California Real Estate Fraud Report

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Owner of All Ways Financial Services Goes to Prison for Mortgage Fraud

February 27th, 2013 at 11:52am

Cynthia Suratos Lorica, a Hayward woman, is off to prison after preading guilty to mortgage fraud and tax evasion.

Lorica, 51, also was ordered by Chief U.S. District Court Judge Claudia Wilken to pay more than $1 million in restitution, according to U.S. Attorney Melinda Haag.

Under the plea deal, Lorica, who was the owner and CEO of  All Ways Financial Services Inc., admitted she schemed to obtain money from Washington Mutual Bank in 2006 and 2007 by making false statements in her loan applications (loan fraud). At the same time she was an officer of Absolute Value Financial Inc., also a financial services company.

Read the original article in the Mercury News.

Bank of America Backpedals on Misleading Short Sale Directive

February 27th, 2013 at 9:38am

On February 11, Bank of America issued a dictum regarding the management of its short sales that most real estate agents immediately recognized as misleading and unethical.

The BofA Short Sale Agent Update required listing agents to keep the MLS (Multiple Listing Service) status of any short sale properties which the seller had accepted to “current and active” until a short sale approval letter has been issued. The benefit to BofA is obvious: this would significantly reduce the amount of time its staff would appear to have taken to evaluate the sale and issue approval, generating a substantiating paper trail, should any nosy state or federal agencies audit the files.

C.A.R. Legal (California Association of Realtors Legal Deparment) reviewed the Update and notified Bank of America that its directions to Realtors® was not only a violation of MLS rules, but would convey a false representation of the property’s actual status. Once a seller accepts an offer, the status should always be changed to “back-up” or “pending,” depending on the circumstances of the purchase contract.

On February 14, Bank of America posted an “Update: Multiple Listing Service Requirements” on its website. There is no link to the February 11 directive because Bank of America removed it from its agent website.

I take issue with the second paragraph on the February 14, entitled “The listing requirement demonstrates that the property was listed on the open market and the offer received represents an open market transaction. ” One of the current short sale fraud scams, definitely perpetrated by crooked listing agents, is to place the property on the MLS but refuse to allow buyers’ agents to show the property. The reason, of course, is that the “seller” and his/her listing agent, have no intention of conducting an arms-length sale and have already worked out an agreement to “sell” the property to a relative, friend or business associate and has no intention of moving.

Note: on March 4, 2013, the powers-that-be at the Southland Regional Association of Realtors issued a directive to its membership, which I have cut and pasted below in italics:

One of our most common MLS Rules violations, involve short sales.  MLS Rules are very definite about reporting of sales.

Short Sale listings are to be treated just as any other listing.   Listings with accepted offers shall be reported to the MLS or input into the MLS database as “Pending” Or “Back-Up” within 2 business days of the acceptance by the Listing Broker. (Rule 10.2 “Reporting of Sales”)    

In a Short Sale, the homeowner is still the legal owner of the property, not a bank.  When the Seller accepts an offer, that listing is to be reported as “Pending” or “Back-Up”.   Agents who do not report a sale within 2 business days will be assessed.

I assume that other Realtor® boards will be taking a similar position, if they have not done so already, in order to prevent short sale fraud being committed by listing agents on behalf of their sellers.

Justice Grinds Slow but Long Beach Mortgage Sales Rep Gets Prison Time

February 27th, 2013 at 8:48am

I’m curious when the crimes detailed in this posting came to the attention of the feds.

Joel Blanford, a 44-year old sales rep found guilty of mortgage fraud by a jury, is off to prison after United States District Judge William B. Shubb sentenced him to 30 months plus three years of supervised release.

Blanford was formerly a senior sales representative for Long Beach Mortgage, a wholesale subprime lender and former subsidiary of Washington Mutual Inc . Between April 2003 through October 2005, he was found to have conspired with a loan coordinator, whom he bribed, to provide false information regarding the borrowers’ employment or professional licensing standing, falsify financial documents and to overlook misrepresentations (loan fraud) by the borrowers. Blanford, who was compensated based on the volume of loans processed, earned more than $1 million in commissions and other benefits from Long Beach Mortgage.

The original article, published in 7th Space, does not detail how Joel Blanford was caught, nor does it name the loan coordinator or mention whether that person was prosecuted.

The Blanford case was the product of an investigation by the FBI, Financial Fraud Enforcement Task Force (FinCEN) and the Internal Revenue Service-Criminal Investigation (IRS-CID) and was prosecuted by the office of U.S. Attorney Benjamin B. Wagner.  The prosecutors were Assistant United States Attorneys Paul A. Hemesath and Michael M. Beckwith.

Zombie Foreclosures Make Consultants Rich at the Expense of Homeowners

February 22nd, 2013 at 12:28pm

This is another sad story about the federal government  havings its strings pulled by large banking institutions with no benefit to the intended beneficiaries.

Zombie Foreclosures refer to homes which were foreclosed in 2009-2010, possibly incorrectly, and/or illegally due to banking errors. The largest banks were supposed to direct $3.3 or $3.5 billion  in compensation (stories conflict on the exact number) to 3.8 million borrowers as “compensation” to those borrowers. Yep – that’s $1,000 average compensation for possibly stealing people’s homes. But the amount turned out to be a fraction of that.

Under this program, called the Independent Foreclosure Review,”  independent consultants” were supposed to review the files of the borrowers, identify errors and award “compensation.” Instead, the “consultants,” which among others were Ernst & Young, Deloitte & Touche, PricewaterhouseCoopers and the Promontory Financial Group, were “chosen and overseen by the lenders they were reviewing” according to MSN Real Estate and were paid up to $630 per hour. In an article in the Huffington Post, employees of these consulting firms looking at Bank of America loans were quoted as saying they were “discouraged” from reporting errors. One employee said “. . . we were told under threat of losing our jobs to not report what we saw.”

In the same article published by Huffington Post, Sheila Bair, the former chairwoman of the Federal Deposit Insurance Corp., stated that the Independent Foreclosure Review “. . .was doomed from the beginning. It was designed to generate fees for consultants, not to help homeowners.”

The finger of blame for mismanaging this gigantic barrel of pork appears to be pointed at the U.S. Comptroller of the Currency Office, as well as the Federal Reserve (which is not an agency of the federal government) and Chairman Ben Bernanke.

Carolyn Maloney, a New York congresswoman who is a member of the House Financial Services Committee, has asked the federal regulators who oversee foreclosure reviews, to look into this matter.

Ironically, the byline on the Comptroller of the Currency Office‘s website is “Ensuring a Safe and Sound Banking System for all Americans”. Go figure.

If you feel that the federal government may be more a part of the problem than the solution, you are not alone. The 2012 Corruption Perceptions Index, published by Transparency International, shows the government of the United States is perceived to be more corrupt than that of 18 other countries.

 

Giant LPS Pays $35 Million to Resolve Robo-signing by Subsidiary DocX

February 22nd, 2013 at 12:28pm

Lender Processing Services Inc. (LPS) has agreed to pay $35 million to close out criminal fraud violations involving fraudulently signed and notarized mortgage documents by its subsidiary DocX, according to the U.S. Department of Justice.

The non-prosecution agreement between LPS, the US DOJ and the U.S. Attorney’s Office for the Middle District of Florida requires LPS to pay $20 million to the United States Marshals Service and $15 million to the US Treasury.

Lorraine Brown, the former CEO and President of DocX, pleaded guilty to conspiracy to commit mail and wire fraud in federal court in Florida. She has further entered into a plea deal in Missouri and Michigan Attorney General Bill Schuette has announced Brown has pleaded guilty to racketeering. Brown and other DocX employees had been accused of ordering their authorized signers to get unauthorized employees to sign the documents and have them notarized (notary fraud) to pump up profits.

A similar multi-state agreement was entered into by Lender Processing Services in January for the same robo-signing accusations, as published by DSNews.

LPS’ motto, as per its website, is “Proven Expertise, Trusted Solutions.”

Read more about the $35 million settlement in DSNews.

 

Sad End for Thousand Oaks Woman Who Plead Guilty to Mortgage Fraud

February 15th, 2013 at 9:26am

Sonya “Cheri” Tucker, a  former Thousand Oaks woman who along with her husband Terrance “Terry” Tucker pleaded guilty in a mortgage fraud scheme, has died in prison.

Cheri Tucker, 68, and Terry Tucker were each given 10 year sentences in 2009 after they pleaded guilty to bank fraud. They ran Tucker Mortgage in Thousand Oaks and San Diego and used their business to falsify loan documents submitted to banks (loan fraud) for the purchase of homes. Many of the homes were lost to foreclosure. In the meantime, the fraudulent paperwork scheme brought in over $31 million to the Tuckers in the form of loan brokerage fees, real estate commissions and fees assessed to investors. The investors were friends from the Tuckers’ church, none of whom were apparently aware of how their investment money was being misused.

The case was investigated first the the Ventura County District Attorney’s Office and then by the Secret Service.

You can search the California Real Estate Fraud Report for earlier articles on Cheri Tucker.

Read the original article in the Ventura County Star.

L.A. Dept. of Building & Safety Inspector Pleads Guilty to Bribe-Taking

February 7th, 2013 at 7:25pm

Note: there are earlier articles/postings in the California Real Estate Fraud Report about the public corruption investigations by federal authorities involving Los Angeles Department of Building and Safety employees.

Samuel In, 65, a 37-year employee of the L.A. Department of Building and Safety, has agreed to plead guilty to one count of felony bribery that was filed by the U.S. Attorney’s Office. The charge stemmed from a 2008 occasion when he accepted a cash bribe of $5,000 he solicited from a Koreatown man who needed assistance from In’s agency. He is the third employee to have been criminally prosecuted in the past two years.

According to Assistant U.S. Attorney Joseph Akrotirianakis, In, who was a senior inspector, admitted taking more than $30,000 of bribes in the area of Koreatown. He used his Korean-language skills and his position of authority to take advantage of Koreans whose English-speaking skills were limited.

Samuel In, who retired in May 2011, just two days after LADBS General Manager Robert “Bud” Ovrom put him on administrative leave, told the L.A. Times “I always sleep with peace” when he first denied taking bribes.

For my part, as a taxpayer, I’d like to see public employees who plead guilty to felony charges of public corruption or are convicted of such, to completely lose their pensions.

I also believe that the investigations by the feds into corruption at the L.A. Department of Building and Safety don’t even begin to scratch the surface of bribe-demanding, bribe-taking, influence-peddling and corruption that have occurred for decades at this agency.

Read the original article in the Los Angeles Times.

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Investor Gilbert Chung the 27th to Plead Guilty in Foreclosure Auctions

February 7th, 2013 at 6:25pm

Read this important press release from the U.S. Attorney’s Office in the Northern District of California about the felony charges filed against Gilbert Chung and Chung’s agreement to plead guilty in the US DOJ’s ongoing investigation into bid-rigging at foreclosure auctions.

A Northern California real estate investor has agreed to plead guilty for his role in conspiracies to rig bids and commit mail fraud at public real estate foreclosure auctions in Northern California, the Department of Justice announced.

Felony charges were filed today in the U.S. District Court for the Northern District of California in San Francisco against Gilbert Chung of Burlingame, Calif. Chung is the 27th individual to plead guilty or agree to plead guilty as a result of the department’s ongoing antitrust investigations into bid rigging and fraud at public real estate foreclosure auctions in Northern California.

According to court documents, Chung conspired with others not to bid against one another, but instead to designate a winning bidder to obtain selected properties at public real estate foreclosure auctions in San Francisco and San Mateo counties, Calif. Chung was also charged with conspiring to use the mail to carry out schemes to fraudulently acquire title to selected properties sold at public auctions, to make and receive payoffs and to divert to co-conspirators money that would have otherwise gone to mortgage holders and others.

The department said Chung conspired with others to rig bids and commit mail fraud at public real estate foreclosure auctions in San Francisco and San Mateo counties beginning as early as January 2010 and continuing until about December 2010.

“The conspirators went to great lengths to suppress competition and prices at these foreclosure auctions,” said Bill Baer, Assistant Attorney General in charge of the Department of Justice’s Antitrust Division. “The division will continue to vigorously enforce the antitrust laws and to prosecute those who violate them at the expense of distressed homeowners.”

The department said that the primary purpose of the conspiracies was to suppress and restrain competition and to conceal payoffs in order to obtain selected real estate offered at San Francisco and San Mateo County public foreclosure auctions at non-competitive prices. When real estate properties are sold at these auctions, the proceeds are used to pay off the mortgage and other debt attached to the property, with remaining proceeds, if any, paid to the homeowner.

“Today’s charges are another example of our resolve to bring to justice those who engaged in fraudulent bid rigging and anticompetitive practices at foreclosure auctions,” said FBI Special Agent in Charge David J. Johnson of the San Francisco Field Office. “We continue our partnership with the Antitrust Division in aggressively pursuing individuals who participate in these criminal acts.”

A violation of the Sherman Act carries a maximum penalty of 10 years in prison and a $1 million fine for individuals. The maximum fine for the Sherman Act charges may be increased to twice the gain derived from the crime or twice the loss suffered by the victim if either amount is greater than $1 million. A count of conspiracy to commit mail fraud carries a maximum sentence of 30 years in prison and a $1 million fine. The government can also seek to forfeit the proceeds earned from participating in the conspiracy to commit mail fraud.

The charges today are the latest filed by the department in its ongoing investigation into bid rigging and fraud at public real estate foreclosure auctions in San Francisco, San Mateo, Contra Costa and Alameda counties, Calif. These investigations are being conducted by the Antitrust Division’s San Francisco Office and the FBI’s San Francisco office. Anyone with information concerning bid rigging or fraud related to public real estate foreclosure auctions should contact the Antitrust Division’s San Francisco Field Office at 415-436-6660, visit www.justice.gov/atr/contact/newcase.htm or call the FBI tip line at 415-553-7400.

Today’s charges are part of efforts underway by President Obama’s Financial Fraud Enforcement Task Force (FFETF), which was created in November 2009 to wage an aggressive, coordinated and proactive effort to investigate and prosecute financial crimes. With more than 20 federal agencies, 94 U.S. attorneys’ offices and state and local partners, it’s the broadest coalition of law enforcement, investigatory and regulatory agencies ever assembled to combat fraud. Since its formation, the task force has made great strides in facilitating increased investigation and prosecution of financial crimes; enhancing coordination and cooperation among federal, state and local authorities; addressing discrimination in the lending and financial markets and conducting outreach to the public, victims, financial institutions and other organizations. Over the past three fiscal years, the Justice Department has filed more than 10,000 financial fraud cases against nearly 15,000 defendants, including more than 2,700 mortgage fraud defendants. For more information on the task force, visit www.stopfraud.gov .

U.S. Attorney’s Office in New Jersey Charges Nine People in $10 Million Short Sale Fraud

February 7th, 2013 at 6:15pm

The following is a full reprint of the press release from the U.S. Attorney’s Office in New Jersey, continuing the aggressive actions taken by U.S. Attorneys in Eastern states to prosecute short sale fraud (compared to zip action out here in California by either the feds or the California Department of Justice).

Nine people involved in a long-running, large-scale mortgage fraud scheme that caused losses of approximately $10 million were charged in two Complaints with conspiracy to commit bank fraud, U.S. Attorney Paul J. Fishman announced.

Jose Luis Salguero Bedoya, also known as Jose Salguero, 36, of Elizabeth and Verona, N.J.; Paul Chemidlin, Jr., 41, of Morganville, N.J.; Delio Coutinho, 50, of Colonia, N.J.; Joseph DiValli, 44, of Jackson, N.J.; Christopher Ju, 26, of East Brunswick, N.J.; Carmine Fusco, 44, of East Hanover, N.J.; Jose Martins, 31, of Newark, N.J.; Yazmin Soto-Cruz, also known as Yazmin Soto, 32, of Elizabeth, N.J.; and Kenneth Sweetman, 32, of Lyndhurst and Nutley, N.J., were arrested this morning by FBI special agents.

Salguero, Chemidlin, Coutinho, DiValli, Ju, Fusco, Martins, Soto, and Sweetman, are scheduled for initial appearances and bail hearings this afternoon before U.S. Magistrate Judge Joseph A. Dickson in Newark.

According to the Complaints:

From March 2008 to July 2012, the defendants engaged in multiple mortgage fraud conspiracies targeting at least 15 properties in and around Newark and Elizabeth, N.J. The defendants mortgage frauds took several forms, including obtaining control of properties through fraudulent “short sale”  transactions, short sale flips, and identity theft. They submitted materially false mortgage loan documents to lenders in order to obtain loan proceeds, which the defendants then used for their own financial gain. The defendants also obtained money through various sales to straw buyers.

From March 2008 to June 2010, Salguero, Coutinho, Ju, and Soto conspired with each other and others to release liens on encumbered properties via fraudulently arranged short sale transactions. This allowed the defendants to profit from new fraudulent mortgage loans obtained on the properties from other mortgage lenders. To complete the short sale transactions, the defendants submitted materially false closing and other documents to mortgage lenders. They submitted materially false mortgage loan applications to mortgage lenders to obtain new mortgage loans on properties in and around Elizabeth, New Jersey, including a property on Fulton Street.

From March 2011 to July 2012, Salguero, Chemidlin, DiValli, Fusco, Martins, and Sweetman submitted false mortgage loan applications to mortgage lenders for a property on Smith Street, Elizabeth. The defendants submitted gift letters to mortgage lenders that falsely stated that the borrower was obtaining the funds necessary to close the real estate transaction from a relative or friend in the form of a gift, when the funds used as the borrowers’ down payments were actually provided by Salguero. The defendants also submitted false appraisal reports in order to support inflated property values and therefore obtain mortgage loans in larger amounts. The defendants formed limited liability companies (“LLCs”) in the names of companies similar to those of licensed title companies in order to open bank accounts in the LLC names to conceal the defendants’ identities and to control the receipt and distribution of fraudulently obtained mortgage loan proceeds. They submitted fraudulent documents that misrepresented Salguero’s ownership in various properties and the disposition of mortgage loan proceeds related to various transactions. The defendants then distributed fraudulently obtained mortgage loan proceeds to themselves and others and concealed those distributions by failing to include them on the HUD-1 Settlement Statements.

As a result of the mortgage fraud schemes described in the two Complaints, which involved at least 15 properties, the defendants and others defrauded financial institutions out of approximately $10 million.

The defendants played different roles in the schemes. Salguero was a real estate investor who, along with his girlfriend, Soto, provided much of the funds used by the defendants to perpetuate their fraudulent schemes. Coutinho was a loan officer at a Northern New Jersey mortgage brokerage company; he submitted false documents in support of the schemes. Chemidlin provided fraudulent real estate appraisals for the defendants although he was not a licensed real estate appraiser. DiValli was a loan officer at a Northern New Jersey mortgage brokerage company who also submitted false documents in support of the schemes. Ju negotiated the fraudulent short sale real estate transactions. Fusco and Sweetman conducted fraudulent real estate closings for the defendants although they were not licensed attorneys or title agents. Martins was a bank employee who facilitated certain financial transactions for the defendants.

The criminal Complaints charge each of the defendants with one count of conspiracy to commit bank fraud, which is punishable by a maximum potential penalty of 30 years in prison and a fine of $1,000,000.

U.S. Attorney Fishman credited law enforcement agents of the FBI Newark Mortgage Fraud Task Force for the investigation leading to today’s charges. Specifically, U.S. Attorney Fishman thanked special agents of the FBI, under the direction of Acting Special Agent in Charge David Velazquez, postal inspectors of the U.S. Postal Inspection Service, under the direction of Acting Inspector in Charge Maria Kelokates, special agents of the U.S. Housing and Urban Development, Office of Inspector General (HUD-OIG), Northeast Region of Investigations, under the direction of Special Agent in Charge Cary Rubenstein, special agents of the Federal Housing Finance Agency, Office of Inspector General (FHA-OIG), under the direction of Inspector General Steve Linick, special agents of the Office of the Special Inspector General for the Troubled Asset Relief Program (SIGTARP), under the direction of Special Inspector General Christy Romero, and special agents of IRS–Criminal Investigation, under the direction of Acting Special Agent in Charge Shantelle P. Kitchen, and the Hudson County Prosecutor’s Office, under the direction of Acting Prosecutor Gaetano Gregory.

The government is represented by Assistant U.S. Attorneys Lakshmi Srinivasan Herman, Aaron Mendelsohn, and Charlton Rugg of the U.S. Attorney’s Office Economic Crimes Unit in Newark.

This case was brought in coordination with President Barack Obama’s Financial Fraud Enforcement Task Force. President Obama established the interagency Financial Fraud Enforcement Task Force to wage an aggressive, coordinated, and proactive effort to investigate and prosecute financial crimes. The task force includes representatives from a broad range of federal agencies, regulatory authorities, inspectors general, and state and local law enforcement who, working together, bring to bear a powerful array of criminal and civil enforcement resources. The task force is working to improve efforts across the federal executive branch, and with state and local partners, to investigate and prosecute significant financial crimes, ensure just and effective punishment for those who perpetrate financial crimes, combat discrimination in the lending and financial markets, and recover proceeds for victims of financial crimes.

The charges and allegations contained in the Complaints against each defendant are merely accusations, and the defendants are considered innocent unless and until proven guilty.

Riverside Increases Transaction Fees to Fund Real Estate Fraud Investigations

February 7th, 2013 at 5:57pm

A somewhat controversial proposal to increase fees on property transactions in Riverside that are used to fund real estate fraud investigations was passed after a compromise.

The new few is going to be $6 beginning March 5.

Both the Riverside District Attorney’s Office and the Assessor-Clerk-Recorder pushed for the increase. On the District Attorney Paul Zellerbach argued for the increase due to the continuing volume of complaints of real estate fraud and mortgage fraud in his jurisdiction.

Part of the fee currently goes to the Assessor’s office to help defray its costs for mailing out noticed to property owners when transactions are made concerning their properties. There have been numerous frauds committed when property documents are fabricated and/or forged in order to defraud the lawful owner from his/her property, almost always without the owner’s knowledge (title fraud).

Read the original article in UT San Diego.

© Copyright 2007-2014 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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