California Real Estate Fraud Report

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Family who ran charter bus company going to prison for mortgage fraud, tax fraud

February 11th, 2015 at 7:43am

Fidencio Moreno, 52, and Arturo Moreno, 38, brothers who owned Quality Insurance Travel Inc., have been sentenced to prison for conspiracy to commit tax fraud.

Fedencio Moreno was sentenced to U.S. District Judge Lucy Koh to three years and five months in prison; Arturo Moreno received three years and five months in prison. Arturo also pleaded guilty to conspiracy to commit bank fraud.
Elena Moreno, 40, the wife of Fidencio and the bookkeeper to the business, pleaded guilty to conspiring to commit tax fraud and conspiring to commit bank fraud and was sentenced last month to one year and 10 months in prison.

While part of the prosecution by the office of U.S. Attorney Melinda Haag had to do with unreported income related to their bus service contracts, they had also been charged for submitting fraudulent loan applications to purchase four properties in San Jose owned by family members.

Arturo Moreno and Elena Moreno were ordered by the judge to make restitution to the lenders of $423,000 and to forfeit $3.3 million obtained in home loans.
Read the original article in the San Jose Mercury News.

They’re back . . . risky “piggyback” loans

February 11th, 2015 at 7:24am

 Kinecta Federal Credit Union has been churning out loans that exceed the $625,000 loan limits by Fannie Mae and Freddie Mac and with attached second liens valued up to $300,000. The cumulative loan-to-value ratio for some of these loans exceeded 89.9%.

I wonder how long it will take before these risky loans blow up and trigger another round of short sales, foreclosures and disruption to the economy, not to mention mortgage fraud.

Read the original article in News to Watch.

Roseville residents plead guilty in loan modification scheme targeting Hispanics

February 6th, 2015 at 10:41am

Two Roseville residents each face 20 years in federal prison and up to $250,000 for operating a loan modification scam that primarily targeted distressed Hispanic homeowners (affinity fraud, ethnic fraud).

Martin Wayne Flanders, 50, and Ligia Sandoval Spafford, 48, pleaded guilty to mail fraud according to U.S. Attorney Benjamin Wagner.

According to court documents filed by prosecutors, between 2008 and 2010, Flanders charged clients upfront/advance fees and promised to provide the victims loan modifications, mortgage loan audits, credit repair, debt relief, bankruptcy filings, and an option to sell their homes to investors, who would rent back to them and offer a later re-purchase. Victims were found by advertising in Spanish-language TV and magazines. They also had air time on the Bay Area Spanish-language Christian radio station known as Radio Luz, where Sandoval advertised the “services” she and Martin Flanders offered.

The charges in this case were numerous. Read the original article in the Central Valley Business Times to learn more details.

 

Three L.A. Deputy Sheriffs charged in mortgage fraud scheme – and they’re brothers

February 6th, 2015 at 10:20am

Brothers Billy, Benny and Johnny Khounthavong are charged with conspiracy to make false statements to two banks in a mortgage fraud scheme known as a “buy-and-bail” that is being heard by a federal jury.

Federal prosecutors allege that the Khounthavongs submitted false reports to Flagstar Bank in order to purchase a 3,900 sq. ft. home in Corona. A second allegation is that the three lied to Bank of America and walked away from another property they owned in Chino in which they were underwater, causing losses of $340,000 from the unpaid mortgage.

The Khounthavong brothers are currently on leave from the Los Angeles Sheriff’s Department and are free on bond.

Read the original article in the Claremont-La Verne Patch.

Criminal defense attorney pleads to being a criminal in short sale fraud of his home

February 4th, 2015 at 6:29pm

Luis Rojas, 38, has pleaded guilty in federal court to making false statements in connection with a fraudulent short sale of his property in Clark County, Nevada.

The U.S. Attorney’s Office for the Southern District of California reported that Rojas paid his brother-in-law cash to act as a straw buyer (non-arms-length buyer) for the short sale purchase of his $935,430 home in Henderson for $288,000. In other words, by completing the purchase, Luis Rojas and his wife, who remained in the house, now own it outright. He was so brazen that just one month after the “short sale”, the brother-in-law transferred the property back to Luis. All of these acts are against the agreements typically required by lenders to effect an acceptable, arms-length  short sale and are considered by lenders to be short sale fraud.

Even though he is a criminal defense attorney in Las Vegas – where there is no shortage of crime –  Luis Rojas told his lender GMAC he could not longer afford his mortgage payments, which he admitted in his pleading was untrue. He also hid from GMAC that he had liquid assets in a brokerage account valued at over $134,000 when he filed his financial disclosure form.

When he faces U.S. District Judge James C. Mahan on June 1, Luis Rojas faces a maximum sentence of five years in prison and a fine of up to $250,000.

No word as to whether Rojas’ brother-in-law is being prosecuted. And as of the date of this writing, the property is still in the name of Luis Rojas and his wife.

Read the original article in KLAS-TV.

Fidelity National Title fined by HUD for RESPA kickbacks; brokers face class-action lawsuits

February 4th, 2015 at 5:53pm

Two real estate businesses could be in hot water, according to this article in RE-Insider.

Fidelity National Title Insurance marketed their TransactionPoint program to brokers. This was a “pay-for-click” system that made it possible for brokers to generate revenues for settlement services.

The problem, according to HUD, is that this form of revenue enhancement falls under RESPA kickbacks violations and the agency just fined Fidelity $4.5 million. A second settlement was also reached between the California Department of Insurance and Fidelity National Title Insurance over allegations of illegal kickbacks that were paid out from 2003 to 2011.

RESPA is an abbreviation for the Real Estate Settlement Procedures Act. It is federal law and those found in violation could face stiff financial penalties, loss of their licenses to conduct their businesses and time in federal prison.

RE-Insider wanted to know if any of the money Fidelity made from these deal was used to indemnify brokers who participated in the TransactionPoint program and what the names of the brokers were.

Two of the brokers are now identified, as the La Jolla based law firm, Bottini & Bottini, filed two class action lawsuits on behalf of homeowners in the past month naming over ten individuals at Alain Pinel  and Pacific Pinnacle  for violation of California Civil code 1710 (3), California Business and Prof. Code 17200, fraud and others. Of course, there could be more names coming to the surface.

Moreno Valley Pastor gets 30 days for stealing $200,000 from elderly man

February 3rd, 2015 at 8:42am

This is not only an egregious case of elder financial abuse, it shows the failure of the justice system to treat these abuses harshly. Thirty days in jail for stealing $200,000: not bad for a few months’ “work”.

Pastor Matthew Taylor of the Moreno Valley First Apostolic Faith Church and the Pentecostal Assemblies of the World pleaded guilty to embezzlement, fraud of an elderly person by a caretaker, and admitted a sentencing enhancement of taking property from the now-deceased 87-year old Lawrence Fusha. He might not have been caught except for the vigilance of a bank employee.

Read the original article in the Press Enterprise.

Former FBI employee, wife, plead guilty to bank fraud

January 29th, 2015 at 4:04pm

Charles Espinel, a former FBI file clerk and support services technician, and his wife Jeannette Espinel were each sentenced to 90 days in prison plus six months monitoring and 200 hours of community service for committing bank fraud.

In their plea agreements, the Espinels admitted that, beginning in 2006 and continuing through 2010, they defrauded First California Bank and Wells Fargo Bank on loan applications two purchase two rental properties, one for $750,000 in Daly City and the other for $600,000 in San Bruno, according to the U.S. Department of Justice. The admissions included that they overstated their incomes and that the properties were intended to be occupied as their primary residences.

Read the original article in the Mercury News.

Hispanics charged with targeting other Hispanics in Orange County loan modification scam

January 29th, 2015 at 3:50pm

Five people are facing charges of committing loan modification fraud by targeting Latino victims throughout Southern California. Three of the defendants are family members and are charged with leading a family-run home loan modification ring and illegally charging victims for services that they did not provide.

According to an article in the Orange County Breeze,

“Carlos Centeno is accused of owning and operating the Foreclosure Prevention Department in Irvine, and co-defendants Ricardo Centeno and Lizeth Arzate are accused of owning and operating Debt Settlers of America (DSA) in Orange, which advertised assistance for the renegotiation of home loans. The defendants are accused of advertising DSA on Hispanic radio stations throughout the state in order to target victims.

Co-defendants Hector Valdivia and Susie Rabadan are accused of being office managers and consultants at DSA. Valdivia and Rabadan are accused of knowingly assisting Carlos Centeno, Ricardo Centeno and Liz Arzate in charging and accepting illegal upfront fees from victims for services that they did not provide by collecting and processing loan modification applications.”

Prosecutors are alleging that between December 2009 and December 2012, the defendants contacted 23 victims and promised them assistance with negotiating their home loans. The defendants then charged their victims upfront fees (“advance fees”) of $2,000 to $2,500, which is illegal. They are further accused of directly collecting several victims’ monthly mortgage payments and depositing them into their personal bank accounts. As a result, many of the victims’ homes were foreclosed by the lenders.

Orange County Senior Deputy District Attorney Pete Pierce of the Major Fraud Unit is prosecuting this case.

Sacramento man gets over 7 years for brazen mortgage fraud

January 29th, 2015 at 3:34pm

Another successful mortgage fraud prosecution by the prolific United States Attorney Benjamin B. Wagner.

Leonard E. Williams, 52, was sentenced today to over seven years and three months in prison on charges of conspiracy to commit mail and wire fraud and two counts of money laundering after being found guilty by the federal jury.

According to evidence presented by the prosecution, Williams conspired with his partner Joshua Clymer and others to carry out a mortgage fraud scheme in the Chico and Sacramento areas using his companies Diamond Hill Financial and Bay Area Real Estate Holdings. The two men recruited under-qualified friends, family and other buyers, including family and friends, to purchase homes with promises of cash back, no money down, and non-existent equity in the properties. They facilitated the purchases by fabricating the loan applications. In many of the instances, the loan applications fraudulently stated that the buyers worked at Diamond Hill Financial, and Leonard Williams verified the lies when the victims-lenders called to confirm it.

Since the buyers were unqualified, most defaulted, causing losses to the lending institutions of over $2 million.

Williams is the last of 14 defendants who have been convicted of mortgage fraud offenses in connection with this case. Others who already been convicted and/or pleaded guilty have already been sentenced. They include William E. Baker, Shane Burreson, Christopher M. Chiavola, Carlos Chamorro, Eric Clawson, Niche Fortune, Garret Gililland, Kesha Haynie, Remy Heng, Nicole Magpusao, Brandon Resendez, and Anthony Symmes.

The sentence was imposed by United States District Judge William B. Shubb. He was prosecuted by Assistant United States Attorney Christopher S. Hales and Assistant United States Attorney Audrey B. Hemesath.

This mortgage fraud was investigated by the Federal Bureau of Investigation; the Internal Revenue Service, Criminal Investigation; and the Butte County District Attorney’s Office’s Major Crimes Unit.

Read the original article in the Imperial Valley News.

© Copyright 2007-2017 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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