received a 10-year sentence in the mortgage fraud case.

Eight other persons have been charged in this case; seven have already pleaded guilty and await their fates . . .

Unrelated to this prosecution is an action by the California State Bar Court in April, 2012, which placed Sean Gjerde on inactive status because of pending cases alleging misconduct on his part.

Federal prosecutors have charged eight others in the mortgage fraud scheme. Seven have entered guilty pleas and await sentencing.

There are a number of postings on the California Real Estate Fraud Report regarding the prosecution of Hoda Samuel that you can find by using the search tool.

Read the original article in News10 ABC.

Santa Paula Man Indicted in Mortgage Fraud That Allegedly Targeted Latino Community

September 27th, 2013 at 3:54am

An investigation into a mortgage fraud conspiracy that is alleged to have targeted both Spanish-speaking persons (affinity fraud, ethnic fraud) and lenders has resulted in the arrest of eight people by the FBI, seven of whom are Ventura County residents.

Just arrested is Cesar Rodriguez Azamar, 36, of Santa Paula. The scheme was led allegedly by Jose “Joe” Garcia, 36, of Camarillo via Oxnard-based New Concepts Home Loans. Jose Garcia is a broker who also owned Century 21 Premier Realty, which still has a license to operate by the Bureau of Real Estate.

Besides Cesar Azamar and Joe Garcia, the others indicted are Lucy Ann Garcia, 46, (wife of Joe Garcia), Fernando Murguia, 47, of Oxnard; Jose Garcia’s sister, Sesilia Garcia, 30, of Oxnard; Lili Ayala Hernandez, 41, of Oxnard; Gregg Scott Quinn, 40, of Camarillo; and Lidubina “Lido” Mendoza Perez, 41, of Moreno Valley, who worked at New Concepts Home Loans office in  Bakersfield.

According to the indictment, New Concepts employees allegedly prepared mortgage applications that contained false information about borrowers’ income, employment and assets.

Ventura County Chief Deputy District Attorney Miles Weiss said fraudulent loans were written “for more than 100 homes, a conservative safe number,” and losses to the lender exceeded $11 million.

FBI Assistant Director in Charge Bill L. Lewis said that Joe Garcia “allegedly directed his workforce, including unlicensed individuals acting as Realtors, to peddle the dream of home ownership in the poorest neighborhoods of Oxnard, where they easily found people eager to buy.” If this is true, it could be concluded that the defendants used non-licensees because they knew that their victims would be unaware that a license is required to sell real estate in California.

The victim-banks were Washington Mutual, Wells Fargo, Countrywide, IndyMac, SunTrust, World Savings Bank and JPMorgan Chase.

Read the original article in the Santa Paula Times.

New York Judge Rejects Wells Fargo Motion to Dismiss U.S. Lawsuit of Fraud

September 27th, 2013 at 3:16am

In a surprise defeat to Wells Fargo, U.S. District Judge Jesse Furman in Manhattan has rejected the bank’s motion to dismiss the U.S. Attorney’s lawsuit accusing it of fraud in the sale of mortgages to HUD.

Judge Furman is following the decisions of his fellow judges on the Manhattan federal court, Jed Rakoff and Lewis Kaplan, in cases they are hearing against Bank of America Corp and Bank of New York Mellon Corp., respectively. He agreed with the interpretation of the U.S. Department of Justice’s interpretation of the Financial Institutions Reform, Recovery and Enforcement Act of 1989 (FIRREA). FIRREA was enacted following the savings-and-loan meltdown in the mid-1980s and gives the government the right to sue for fraud when a federally-insured financial institution is involved.

The lawsuit was brought by then U.S. Attorney Preet Bharara in Manhattan in October 2012. Bharara cited Wells Fargo’s alleged “longstanding and reckless trifecta of deficient training, deficient underwriting and deficient disclosure, all while relying on the convenient backstop of government insurance.”

Wells Fargo had argued that the FIRREA claim should be dismissed because the only institution affected by its conduct was itself.

Trial began earlier this week in the Bank of America case being heard in front of Judge Rakoff. In that case, the government is accusing the second-largest U.S. bank of violating FIRREA through the fraudulent sale of risky loans to Fannie Mae and Freddie Mac. Read more by clicking on the link to this post on the California Real Estate Fraud Report.

In 2012, the government settled False Claims Act mortgage cases for $1 billion with Bank of America, $202.3 million with Deutsche Bank AG, $158.3 million with Citigroup Inc and $132.8 million with Flagstar Bancorp Inc.

The case is U.S. v. Wells Fargo Bank NA, U.S. District Court, Southern District of New York, No. 12-07527.

Read the original article in Reuters.

Afkarians Face Prison for $4 Million Real Estate Fraud

September 27th, 2013 at 2:43am

Adel Afkarian, 40, of Carlsbad, and Atef Afkarian, 38, of Slidell, La., pleaded guilty to conspiracy Monday, for taking $4 million in fraudulent home sales in the San Diego area.

Both men were real estate salespersons until their licenses were revoked by the California Bureau of Real Estate.

The U.S. Attorney’s Office in San Diego had charged both Afkarians with committing mail fraud and wire fraud. The pair admitted that they altered deeds of trust and reconveyances in order to wipe out the debt on properties (title fraud, mortgage fraud), including their own, sold properties that were not their own and used shell entities to do so.

When they are sentenced in March 2014, each man could get five years in federal prison.

Read the original article in Courthouse News.

U.S. Attorney’s Lawsuit against Bank of America Goes to Trial in New York

September 25th, 2013 at 9:54am

Attorneys for the U.S. Attorney’s Office in Manhattan are squaring off against Bank of America’s lawyers in a massive lawsuit in which the banking behemoth’s Countrywide predecessor is accused of underwriting and selling toxic mortgages to Fannie Mae and Freddie Mac.

Pierre Armand is an attorney in the civil division of the U.S. Attorney’s Office in Manhattan. Armand calls Countrywide’s business model one in which quality suffered under profiteering and which resulted in massive fraud that cost the two former government-sponsored entities dearly while making Countryside $165 million selling the loans.

“Hustle was not about quality,” Armand said. “It was about speed. It was about volume. It was about profits.”

Countrywide’s loan program, implemented in 2007, went under various names: the “High Speed Swim Lane,”  “HSSL” or “Hustle.” HSSL was overseen by Rebecca Mairone, a former chief operating officer of Countrywide’s Full Spectrum Lending division. Mairone is a co-defendant in the lawsuit who currently works at JPMorgan Chase & Co. and is being defended by Bracewell & Giuliani.

The government’s lawsuit was filed under the Financial Institutions Reform, Recovery, and Enforcement Act, which was passed following savings-and-loan frauds and scandals that occurred during the early 1980s. It blames Countrywide (now Bank of America) for the losses borne by Fannie Mae and Freddie Mac on thousands of supposedly prime mortgages that later defaulted, causing losses of $131 million to Fannie Mae and Freddie Mac.

Bank of America’s attorney is Brendan Sullivan, who countered that Countrywide had quality control in place as well as systems to prevent fraud. “No fraud,” he said. “Two words. That’s the heart and soul and body of the defense. No fraud. And that’s what the evidence will show.”

The case is U.S. ex rel. O’Donnell v. Bank of America Corp et al, U.S. District Court, Southern District of New York, No. 12-01422. It is being heard in front of U.S. District Judge Jed Rakoff.

Read the original article in the Chicago Tribune.

Los Angeles Broker Pleads Guilty in Theft of Escrow Funds

September 25th, 2013 at 8:23am

Steve Kessedjian, 50, from the Los Angeles community of Tarzana, pleaded guilty in Fresno U.S. District Court to committing mail fraud.

According to the plea agreement he signed, Kessedjian used his two businesses Amerilend and Targa Escrow to defraud his clients of funds they were due from escrow (escrow fraud).

In December 2007, a Tuolumne County couple used Amerilend to apply for a loan to refinance their home and pay their credit card debt. The HUD-1 settlement statement would normally have instructions to the escrow officer to, in this case, pay off the credit cards. But Kessedjian instead modified the HUD-1 so that no funds were allocated by Targa Escrow to the pay-off; instead, he used the money for himself. Six months later, he wrote checks to repay those escrow funds but they bounced.

Sadly, Steve Kessedjian’s crimes, which he admitted in his plea agreement, caused the couple to have to file bankruptcy. The plea agreement also requires Kessedjian to repay the victims over $66,000.

U.S. District Judge Lawrence O’Neill will sentence Kessedjian in December, at which time the could get up to 20 years in federal prison and a fine of $250,000.

The Bureau of Real Estate revoked Steve Kessedjian’s broker’s license.

Read the original article in the Central Valley Business Times.

President of Paso Robles Lending Company Sentenced for Securities Fraud

September 25th, 2013 at 8:09am

Candy Wells, the former president of Heritage Lending in Paso Robles, has been sentenced  to five years in state prison.

Last August, Wells pleaded no contest to five felony counts of securities fraud for soliciting investors and selling hard money loans for real estate projects (real estate investment fraud, hard money fraud). Her husband, Ronald Wells, received an already-served sentence of 88 days and five years of felony probation after pleading no contest to being an accessory after the fact to the securities fraud and also embezzlement.

The losses to victims totaled over $1.3 million. The restitution hearing is set for December.

You can read the history and background to this prosecution by going to this link on the San Luis Obispo County District Attorney’s Office website.

Two Men Sentenced to Federal Prison for National Mortgage Rescue Fraud Scheme

September 18th, 2013 at 4:46pm

Two men who operated a nationwide network of businesses that purported to help distressed homeowners but were simply mortgage rescue frauds have been sentenced to federal prison.

Mark S. Farhood, formerly of San Diego, California, and Jason S. Sant of Lecanto, Fla., were sentenced to 11 years and six years, respectively, in addition to terms of supervised released. Each man was also ordered by United States District Judge Anthony J. Trenga to forfeit approximately $2 million to the federal government.

Farhood and Sant co-owned and operated Home Advocate Trustees, which also went by the names Walk Away Today, First Equity Trustees, Home Security Consultants, Sell Fast USA, Short Sale Buyer, USA Sell House Fast, and USA Rental Housing.

The remainder of this post is taken from the press release by the U.S. Attorney for the Eastern District of Virginia’s website.

Christy Romero, Special Inspector General for the Troubled Asset Relief Program (SIGTARP); Neil H. MacBride, United States Attorney for the Eastern District of Virginia; and Valerie Parlave, Assistant Director in Charge of the FBI’s Washington Field Office, made the announcement today after sentencing by United States District Judge Anthony J. Trenga. Farhood and Sant each pleaded guilty to conspiracy charges on May 10, 2013.

“Farhood should spend the next 11 years in prison thinking about how he preyed on and cheated 389 distressed homeowners out of their homes by ‘buying’ their homes in fake sales for $10 per property and then renting out the homes for $4 million, which he used to fund construction on his $1 million home in Costa Rica,” said Christy Romero, Special Inspector General for TARP (SIGTARP). “Farhood and his co-conspirator Sant, who was sentenced to six years in prison, hid their identities, stole identities of people whose pictures they found on the Internet, and exploited TARP’s housing program by submitting phony applications to stall foreclosures while they rented out the properties. When caught by SIGTARP and our law enforcement partners, Farhood tried to hide the proceeds of his crime, including the Costa Rica house and bags of silver coins, and tried have computer evidence of his crime deleted. SIGTARP will bring to justice all those who commit crimes exploiting the TARP bailout.”

According to court records, Farhood and Sant co-owned Home Advocate Trustees, which also went by the names Walk Away Today, First Equity Trustees, Home Security Consultants, Sell Fast USA, Short Sale Buyer, USA Sell House Fast, and USA Rental Housing. They marketed the businesses nationwide as purchasers of distressed real estate and a means by which vulnerable homeowners could avoid foreclosure and the accompanying negative effects on their credit. The companies told homeowners they were in the business of negotiating with lenders to purchase mortgage notes at a discount and falsely claimed to have been in business for seventeen years, to have experienced a 90 percent success rate in purchasing such notes, and to be the nation’s largest volume buyer of short sale and over-leveraged real estate.

As Sant and Farhood admitted in connection with their pleas, the businesses were a fraud, no such negotiations with lenders ever took place, and the scheme was merely a way for them to take possession of hundreds of residential properties, including homes within the Eastern District of Virginia, at virtually no cost and then reap millions of dollars in profits by renting the homes to unsuspecting tenants.

Farhood and Sant further admitted that as part of the scheme, they submitted fraudulent loan modification applications to mortgage lenders under the Treasury Department’s Making Home Affordable Program in the name of homeowners, without the homeowners’ knowledge or consent. Farhood and Sant used the fraudulent applications to stall foreclosures on the properties under their control and for which no mortgage payments were being made and to maximize the time period during which they could collect rental income.

The homes purportedly sold to Home Advocate Trustees and its related entities ended in foreclosure, harming the participating homeowners and commonly resulting in eviction of the tenants.

This case was investigated by SIGTARP and the FBI’s Washington Field Office. Assistant United States Attorney Paul J. Nathanson prosecuted the case on behalf of the United States.

$100 Million Mortgage Fraud Costs Laguna Hills Man Only One Year of Prison Time

September 18th, 2013 at 4:27pm

The OC Weekly blog reports that John Allen, an unlicensed mortgage loan processor from Laguna Hills, was sentenced to one year in federal prison for his role in a $100 million mortgage fraud scam.

Allen pleaded guilty earlier to wire fraud, money laundering and conspiracy and was sentenced on September 16 in San Diego.

Four other people were sentenced for their roles in the same mortgage fraud, which entailed recruiting straw buyers, creating phony loan and other supporting financial documents in order to obtain mortgages. Most of the properties were later foreclosed, but only after the conspirators “earned” $15 million due to their crimes.

One year in prison in exchange for a piece of $15 million. Some might consider that a cost-effective crime.

The original indictments were reported in 2012 in the California Real Estate Fraud Report.

© 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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