California Real Estate Fraud Report

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Daly City Real Estate Broker Pleads Not Guilty in Real Estate Fraud Case

June 11th, 2013 at 3:06pm

Andrew Abed Khoury, 42, San Mateo County real estate broker, pleaded not guilty Friday in San Mateo County Superior Court to 36 counts of real estate fraud. According to San Mateo County District Attorney Steve Wagstaffe , Khoury scammed three people out of over $800,000 between May 2006 and May 2012. 

A co-defendant, Cindy Teahan, worked at several escrow companies and said she knew Khoury on a business level. Teahan has been charged with six felonies, including three counts of falsifying documents.

Teahan said one of the victims was her 83 year-old mother-in-law, who Khoury allegedly convinced to turn over $202,000 she netted from selling her home and moving into senior housing.

Another man, 74 years old, gave Khoury $100,000 to invest after being told money was secured by a deed of trust, but according to DDA Wagstaffe, it wasn’t and Khoury allegedly used it to pay his credit card bills.

Andrew Khoury is being held at San Mateo County Jail in lieu of $1 million bail; Cindy Teahan is out on bail.

Read the original article in the San Jose Mercury News.

Bakersfield Married Couple Plead Guilty in Mortgage Fraud Case

June 11th, 2013 at 2:44pm

United States Attorney Benjamin B. Wagner announced that Eric Ray Hernandez, 37, and his wife Monica Marie Hernandez, 32, have pleaded guilty to conspiracy to commit mail fraud, wire fraud, and bank fraud.

According to court documents, between October 2005 and May 2007, the Bakersfield couple conspired with three other defendants to defraud lenders by submitting false and fraudulent loan applications  to the lenders in order to obtain mortgages, ultimately causing losses of approximately $6,037,541. Eric Hernandez was employed at a mortgage brokerage during the period when the crimes occurred.

Both defendants face length prison terms when they are sentenced this fall – up to 30 years in prison, a $1 million fine, and five years of supervised release.

One of their co-defendants, Patricia King, has already pleaded guilty to three counts of mail fraud and been sentenced to three years and one month in prison. The remaining co-defendants Evelyn Sanchez and Darling Montalvo have pleaded not guilty and are awaiting their trials on August 13, 2013.

Read the original article in KERO-TV 23 and the Central Valley Business Times.

Man Dies in Court after Suing Wells Fargo for Negligence, Wrongful Foreclosure

June 7th, 2013 at 10:45am

This is one of the most egregious cases of corporate ineptitude and callousness I’ve heard of to date. And after wrongfully costing a man his property, it then may have cost him his life.

Larry Delassus was a disabled retiree, living on $1,600 a month in the Hermosa Beach condo he had owned for 16 years.

One of Delassus’ neighbors neighbors fell behind in his property tax payments. The neighbor, like Delassus, had his mortgage with Wells Fargo. Wells Fargo, in order to preserve its interest in the property, paid the property taxes. But instead of pursuing the neighbor for the shortfall, these idiots went after Delassus because they mistyped the parcel number on documents to show the person in default was Delassus.

Larry Delassus had actually paid his property taxes six months in advance.

In a scenario familiar to thousands of homeowners who have tried to communicate with this lender, Wells Fargo heaped on penalties, interest, fines and attorney fees in its relentless pursuit of Larry Delassus, forcing him into default by doubling his mortgage. He and his attorney tried and tried to call the bank, but got the runaround typical of Wells Fargo and other mega-lenders: put the borrower on hold forever, disconnect the call, transfer the call to the wrong department, transfer the call to employees unauthorized to make decisions, lose paperwork, etc.

According to an article in the LA Weekly, even after it admitted its error, Wells Fargo foreclosed on him anyway.

The next two paragraphs are quoted directly from the LA Weekly:

Robert Baily of Anglin Flewelling Rasmussen Campbell & Trytten LLP admitted the bank’s mistake: “Wells Fargo paid the amount it determined was owed to the County Assessor: approximately $10,500. This was a mistake. The $10,500 was the tax amount owed on a neighboring property, not Plaintiff’s.” (Bailey did not address the discrepancy between $13,361 and $10,500.)

Bailey added: “In September, 2010 Wells Fargo acknowledged its error in paying the taxes on Plaintiff’s neighbor’s property and corrected it.” By then, however, Delassus was so far behind on his mortgage payments wrongly doubled by Wells Fargo that the bank refused to let him resume his $1,237.69 installments, Trujillo says. He faced a sizable “reinstatement” cost — which is often the past due amount plus fees.

Delassus’ neighbor and friend, attorney Anthony Trujillo, sued Wells Fargo on his behalf for negligence and discrimination (based on his disability).

Wells Fargo litigation support manager Michael Dolan, in a videotaped deposition, was asked the following:  “So Plaintiff was never provided with the reinstatement amount after the bank discovered its error, correct?” Dolan replies, “That is correct.”

Larry Delassus was in Torrance Superior Court last December listening to Trujillo argue his case when he slumped over and died.

Watch this YouTube video that discusses this story further. Read another article in Slate about Larry Delassus versus Wells Fargo.

Sentencing Delayed in Hendrix Montecastro, Helen Pedrino Real Estate Investment Fraud

June 6th, 2013 at 10:14am

Hendrix Montecastro and his mother, Helen Pedrino, have caught a lucky break: their new attorney managed to get their sentencing reset for August 8.

Montecastro and Pedrino had represented themselves at the 86-day trial, in which prosecutors had accused him and the other defendants of fleecing victims out of a staggering $142 million. Similar to a Ponzi scheme, money was brought in by the defendants by holding seminars and setting up shell companies to take in money from the victims, who were located primarily in Riverside County and Palm Springs.

Mastermind James Duncan and Charles McLeod, pleaded guilty, and are already serving time in jail as they await their sentences, after agreeing to cooperate and testify against Montecastro and Pedrino, both of whom are sitting in jail.

 
Read the original article in the Press Enterprise. There are also numerous articles about this case on the California Real Estate Fraud Report.

“Ken & Katie Show” Defendant Sentenced for Real Estate Investment Fraud

June 6th, 2013 at 9:50am

Paul Lascola, a Thousand Oaks man who pleaded guilty to 11 of the 24 felonies with which he was charged as part of the “Ken and Katie Showreal estate investment fraud case, has been sentenced to serve 10 years in state prison.  

Lascola, who faced charges of elder financial abuse and grand theft, was linked with former radio show hosts Kathryn “Katie” Bess Rose, 63, of Woodland Hills and Kenneth Alan Powell, 59, of Bakersfield. Rose and Powell were on News Talk KVTA 1520 AM, on which they paid to broadcast weekly. Their program focused on real estate investments and according to the Ventura County District Attorney’s Office, targeted mostly retired and elderly investors from Ventura, Los Angeles and Santa Barbara counties.

At his May 30 restitution hearing, Paul Lascola was also ordered to repay his victims $3 million, according to Senior Deputy District Attorney Anthony Wold. Wold added “The point of restitution is to try to make our victims whole through the process of criminal prosecution. They are completely and utterly financially devastated. At least one was retired and had to go back to work. Most of them lost all the equity in their homes. They may have tremendous difficulty recovering from this financially, if they ever recover.”

Katie Rose pleaded guilty to 13 felonies, was sentenced in July 2012 to 12 years and eight months in state prison and was ordered to pay $3.4 million in restitution to her victims. Kenneth Powell pleaded guilty to 15 felonies, received a sentence of 18 years in state prison and must repay his victims $4.3 million.

Read the original article in The Acorn.

There are numerous articles about the Ken & Katie Show case on the California Real Estate Fraud Report. Use the search option at the left to locate them.

Modesto Realtor’s Second Trial for Real Estate Fraud Postponed

June 6th, 2013 at 9:33am

The Sacramento Bee reports that the second trial for former Realtor® Erica Burdg has postponed until September 10.

Burdg, 61, of Modestor, was charged with grand theft, forgery and attempted perjury. Prosecutors accuse her of taking money from Carlos Gonzales and his family, who thought she was helping them purchase a three-bedroom, two-bathroom house in the community of Newman.

Burdg’s first trial ended two years ago with a hung jury. Her real estate salesperson’s license expired in May 2012.

You can read an earlier article about Erica Burdg on the California Real Estate Fraud Report by clicking here.

 

New York Attorney General Sues HSBC for Stalling Foreclosures

June 6th, 2013 at 7:02am

New York Atorney General Eric Schneiderman has sued HSBC Bank USA and HSBC Mortgage Corp., accusing it of dragging out foreclosure cases in violation of state law in order to make it more difficult for homeowners to avoid foreclosure. 

Banks use stalling tactics as a strategy in order to stack up more penalties, fees and interest against homeowners. That said, Schneiderman is looking at suing other lenders for using the same tactics.

According to Schneiderman, “Companies like HSBC are brazenly ignoring state law, leaving homeowners across New York stuck in a legal limbo where they can’t even get the legally required settlement conference that could help them keep their homes. For homeowners facing foreclosure, time is their greatest enemy. Every day spent waiting for a settlement conference is a day that the lender piles on additional interest, fees and penalties and the homeowner falls further behind.” Read his statement on the New York Attorney General’s website.

Unlike California, which is not a judicial foreclosure state, in New York, the lender is required to file a request for judicial intervention once it files suit against the borrower. That triggers a requirement to hold a settlement conference to explore alternatives to foreclosure, including mortgage modification, within 60 days, which Schneiderman is saying HSBC and other lenders are intentionally avoiding.

An example of this tactic, Schneiderman outlined the case of Rebecca Karm of Erie County. Karm, who suffered both a medical illness and the loss of her job, fell behind on her payments. Although HSBC filed the proof of service on November 12, 2010, it didn’t file the request for the conference until June 8, 2012. According to an affirmation filed by the Western New York Law Center, during those 547 days, Karm’s principal balance ballooned by $23,000 because of fees and penalties HSBC piled on her.

Read the original article in MSN Real Estate.

Orange County Brothers Convicted of Running National Foreclosure Rescue Scam

June 3rd, 2013 at 1:54pm

Charles Head and Jeremy  Head (aka Mike Head), brother who owned Head Financial in Orange County, have been convicted for scamming $15 million from homeowners at-risk of foreclosure by promising the victims that they can keep them out of foreclosure and repair their credit (mortgage rescue scams, foreclosure fraud).

Charles Head was convicted on four counts of mail fraud; Mike was convicted on two counts. Their crimes were committed between January 2004 and March 2006, according to court documents.

The men used their own friends and relatives to act as straw buyers and gain title to the distressed properties without the homeowners’ consent (title fraud). They then applied for mortgages in order to suck any equity from the properties, as well as divided the rents paid by the homeowners among themselves. Of course, this resulted in the homeowners losing their homes to foreclosure, losing their equity and having their credit ruined.

Previous to the convictions, nine other defendants pleaded guilty.

 “The Head brothers preyed on the victims’ fear of losing their homes and then took advantage of those victims’ predicament to steal from them their last remaining equity in those homes, enriching themselves in the process,” according to U.S. attorney Benjamin Wagner. “As a result of their conduct, many of the victims who looked to the Head brothers for help were evicted and left destitute.”

Read the original article in National Mortgage News.

FHFA-OIG to Scrutinize Fannie Mae, Freddie Mac for REO Sales

May 31st, 2013 at 8:41am

REO (foreclosure) sales are winding down; investors will tell you the inventory is dwindling. This is due to the banks finally waking up years after Realtors® told them it was better for the bottom-line to allow homeowners to do a short sale.

HUD, FHFA, Fannie Mae and Freddie Mac (the latter two are GSEs) still have sizeable REO inventories across the country. Now the Office of the Inspector General for HUD (HUD-OIG) and the Office of the Inspector General for FHFA (FHFA-OIG) are taking aggressive steps to study how those inventories can best be managed, how to reduce REO fraud and to ultimately reduce inventories with minimal negative impact to neighborhoods.

FHFA-OIG has implemented an evaluation strategy, the objective of which is to learn whether both FHFA and the GSEs are maximizing financial recoveries and minimizing the negative effects of foreclosures on affected communities during their management of REOs. Part of FHFA-OIG’s task will be to audit the effectiveness of these REO management activities and determine if proper risk management controls have been established to avoid fraud and abuse.*

*Note: having sold REOs for banks and seen first-hand how some agents manipulate sales, including property management, for their own benefit (REO fraud), I’d say the FHFA-OIG has a difficult task ahead.

Read the entire well-written article in HousingWire.com.

Disgraced Former Michigan Supreme Court Justice Diane Hathaway Sentenced to Prison for Short Sale Fraud

May 29th, 2013 at 5:02pm

In California, homeowners who commit short sale fraud are very rarely investigated or prosecuted for the crime. There is not one conviction of which I’m aware, which is why short sale fraud is so rampant. Nor is there any criminal or civil downside to banks that knowingly approve short sales that are not arm’s-length.

In Michigan, the same property owners are convicted of short sale fraud and they go to prison.

In a long-awaited and much-anticipated decision, Judge John Corbett O’Meara sentenced former Michigan Supreme Court Judge Diane Hathaway to one year and one day in prison.

Hathaway, who also held a real estate license, pleaded guilty in January to one count of bank fraud in the short sale of her Grosse Pointe, Michigan home.

During the short sale of the Michigan home, Diane Hathaway concealed ownership of her second home in Florida when she filed her hardship declaration to lender ING by transferring the home via quit claim to her husband’s daughter prior to the short sale. Following the short sale, the home Hathaway and her husband owned free-and-clear in Windermere, Florida, was quit-claimed back to her.

In addition to her sentence, Hathway must pay $90,000 in restitution to ING and be on probation for two years following her sentence.

Hathaway’s attorney, Steven Fishman, failed in his attempt to convince the judge that she did not deserve prison. In a pre-sentencing memorandum to the court, Fishman wrote of Hathaway that “Her fall from the pinnacle of professional success has been swift, sudden, and tragic.”  He also wrote that he felt that Hathaway, who made a bee-line to Florida after the scandal broke, could volunteer at a women’s shelter by doing interior decorating or a local cancer support organization.

U.S. Attorney Barbara McQuade prosecuted the case and was insistent on prison time. “Homeowners who play by the rules should know that those who don’t will be held accountable, no matter who they are.”

Michigan Attorney General Bill Schuette also supported the sentence and commended the FBI for investigating the case. “Public corruption scandals have damaged the public’s trust in government and tarnished our state’s reputation. No matter who you are or what position you hold, the same rules apply.” 

Robert Foley, Special Agent in Charge of the FBI Detroit office was quoted, “Regardless of a person’s stature or position in life, we must all follow the same set of rules. In this case, an individual in a prominent position of public trust made extremely poor choices that have resulted in criminal activity. The FBI is committed to stopping these illegal acts.”

Read the original articles in USA Today and in AOL Real Estate. There are also previous postings in the California Real Estate Fraud Report on this case which can be found by using the Search form on the left side of this blog.

© 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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