California Real Estate Fraud Report

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Archive for the 'Affinity Fraud' Category

Loan Officers Sentenced to Prison for Mortgage Fraud Involving Los Angeles African-American Churches

November 11th, 2016 at 11:35am

Two men who operated a mortgage fraud scheme that targeted mostly African-American churches in the Los Angeles area have been sentenced to federal prison and fined.

Paul Ryan, a former mortgage loan officer with Broadway Federal Bank, and mortgage broker Chester Peggese received sentences of 18 months and one year and one day, respectively. Paul Ryan was ordered to pay $353,925 in restitution to Broadway Federal Bank and Chester Peggese was ordered to pay the bank $4.2 million. Ryan had pleaded guilty to one count of receiving bribes and rewards as a bank employee two years ago.

Peggese acted as a “consultant,” targeting Los Angeles churches to either acquire new property or to refinance their mortgages. At the time Broadway Federal Bank was paying rebates to brokers who brought them loan business; Ryan had been accused of demanding that all or part of the rebate money be paid to him in exchange for processing and approving the bank loans. The scheme ran from 2007 until March 2010.

The case was the result of a multi-agency investigation of the following federal agencies: Federal Bureau of Investigation (FBI), Internal Revenue Service’s Criminal Investigation Division, Office of the Special Inspector General for the Troubled Asset Relief Program (SIGTARP), and Federal Deposit Insurance Corporation’s Office of Inspector General.

Read the original article in The Scanner.

 

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.

 

Santa Paula Man Indicted in Mortgage Fraud That Allegedly Targeted Latino Community

September 27th, 2013 at 3:54am

An investigation into a mortgage fraud conspiracy that is alleged to have targeted both Spanish-speaking persons (affinity fraud, ethnic fraud) and lenders has resulted in the arrest of eight people by the FBI, seven of whom are Ventura County residents.

Just arrested is Cesar Rodriguez Azamar, 36, of Santa Paula. The scheme was led allegedly by Jose “Joe” Garcia, 36, of Camarillo via Oxnard-based New Concepts Home Loans. Jose Garcia is a broker who also owned Century 21 Premier Realty, which still has a license to operate by the Bureau of Real Estate.

Besides Cesar Azamar and Joe Garcia, the others indicted are Lucy Ann Garcia, 46, (wife of Joe Garcia), Fernando Murguia, 47, of Oxnard; Jose Garcia’s sister, Sesilia Garcia, 30, of Oxnard; Lili Ayala Hernandez, 41, of Oxnard; Gregg Scott Quinn, 40, of Camarillo; and Lidubina “Lido” Mendoza Perez, 41, of Moreno Valley, who worked at New Concepts Home Loans office in  Bakersfield.

According to the indictment, New Concepts employees allegedly prepared mortgage applications that contained false information about borrowers’ income, employment and assets.

Ventura County Chief Deputy District Attorney Miles Weiss said fraudulent loans were written “for more than 100 homes, a conservative safe number,” and losses to the lender exceeded $11 million.

FBI Assistant Director in Charge Bill L. Lewis said that Joe Garcia “allegedly directed his workforce, including unlicensed individuals acting as Realtors, to peddle the dream of home ownership in the poorest neighborhoods of Oxnard, where they easily found people eager to buy.” If this is true, it could be concluded that the defendants used non-licensees because they knew that their victims would be unaware that a license is required to sell real estate in California.

The victim-banks were Washington Mutual, Wells Fargo, Countrywide, IndyMac, SunTrust, World Savings Bank and JPMorgan Chase.

Read the original article in the Santa Paula Times.

Eight Arrested in Ventura County Fraudulent Mortgage Brokerage

July 31st, 2013 at 4:52pm

The following is a joint press release from the U.S. Attorney for the Central District of California and the Ventura County District Attorney’s Office:

   Federal and local authorities this morning arrested eight individuals linked to a mortgage fraud scheme that filed loan applications on behalf of lower-income, primarily Spanish-speaking individuals, generating substantial loan fees and commissions and causing lending institutions to suffer millions of dollars in losses when homes went into foreclosure.
   This morning’s arrests are the result of a grand jury indictment that charges the eight defendants in a conspiracy to commit bank fraud and wire fraud. The investigation, which was started by the Ventura County District Attorney’s Office, determined that members of the scheme generated dozens of mortgage loans for unqualified borrowers. The indictment specifically outlines a series of allegedly fraudulent loans worth more than $11 million.
   The federal investigation that resulted in the indictment unsealed this morning was conducted by the Federal Bureau of Investigation; the Federal Housing Finance Agency, Office of Inspector General; the U.S. Department of Housing and Urban Development, Office of the Inspector General; and the United States Secret Service.
   The indictment details a scheme led by Camarillo resident Jose Garcia and run out of an Oxnard-based company called New Concepts Home Loans (NCHL), where members of the alleged conspiracy prepared mortgage applications that contained false information about borrowers’ income, employment and assets. As part of the scheme, according to the indictment, Jose Garcia’s wife and others obtained bogus “CPA letters” from tax preparers that falsely stated the mortgage applicants were engaged in a particular business.
   The defendants in these cases generated huge commissions and fees through the mortgage application process – typically at least $10,000 per mortgage.
   The victim lenders who suffered losses as a result of the alleged scheme include Washington Mutual Bank, Wells Fargo Bank, Countrywide Bank, IndyMac Bank, SunTrust Bank, World Savings Bank and JPMorgan Chase Bank.
   “Jose Garcia and his cohorts are alleged to have lured unsophisticated borrowers with promises of putting them into homes they clearly could not afford,” said United States Attorney André
Birotte Jr. “But this American dream quickly turned into a nightmare for these borrowers when they realized they could not afford their new homes. All the while, real estate professionals like
Jose Garcia reaped huge profits from the fraudulent loans that they brokered.”
   District Attorney Gregory D. Totten stated: “These arrests for serious federal crimes illustrate the tenacity of state and federal law enforcement to continue our years-long effort to
bring to justice those who perpetrated real estate fraud-based crimes against unsuspecting, often monolingual, victims in our communities.”
   FBI Assistant Director in Charge Bill L. Lewis commented: “Mr. Garcia allegedly directed his workforce, including unlicensed individuals acting as realtors, to peddle the dream
of home ownership in the poorest neighborhoods of Oxnard, where they easily found people eager to buy. This case and others were made based on the cooperative relationship among
federal and local investigators working as a team to combat mortgage fraud in Ventura County.”

   The indictment charges:
Jose Bautista Garcia, 46, of Camarillo, a real estate broker who in addition to NCHL owned Century 21 Premier Realty, who allegedly directed agents to go door-to-door and “cold call” unqualified borrowers in Ventura County;
Lucy Ann Garcia, Jose Garcia’s wife, 46, also of Camarillo, who co-owned NCHL;
Jose Fernando Murguia, 47, of Oxnard, a loan officer at NCHL;
Sesilia Garcia, one of Jose Garcia’s sisters, 30, of Oxnard, a loan officer at NCHL;
Lili Ayala Hernandez, 41, of Oxnard, a loan officer at NCHL;
Lidubina “Lido” Mendoza Perez, 41, of Moreno Valley, a loan officer who worked at NCHL’s office in Bakersfield;
• Gregg Scott Quinn, 40, of Camarillo, a loan officer at NCHL; and
• Cesar Rodriguez Azamar, 36, of Santa Paula, an employee of NCHL.

   All of the defendants in this case face a statutory maximum sentence of 30 years in prison if they are convicted of the conspiracy count in the indictment.
   An indictment contains allegations that a defendant has committed a crime. Every defendant is presumed innocent until and unless proven guilty beyond a reasonable doubt.
   The defendants arrested today will begin making their initial court appearances this afternoon in United States District Court in Los Angeles.
   The investigation was conducted by the Federal Bureau of Investigation; the Ventura County District Attorney’s Bureau of Investigation; the Federal Housing Finance Agency, Office of Inspector General; the U.S. Department of Housing and Urban Development, Office of the Inspector General; and the United States Secret Service.

USAO News Release No. 13-098

Latino Real Estate Agent Pleads Guilty to Scamming Latino Homeowners

June 24th, 2013 at 8:00pm

A San Jose man who targeted the Spanish-speaking homeowners with a refinancing scam (affinity fraud) has pleaded guilty to accepting advance fees for loan modifications and performing unlicensed real estate activity, according to the Santa Clara County District Attorney’s Office.

Michael Mendoza, 56, was collecting upfront fees of $3,000 from his victims in exchange for promising them he would negotiate lower mortgage payments.

His employee Maria “Marilou” Jackson, 59, also pleaded guilty.

Both Mendoza and Jackson received three years of probation (what, no prison?), unknown fines and Mendoza was ordered to reimburse the victims.

Mendoza’s employee Maria “Marilou” Jackson, 59, also pleaded guilty. They were sentenced to three years of probation and fined. Mendoza also had to reimburse the victims for their losses.

Read the original article in the Silcon Valley Mercury News.

$142 Million Hendrix Montecastro Trial Will Go to Jury Soon

March 13th, 2013 at 8:23pm

One of the biggest real estate investment fraud trials in the history of Riverside County (or anywhere) will soon be in the hands of the jury.

Jurors in the trial in which prosecutors accuse Hendrix Montecastro and his mother, Helen Pedrino, of felony crimes and securities investment fraud have concluded their closing arguments.

The trial is being heard in front of Riverside County Superior Court Judge Jeffrey Prevost.

Hendrix Montecastro, 40, stands accused of being at the center of a Ponzi scheme that numbers 27 victims. Helen Pedrino, 61, has been accused as recruiting five of the victims.

Two other defendants, purported “mastermind” James Duncan, and Maurice McLeod, have already pleaded guilty, as have several other co-conspirators/defendants.

Read the original article in the Press Enterprise.

San Francisco Man Sentenced to 12 Years for Mortgage Fraud

December 17th, 2012 at 9:16am

Sergio Gutierrez, a 49-year-old San Francisco businessman, has been setenced by U.S. District Judge Jeffrey White to 12 years in federal prison for a mortgage fraud scam that targeted Spanish-speaking borrowers (affinity fraud, ethnic fraud).

Gutierrez sought our Latinos in 2008 and 2009 and promised them that in exchange for a fee he could write-up documents that would prove their mortgages were invalid and that they did not have to pay off their loans. Predictably, most of the persons who signed up for Gutierrez’ service lost their homes. Apparently, none of these people was able to reason that if their mortgages were invalid, so was their right to stay in a home that they couldn’t possibly own. Dumb meets crooked.

 U.S. District Judge Jeffrey White sentenced Gutierrez to a longer term than that requested by prosecutors and ordered him to pay restitution to his “victims.”

 Read the original article in the San Francisco Chronicle / SFGate.

Hendrix Montecastro, Helen Pedrino Ponzi Scheme Goes to Trial

November 30th, 2012 at 10:03am

The long-awaited criminal trial of Hendrix Montecastro and his mother, Helen Pedrino, is finally underway, after a panel of jurors and four alternates was seated November 27.

Montecastro and Pedrino, who are representing themselves, are facing a staggering  317 counts relating to scamming 28 victims out of close to $30 million in a real estate investment fraud and Ponzi scheme.

Prosecutor, chief deputy district attorney Vicki Hightower from the San Bernardino District Attorney’s Office has the unenviable task of painting a picture of the massive amounts of evidence so that the jury can understand the charges. Thus far, she has shown the jury a poster with the alleged cast of persons, alleging that Montecastro and Pedrino were the chief architects and that Pedrino, a nurse, targeted church-goers and hospital employees (affinity fraud), using faith to get the former to reveal their financial details.

What should have raised eyebrows were the rules prospective investors were required to follow: commit to three years’ of investing, turn over control of their finances and ask no questions. In return, they would receive (literally) unbelievable returns of 300-700%.

Prosecutor Hightower is trying the case before Riverside County Superior Court Judge Jeffrey Prevost.

Read the original article in the Press Enterprise.

Update: Hendrix Montecastro has made his own opening statements, in which he responds to the prosecution’s opening by stating  “There’s no direct evidence” and that “I have God for my attorney” (the Jesus defense). Let’s see if the jury buys it, after they listen to the testimony of persons such as Deborah Weber, who, along with her husband, invested tens of thousands of dollars and lost all of it. You can read more about witness testimony and Montecastro’s defense by clicking here.

Note: James Benjamin DuncanMaurice McLeod, Cindi Gayle Kelly, Thuan Nhan Du and Charlie Choi have already entered pleas.

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.

 

California DRE Revokes Record Number of Real Estate Licenses for FY 2011-2012

August 7th, 2012 at 7:05am

The fall in real estate markets has not only cost property owners their equity and many times the loss of their homes, it’s also been a magnet for scammers. Some are licensed real estate agents; others are not. Since the top of the market in fall 2006, there has been a flood of real estate crimes consumers had no concept of: real estate fraud, short sale fraud, REO fraud, Ponzi schemes, real estate investment fraud, foreclosure rescue scams and loan modification scams. In a number of cases, those crimes were carried out within certain ethnic or religious circles (affinity fraud).

The California Department of Real Estate, the primary means of investigating housing-related crimes, has responded by revoking a record number of real estate licenses for the fiscal year ending June 30, 2012. Here is a summary of the DRE’s August 6 press release:

781 real estate licenses revoked (up 14% from 681 the prior fiscal year)

190 real estate licenses suspended for cause (up 80% from 106 the prior fiscal year)

138 real estate licenses surrendered by the licensees (up 20% from 115 the prior fiscal year)

213 desist and refrain orders, typically ordered against an unlicensed individual or business

And now . . . my editorial

Why are there so many disciplinary actions in real estate? Very simply, because the barrier to entry is so low. This I blame on the California Association of Realtors, the trade and lobbying association for Realtors®, which gets its strength from the number (=volume) of dues-paying members under its wing. If you’re 18 years old and haven’t committed a major financial crime, you can get your real estate license.

Real estate training schools are big business. RealEstateExpress.com, a real estate “training” website, starts the first paragraph of its web page on licensing requirements by announcing “Getting Your Real Estate License In California is Not Difficult…” Although they state that “eight statutory college-level courses” are required for a prospective licensee to sit for the salesperson’s (aka “real estate agent”) exam, anybody who has attended even community college knows these courses are anything but college level. Prospective licensees are encouraged to sign-up for “boot camps” that are simply mass cramming sessions that show attendees what questions they must know in order to pass the exam. The purposes of these schools is in no way to inspire learning or to impart knowledge. That, along with taking online “practice exams” over and over until the answers are memorized, constitute the sum-and-total of what it takes to get a real estate license.

© Copyright 2007-2018 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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