California Real Estate Fraud Report

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Realtors Indicted for Operating Mortgage Fraud, Short Sale Fraud Schemes

December 5th, 2013 at 9:04pm

Two Stockton Realtors have been arrested by federal agents and charged with operating a unique mortgage fraudshort sale fraud business,  according to U.S. Attorney Benjamin Wagner.

Lillian Marquez, 38, and Michael Keatts, 56, were charged in a federal grand jury indictment with conspiring to commit mortgage fraud and with nine counts of mail fraud.

According to the indictment, both defendants enjoyed a long run: from February 2006 through August 2012 or later, both Marquez and Keatts submitted loan applications in which fraudulent pay stubs and tax documents were submitted to lenders.

The other side to the defendants’ business was that they allegedly facilitated short sale fraud. In a classic short sale fraud scheme, they would assist the homeowners in default with selling their homes to straw buyers. The “sellers,” however, would remain in their homes at much-reduced mortgages and lowered property taxes. Of course, they would also be relieved of paying taxes on the gains they received by not having to pay either the IRS or Franchise Tax Board (FTB) on their loan foregivenes. Both agencies are completely asleep-at-the-wheel when it comes to short sale fraud, as is most of law enforcement.

Even if these defendants are convicted, I doubt either of the above agencies will lift a finger to prosecute them, the straw buyers or the “sellers,” including putting a lien on the houses. The feds, including the Department of Justice, are too busy pretending to prosecute crooked bankers.

Read the original article in the Central Valley Business Times.

Three Men Convicted of Operating Fraudulent Mortgage Rescue Service

December 5th, 2013 at 8:45pm

Three Southern California men have been found guilty of conspiracy to commit mail fraud by a federal jury. The case was tried by the office of U.S. Attorney Benjamin Wagner.

Charles Head, 36; Benjamin Budoff, 46; and Domonic McCarns, 39, were accused by prosecutors of operating a large-scale foreclosure rescue scam. Head was convicted of three additional charges of mail fraud.

Prosecutors presented evidence that Charles Head led the scam under the entities Head Financial Services and Creative Loans. The firms operated from Orange County between March 2005 and June 2006 and received more than $5.7 million from distressed homeowners by promising them they could save their homes.

Read the original article in the Central Valley Business Times to learn how the foreclosure rescue scam operated.

Five Defendants in $26 Million Sacramento Ponzi Scheme

December 5th, 2013 at 8:34pm

Five persons are sent to be tried in January 2014 in U.S. District Court in Sacramento for operating a real estate fraud that cost investors up to $26 million.

Christopher Jackson, Michael Bolden, Victor Alvarado, Erica Arceo and Nicholo Arceo are facing charges of taking the money from 180 investors through their former company, Diversified Management Consultants Inc., or DMC. DMC was allegedly run as a Ponzi scheme, where money from new investors was either used to pay the earlier ones or to provide defendant Jackson with cash to purchase jewelry, make home improvements and lease a Lamborghini and Land Rover.

Read the original article in the Sacramento Bee.

Banks Should Look in the Mirror for Mortgage Fraud Blame

December 5th, 2013 at 8:26pm

This interesting article, published in MortgageOrb, points out the paradox that if banks don’t collect mortgage fraud data and report it, other banks fall “victim” to fraud by the same borrower.

The article then acknowledges that banks do a poor job of reporting fraud and sharing such data with each other. I would add that for the most part, the largest lenders do not care about mortgage fraud, do not aggressively pursue leads and rarely cooperate to prosecute mortgage fraud, thereby explaining why mortgage fraud is so rampant. This is even more true for short sale fraud, which is a profitable fraud committed by homeowners and generally handled by banks by simply looking the other way.

Three More Crisp & Cole Defendants Plead Guilty in Bakersfield Mortgage Fraud Conspiracy

November 29th, 2013 at 12:16pm

The Feds are going to need an entire prison wing to house all the defendants who have either pleaded guilty or been convicted in the Crisp & Cole (CCRE) mortgage fraud case.

In the latest news, Michael Angelo Munoz, 34, pleaded guilty to two counts of mail fraud relating to his role in an extensive mortgage fraud scheme that ran from January 2004 to September 2007. Munoz was employed at CCRE as a licensed real estate agent. According to the California Bureau of Real Estate, Munoz’ license is expired and shows no disciplinary action.

Another CCRE defendant,  Jayson Peter Costa, 40, also pleaded guilty to conspiracy to commit mail fraud, wire fraud, and bank fraud in the case. Costa was an unlicensed loan officer at Tower Lending.

Both men are Bakersfield residents.

Read the original article in 23ABC News.

Jeriel Salinas, 32, has pleaded guilty to one count of conspiracy to commit mail fraud, wire fraud, and bank fraud.

Salinas, who was employed at CCRE as a licensed real estate agent. In court documents, he was accused along with others at CCRE and Tower Lending of defrauding lenders out of millions of dollars by using straw buyers to purchase properties at inflated prices. The loans were often 100% loans and were obtained by submitting fraudulent documentation.

Like Michael Munoz, Jeriel Salinas’ license with the California Bureau of Real Estate is in an expired status and there is no record of disciplinary action.

The loan fraud occurred between January 2004 and September 2007.

All the cases were prosecuted by the office of Benjamin Wagner, the U.S. Attorney for the Eastern District of California.

Read the original article in 23ABC News.

Two Plaintiffs’ Lawsuits against MERS Dismissed in Washington State

November 21st, 2013 at 10:34am

In a victory for the practice by large banks of assigning beneficiary status to loans for which the beneficiary does not hold the promissory note, two Washington state courts have dismissed lawsuits by plaintiffs against the practice.

MERS, the Mortgage Electronic Registration System, is a shadowy black box by which banks, among other benefits, sell and re-sell the notes to residential homes without having to pay taxes upon the transfers. When a borrower goes into default, s/he or she often finds in near-impossible to contact the note-holder in order to negotiate a loan modification or other terms. MERS, without being the holder of the note (which is often lost) often stands in the place of the bank and takes the borrower to court in order to effect a foreclosure.

In the first case, Reid v. Countrywide Bank NA, U.S. District Court Judge John Coughenour granted MERS’ motion to dismiss this case, in which the plaintiff claimed Countrywide (the lender), LS Title (trustee) and MERS (the beneficiary) “committed fraud, violated the Washington Consumer Protection Act, were negligent, breached the duty of good faith and fair dealing, placed a cloud on their title, and inflicted emotional distress.” Judge Coughenourfound otherwise, writing “Plaintiffs do not state, for example, that they have attempted to identify who holds the note in order to negotiate a loan modification,” the court document says. “Nor have they directed the court any authority stating that the loss of opportunity to engage in such negotiation is a cognizable injury.”

Judge Marsha Pechman, Chief U.S. District Judge of Washington reached a similar conclusion in the case Ryan Wear filed against Sierra Pacific Mortgage Co., MERS and other defendants. In her ruling, Judge Pechman noted “The only injury identified by plaintiff is the pending foreclosure of his home,” the judge said in her ruling. “Plaintiff does not claim that any action by the defendants caused or induced the plaintiff to default on the loan…therefore, regardless of who the actual beneficiary was…plaintiff’s property would still face foreclosure.”

Read the original article in National Mortgage News.

Two Crisp & Cole Defendants Plead Guilty in Bakersfield Mortgage Fraud Conspiracy

November 21st, 2013 at 10:13am

Two more defendants from the $30 million mortgage fraud case that took place in Bakersfield from January 2004 to September 2007 have pleaded guilty.

Michael Angelo Munoz, 34, of Bakersfield, pleaded guilty to two counts of mail fraud relating to his participation.

Munoz’ co-defendant Jayson Peter Costa, 40, of Bakersfield, pleaded guilty to conspiracy to commit mail fraud, wire fraud, and bank fraud.

Principal Carl Cole pleaded guilty to multiple charges earlier this month, in a long-standing case that was prosecuted by the office of U.S. Attorney Benjamin Wagner. The business entities were Crisp, Cole & Associates, aka Crisp & Cole Real Estate, and Tower Lending, an related mortgage brokerage.

The defendants used straw buyers to purchase properties at inflated values, receiving the loan money from mortgage loan companies and federally insured financial institutions. The loans were 100% financed and much of the loan application documentation was false and fraudulent. Court documents stated that while the properties were held in the names of the straw buyers, they were controlled by the defendants.

To date, I have not heard of prosecutors pursuing any of the straw buyers for their roles in facilitating the fraud. Crime still pays for some, or so it seems.

Read the original article in the Central Valley Business Times.

You can read many previous postings about the Crisp and Cole case in earlier editions of the California Real Estate Fraud Report.

DM Financial Mortgage Brokers Indicted for Loan Fraud Scheme

November 21st, 2013 at 9:59am

Two former Marin County mortgage brokers have been indicted in a $2.4 million loan fraud scheme, federal authorities announced Monday.

Paul Sloane Davis and Diane Cobb, mortgage brokers who ran DM Financial, were arrested in Las Vegas after being indicted in a $2.5 million loan fraud.

Davis, 74, and Cobb, 56, both of Marin County, have been accused by prosecutors of finding investors to fund short-term “bridge loans” for home buyers. They allegedly give the investors with the names of the borrowers and the promissory notes and deeds that were to be used to secure the loans. They further are alleged to have given the borrowers no loan money and used the funds they did receive either for their own personal use or to pay-off earlier investors (Ponzi scheme).

Davis and Cobb are each charged with 15 counts of conspiracy, mail fraud and wire fraud. Diane Cobb is further charged with five counts of aggravated identity theft.

Read the original article in the Marin Independent Journal.

San Diego Man Sentenced for Posing as Real Estate Attorney, Defrauding Investors

November 16th, 2013 at 4:11pm

Timothy Mark Brachmanis, 44, was sentenced to nine years and eight months in prison after pleading guilty to defraud investors, according to the San Diego District Attorney’s Office.

Brachmanis falsely posed as a real estate attorney and solicited investors for properties that would be sold at a profit, investments that were either never made or only partially (real estate investment fraud). He pleaded guilty last August to three counts of grand theft, a tax-code violation and admitted aggravated white collar-crime enhancements.

In addition to sentencing him, Superior Court Judge Frederic L. Link ordered Brachmanis to (re)pay his victims over $3.7 million, which includes fines.

Read the original article in the San Diego Union Tribune.

Tax Write-Offs for Fraud? – JP Morgan Chase Thinks So

November 15th, 2013 at 11:20am

Several U.S. Senators, U.S. PIRG and Americans for Tax Fairness have presented over 160,000 signatures to the Department of Justice, demanding that DOJ prohibit JPMorgan Chase from receiving a multi-billion dollar tax deduction as a result of its settle for fraud in the sale of crisis-era mortgage securities.

If the DOJ allows the $13 billion settlement to be tax deductible, taxpayers – who were the ultimate victims of the bank’s fraudulent practices – would be on the hook for $3 billion.

According to a press release by U.S. PIRG that was published on YubaNet,

“A settlement has to mean something or it won’t have the deterrent effect it’s supposed to have,” said U.S. Sen. Chuck Grassley (R-IA). “Federal agencies should do everything they can in negotiating settlements to limit deductions.”

“Taxpayers should not be subsidizing more than $3 billion of JPMorgan’s penalties at a time when federal priorities like education, clean energy, infrastructure and other job creating investments are facing budget cuts. This settlement has to be meaningful if it is going to deter future abuses. I join the 150,000 people today who are urging Attorney General Holder to stand firm and fight for taxpayers and middle class families,” said Senator Mazie K. Hirono (D-HI), who led an effort in the Senate to ensure the Justice Department reaches a deal with JPMorgan that is fair to taxpayers.

“In its effort to protect consumers from financial crimes, the Justice Department should also protect taxpayers from getting stuck with the costs of JPMorgan’s mortgage misdeeds,” said Francisco Enriquez of the U.S. Public Interest Research Group (U.S.PIRG). “The DOJ should include language in its settlement barring the bank from deducting the cost of the settlement as a tax write off.”

© Copyright 2007-2015 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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