California Real Estate Fraud Report

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Short Sale Fraud Still Pays as Judge Goes Easy on Defendants

April 4th, 2014 at 8:30am

Rejecting the recommendations of Assistant U.S. Attorney Gregory DammU.S. District Judge Jennifer Dorsey gave two former real estate agents only one day in custody of the U.S. Marshals Service and ordered them to pay restitution to the lenders they conned in a short sale fraud. Judge Dorsey did “sentence”  Cynthia Hosbrook, 41, and Robert Hosbrook, 52, to five years of supervised release and ordered them to pay fines of $10,000 each.

The losers here are taxpayers, who footed a trial that probably cost several hundred thousand dollars.

The Holbrooks lied to Wells Fargo and Fannie Mae, claiming they needed to do a short sale of their home due to hardship. They “sold” the Las Vegas house to Cynthia Hosbrook‘s mother for cash and continued to live in it, causing a $170,000 loss to the lenders. Unmentioned is that they got a write-down of their mortgage and a reduced property tax basis, so their fraud still appears to have paid-off.

In their plea agreement last November to one count of bank fraud each, they admitted they had committed short sale fraud in the sale of two other Las Vegas homes in 2008 and 2009.

Read the original article in the Las Vegas Review Journal.

Crisp & Cole Defendant David Crisp Gets 17+ Years in Prison

April 4th, 2014 at 8:12am

David Crisp, the figurehead in the largest mortgage fraud conspiracy in Bakersfield’s history, has been sentenced to 17 1/2 years in federal prison. He had pleaded guilty in December 2013 to conspiracy to commit mail, wire and bank fraud.

Just prior to sentencing Crisp, the judge called him a “fiscal predator.” The judge did show mercy to Crisp’s wife, Jennifer Crisp, who despite admitting to mail fraud and wire fraud, received only five years probation because the judge didn’t want their 10 year-old son to have both parents in prison.

David Crisp‘s business partner, Carl Cole, also received the same sentence in February and most of the defendants, who were relatives and employees, have been sentenced.

The only defendant to have not accepted a plea deal is Julie Farmer, who is awaiting trial. She began her career as Crisp & Cole’s bookkeeper and eventually became the operations manager.

Read the full article on Bakersfield Now.

A synopsis of all the players in this case can be found by clicking on this link of an earlier article on Bakersfield Now.

Charles Keating, Face of 1980s S&L Fraud, Dies

April 3rd, 2014 at 9:28am

Charles Keating, the banker who became one of the symbols of the last great mortgage crisis, has died at age 90.

Keating bought Irvine-based Lincoln Savings & Loan in 1984. It and other savings and loan institutions went bust in the late 1980s following the policies of President Reagan, who strongly advocated deregulation and letting the “free market” work. As with the banking crisis of the past eight years, the “free market” was anything but free, costing homeowners and stock investors billions in losses in the devastating savings-and-loan crisis. It also stuck taxpayers with $500 billion in bail-out costs.

Long after the damage was done, federal regulators pursued a $1.1 billion civil racketeering and fraud lawsuit against Keating. Among other things, they accused him of using the money from Lincoln’s depositors for himself and his family and to finance his failed political campaigns. Ultimately, he was sentenced to 12 years in seven months in prison but lucked out after his conviction was overturned on a technicality and served only 50 months of the sentence.

Charles Keating‘s involvement in politics exposed the relationship between bankers and politicians as Senator John McCain and former Senator Dennis DeConcini, both of Arizona, were accused along with three more senators of improperly acting on his behalf by intervening with the federal regulators. Those senators became known as the “Keating Five“.

Another famous family was caught up in the S&L scandal: Neil Bush and Jeb Bush, sons of President George H. W. Bush. Click here to read about their roles.

Read the original article in USA Today.

San Diego Couple Sentenced for Mortgage Fraud

March 28th, 2014 at 10:12am

A married couple who worked in the loan industry received sentences of three years and five months for participating in a multimillion dollar mortgage fraud.

Eric Elegado and Charmagne Elegado pleaded guilty in October 2013 to conspiracy to commit wire fraud in a mortgage sche. The Elegados, both 49 and well-known in the Filipino community were very successful in San Diego real estate.  Eric was on the flamboyant side, putting his face on bus benches and billboards and parking Bentleys, Ferraris and Rolls Royce cars he owned outside his real estate seminars.

According to the prosecution, the Elegado’s crimes occurred from  December 2005 to February 2007, when Charmagne was working for New Century Mortgage. New Century Mortgage, based in Irvine, was considered by some experts to be the Ground Zero for the housing bubble, with its novel subprime loans, aka “liar’s loans”, where borrowers could get a mortgage on stated income, meaning no documentation was required. The prosecution had contended that not only had the couple procured loans for unqualified buyers, they also obtained some mortgages for the borrowers that were higher than the actual price of the homes. The excess was skimmed and then run through shell corporations.

The couple’s defense was that they were just trying to help the borrowers buy homes.

According to the FBI, the couple earned $3.5 million on over 100 fraudulent loan transactions and the losses to lenders amounted to approximately $10.4 million.

Read the original article in UT-San Diego.


Irvine Man Sentenced to Prison for Southern California Mortgage Fraud

March 28th, 2014 at 9:52am

A Southern California man has been sentenced to prison for his role in a mortgage fraud scheme that involved residential properties in Rocklin, Roseville and San Clemente.

Alexander Romaniolis, 48, an Irvine man, has been sentenced to 30 months in prison by U.S. District Judge Troy R. Nunley to 30 months in prison. Judge Nunley also fined Romaniolis $17,500 and ordered him to forfeit over $400,000 for his part in a mortgage fraud case.

According to the prosecution, Romaniolis was responsible for recruiting straw buyers to purchase homes in Rocklin, Roseville and San Clemente. His role in the fraud was to help the straw buyers with falsifying their income, asset and employment information that was submitted to lenders. The losses to the lenders was over $2 million, since all the properties were eventually foreclosed.

The case was investigated by the FBI and California Department of Justice.

Read the original article in the Sacramento Bee.


Bakersfield Man Pleads Guilty in Real Estate Development Fraud Case

March 28th, 2014 at 9:37am

 U.S. Attorney Benjamin Wagner announced that Antonio Perez-Marcial, 41, a Bakersfield man, has entered guilty pleas to conspiracy to commit bank fraud, mail fraud, and wire fraud in a large mortgage fraud conspiracy case in Bakersfield.

In this case, Perez-Marcial admitted conspiring with other persons to procure straw buyers to purchase Bakersfield homes developed by Jara Brothers Investments and Pershing Partners LLC. Jara Brothers is owned by Eliseo Jara and Sergio Jara and Pershing Partners is owned by Lucia Chavez, all of whom are defendants who have pleaded not guilty.

According to Perez-Marcial, he was paid a “consulting fee” of $20,000 to $30,000 for finding the straw buyers and funding their down-payments, which, along with false income and asset information, was used to obtain loans. He admitted his role cost the lenders approximately $3,455,250 in losses.

Read the original article in the Central Valley Business Times.


Crisp & Cole Defendant Gets 6+ Year Prison Sentence

March 28th, 2014 at 9:20am

Jayson Peter Costa, 41, of Bakersfield, who was a loan officer in the largest mortgage fraud prosecution in Bakersfield, was sentenced to 78 months in federal prison.

Costa worked for David Crisp and Carl Cole at their Tower Lending mortgage brokerage. He admitted in his plea agreement  that he submitted fraudulent loan applications for his co-conspirators and straw buyers and for himself acting as a straw buyer. He also admitted that the frauds he committed resulted in losses to the lenders of at least $7,580,019.

The mortgage fraud conspiracy operated from January 2004 to September 2007.

You can read many articles about the Crisp & Cole mortgage fraud conspiracy, which was prosecuted by the office of U.S. Attorney Benjamin Wagner, by searching for them on the California Real Estate Fraud Report.

Read the original article in the Central Valley Business Times.

OIG Says U.S. DOJ, FBI Put Mortgage Fraud at Low Priority

March 19th, 2014 at 6:20pm

The Office of the Inspector General has released a report charging that the U.S. Justice Department did not match its public statements that mortgage fraud was a priority with actual action, something millions of Americans have figured out on their own.

In its report, it said “The OIG further found significant deficiencies in DOJ’s ability to report accurately on its mortgage fraud efforts.”

The OIG found that the FBI, which received $196 million in taxpayer money from 2009 through 2011, ranked mortgage fraud as the lowest criminal threat in its lowest crime category. This occurred at the same time that mortgage servicing companies were committing massive fraud against homeowners in distress by implementing “robo-signing” to hasten foreclosures, something for which, to my knowledge, there have been no criminal convictions brought by the U.S. DOJ.

In addition, the OIG said it could not accurately verify the scope of the U.S. DOJ’s prosecutorial efforts against mortgage fraud because it was not provided with sufficient data.

“DOJ could not provide readily verifiable data related to its criminal enforcement efforts because of underreporting and misclassification of mortgage fraud cases in the case management system used by the Executive Office for United States Attorneys (EOUSA),” the report reads.

According to an article published on CNBC, “One glaring example of inaccurate reporting was cited by the OIG. Specifically, it says, the Justice Department inflated the number of criminal defendants by five-fold during an October 2012 highly publicized press conference. The event was held to tout the success of the Distressed Homeowners Initiative, a mortgage fraud program involving the Justice Department and the Financial Fraud Enforcement Task Force. It took a year for the Justice Department to correct the mistake.”

An August 2013 article in Mother Jones reports the same self-serving inflating by U.S. DOJ.

In its defense, Department of Justice spokesperson Ellen Canale said: “The facts regarding the department’s work on mortgage fraud tell a much different story than this report. In the time period in question, the number of mortgage fraud indictments nearly doubled, and the number of convictions rose by more than 100 percent. As the report itself notes, even at a time of constrained budget resources, the department has dedicated significant manpower and funding to combatting mortgage fraud.”

Note: if mortgage fraud itself rose 10,000% during the indicated time period, how meaningful is it to say that convictions rose 100%?

Petaluma Man Pleads No Contest in Ponzi Scheme, Elder Financial Fraud

March 19th, 2014 at 6:01pm

A Petaluma man was pleading no contest in Sonoma County Superior Court Wednesday morning to bilking dozens of investors of $20 million through a Ponzi scheme.

Aldo Baccala, 73, a former real estate agent, has pleaded no contest to 141 charges of making false statements to sell securities, grand theft, and elder financial abuse and dependent financial abuse. He entered his plea in front of Sonoma County Superior Court Judge Gary Medvigy, who indicated he would sentence Baccala to 20 years or less of prison time in exchange for making his plea.

Baccala was charged with defrauding over 50 investors, many of them elderly, of over $20 million in a Ponzi scheme that promised returns for investing in assisted living facilities, a car wash and other businesses in California, South Carolina and other states. His company was called Baccala Realty and was based in Petaluma.

Instead of investing his victims’ money as promised he spent it on risky stock market investments, including covering margin calls.

Read the original article in

JPMorgan Chase Whistleblower Gets $63.9 Million

March 19th, 2014 at 5:51pm

Keith Edwards, a former assistant vice president supervising a government insuring unit for JPMorgan, will be paid $63.9 million for providing the information that led to the banking giant’s agreement to pay the U.S. government $614 million. JPMorgan also promised (don’t hold your breath) to change the procedures and oversight that resulted in it being charged with defrauding the government into insuring toxic home loans.

The settlement was filed with the U.S. District Court in Manhattan and besides indicating the amount paid to Edwards, included an admission by JPMorganthat for over a decade it had submitted thousands of mortgages to be insured with the FHA and VA that did not qualify for guarantees by the government. The bank also admitted that when its own internal auditing turned up these problems, it did not inform the agencies.

Keith Edwards originally filed his lawsuit in January 2013 under the False Claims Act. His attorney, David Wasinger, also represented Edward O’Donnell, whose tips regarding defective mortgages by Countrywide led to a verdict against Bank of America in October 2013, for which the government is seeking $2.1 billion in penalties.

The case is U.S. ex rel. Edwards v. JPMorgan Chase Bank NA et al, U.S. District Court, Southern District of New York, No. 13-00220.

Read the original article in MSN Money.

© 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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