California Real Estate Fraud Report

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Archive for March, 2017

CFPB’s Richard Cordray Discusses Dodd-Frank

March 31st, 2017 at 7:24am

The CFPB (Consumer Financial Protection Bureau) exists to protect us. This is why banks and loan servicing companies are trying to kill it.

Read the full article and interview with Richard Cordray in DSNews.

Real Estate Brokerage, Agents Successfully Defend Charges of Fraud, Negligence

March 30th, 2017 at 3:52pm

An unnamed real estate brokerage and its agent received a unanimous verdict in their favor after an 11-day jury trial in San Mateo Superior Court (CIV528024).

The plaintiff was a real estate investor who had purchased a 4-plex in Menlo Park in 2013 that required substantial remodeling. The seller’s real estate agent had recommended a contractor who was later found to be unlicensed. The buyer/investor then sued the agent and brokerage, accusing them of intentional misrepresentation, negligence, and unjust enrichment.

“A lot was at risk for our clients, and we are absolutely thrilled that we were able to defend them outright from some very serious claims,” said prevailing attorney Charlie Bronitsky of the Law Offices of Peter N. Brewer. “It came down to the fact that, every day, real estate agents refer vendors to clients and prospective clients; establishing a duty for the realtors regarding the validity of those vendor recommendations would create an undue burden.”

Read the original article in Digital Journal.

 

Citrus Heights Real Estate Agent Sentenced to Prison in Mortgage Fraud Case

March 30th, 2017 at 3:35pm

Dianna Woods has received a three-year sentence in federal prison after being convicted of four counts of making false statements on loan applications. She was sentenced in Sacramento by Senior U.S. District Judge William B. Shubb.

Woods, 60, was a licensed real estate salesperson for a brokerage called VLD Realty, dba Trade House USA. VLD built and sold houses in residential developments in the Sacramento, Carmichael and Copperopolis areas. When the real estate market started to decline in 2006, VLD tried to sell some of its properties by making the down-payments for buyers and giving them money after the sale closed. Woods was accused of purchasing two of the houses without disclosing the kickbacks and also allegedly submitted loan applications and supporting documentation containing untrue information regarding the purchase terms, as well as her income, employment and assets.

The prosecution grew after the circumstances were investigated by the Federal Bureau of Investigation (FBI) and Internal Revenue Service Criminal Investigation. The case was prosecuted by the U.S. Attorney for the Eastern District of California.

Read the original article in the Sacramento Bee.

Two Plead Guilty in Massachusetts Short Sale Fraud

March 30th, 2017 at 3:17pm

Four persons are facing the justice system for their involvement in a short sale fraud scheme that occurred in Essex County in Massachusetts.

Jasmin Polanco, 37, a real estate closing attorney, and Vanessa Ricci, 40, a mortgage loan officer, each pleaded guilty yesterday to one count of conspiracy to commit bank fraud. Both women have not yet been sentenced.

In the same alleged scheme, Methuen real estate broker Greisy Jimenez, 49,  was indicted this week on two counts of bank fraud and one count of conspiracy to commit bank fraud.

On March 22, 2017, U.S. District Court Judge Rya W. Zobel sentenced a fourth person, Hyacinth Bellerose, 51, a real estate closing attorney from Dunstable, to time served and one year of supervised release to be served in home detention.

Jimenez, Polanco, Ricci, Bellerose and others allegedly submitted materially false and misleading documents to different banks so that the lenders would approve short sales. Approved short sales are required to be arms-length transactions where the seller and buyer are not acquainted through familial, business or other pre-existing relationships with one another. Also, the seller/borrower is almost always required to move out of the property following the sale.

Read the original article in The Patch.

“Assistant Coach Bandit” Pleads Guilty in Loan Modification Scam

March 30th, 2017 at 3:01pm

Huntington Beach resident James Allen Ramsdell, called the “Assistant Coach Bandit” by the FBI for robbing banks in Southern California, has pleaded guilty to defrauding people who sought loan modifications.

In 2009, Ramsdell, 51, received a three-year sentence in federal prison for robbing banks in Anaheim, Costa Mesa, Huntington Beach and San Diego County.

A youth coach as well as a sub-prime mortgage broker, Ramsdell now faces 6 months in county jail following his guilty plea to eight felony counts including grand theft and a sentencing enhancement for his prior bank robbery conviction. There were six victims, from which he took $40,000 for illegally charging upfront/advance fees for loan modification services he did not perform.

Read the original article in the Orange County Register.

 

Judge Sends a Signal as Former Executive Gets Prison in Seeno Mortgage Fraud Case

March 28th, 2017 at 11:26am

Pray that you are not a white-collar criminal whose sentence is up to Judge Yvonne Gonzalez Rogers.

The Oakland judge sentenced Ayman Shahid, 41, of Rancho Santa Fe, to 46 months in federal prison. Shahid had pleaded guilty in 2015 to conspiracy to commit bank fraud and had cooperated with federal authorities in their efforts to build a case against  the Discovery Sales corporation, which is the sales arm of the Seeno homebuilding empire. Federal prosecutors had asked for a lesser sentence for Shahid.

Judge Gonzalez Rogers said she wanted to make an example out of white-collar criminals because she believes federal financial rules appeared to be going in the direction of deregulation of the mortgage industry.

This is a case that dates back over seven years, which was when federal agents raided the Concord headquarters of the Senno family.

Read the original article in the Mercury News. There are also earlier postings in the California Real Estate Fraud Report about this case which you can search and read.

 

 

Fraud on the Rise in 2017 Mortgage Applications

March 28th, 2017 at 10:49am

Fraud and misrepresentation in mortgage applications (mortgage fraud) is on the increase again, according to new data from First American’s Loan Application Defect Index.

The overall Index reveals that the frequency of defects, fraud and misrepresentation in mortgage applications was up 4.1% from January to February in 2017. It was also up 1.3% the same month in 2016. The peak was in October 2013.

Split apart, the Defect Index for (new) purchase transactions was up 2.4% for both month over month and year over year and the refinance defect index grew 3.4% month over month in February, but decreased 6.4% from February of 2016.

Mark Fleming, the chief economist at First American, believes that the recent Fed interest-rate hike, which caused lenders to raise their rates, sent a signal to prospective buyers, some of whom may have submitted loan applications with false or fraudulent information.

“Defect, fraud and misrepresentation risk continues to respond to the shift in market composition. Rising mortgage rates continue to increase the share of higher risk purchase loan applications, but they are also incenting more borrowers to apply for ARMs,” Fleming said. “The savings for the consumer can be significant, but ARM loan applications have historically had higher defect, misrepresentation and fraud risk,” said Fleming. “The increasing popularity of adjustable rate mortgages is something to keep an eye on as the spring home buying season warms up.”

Read the original article in  Mortgage Professional America.

An Important Supplemental Disciplinary Advisory from the California Bureau of Real Estate

March 24th, 2017 at 4:54am

The following is from an email alert from the California Bureau of Real Estate:

    Licensee Alert                 Issued March 2017

Supplemental Disciplinary Advisory to Real Estate Salespersons Who Mislead Consumers into Falsely Believing that They are Brokers — and a Concurrent Caution to the “[Ir]responsible” Brokers Who Permit or Support Such Practices

                       By Wayne S. Bell, California Real Estate Commissioner and

Mark Tutera, Special Investigator

 

In September 2015, the California Bureau of Real Estate (CalBRE) issued an advisory which was captioned “Disciplinary Warning to Real Estate Salespersons Who Act, Conduct Themselves, and/or Advertise as ‘Independent’ Real Estate Professionals — and a Simultaneous Caution to Brokers Who Allow or Support Such Practices”.

(http://www.calbre.ca.gov/files/pdf/adv/Independent%20Real%20Estate%20Professionals.pdf)

Licensees of CalBRE are well advised to review that prior advisory since we continue to see some of the same bad practices identified in that writing.

This discipline “advisory” is being issued as a supplement to that prior warning since CalBRE has taken notice of the use by some real estate salespersons of names and designations (and attendant Internet and marketing materials) that suggest to the public – and mislead consumers into falsely believing – that such salespersons are real estate brokers.

A scenario that we have repeatedly seen is the use by a salesperson (who for this illustration we will identify as John Doe) of a fictitious business name that would lead members of the public to incorrectly believe that the business is operated and managed by a real estate broker. In this example, salesperson Doe conducts business using the name Doe Real Estate.  Doe advertises using that business name, and the advertisements are connected to, or accompanied by, a webpage and other materials that extol the virtues of Doe Real Estate.  The public would not think that Doe is a salesperson who must be supervised by another, and would most certainly conclude that Doe Real Estate is a real estate broker or brokerage.  And the above practices are unlawful.

In addition to the above, many salespersons continue to brand and identify themselves as “independent” real estate practitioners, and they practice and advertise as such.  Unless those salespersons are operating as “teams”, in full compliance with the California laws and rules pertaining to teams (e.g., the disclosure of I.D numbers and the name of responsible broker, and the surname of at least one of the licensee members of the team along with the use of the terms “team”, “group” or associates” with regard to the team), that is unlawful as well.

Further, and depending on the specific language employed with respect to the name(s) and designation(s) used by the real estate salespersons, there might be a violation of the law relative to the use of fictitious names.  Please see the prior guidance given by CalBRE on the proper use and licensing of fictitious names.

As was also stated in the prior warning, under California law, with its two-tiered licensing system, real estate salespersons cannot provide – or advertise that they can provide – real estate services independently of their responsible brokers.

Likewise, salespersons must be associated or affiliated with, and be reasonably supervised by (which supervision includes broker review of the advertising used by the broker’s salesperson or salespersons pursuant to Commissioner’s Regulation 2725(e)) a responsible broker in order to engage in real estate licensed activities in California.  The law provides no exceptions.

CalBRE will take appropriate disciplinary action (including the imposition of significant fines, and  – where appropriate – the revocation of licensure) against real estate salespersons who engage in the unlawful activities discussed above, and against real estate brokers who permit their salespersons to engage in such activities.

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Wave of Short Sale Deposit Scams in the Los Angeles Area

March 23rd, 2017 at 9:41am

The following short sale fraud scam was printed on the California Association of Realtors website:

While we all are concerned about cybercrime and identity theft, it appears taking someone’s money the old-fashioned way has reappeared in short sale scams in Southern California. The alleged scams appear to follow the same basic format.  A short sale agreement was entered into four to six months ago.  The buyer made an initial deposit in the $5,000 to $15,000 range into the listing broker’s non-independent broker escrow.  As with most short sales, the process takes several months and the selling agent is assured that the listing agent is working towards lender approval – it is just taking more time.  Then the communication slows down, the selling agent begins to get concerned and calls the listing broker’s escrow.  There is no answer and no return call and no other number to contact.

A case has been opened with the Long Beach Police Department, Financial Crimes Division.  The officer in charge is Detective Robert Ryan (562) 570-7391.  As of late December, there were approximately 20 victims.  However, the C.A.R. Hotline has received more than 15 calls since the first of the year which have been referred to the Long Beach Police.  The California Bureau of Real Estate is also aware of this case.

Additionally, the Los Angeles County Sheriff has made an arrest in what appears to be an identical scam involving at least 32 victims with a total loss of $498,000. To contact the LA Sheriff’s office call Detective Keith Clark at (562) 946-7217 or tips can be made anonymously at Crime Stoppers, (800) 222-TIPS (8477).

If you believe you or your buyer has fallen victim to a short sale scam, you should contact the police and the Bureau of Real Estate.

Appeals Court Upholds $23 Million Award for Disabled Siblings Defrauded by Contractor

March 17th, 2017 at 9:11am

This month California’s Second Appellate District, Division Two, Court of Appeal upheld an award (case no. BC495095) of $21 million in punitive damages and $2.2 million in compensatory damages against building contractor Noam Bouzaglou, and his shell corporation, Ness Adam, Inc. for defrauding siblings Kathleen McGinty and Tim McGinty, in order to obtain their 1948 home in Santa Monica.

Kathleen suffers from autism and Tim (now deceased) from bipolar disorder, depression and substance addiction.

After their garage was red-tagged by the City of Santa Monica in 2010, they hired Noam Bouzaglou to do the repairs. A series of events and meetings that occurred between Bouzaglou, attorney Andrew J. Stern and the McGintys that resulted in the latter transferring their home to Bouzaglou.

Jeanne Haworth, the trustee after Tim McGinty‘s death, found out that the home was in escrow for $1.55 million and contacted the original estate planning attorney Joe Girard of LA Elder Law, who filed a lawsuit to stop the sale.

“If this sale had gone through, $1.55 million could have disappeared overnight,” said Girard. “Once we got the real estate under control of the judge, Jeanne and Kathleen had more security.”

Read the original article in PRWeb and on the LA Elder Law website.

© Copyright 2007-2017 Monique Bryher

Legal Disclaimer.

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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