California Real Estate Fraud Report

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Calif. Assemblyman Ed Chau to Hold Meeting about Elder Financial Abuse on August 1

July 29th, 2013 at 11:28am

On August 1, the Arcadia Chamber of Commerce will hold a Government Affairs Forum.

49th District Assemblyman Ed Chau will be speaking about AB 477, the legislation he introduced to fight financial elder abuse. AB 477  adds notaries public to the list of persons mandated to report possible elder financial abuse and fraud. Reporting parties may also make a claim to the California Victim Compensation and Government Claims Board for reasonable attorney’s fees for any costs they incurred when filing their report.

The public is invited to attend and ask questions of Assemblyman Chau.

For more information or to RSVP, please call the chamber 626-447-2159 or info@arcadiacachamber.org.

The chamber is located at 388 W. Huntington Dr., Arcadia 91007.

Read the original article in the Pasadena Star News.

Rancho Santa Fe Broker Arrested for Mortgage Fraud in San Diego Area

July 29th, 2013 at 11:14am

A mortgage broker has been arrested and charged by the U.S. Attorney’s Office in San Diego for allegedly operating a scheme that defrauded lenders, including Fannie Mae and Freddie Mac.

Donald V. Totten, 56, now a resident of Oakland, operated Integrated Home Loans, Integrated Lending, Money World, Island Financial and Little Angels Living Trust.

According to prosecutors, between 2002 and 2007 Donald Totten allegedly received $2.2 million in loans by falsifying the loan applicatons of a straw buyer, including inflating income and assets. He used the same straw buyer to purchase four homes simultaneously, so that each lender was not aware that the buyer was purchasing multiple properties. After the escrows closed, he then allegedly had the straw buyer sign over the deeds into a trust that he controlled. All four properties eventually were foreclosed, causing losses to the lenders.

This case was investigated jointly by the FBI, Internal Revenue Service and Federal Housing Finance Agency / Office of Inspector General.

Read the original article in the Rancho Santa Fe Review.

California Man Sentenced to Prison for Double-Escrow Fraud in Las Vegas

July 29th, 2013 at 9:59am

A California man who operated what authorities said was a double-escrow fraud scheme has been sentenced to 5 1/2 years in federal prison after pleading guilty to commit wire fraud.

George Anderson, 55, of Copperopolis, California, admitted he sold his Henderson and Las Vegas properties to straw buyers and recruited a co-defendant Andrew Swan to buy the houses back in exchange for a kick-back.

U.S. Attorney Daniel Bogden said that loan applications to Anderson Financial Group and Swan’s firm Creative Capital Group contained deliberately false information in order to receive funding for the loans (mortgage fraud).

Swan, 38, pleaded guilty in January 2013 to wire fraud and conspiracy and was sentenced this June to 2 1/2 years in prison.

Anderson and Swan were ordered by U.S. District Judge Roger Hunt to provide resitution ot $3.5 million to the lenders they defrauded.

Read the original article in Businessweek.

Stanislaus County DA’s Office Going Hard after Real Estate Fraud

July 26th, 2013 at 11:36am

White-collar crime has the attention of the Stanislaus County District Attorney’s Office, as several defendants have found out recently.

Referring to recent cases, Jeff Mangar, a prosecutor with the Stanislaus County DA’s real estate fraud unit says, “There is an emphasis on real estate professionals because of higher standards and the trust people place in them.”

In order to avoid foreclosure on the Papillon Drive home on which he owed $1.4 million, Phil Sotelo pretended he was a representative for his lender in order to deed the property to his own corporation. For making that choice, Sotelo, who owned Realty Executives Sotelo & Associates, has accepted a six-month jail sentence for filing phony documents (title fraud).

Gerald Jeffery, 39, already in possession of a previous felony strike conviction, has entered another plea for impersonating the owner of a property he did not own, changing the locks and renting it on Craigslist (rent fraud, Craigslist fraud). The alert renter met the real owner and authorities caught Jeffrey by setting up a sting.

Modesto resident Mark Redding, 49, pleaded guilty to a misdemeanor charge of operating a property management company without a state license, for which he was fined $1,000 and order to repay his clients. Redding was caught when one of his former clients filed a complaint with the California Bureau of Real Estate and found out Redding Property Management Co. was uninsured.

Gabriel Albor, once the owner of Escalon-based Fidelity First Mortgage, is awaiting a possible six-month jail sentence for filing a fraudulent document to prevent foreclosure on his wife’s property.

 Read the original article in the Modesto Bee.

Consumer Financial Protection Bureau Gets New Director – Moves Aggressively to Protect Consumers

July 25th, 2013 at 11:15am

Only two years old now, the Consumer Financial Protection Bureau (CFPB)  is already very active in bank regulating. With Richard Cordray being confirmed on July 16 as its director, many expect CFPB to become more aggressive on behalf of consumers by keeping an eagle-eye on the practices of banks and mortgage-related businesses.

High on the CFPB’s list is to simplify the current mind-boggling mortgage disclosures home borrowers must sign and to plow through and implement more provisions in the Dodd-Frank Act.

According to Alan Kaplinsky, chief of the consumer financial services group at Ballard Spahr, “There’s a lot going on with the CFPB’s enforcement but about 95% of it has been behind the scenes. “Now with Cordray’s position being secure, I expect we will see a lot more enforcement activity.”

Long overdue is the Qualified Mortgage rule (QM) that shockingly requires that lenders actually analyze a borrower’s ability to pay their mortgages. When QM goes into effect, the compliant lenders will get safe harbor protection in exchange for meeting certain benchmark standards, including a maximum debt-to-income (DTI) ratio of 43% or less.

Regarding simplification of mortgage disclosures, real estate agents and their brokers should take particular note that the CFPB intends to consolidate redundancy between the Truth in Lending Act and the Real Estate Settlement Procedures (RESPA).

Read the full article in National Mortgage News.

Glendale Gets $189,000 to Fight Real Estate Fraud

July 23rd, 2013 at 7:57am

The residents of Glendale can rest assured that officials there take real estate fraud very seriously.

In the past five years, the Glendale Police Department has received over $570,000 in grants from the Los Angeles County Real Estate Fraud Prosecution Trust to investigate and prosecute suspected cases of real estate fraud. The Trust is funded by a $3 fee added to the cost of filing fees for documents entered into the Los Angeles County Registrar-Recorder/County Clerk.

According to Glendale Police Det. Shawn Milligan, victims of real estate fraud suffer extreme stress from losing their homes to con artists or finding out that a criminal has taken a loan out against their home (equity stripping). At that point, it’s up to the Glendale Police Department’s Financial Crimes unit to investigate the alleged crimes, which can take up to 18 months.

Last week, the unit received an additional $189,000 grant from the City Council. One of those who supported the grant motion was Councilman Ara Najarian, who said he experienced real estate agents trying to get him to pay unnecessary fees on his purchase.

Read the original article in the Glendale News Press.

SLO Judge Denies Motion to Dismiss Lawsuit against Cuesta Title, Stewart Title

July 16th, 2013 at 2:37pm

It’s been a long time coming but the investors who sued Cuesta Title,  Stewart Title  and Heritage Oaks Bank for their participation in the scheme perpetrated by Hurst Financial Corp., its owner James Hurst Miller, and real estate developer Kelly Gearhart, are finally going to trial July 29.

The stakes are huge: the 500 investors are trying to recover about $80 million they say Kelly Gearhart and James Miller solicited from them to develop 25 real estate projects between 2004 and 2008, none of which came to fruition.

San Luis Obispo Judge Charles Crandall, who denied motions to dismiss by all three defendant companies, noted: “The court repeats what it said in denying earlier motions for summary judgment: A serious fraud has plainly been perpetrated on a wide group of investors, which is reflected in the indictment and/or conviction of several key players.”

The investors allege that employees at Stewart Title and Cuesta Title helped facilitate wrongdoing by Hurst Financial, Gearhart and Miller by “misdirecting funds out of escrow that were specifically loaned for real estate construction, moving forward with questionable escrows containing contradictory instructions and eliminating valid liens through doubtful business practices,” this according to documents. Heritage Oaks Bank is part of the civil suit because the investors allege the bank also was a participant in the fraud because it was “fully aware of, and assisted in, the fraudulent re-conveyances of the deeds of trust by Hurst.”

James Miller has already pleaded guilty to four counts of money laundering and fraud. For his role, Gearhart has been indicted on 16 counts of fraud and money laundering.

Read the original articles in the San Luis Obispo Tribune and Cal Coast News.  You can also search the California Real Estate Fraud Report to read the many previous postings about this case.

Defendant in “Cash for Keys” Fraud Arrested

July 12th, 2013 at 2:09pm

This is a case of a novel form of fraud.

“Cash for Keys” is a phrase used to describe payments lenders make to homeowners to entice the latter to move out of their foreclosed homes in a timely fashion and without vandalizing them.

Eimbari Kemet, 48, aka John Woodrow Smith, was wanted for allegedly breaking into empty foreclosed homes in Rancho Cucamonga, pretending to be a tenant and then demanding the banks pay him Cash for Keys to move out peacefully. He had been wanted by the San Bernardino County District Attorney’s Office on felony real estate fraud charges since February 2012 but was arrested in Georgia after the police stopped him for driving with a broken tail light.

A suspected accomplice of Kemet’s, Quddusa Lynette Anderson, 38, of Patton, has already been sentenced  to 252 days in county jail and ordered to pay restitution to the victims, which in her case were Bank of America and Freddie Mac.

Read the original article in the Press Enterprise.

Los Angeles Woman Pleads Guilty in Foreclosure Rescue Fraud Case

July 12th, 2013 at 1:56pm

Jewel Hinkles, aka Cydney Sanchez, 63, has pleaded guilty in Sacramento federal court to bankruptcy fraud with respect to a foreclosure rescue scheme she operated.

The office of U.S. Attorney Benjamin Wagner noted that Hinkles is the third defendant to plead guilty. Jesse Wheeler, 36, of Roseville and Brent Medearis, 46, of Modesto had previously entered guilty pleas for committing bankruptcy fraud. A fourth defendant, Cynthia Corn, 60, of Oakland, awaits her trial, which begins August 6.

According to an article in the Central Valley Business Times, the businesses and relationships between the defendants was as follows: 

Jewel Hinkles was the founder and general manager of Horizon Property Holdings LLC, in Beverly Hills. That business offered a program from 2008 through 2010 that she called the “Save My Home” or “Homesaver.” The program promised to both prevent foreclosure and to lower the principal balance on the homeowner’s mortgage. Hinkles/Horizon created a template of her program to affiliates, who then offered it to their clients. Two of the affiliates were Jesse Wheeler, who operated JW Financial Solutions in Roseville and Cynthia Corn, who ran Property Relief! in South San Francisco.

Homeowners were allegedly told by the defendants that investors would purchase their homes at a discount and later resell them back to the homowners at prices discounted from the original mortgage. In the meantime, the defendants filed fraudulent deeds transferring a fractional interest in the homeowners’ properties to the Pacifica Group 49/II (title fraud). The defendants allegedly frequently took their deceit a step further by filing fraudulent bankruptcy petitions in order to prevent the lender from foreclosing; hence, the guilty pleas to bankruptcy fraud.

Enrolling in Save My Home and Homesaver was pricey: there were initial upfront payments of from $1,750 to $6,500 and additional monthly fees ranging from $850 to $1,500.

The defendants allegedly made their business(es) very profitable: the indictment states that they took in approximately $4.9 million from over 1,000 homeowners, including those whose mortgages had been sold to Fannie Mae and Freddie Mac.

Tulare Man Arrested in Multi-County Loan Modification Scam

July 12th, 2013 at 11:42am

Tulare County resident Ricardo Melgoza has been charged with over 15 counts of grand theft and burglary in what authorities said was a loan modification scam that occurred in Tulare, Fresno and Kern counties and targeted Spanish-speaking homeowners.

Melgoza, 43, was arrested in Southern California, who may be in this country illegally, is being held on an immigration hold.

According to investigators, Melgoza charged his victims, whom he met through Spanish-language advertising media, between $1,500 and $3,400 of upfront fees in exchange for a promise to obtain a loan modification. It has been illegal since 2009 to charge advance fees for such services.

Once Melgoza had the fees in hand, he informed the homeowners he was unable to obtain the loan modification and referred them to two attorneys, David Robinson and Mark Shoemaker. Robinson and Shoemaker are disbarred attorneys; Robinson was already barred from the practice of law one year prior to the start of the loan modification frauds.

Deputy Attorney General Leslie Westmoreland with the Special Crimes Unit of the California Attorney General’s Office is prosecuting the case.

The California Bureau of Real Estate worked the California Department of Justice in the case.

Read the original article in the Visalia Times.

© 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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