California Real Estate Fraud Report

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Superceding Indictment Returned in Foreclosure Auction Bid Rigging Prosecution

May 17th, 2013 at 7:21am

A Danville man who was indicted by a federal grand jury in December 2011 with rigging bids at real estate foreclosure auctions and mail fraud faces new charges having to do with evidence tampering.

Andrew Katakis of Danville is the recipient of a superceding indictment charging him with obstruction of justice in the federal investigation. He is now accused of convincing his co-defendants Donald Parker, Anthony Joachim and Theodore Longley to install and run software to overwrite deleted documents stored on their computers (spoliation).

Note: when computer users delete a file, it is not actually deleted, but the space in which it is located is flagged by the system as available for a new file to be written (unallocated space). The purpose of the software is to locate unallocated space and overwrite it one or more times with new data.

“Obstruction of a grand jury investigation is a crime the Antitrust Division takes seriously,” says William Baer, assistant attorney general in charge of the Department of Justice’s Antitrust Division. “We will prosecute those who subvert the competitive process, as well as those who attempt to conceal their illegal actions by destroying evidence.”

“The new charge arises out of a long-running investigation that has already resulted in guilty pleas by numerous other defendants who participated in the scheme charged in this case,” says U.S. Attorney Benjamin Wagner.

Ten defendants have already pleaded guilty in this conspiracy: Anthony B. Ghio, John R. Vanzetti, Theodore B. Hutz, Richard W. Northcutt, Yama Marifat, Gregory L. Jackson, Walter Daniel Olmstead, Robert Rose, Kenneth Swanger and Wiley Chandler.

The current investigation is being conducted jointly by the Antitrust Division’s San Francisco office, the U.S. Attorney’s Office for the Eastern District of California, the FBI’s Sacramento Division, and the San Joaquin County District Attorney’s Office.

Read the original article in the Central Valley Business Times. There are also earlier articles about this auction bid-rigging and prosecution in the California Real Estate Fraud Report.

Orangevale Man Indicted by Federal Grand Jury for Mortgage Fraud

May 9th, 2013 at 6:32pm

An Orangevale man has been indicted by a federal grand jury on five counts having to do with mortgage fraud and loan fraud.

Valeri Kalyuzhnyy, 41,  is charged with making false statements on a loan and credit application and money laundering. The charges date back to the days of Washington Mutual Bank, Countrywide Bank, Bank of America and US Bank, when Kalyuzhnyy worked to prepare and then submit loan applications to the four lenders. According to the indictment, he originated close to $4 million in mortgages by falsifying the income, assets and employment status of the prospective borrowers as as the (non-) fact that they intended to occupy the loans.

The case will be prosecuted by Assistant U.S. Attorneys Stephen Lapham and Lee Bickley and was investigated jointly by the FBI and IRS.

Read the original article in the Sacramento Business Journal.

Los Angeles Man Pleads Guilty to Mortgage Fraud

May 7th, 2013 at 9:09am

Ricardo Fabian Salinas, 34, a Los Angeles man who was one of nine people named in an indictment in July 2012, has pleaded guilty to bank fraud in relation to a mortgage fraud scheme that was perpetrated in Bakersfield.

Salinas’ co-defendants are Eliseo Jara Jr., Sergio Jara, Antonio Perez Marcial, Lucia Yolanda Chavez, Arlene Jeanette Jara, Candace Shantel Gonzales, Joseph Shawn Chavez Jr. and Melissa Rochelle Jara.

Prosecutors allege that from 2007 to 2010 Salinas and his co-defendants deceived mortage lenders by preparing and submitting fraudulent loan applications and selling properties to hand-picked buyers. They charge that the false statements included inflating the borrowers’ income, employment and financial assets and that the intent of the purchasers was to use the homes as primary residences.

Ricardo Salinas could get up to 30 years in federal prison when he is sentenced by the judge for his crimes.

Read the original article in Bakersfield Now.

Folsom Man Goes to Prison for 10 Years for Real Estate Investment Fraud

May 7th, 2013 at 8:47am

A man who was already on home detention for a prior conviction for bank fraud has been sentenced to federal prison for 10 years for mail fraud.

U.S. District Judge Garland Burrell Jr. imposed the sentence on David Romo, 42, now formerly of Folson for operating a real estate investment fraud scheme that cost the victims over $6.9 million.

Romo was prosecuted by the office of U.S. Attorney Benjamin Wagner, who said that David Romo never disclosed to his victims-investors that he had been convicted of bank fraud in 2002 in the U.S. District Court in Sacramento. He solicited investors through his companies Sycamore Ventures LLC, Smarie Investments LLC and Groupo Immobiliare LLC. Wagner stated that Romo did not use the investors’ money for anything other than his personal use and for unrelated business expenses.

In imposing sentence on Friday, U.S. District Judge Garland Burrell Jr. noted that Mr. Romo was on home detention when he committed his current crimes.

In referring to Romo’s gall in committing new federal crimes while on federal supervised release, Judge Burrell said “This is appalling, he does not respect the law, he does not get it. It is evident the public needs protection.”

Read the original article in the Central Valley Business Times.

Imposter Rental Scams Spread to Zillow

May 3rd, 2013 at 1:54pm

Before you read this article about consumers being ripped-off by phony real estate agents, phony landlords and phony property management companies, know that I complained to both the California Association of Realtors (CAR) and the National Association of Realtors  (NAR) about listings being stolen 18 months ago and they did absolutely nothing.

Back then, I reported a real estate agent on the east coast (I am located in California) who had stolen my listing and posted it on his website, along with the listings of other Realtors®, in order to increase his SEO (search engine optimization). When I contacted him, he told me he could do what he wanted and that nobody would stop him. See the first/above paragraph to learn what NAR and CAR did about it.

Now rental scams are starting to appear on Zillow, victimizing both consumers and honest Realtors®. The scam is to take an agent’s rental listing, re-post it on Zillow for a lower fee and change the suffix of the address, e.g., “Drive” not appears as “Terrace.” They use the legitimate Realtor’s name and create an email address similar to the agents in order to communicate with their consumer-prey.

Savvy consumers who are looking for a rental know that Craig’s List has been used for at least several years by con artists who find out a home is vacant, change the locks on the property, post an ad on Craig’s List, then “show” the property to multiple prospective tenants. The con artist will then take rent deposits from more than one renter, all of whom expect to get keys to the property but show up to find either someone else living there or that the scammer has disappeared into thin air.

According to an article just posted in Inman News on May 2, after Inman brought the Zillow case to the attention of the National Association of Realtors, the group’s general counsel, Laurie Janik, called it “the most sophisticated listing scam that she’d heard of.”

In my opinion, it’s not at all sophisticated; in fact, this rental scheme is relatively simple. It’s just that NAR isn’t paying attention to fraud.

One man is taking upon himself to do his job, which is to protect the integrity of listings. Malcolm Waring, the chairman of the Pocono Mountains Association of Realtors’ MLS (PMAR), said he was reviewing his option to bar bar Zillow from posting his MLS’s rental listings. The Zillow rental listing that was cloned belonged to a Realtor® who is a member of PMAR. According to Waring, upon threat of losing rental listings to both Zillow and its subsidiary HotPads, Zillow removed the fake listing. Waring said “I’ve been assured that they’re going to beef up fraud prevention.” But, if this happens again (and it will), “it’s going to be the last time.”

I’ve never met Malcolm Waring, but I like him already.

Laurie Janik of NAR said she has informed NAR’s legal department “so that they also are aware of the latest tactics.” Note that this means NAR wants their staff to be “aware” but they have not stated they intend to do anything affirmative to stop this, and other listing-stealing, so that both consumers and Realtors are protected.

If you’re a Realtor® or a consumer who wants NAR to do something about this, please send an email to Laurie Janik @ ljanik@realtors.org. Her phone number is 312-329-8270.

Read the original article in Inman News, which did the public a genuine service by publishing this information.

Tampa Man Gets 26 Years for Short Sale Fraud and Foreclosure Fraud

May 3rd, 2013 at 11:58am

I love the justice system in Florida – this would NEVER happen in California.

John W. Lebron, 33, already on probation for possession with intent to sell GHB, an illegal steroid with strong sedative properties, has been sentenced to 26 years in prison for committing short sale fraud and foreclosure fraud.

Lebron, a formerly licensed real estate agent, opened a business called EZ Investments with his wife in 2005. Their first sale was consummated when John Lebron helped his sister Cynthia Lebron to buy a home that was in foreclosure. He not only collected both sides of the commission (dual agency), he got the mortgage broker’s commission after placing the name of another loan officer (loan fraud, mortgage fraud) on the paperwork to conceal his plan. Sounds like Lebron’s business model included fraud to help him achieve his goals.

Emboldened by a successful and very profitable transaction, John Lebron next set up a short sale to his brother-in-law and at the same time arranged a second sale to a straw buyer (“flopping”). Since the straw buyer happened to be unemployed, Lebron submitted phony pay stubs on behalf of the buyer. As with the previous sale to his sister, Lebron received both sides of the real estate sale from both sales as well as the commissions from the loans. The straw buyers earned $5,000 for their troubles.

John Lebron’s fortunes reversed when he defaulted on loans valued at $1.4 million. He was arrested in 2011, lost his real estate license and has been ordered by the trial judge to return $1.5 million.

Read the original article in the Tampa Bay Times.

Van Nuys Man Charged with Rental Fraud of Foreclosed Homes – Using the Bible

May 3rd, 2013 at 11:04am

Victims of rental scams will be relieved to know that the San Bernardino County District Attorney’s office is on the prowl for the criminal predators who steal from renters.

Van Nuys resident Bob Frierson, 42, is going to court to face six counts of forgery, six counts of recording a false document and residential burglary in connection with scamming renters in Victorville, Rancho Cucamonga and Fontana.

According to Senior Investigator Ed Nyberg, Frierson posed as the landlord for vacant homes and signed “rental agreements” with prospective renters, collected the deposits and monthly rents until the banks foreclosed on the properties. The renters would then be surprised when they were presented with eviction notices by the banks. The property owners, usually investors who were not able to evict the renters in time, often lost their homes to foreclosure. Others resorted to filing bankruptcies.

Bob Frierson was arrested after being investigated by the San Bernardino District Attorney Investigators Real Estate Fraud Prosecution Unit. He will be prosecuted by Deputy District Attorney Lance Cantos.

Read the original article in the Victorville Daily Press.

** Update on this post from the Press Enterprise **

Senior Investigator Ed Nyberg has revealed that the way Bob Frierson found his “rentals” was to drive around North Fontana, Rancho Cucamonga and Victorville looking for vacant homes in foreclosure. He then forged grant deeds and presented them to the renters as “proof” that he lawfully owned the properties and could rent them. The twist, according to Nyberg, is that on seven of the fraudulent grant deeds he saw verses from the Bible inserted.

Said Nyberg: “I’ve never seen anything like that. This guy is just a con artist. I think he was using (the verses) as a lure.”

Interthinx 2012 Mortgage Fraud Risk Report Released

May 3rd, 2013 at 10:42am

Interthinx, an Agoura-based firm that specializes in risk mitigation solutions for the financial services industry, has just released its annual Mortgage Fraud Risk Report. The report covers data and trends by analyzing loan applications processed in calendar year 2012 by its Interthinx FraudGUARD® system.

According to the 2012 report, the Interthinx Annual Mortgage Fraud Risk Index increased 3.4% from 2011. The analysts attribute the increase to rising trend in mortgage fraud risk observed over the prior two years from what they believe is market stabilization, tightening housing inventory and home price increases.

The findings indicate a shift in mortgage fraud schemes from the west coast to east coast. Seven of the “Top 10″ states for mortgage fraud are now located in the eastern United States. These states predominantly use judicial foreclosures and were a focal point of robo-signing foreclosures by the major banks before that multi-state lawsuit was settled by the Attorneys General.

For those interested in mortgage fraud trends, this annual report by Interthinx is well-worth reading. Here is the link: http://www.bit.ly/16zgrWu

Read the original article in the Sacramento Bee.

Marin Realtor® Conned out of $1.6 Million by New U.S. Citizen

May 3rd, 2013 at 10:27am

A Congolese man who allegedly represented that he was the son of the president of the Congo and just became a U.S. citizen last month, has been accused of defrauding a Marin real estate agent and his girlfriend out of $1.6 million.

Blessed Marvelous Herve, 41, stands charged with one count of wire fraud, according to a federal criminal complaint, according to U.S. Attorney Melinda Haag.

An affidavit filed by FBI Agent Brian Weber in support of the criminal complaint states that Herve was granted asylum in the United States in 1999. Between 2006 and 2012, Herve allegedly conned the unidentified agent and his girlfriend by telling them a number of false stories, including

(1) Herve’s father was the president of the Congo and wanted to buy several multimillion-dollar homes in the Bay Area.

(2) Herve needed assistance in recovering $43 million the U.S. government had supposedly seized from him. He allegedly bled the agent financially until he was dry; then did the same to the girlfriend. The lure was millions of dollars in “bonuses.”

Are any of you asking the same question I am: why would a man who was supposedly the son of the president of the Congo need political asylum?

Read the original article in the Novato Patch.

San Diego Realtor® Arrested on Mortgage Fraud Charges

May 3rd, 2013 at 10:13am

San Diego Realtor® Kathryn Sylvester has been arrested by the FBI and now faces charges of operating a $5 million mortgage fraud conspiracy.

According to the U.S. Attorney’s Office, Sylvester, 43, was charged with 10 counts of wire fraud, two counts of bank fraud and conspiracy with regard to submitting fraudulent loan applications on behalf of straw buyers whom she allegedly recruited. Twenty-eight of the 80 properties that were purchased went into foreclosure, causing losses to lenders of over $5 million.

Straw buyers are rarely prosecuted and almost never see jail time, but three of them in this case have pleaded guilty and are awaiting their sentences: Claudia Montes, Tad Lent and Roderick Michener.

Read the original article in Courthouse News.

© 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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