November 15th, 2013 at 9:29am
An Orange County woman was convicted of defrauding Roman Catholic nuns out of $285,000 which was to be used to buy them a retirement home.
Linda Rose Gagnon, aka Linda Gualtieri-Gagnon, 59, was convicted of three counts of wire fraud by a federal jury.
According to Assistant U.S. Atty. Robert Keenan, Gagnon, who does not hold a real estate license in California, told the nuns she was an expert in “short-sale and foreclosure transactions” and offered to help them buy a home they were currently renting for retired sisters. Instead of helping them, Gagnon spent the entire sum in 64 days on lingerie, leasing an Audi and paying off debts for Rose Enterprise, Inc., her real estate finance company.
Read the original article in the Los Angeles Times and a press release from the FBI.
November 8th, 2013 at 11:00am
This article is directly from the California Association of Realtors (CAR) Realegal newsletter.
” . . . on April 4, 2013, the CFPB filed complaints in a federal court in Florida against four national mortgage insurance companies for alleged illegal kickbacks to lenders using captive reinsurance schemes (as explained below). These complaints were the first RESPA enforcement actions taken by the CFPB since it took over enforcement authority from the U.S. Department of Housing and Urban Development (HUD) in July 2011 in accordance with the Dodd-Frank reform law. For this set of lawsuits, the CFPB believed that, for over 10 years, the named mortgage insurers engaged in a prevalent practice of funneling millions of dollars to mortgage lenders in exchange for the referral of business. The mortgage insurers have settled their claims by agreeing to pay $15.4 million and refrain from engaging in these arrangements, but they have admitted no wrongdoing.
The captive reinsurance arrangements alleged in the April 4 complaints involve the mortgage insurance companies issuing mortgage insurance for loans originated by a certain lender, and the lender’s subsidiary company providing reinsurance to cover the mortgage insurer’s risk of loss. Captive reinsurance schemes can also involve settlement service providers other than mortgage insurers and lenders.”
Publisher’s Note: although kickbacks and “referral fees” are common in the real estate and mortgage industries, punishment for violating RESPA provisions is severe.
November 8th, 2013 at 9:50am
At one point, the criminal case against Walter Ng, 84, and his son Kelly Ng, 57, was considered the largest investment fraud case in California, but the U.S. Department of Justice has “settled” it by extracting a minor concession from the men, namely, “structuring transactions for the purpose of evading the reporting requirement.”
Walter Ng will serve five years of probation but no time in prison. Kelly Ng will serve prison time but it is unclear how long.
The 2,000 investors, who collectively lost over $700 million in the Ng’s real estate funds, feel let down by the feds at what they feel, according to one investor, is “getting off scot-free.” More than one investor has committed suicide.
The “scot-free” appears to be a result of a prosecutorial blunder in which, as in the previous post in Fresno County, federal prosecutors failed to keep their eyes on the statute of limitations on securities fraud charges, putting to waste an over-two-year investigation by the FBI.
All that’s left for the investors is their class action lawsuit against Wells Fargo for what they believe was the bank’s role in the Ng investment firms.
Read the original article in ABCNews.com.
November 8th, 2013 at 9:33am
A case in which lenders were defrauded of $15.2 million went south when the presiding judge threw out most of the charges because the district attorney filed her case too late.
Fresno County Superior Court Judge Jonathan Conklin noted that the office of Fresno County District Attorney Elizabeth A. Egan had missed the four-year statute of limitations by filing almost one month too late. This resulted in 100 of 140 charges against the defendants being dismissed. There are now just four defendants facing 13 charges; eight of the defendants have no charges remaining against them. They are Paul Isaac Ramirez, Lisa Sanchez, Johnny Marcos Sanchez, and Lorenzo Lopez.
The original complaint accused 12 people of fraudulently obtaining loans to buy 19 homes in Fresno, Clovis, Sanger and Bakersfield between July 2005 and December 2006. The mortgage fraud originally came to authorities’ attention when Henry Milton, the owner of Worldwide First Mortgage, noticed irregularities with the loans and filed a consumer complaint with the Fresno County District Attorney’s Office.
Read the original article in the Fresno Bee.
November 8th, 2013 at 8:42am
Carl Cole, one of the principals in the Bakersfield firm of Crisp & Cole, is about to enter a guilty plea in the case against him and 14 other defendants in which lenders were defrauded out of millions.
Cole will plead guilty to conspiracy to commit mail fraud, wire fraud and bank fraud. In addition, he will be serving at least eight years in prison and turn over close to $30 million, which he admitted obtaining as a result of the criminal scheme of which he and others were accused.
Pleas were also announced by the U.S. Attorney’s Office for Caleb Lee Cole (Carl Cole’s son), real estate agent Sneha Ramesh Mohammadi, and unlicensed loan officer Jayson Peter Costa.
Julie Farmer, Jeriel Salinas, Michael Munoz and Jennifer Crisp have trial dates in 2014.
Those who have already pleaded guilty are real estate agent Robinson Dinh Nguyen, accountant Kevin Sluga, loan officer Jerald Teixeira, loan officer Christopher Stovall, Megan Balod and Leslie Sluga.
Read the original article in Bakersfield Now.
There are many articles going into more depth about the Crisp and Cole case that can be found be using the search bar in this blog.
November 1st, 2013 at 2:21pm
Dear Readers & Subscribers,
The California Real Estate Fraud Report has been published non-stop for 6 years this month – it was launched in November 2007.
Websites such as this take an investment of time, effort and yes, money. I have never accepted advertising for the Report, but the time has come to make some changes.
As of today, the Report will consider paid advertising solicitations from real estate-related sources. If you or your company are interested in doing so, please email me @ firstname.lastname@example.org. No advertising shall be accepted with the expectation of an endorsement by me, nor will it affect any of my writings or postings, which may refer to news events regarding your company, whether positive or negative.
If I cannot acquire enough advertising money in the next month or so, regrettably, this site will be shut down. I’ve invested hundreds of hours into its design, maintenance and even consumer support and this distracts from my business, which is residential real estate sales.
November 1st, 2013 at 11:15am
The Consumer Financial Protection Bureau (CFPB) has filed a lawsuit in federal district court against a Kentucky law firm, accusing it of violations of the Real Estate Settlement Procedures Act (RESPA).
RESPA is a consumer protection law. It prohibits both taking and giving kickbacks for referrals of settlement services where federally related mortgages are involved. The theory behind the act is that competition – and therefore consumers – are hurt when companies pay kickbacks (“referral fees”), ultimately costing more to consumers for those services. It also creates an uneven playing field for competing businesses.
Borders & Borders, PLC and its principals Harry Borders, John Borders, Jr., and J. David Borders are accused of illegally paying kickbacks for real estate ettlement referrals using a network of shell companies.
According to CFPB Director Richard Cordray, “Today’s action sends a clear message that companies cannot design business structures to hide illegal kickbacks. The CFPB will continue to pursue companies that seek to profit from convoluted arrangements that limit competition and hurt honest businesses.” The CFPB alleges that the violations o
The firm and its principals are being defended by T. Morgan Ward Jr., an attorney with Louisville law firm Stites & Harbison PLLC. Ward released a statement by Borders & Borders, that said “We are a family-owned firm that has been in business for over 40 years, and we would not and did not violate (the Real Estate Settlement Procedures Act). This case concerns a number of agencies that were affiliated with our firm several years ago. The title agencies were ‘affiliated business arrangements’ that are expressly allowed by RESPA.”
Read the original article in Examiner.com.
November 1st, 2013 at 10:59am
Ian T. Kideys, 49, was sentenced in U.S. District Court in Indiana to five years in prison for defrauding homeowners across the U.S., for falsely promising to modify their mortgages. He had previously pleaded guilty to one count of wire fraud.
The court ordered him to pay $1.4 million in restitution to his victims. This looks like a good deal, since Kidey’s company took in upfront fees of over $3.4 million.
Kideys, of La Jolla, owned K2 Capital Management Inc., which operated under the dual names US Mortgage Bailout and iLoanAudit.
According to the U.S. Attorney’s Office in a news release, “US Mortgage Bailout obtained some mortgage relief for its customers through fraudulent representations to lenders, but otherwise simply collected money — thousands of dollars from each customer. Each customer received a money-back guarantee; few got any money back.”
Read the original article in the San Diego Union Tribune.
November 1st, 2013 at 10:49am
Jamall Robinson, a former Your Black Muslim Bakery associate, has been charged along with others in a real estate fraud against two investors.
Robinson, Cordell Hayes, Jhamel Robinson and Marvin Woods are accused of falsifying deeds (title fraud) to give investors the appearance they owned properties in Emeryville and Oakland.
The investors lost $77,000.
Read the original article in the Mercury News.
October 4th, 2013 at 11:46am
David Noonan, an attorney for eight of the investors who lost everything by putting their faith and savings into builder Kelly Gearhart and lender Jay Miller argued last week in court that the three escrow companies were essential to the men’s real estate investment fraud scheme.
In referring to Cuesta Title, Stewart Title and Stewart Title Guaranty, Noonan said, “They are joined at the hip. They were all mutually interested in maximizing their returns.”
Gerard Kelly, the attorney representing Stewart Title of California, said his clients did nothing except to close escrows as they always had done and that “There wasn’t a single trace of a paper trail to suggest any misconduct in this case.”
Mack Staton, Cuesta’s attorney, pointed the finger of blame to Gearhart and Miller as being the sole individuals who committed the fraud. Gearhart and Miller have declared bankruptcy and are neither parties nor witnesses to this $3.9 million trial.
Jay Miller, the former principal of Hurst Financial, has been convicted of fraud. Kelly Gearhart has pleaded not guilty to the federal fraud charges against him and has not yet been tried.
Read the original article in the San Luis Obispo Tribune. There are also numerous articles about Kelly Gearhart, Jay Miller and Hurst Financial that can be found by searching the California Real Estate Fraud Report.