California Real Estate Fraud Report

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Guilty Pleas in Santa Barbara County Loan Modification Prosecution

August 15th, 2014 at 10:39am

Santa Barbara County District Attorney Joyce E. Dudley announced guilty pleas in a case where the defendants promised to obtain loan modifications for struggling homeowners.

Ismael Cancinos, age 56, of Palmdale, CA pleaded guilty to 34 felony counts that included charges of first degree residential burglary, grand theft and fraudulent practices of a foreclosure consultant. Mercedes Alvarez, age 48 of Palmdale, CA, pleaded guilty to 7 felony charges that included fraudulent practices of a foreclosure consultant. She also admitted the special allegation of committing an aggravated white collar crime. They were ordered to pay full restitution to their victims and Mercedes Alvarez has been ordered to surrender her real estate license.

Read the original article in Santa Barbar Edhat.

Three People Charged in SoCal Short Sale Fraud Case

August 15th, 2014 at 10:28am

A common short sale scheme with a twist may land three people in a lot of trouble.

Prosecutors said Nelly Luz Rubiano, 57, of Ojai, and Orange County residents Sergio Sanchez Santibanez, 32, and Alejandra Rodriguez, 31, allegedly operated a foreclosure rescue program that may have incorporated short sale fraud into the business model.

The three worked for Foreclosure Legal Services in the city of Orange and were arrested on allegations they charged homeowners in distress upfront fees, which are illegal in California. They were alleged to have promised the homeowners to save their homes by offering to buy the homes in a short sale and then re-selling the properties to those homeowners at a discounted market value, courtesy of the lenders.

Prosecutors said that from 2011 to 2012, Rubiano, Santibanez and Rodriguez lured struggling homeowners in Ventura County with a promise to save their homes that were undergoing foreclosure. The three allegedly promised to buy the distressed properties in a short sale and said they would then sell the properties back to the homeowners at a reduced market value, prosecutors said.

Read the original article in the Ventura County Star.

U.S. Attorney Charges 3 Men in $18.5 Million Mortgage Modification Scheme

August 8th, 2014 at 9:17am

In an announcement made by Christy Romero, Special Inspector General for the Troubled Asset Relief Program (SIGTARP), and Preet Bharara, the U.S. Attorney for the Southern District of New York, three men have been arrested and charged in relation to what may be one of the largest mortgage modification schemes ever committed.

Charged with one count each of wire fraud and conspiracy to commit wire fraud are Ped Abghari, aka “Ted Allen”, 37, of Irvine, California; Dionysius Fiumano, aka “D”, 43, of Irvine, California; and Justin Romano, 40, of Blue Point, New York. The three are alleged to have taken up to $18.5 million from over 8,000 financially distressed homeowners in all 50 states by falsely promising them pre-approval for lower payments through the Home Affordable Modification Program (HAMP) and aggressive legal representation.

“This was all a purported ruse used to trick vulnerable homeowners into paying the defendants thousands of dollars in up-front fees for which zero meaningful work was ever actually done,” Romero said. “SIGTARP has aggressively pursued these allegations, working closely with Preet Bharara’s office, to protect homeowners in New York and across our nation from becoming victims of this crime and to bring perpetrators to justice.”

Read the original article in DSNews.

Jurors Award Ranchers $12.2 Million in Commercial Real Estate Deal that Soured

August 8th, 2014 at 7:37am

A Sonoma County jury Friday awarded $12.2 million in punitive damages against a man who sold a Petaluma ranching family his commercial property and failed to fulfill a 10-year lease.

Edward and Cathleen Cardoza, the ranchers, had sold some of their land to the Open Space District for $18 million in 2005. In order to avoid capital gains taxes, they purchased David H. Reed’s commercial property on Corby Avenue for $4.7 million. Reed who owned RPM OptoElectronics Inc., moved out just 3 months later. The Cardoza’s attorney, Joseph Piasta, told jurors the couple was forced to sell the property and suffered a $1.2 million loss.

Reed denied that he tried to swindle the Cardozas and said he had fulfilled his promises.

Whether the Cardozas will be able to collect their damages remains unanswered, as Reed claims he is unemployed and a forensic accountant said he is worth $2.5 million.

Read the original article in the Press Democrat.

Nevada County Seeks Financial Help from State in Prosecution

August 8th, 2014 at 7:21am

In 2012, Attorney General Kamala Harris arrested and charged four people from a Grass Valley real estate company with securities fraud, conspiracy and elder abuse for their alleged involvement in a scam that cost investors over $2.3 million.

Philip Lester, 66, and his sister Susan Laferte, 60, claimed they were broke and were provided public defenders by Nevada County. Lester’s wife, Ellen Lester, and Jonathan Blinder, later had the charges against them dropped.

Nevada County officials, claiming that the legal fees for Lester and Laferte, who ran Gold Country Lenders, will cost upwards of $600,000, want the state to pick up the costs of the pair’s defense since it was Harris who brought charges and whose office is prosecuting the case. Nevada County is small – just 100,000 residents – and says the money could be spent on either law enforcement or restoring public employee jobs that were cut.

Read the original article in SFGate.

Modesto Man Charged in Real Estate Investment Fraud Case

August 8th, 2014 at 7:02am

A Modesto man was arrested Tuesday on allegations he mislead victims into putting funds into what they believed were legitimate real estate investments.

Xue Heu, 37, of Modesto has been arrested and charged with eight counts of wire fraud for allegedly taking over $360,000 from investors, who thought their money was being used to purchase real estate investments. Instead, Heu is being accused by the U.S. Attorney, Eastern District of California of using the money for his own purposes.

Read the original article in


BofA Fined $1.27 Billion for Countrywide Mortgage Fraud

August 1st, 2014 at 6:48am

Bank of America is still paying heavily for fraud by its acquisition Countrywide Financial Corporation that occurred before and during the time U.S. taxpayers were forced to invest $45 billion in TARP (Troubled Asset Relief Program).

U.S. District Judge Jed S. Rakoff ordered BofA to pay a civil penalty of $1.27 billion for the fraud, which was related to low-quality mortgages sold by Countrywide. Bank of America acquired Countrywide in July 2008. In addition, the court ordered former Bank of America executive Rebecca Mairone to pay a civil penalty of $1 million.

The mortgage fraud was with respect to Bank of America’s lending program called “Hustle,” which stood for “High Speed Swim Lane” or “HSSL.” In a nutshell, it was a product line by which the bank created and re-sold a high volume of mortgages at high speed to the GSEs (government-sponsored entities) Fannie Mae and Freddie Mac.

The investigating agency was the Office of the Special Inspector General for TARP (SIGTARP) and was headed by Christy Romero, Special Inspector General for SIGTARP.

Here’s what Romero had to say about HSSL: “Bank of America’s mortgage fraud, uncovered and investigated by SIGTARP and its law enforcement partners, was brazen, but simple.”

“To do so, Bank of America removed critical quality control checks and fraud prevention measures that could have slowed down the origination process, despite repeated warnings that doing so would yield disastrous results, including defaults on the loans”.

“Although Bank of America received $45 billion in TARP funds, American taxpayers’ hard-earned tax dollars and TARP investments were not intended to support mortgage fraud.  All TARP-related crime is unacceptable”.

Read the original article in DSNews.


In David vs. Goliath, Homeowner Awarded $16 Million in Mortgage Modification Fraud Case

July 31st, 2014 at 1:32pm

Phillip Linza, a Plumas Lakes man who claimed that PHH Mortgage never corrected a mistake in the modification to his home loan, has won a major settlement that is certain to get the attention of attorneys representing similar homeowners.

A Yuba County Superior Court jury awarded Linza $513,902 in damages and $15.7 million in punitive damages against PHH.

United Law Center attorney Andre Chernay said PHH Mortgage, despite repeated attempts by Linza to reach them, never explained why they raised his mortgage to $2,300 per month after first lowering it to $1,530.

“It’s a classic case of David v. Goliath,” according to Jon Oldenburg, Managing Attorney and partner at United Law Center. “No one thought the banks could be beaten. This award is a huge step in the right direction to help us continue to punish the banks for violations against millions of California homeowners.”

Read the original article in

Bay Area FBI Agent Pleads Guilty to Bank Fraud

July 31st, 2014 at 1:14pm

Charles Espinel, a 32-year employee of the FBI, pleaded guilty to bank fraud, per an announcement by United States Attorney Melinda Haag of the United States Attorney’s Office for the Northern District of California.

Charles and his wife Jeannette Espinel, who also pleaded guilty to the same charge, admitted that they defrauded both First California Bank and Wells Fargo Bank by submitting fraudulent loan applications. The misleading statements were with respect to their income and that they intended to occupy the rental properties as their primary residence.

As part of his job with the FBI, Espinel was required to file security financial disclosure form (SFDF) on an annual basis in order to retain his Top Secret clearance. In an additional admission, he acknowledged knowingly filing false statements and making material omissions on at least four years of the SFDFs.

Read the original article the U.S. Attorney’s website.

FBI Investigation Gets Prison Time for Short Sale Fraud for Former BofA Employee

July 31st, 2014 at 12:59pm

A former Bank of America employee who admitted taking over $1.2 million in bribes to approve short sales at below-market values has received a sentence of 30 months in federal prison.

United States District Judge Otis D. Wright II sentenced Kevin Lauricella, 29, of Thousand Oaks,  and also ordered him to repay Bank of America $5.7 million and give up his home, which was purchased with some of Lauricella’s illegal earnings. As part of his plea, Lauricella admitted that he had approved short sales for at minimum nine properties for the low valuations so that the buyers could flip (re-sell) the properties quickly (short sale fraud). The sales, which occurred in 2010 and 2011, were entered at higher/false values in the bank’s computer system with the purpose of making it appear that Bank of America had approved the lower values.

Read the original article on the FBI website.

© Copyright 2007-2016 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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