California Real Estate Fraud Report

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Multi-State Mortgage Fraud Ring Broken Up

October 29th, 2012 at 2:03pm

Laura Duffy,  the U.S. Attorney for the Southern District of California, has announced indictments in a mortgage fraud case that involved $100 million in real estate in California and Washington state.

Laguna Hills loan processor John Allen, 54, was charged last month by a federal grand jury for submitting fraudulent loan applications to lenders using straw buyers. The straw buyers were promised $10,000 in exchange for their participation in the scheme.

Los Angeles accountant Audrey Yeboah, 54, has already admitted her role by creating phony financial statements such as pay stubs and W-2 forms on behalf of the straw buyers. According to her guilty plea, Yeboah also admitted to reviewing financial statements that totaled over $14.5 million in kickbacks from the scheme.

Others who have been charged in this case are Mary Armstrong, an unlicensed mortgage broker; Armstrong’s assistant, William Fountain; Ramona real estate agent Teresa Rose; and a Seattle-area businessman named Justin Mensen.

Read the original articles in San Diego 6 and the Imperial Valley News.

Lawsuit in Real Estate Fraud Complaint of Clovis Horse Ranch Decided by Jury

October 27th, 2012 at 9:59am

This story probably ranks as the strangest case of real estate fraud report on the California Real Estate Fraud Report.

A common woman who changed her name in 1991 and passed herself off as coming from a wealthy European family that had bred horses for “1,000 years” lost the lawsuit brought against her and her physician husband, who admitted fraudulently signing her death certificate.

Dr. Brian Gwartz, an anesthesiologist, and his wife, Cheryl Skigin, an attorney, purchased the 15-acre Parlier ranch belonging to Genevieve de Montremare (real name: Genevieve Sanders) in 2008 for $2.3 million. Besides claiming to be French royalty, de Montremare held herself out to be a genetics expert in the high-end world of Friesen horse breeding and showing. The ranch she shared with her husband, Dr. Michael Weilert, a pathologist who is the director of Pathology & Clinical Laboratories for Community Regional Medical Centers, was often the site for horse shows and gatherings of the very-well-to-do in horse circles.

Weilert admitted during the trial that he had signed the death certificate for his wife in 2007 and writing an obituary, clearly an exercise in creative writing. His attorney Steven Paganetti offered no defense for Weilert’s deception.

The jury awarded Dr. Gwartz and his wife $700,000 in damages for the fraud committed against them by the plaintiffs and is now working on determining punitive damages. Their attorney is Daniel Spitzer.

Read the original article in the Silicon Valley Mercury News.

There is posting in April 2011 of Genevieve de Montremare, Dr. Michael Weilert and their bizarre life in the California Real Estate Fraud Report (click on the link).

 

Real Estate Agent Charged with Stealing from Clients to Pay for Maui Condo

October 24th, 2012 at 10:46am

The Contra Costa District Attorney’s Office has announced the arrest of a former Sacramento real estate agent for allegedly fleecing over $76,000 from a Martinez family in a real estate investment fraud case.

Lawrence Grzelak, 54,  is charged with one count of securities fraud and one count of grand theft by embezzlement, with one enhancement for an excessive loss.

Deputy District Attorney Ken McCormick of the Real Estate Fraud Unit alleged that Grzelak bought a condo in Maui (the island) and convinced his victims to purchase securities funds that were non-existent (securities fraud) in order to get their money so that he could catch up on his late payments.

Read the original article in the Silcon Valley Mercury News.

US DOJ Sues Bank of America for $1 Billion in Losses Due to Mortgage Fraud

October 24th, 2012 at 10:32am

Ramping up an aggressive stance against mega-banks whose lending practices caused billions of dollars of losses to the taxpayer through Fannie Mae and Freddie Mac, the US Department of Justice has filed suit against Bank of America for $1 billion due to mortgage fraud. Fannie Mae and Freddie Mac are large financial institutions, backed by the federal government, that purchase loans from banks in the secondary market.

The U.S. Attorney for the Southern District of New York filed the suit. Its target is the “Hustle” loan program that originated with Countrywide Financial but was taken over when Bank of America purchased Countrywide in 2008. “Hustle” loans were named for Countrywide’s “High-Speed Swim Lane” (HSSL) program that was created ostensibly to streamline loans. U.S. Attorney Preet Bharara’s office charges that HSSL was “intentionally designed to process loans at high speed and without quality checkpoints, and which generated thousands of fraudulent and otherwise defective residential mortgage loans.”

Read more about this landmark lawsuit on CNN and the press release for the U.S. Attorney for the Southern District of New York website.

San Diego Escrow Officer Acquitted in $11 Million Mortgage Fraud

October 22nd, 2012 at 10:39am

A unique mortgage fraud case that was tried in federal court has come to an end with the only defendant of 24 to be acquitted.

Escrow officer Billie Bishop, 52, of La Mesa, unlike most of the other defendants, did not plead guilty and instead elected to go to trial. Bishop had been charged with wire fraud and making a false statement to a bank; her case was the first time the racketeering law was used in a mortgage fraud case.

Prosecutors had accused her of processing 77 transactions in a scheme where the other defendants received more than the listed price for homes, with the remainder going to an account earmarked for construction upgrades. This special account was managed by Darnell Bell, a Lincoln Park gang member. The homes were purchased in the days of Ninja loans (No Income No Job or Assets) and most were foreclosed after the straw buyers walked away, with Bell and his co-defendants pocketing the loan money (loan fraud, mortgage fraud).

Billie Bishop was tried before U.S. District Court Judge Larry A. Burns. The attorneys who represented her were Gastone Bebi and Jonathan Jordan.

After the trial, Bebi stated that prosecutors had been unable to prove that Bishop had any awareness that the construction work was being performed or that the sales were fraudulent (real estate fraud, escrow fraud).

Read the original article in U-T San Diego (San Diego Union Tribune).

Two Westwood Men Charged in Distressed Homeowner Initiative Sting

October 22nd, 2012 at 9:24am

Two men who were managers at Westwood-based Direct Money Source (DMS) have been indicted as part of a nationwide investigation dubbed “Distressed Homeowner Initiative” by the U.S. Department of Justice.  The purpose of the nationwide opeation was to target businesses that lured distressed homeowners by promising “foreclosure avoidance” but which allgedly skimmed equity from many of the same homeowners. Over 500 people have been criminally charge in 285 cases filed by the Department of Justice across the country. The DOJ identified a staggering 73,000 homeowners as victims and losses to them and to lenders (loan fraud, mortgage fraud) as exceeding $1 billion.

David Singui, 49, the owner of Direct Money Source, and Aziz Meghji, 35, a DMS manager, were arrested last month and charged with conspiracy, wire fraud, loan fraud, aggravated identity theft and money laundering. Two other locals, Kiet Truong, 27, of Hawthorne, and Starr Smith, 31, face charges all of the same charges in the 42-count indictment except for money laundering.

Commenting on the arrests, United States Attorney André Birotte Jr. said “Shameless con artists seeking to prey on homeowners in financial distress need to know that law enforcement is hot on their trail. The results of this initiative demonstrate that the combined resources of federal, state and local authorities will be brought to the table in a concerted effort to bring fraudsters to justice and protect the nation’s homeowners.”

Read the original article in the Century City Patch and DSNews (Default Servicing News).

 

Sacramento Man Pleads Guilty to Mortgage Fraud

October 19th, 2012 at 11:17am

Sean McClendon, 46, a West Sacramento man, pleaded guilty in federal court for his role in committing mortgage fraud. 

McClendon was allegedly paid by his co-defendant Anthony Salcedo for falsifying documents in the loan origination process (loan fraud). Another co-defendant, Anthony Williams, is alleged to have helped Salcedo find buyers for four properties either owned or associated with Salcedo. In violation of the law, none of the back door payments were disclosed to the lenders in any of the real estate contracts. In the end, the lenders suffered losses of over $1 million.

The case was investigated by the FBI and the IRS.

Read the original article in the Sacramento Bee

JSW Financial Defendant Sentenced to Prison for Real Estate Investment Fraud

October 19th, 2012 at 11:09am

Edward G. Locker, 37, one of the defendants in the JSW Financial Inc. real estate fraud prosecution, was sentenced to 30 months in prison for his role in defrauding investors.

Co-defendants Richard F. Tipton, 62, was sentenced last month to 18 months in prison and James W. Ward, the principal defendant, got 5 years.

David Lin, 44, the only person charged who went to trial, was found guilty on 17 counts by a jury and sentenced to 28 months in prison.

Mountain View-based JSW Financial (formerly known as Jim Ward & Associates Inc. (JWA)) was a hard money lender that solicited money from people to purchase fractional interests in loans they made to borrowers to build residential homes. Investors were also given the “opportunity” to invest in the Blue Chip Realty Fund LLC (Blue Chip) and Shoreline Investment Fund LLC (Shoreline).

All the defendants had been charged with 18 counts alleging conspiracy to commit mail and wire fraud, mail fraud, and wire fraud, in violation of 18 U.S.C. §§ 1349, 1341, and 1343. For the three that had entered guilty please, they admitted that their representations to investors that JWA and JSW generated claiming that Blue Chip and Shoreline wrote and invested in loans that were secured by deeds of trust on real property were completely false.

 Read the press release on the FBI.gov.

L.A. County Assessor John Noguez Arrested in Massive Appraisal Fraud Case

October 18th, 2012 at 9:48am

The long-running public corruption investigation into Assessor John Noguez, who runs the L.A. County Assessor’s Office, has culminated in the arrests of Noguez, his head appraiser and a tax consultant for allegedly conspiring to lower tax assessments for expensive commercial and residential properties in exchange for cash and contributions to Noguez’ re-election coffers.

L.A. County District Attorney Steve Cooley announced the arrests and said “Los Angeles County voters and taxpayers deserve honest, hardworking elected and appointed officials who will serve the best interests of the people. Residents must have confidence that their government is not for sale to the highest bidder or the highest briber.”

If the allegations are found to be true, the people of Los Angeles will have been robbed of millions of dollars in lawfully owed property taxes.

The charges are as follows:

- John Noguez, 47, (real name: Juan Renaldo Rodriguez): 24 felony counts, including four counts of accepting bribes; five counts of perjury, two counts of conspiracy; and 13 counts of misappropriation by a public officer; he is being held on $1.385 million bail.

- Mark McNeil, 54, head of the Major Appraisal Division; held on $1.16 million bail.

- Ramin Salari, 49, a tax consultant and campaign contributor to Noguez; held on $1.36 million bail.

Among other criminal acts, Noguez is accused of taking $185,000 in bribes from Salari between February and September, 2010. Soon thereafter, chief appraiser McNeil attended hearings and reduced the assessed value of properties located in Santa Monica, Hermosa Beach, Torrance and Los Angeles, including the Old Spaghetti Factory.

An L.A. County appraiser for the Westside named Scott Schenter, who worked in the Assessor’s Office from 1988 to 2011, has previously been charged with cutting values on expensive businesses, homes and condominiums in Beverly Hills, Brentwood and Pacific Palisades, allegedly receiving campaign contributions for Noguez from the property owners.

I sincerely hope that DA Steve Cooley will pursue recovering back taxes, including interest and penalties, from the property owners, as well as re-assessing their properties to market values.

Santos H. Kreimann is acting as Chief Deputy Assessor and running the Assessor’s Office now that John Noguez is out of the picture.

This public corruption case will be prosecuted by Deputy District Attorneys Susan Schwartz and Michele Gilmer.

Read the original article in WeHo News.

California AG Arrests 2 in Los Angeles for Mortgage Fraud

October 16th, 2012 at 3:53pm

The Office of California Attorney General Kamala D. Harris sent out a press release today announcing it has arrested and charged two persons with 41 felonies, including grand theft, burglary, unlawful collection of advance fees, tax evasion and conspiracy in what it terms was “a wide-ranging mortgage fraud scheme.”

The suspects,  Joana Sosa, age 54 of Gardena, and Zoila Ortega, age 31 of Gardena, also face special enhancements for excessive taking and aggravated white-collar crime for losses to victims exceeding $350,000. Sosa and Ortega are alleged to have targeted member of their own community of Spanish-speaking homeowners (affinity fraud, ethnic fraud).

According to Attorney General Harris, “As the mortgage crisis continues, we are seeing a troubling rise in fraud that targets struggling homeowners, including those with limited English language skills.  The predators targeting these victims are ruthless, and I am proud of our prosecutors and special agents for helping to bring them to justice.” Deputy Attorney General David Peyman will be prosecuting this case.

The complaint against Sosa and Ortega accuses them, from 2008 – 2010, of charging their victims advance fees, promising them new mortgage payments they could afford and promising to protect their client-victims from eviction, which is exactly what happened to most of them.

In addition to the Attorney General’s Office / Mortgage Fraud Strike Force, the alleged crimes were initially investigated by the Los Angeles County Department of Consumer Affairs Real Estate Fraud Unit.

 

© 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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