California Real Estate Fraud Report

You have just entered the #1 private-sector resource on the Internet for real estate fraud. In doing so, you have voluntarily left the dimension of the conventional real estate world and crossed over to the Dark Side, the realm where greed, dishonesty and evil are the order of the day. Sign up for a free subscription to this comprehensive news resource and receive weekly, timely news reports about real estate fraud, mortgage fraud, short sale fraud, REO fraud, title fraud, loan fraud, appraisal fraud, affinity fraud, loan modification scams, securities fraud and elder financial fraud.

Sacramento Brothers Plead Guilty in Mortgage Fraud Case

April 17th, 2013 at 1:27pm

Two men, brothers Andrey Andreyev, 37, of Sacramento, and Vitaliy Andreyev, 30, of Antelope, entered guilty please to wire fraud with respect to a mortgage fraud scheme.

U.S. Attorney Benjamin Wagner said the two were recruited to act as straw buyers by Vera Kuzmenko, the owner of VK Tax Services, to buy properties. Andrey bought one for $850,000 and Vitaliy purchased another for $1.2 million. Kuzmenko allegedly prepared the loan documents and promised the men money for their “services.”

Vera Kuzmenko knew the statements on the loan applications were false because she was their tax preparer. Kuzmenko has been charged with wire fraud, mail fraud, money laundering, and witness tampering in connection but has not been to trial yet.

Read the original article in the Central Valley Business Times.

Another Northern California Investor Pleads Guilty in Bid Rigging of Foreclosure Auctions

April 17th, 2013 at 1:17pm

Below is a press release by the Financial Fraud Enforcement Task Force regarding rigging of bids at public real estate 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 Mohammed Rezaian, of Novato, Calif. Rezaian is the 30th 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, Rezaian 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 . Rezaian 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.   According to court documents, a forfeiture allegation was also included in the charges against Rezaian.
 
The department said Rezaian 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 July 2008 and continuing until about January 2011.

 
“As a result of this investigation, the Antitrust Division has thus far filed charges against 30 real estate investors in Northern California for their illegal activity at foreclosure auctions,” said Bill Baer, Assistant Attorney General in charge of the Department of Justice’s Antitrust Division. “The division will vigorously pursue the perpetrators of these fraudulent and anticompetitive schemes.”
 
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.

 
“Not only is bid rigging at public foreclosure auctions illegal, it also severely undermines the integrity of a fair and competitive marketplace,” said David J. Johnson, FBI Special Agent in Charge of the San Francisco Field Office. “The FBI will continue to investigate and pursue those who commit fraudulent anticompetitive practices at foreclosure auctions and work with those who have fallen victim to such selfish crimes.”

 
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 victims 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 office at 415-436-6660 , visit www.justice.gov/atr/contact/newcase.htm, or call the FBI tip line at 415-553-74 00.

Today’s charges were brought in connection with the President’s Financial Fraud Enforcement Task Force. The task force was established 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 nearly 10,000 financial fraud cases against nearly 15,000 defendants including more than 2,900 mortgage fraud defendants. For more information on the task force, please visit www.StopFraud.gov .

More Hitches in Foreclosure Fraud Settlement to Consumers

April 17th, 2013 at 1:11pm

Consulting firm, Rust Consulting Inc.,  which has been overseeing payments to former homeowners and the paying bank, Huntington National Bank, have made corrections in their systems, which resulted in consumers being unable to cash or deposit their checks due to non-sufficient funds (NSF). The payments to the 4.2 million borrowers were a requirement of the agreement between bank regulators and the 13 largest mortgage servicers.

Originally, Rust Consulting indicated that 1.4 million payments had been sent on April 12, some of which were unable to be cashed, but now says that $3.6 billion is available.

However, consumers were unable to cash or deposit their checks due to insufficient funds.

Rust has since corrected the problem and verified that $3.6 billion is available to be cashed or deposited.

In a press release, James Parks, senior vice president of Rust Consulting, said “We apologize to anyone who experienced problems trying to cash their checks. We are working hard and communicating with the banking regulators, the servicers, and other banks to ensure those issues are not repeated. We want to assure the public that checks we have mailed under the Independent Foreclosure Review Payment Agreement process are valid.”

Read the original article in National Mortgage News.

Northern California Man Charged in Real Estate Investment Fraud Case

April 17th, 2013 at 12:53pm

A man Contra Costa prosecutor Ken McCormick has referred to as a “national expert” in real estate has been charged by the Contra Costa County District Attorney’s Office of ripping off a New York family of over $1 million.

The man, Ken Beasley, 67, is also a resident of New York but but the three felonies with which he has been charged occurred in Danville. Beasley was charged with two felony counts of embezzlement and one enhanced charge accusing him of causing excessive loss.

The New York family gave Beasley, who has published four books about real estate and who has appeared on Fox News Channel as a real estate “guru,” $1,140 million back in 2006 to purchase three investment properties in Las Vegas, Nevada. According to prosecutors, Beasley did not purchase the properties (real estate investment fraud) but gave the victim fraudulent documents  (title fraud) and sent him monthly rental payments to keep the fraud going. The scam was only discovered when several years later, the family attorney did a title search on the properties while setting up a will and saw they were not in the name of his client.

Read the original article in the Silicon Valley Mercury News.

Update: Ken Beasley is quoted in a subsequent article in the Silcon Valley Mercury News as denying the charges.

Van Nuys Woman Charged with Forging, Filing Fraudulent Title Documents

April 9th, 2013 at 6:50pm

The Los Angeles District Attorney’s Office filed 36 felony counts against Anna Moskovyan related to real estate fraud on March 31.

In the complaint, Moskovyan, 30, is accused of forging signatures on grant deeds  (title fraud) to illegally establish ownership of homes she had identified as having tax liens against them by the L.A. County Treasurer and Tax Collector’s Office. In order to receive the excess proceeds from when the properties were auctioned (foreclosed),  Moskovyan then filed claims with the tax agency.

Moskovyan is also accused of two other schemes. The first is that she allegedly recorded fraudulent Mechanic’s Liens against properties which were about to be foreclosed on. Financial institutions then paid her to remove “her” liens so that the properties could be sold.

The last scheme alleged is that Moskovyan transferred two properties to herself by filing fraudulent grant deeds (title fraud).

Read the original article by the L.A. County Department of Consumer Affairs and the Press Advisory from the Los Angeles County Sheriff’s Department.

Note: per the North Hollywood – Toluca Lake Patch, Anna Moskovyan remains in jail in lieu of a $1.24 million bail. The 100 or more properties on which she allegedly recorded fraudulent mechanic’s liens are located in North Hollywood, Valley Village, Altadena, Canoga Park, Canyon Country, Cerritos, Diamond Bar, Downey, Hacienda Heights, La Canada, La Mirada, La Puente, Lakewood, North Hills, Northridge, Monterey Park, and Valencia.

Seven Persons Indicted for Mortgage Fraud Scheme

April 4th, 2013 at 9:41am

Benjamin Wagner, U.S. attorney for the Eastern District of California, announced that a federal grand jury has returned indictments against seven men and women, who have been charged with mail fraud, wire fraud and making false statements involving the purchase of at least 23 homes in a mortgage fraud conspiracy.

Readers of the California Real Estate Fraud Report recognize that Wagner is by far the most aggressive federal prosecutor for his district in California.

The defendants are Jannice Riddick, aka Jannice Frazier, 30, of Sacramento; Aleksandr Kovalev, 50, of Rocklin; Arthur Chang Menefee, 42, of Stockton; Adil Qayyum, 31, of Rosele, Ill.; Elsie Pamela Fuller, 38, of Richmond; Leona Yeargin, 46, of San Pablo; and Florence Francisco, 62, of Houston, Texas.

Elsie Pamela Fuller and Leona Yeargin were additionally charged with aggravated identify theft because they allegedly used stolen identification to purchase one or more of the homes.

Read the original article in the Sacramento Bee.

 

Man Killed in Washington State Stand-off Wanted in Sacramento for Real Estate Fraud

April 4th, 2013 at 9:21am

The Sacramento Bee reported that a local man who was killed in a showdown with Washington State police was the subject of a 2004 warrant from the Sacramento County District Attorney’s Office.

The warrant from the DA’s office charged Sacramento residents Nina and Rick Marlowe of Sacramento with filing a false or forged instrument, theft by false pretenses and identity theft. Although the warrant had been active for eight years, it wasn’t until very recently that the investigation led authorities to a home in Hoquiam, Washington. Authorities arrested a woman but the man showed fraudulent identification. When police returned to arrest the man, whom they believed to be Rick Marlow, he shot Police Sgt. Jeff Salstrom.

The warrant was issued after investigators believe the Marlowe’s forged the name of a woman who co-owned a piece of property (title fraud) so that they could sell it (real estate fraud).

 

 

Hendrix Montecastro, Helen Pedrino Convicted in $142 Million Ponzi Scheme in Riverside

April 1st, 2013 at 12:30pm

Hendrix Montecastro, 40, of Maryland, was convicted on March 25 of 304 counts in a complex real estate fraud case that prosecutors say cost the victims $142 million in total. According to Riverside County Chief Deputy District Attorney Vicki Hightower, the jury convicted Montecastro on charges that included grand theft, destruction of evidence and felony fraud against 26 of 27 named victims — with asset losses totaling $3.6 millions.

He faces a prison sentence of more than 100 years.

Helen Pedrino, 61, of Murrieta – the mother of Hendrix Montecastro, was found guilty of 54 felonies based on her recruitment of five victim investors. When she is sentenced, she could spend up to 30 years in prison.

James Benjamin Duncan, who orchestrated the fraud, testified against Montecastro and Pedrino after making a deal with prosecutors. He is going to be sentenced for his crimes this month, along with Maurice McLeod, who also played a prominent role. A third man, Christopher Oetting, hanged himself on February 16, 2010 in his home, after admitting he to charges of conspiracy, money laundering and multiple counts of filing fraudulent tax returns.

The remaining defendants: Charlie Choi, Cindy Kelly and Thuan Nhan Du pleaded guilty to selling securities without a license and received probation.

As with all Ponzi schemes, this one worked well because friends and relatives convinced each other that the defendants’ “real estate investment” program was profitable. Good judgment was suspended and people refinanced their homes to draw out equity, cashed in their retirement plants and charged up their credit cards. Almost all of the victims were completely ruined as no monies have been recovered.

In a nutshell, the real estate investment fraud worked by the use of two companies set up by the defendants: Jovane Investments and Stonewood Consulting. The investors placed their money into Jovane, a shell company. The investors paid the seller the asking price or close to it and Jovane Investments funded the loans, but at 20-25% more than the appraised value.

The investors were unaware that Stonewood would locate the properties, also arrange financing and do so also at inflated values.

To understand the depth of this real estate fraud, refer to the article published in the Press Enterprise.

Part of Hendrix Montecastro’s defense was that he was a victim of James Benjamin Duncan too, but Prosecutor Hightower showed that Montecastro was anything but poor, spending $500,000 just before the Ponzi scheme collapsed on a non-profit called the Biocybernaut Institute.

Fannie Mae Sales Associate Indicted for Demanding Kickbacks for REO Referrals

March 27th, 2013 at 4:50pm

A former Fannie Mae employee who demanded kickbacks in exchange for handing out REO listings (REO fraud) got stung when a real estate broker informed the feds and participated in taking down the man.

Armando Granillo, 44, who worked out of Fannie Mae’s Irvine, California office as an REO specialist, has been indicted on three counts of wire fraud. Granillo’s job was to review applications from prospective listing agents for Fannie Mae foreclosures.

The honest broker is located in Tucson, Arizona. Granillo travelled to Phoenix to meet the broker in anticipation of a 20% “referral fee” for himself, which amounted to $11,200 of the broker’s legitimate commissions. During the meeting, which was recorded by the investigators from the Federal Housing Finance Agency’s Office of Inspector General, Granillo is alleged to have stated that the kickbacks were “a natural part of business.”

The U.S. Attorney’s Office for the Central District of California is the prosecuting agency for this case. Armando Granillo is out on bail pending his arraignment. Read a copy of their press release by clicking here.

This prosecution for REO fraud is a first . . . and just the tip of the iceberg for this type of real estate fraud. Any real estate agent who has sold REO properties knows that kickbacks to bank employees occurs. Some of the worst REO listing agents get listing after listing and yet do a poor job of marketing, showing and maintaining bank-owned properties, even ones where their relatives get the trash-out and remodeling contracts from the banks. They rarely, if ever, respond to or return phone calls from buyers’ agents. Ever wonder why that is?

The good news is that REO listings are significantly down  – 67%  according to my research – in certain sections of Los Angeles. So REO fraud is being extinguished as banks have come to the astounding conclusion after seven long years that it makes better business sense to do short sales or provide creative financing terms to keep borrowers in their homes than to foreclose.

Read the original article in Inman News.

Irvine Man Indicted for Mortgage Fraud Using Straw Buyers

March 27th, 2013 at 10:04am

Alexander Romaniolis, 48, of Irvine, was arrested in a mortgage fraud case involving residential properties.

Romaniolis was arrested in Huntington Beach after a federal grand jury in Sacramento returned a three-count indictment for mail fraud. The indictment charges that he recruited five straw buyers to purchase the residential properties in Rocklin, Roseville and San Clemente and used his position as a real estate licensee to help them falsify their income, employment and other financial information to the lenders (loan fraud, mortgage fraud).

The value of the loans was over $5 million and the losses due to the resulting foreclosures amounted to more than $2 million.

The case was jointly investigated by the California Attorney General’s Mortgage Fraud Strike Force and the FBI.

Read the original article in the Sacramento Bee and the Sacramento Business Journal.

© Copyright 2007-2014 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.

ALL RIGHTS RESERVED. No part of this publication may be reproduced or transmitted in any form or by any means, electronic or mechanical, including photocopying, recording or by any information storage and retrieval system, without written permission from the author, except for the inclusion of BRIEF QUOTATIONS in a review.

BLOG POWERED BY SHARP BIZ IMAGE

Copy Protected by Chetans WP-Copyprotect.