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Archive for the 'Liar’s Loans' Category

U.S. Attorney’s Lawsuit against Bank of America Goes to Trial in New York

September 25th, 2013 at 9:54am

Attorneys for the U.S. Attorney’s Office in Manhattan are squaring off against Bank of America’s lawyers in a massive lawsuit in which the banking behemoth’s Countrywide predecessor is accused of underwriting and selling toxic mortgages to Fannie Mae and Freddie Mac.

Pierre Armand is an attorney in the civil division of the U.S. Attorney’s Office in Manhattan. Armand calls Countrywide’s business model one in which quality suffered under profiteering and which resulted in massive fraud that cost the two former government-sponsored entities dearly while making Countryside $165 million selling the loans.

“Hustle was not about quality,” Armand said. “It was about speed. It was about volume. It was about profits.”

Countrywide’s loan program, implemented in 2007, went under various names: the “High Speed Swim Lane,”  “HSSL” or “Hustle.” HSSL was overseen by Rebecca Mairone, a former chief operating officer of Countrywide’s Full Spectrum Lending division. Mairone is a co-defendant in the lawsuit who currently works at JPMorgan Chase & Co. and is being defended by Bracewell & Giuliani.

The government’s lawsuit was filed under the Financial Institutions Reform, Recovery, and Enforcement Act, which was passed following savings-and-loan frauds and scandals that occurred during the early 1980s. It blames Countrywide (now Bank of America) for the losses borne by Fannie Mae and Freddie Mac on thousands of supposedly prime mortgages that later defaulted, causing losses of $131 million to Fannie Mae and Freddie Mac.

Bank of America’s attorney is Brendan Sullivan, who countered that Countrywide had quality control in place as well as systems to prevent fraud. “No fraud,” he said. “Two words. That’s the heart and soul and body of the defense. No fraud. And that’s what the evidence will show.”

The case is U.S. ex rel. O’Donnell v. Bank of America Corp et al, U.S. District Court, Southern District of New York, No. 12-01422. It is being heard in front of U.S. District Judge Jed Rakoff.

Read the original article in the Chicago Tribune.

Phony Broker Pleads Guilty to Mortgage Fraud, Costing Lenders & Taxpayers $20 Million

May 1st, 2013 at 10:39am

A San Diego woman who brazenly brokered loans without possessing the necessary license has pleaded guilty to operating a a loan origination fraud scheme that included kickbacks.

According to the U.S. Attorney’s Office, Mary Armstrong, 51, wrote over $100 million in fraudulent loans (mortgage fraud, loan fraud) and skimmed $14.5 million from it (equity skimming). Armstrong confessed to selling $100 million of real estate around the country at puffed-up prices (appraisal fraud) and took the overpayments for herself. Her admitted crimes included fabricating loan applications for her straw buyers and  getting supporting fraudulent documents from her co-conspirators.

Prior to Armstrong’s guilty pleas, the following co-conspirators also pled guilty:

Teresa Rose, a Ramona real estate agent

Audrey Yeboah, Mary Armstrong’s accountant

– Seattle businessman Justin Mensen

Still awaiting their turn to face the scales of justice are John Allen, 44, of Laguna Hills, and William Fountain, 57, of Los Angeles.

Prosecutors said that the straw buyers were recruited in Southern California and other states by the defendants advertising on the Internet and placing ads in the Los Angeles Times seeking “investors.” The straw buyers were paid $10,000 for each property they “purchased.” Taking advantage of greed by institutional lenders to capture more loan business, the straw buyers were able to obtain 100% financing, relieving them of the risk to make down-payments, as occurred back in the good old days of prudent underwriting. When the straw buyers defaulted, the originators and their secondary market victims, e.g., Fannie Mae and Freddie Mac, lost upwards of $20 million.

My pet peeve with prosecutors is their consistent lack of interest in prosecuting the straw buyers in mortgage fraud cases. Let’s see if this case is any different.

Read the original article in Courthouse News. You can also read earlier postings about these defendants by using the Search tool on the left side of the California Real Estate Fraud Report.

Hendrix Montecastro, Helen Pedrino Convicted in $142 Million Ponzi Scheme in Riverside

April 1st, 2013 at 12:30pm

Hendrix Montecastro, 40, of Maryland, was convicted on March 25 of 304 counts in a complex real estate fraud case that prosecutors say cost the victims $142 million in total. According to Riverside County Chief Deputy District Attorney Vicki Hightower, the jury convicted Montecastro on charges that included grand theft, destruction of evidence and felony fraud against 26 of 27 named victims — with asset losses totaling $3.6 millions.

He faces a prison sentence of more than 100 years.

Helen Pedrino, 61, of Murrieta – the mother of Hendrix Montecastro, was found guilty of 54 felonies based on her recruitment of five victim investors. When she is sentenced, she could spend up to 30 years in prison.

James Benjamin Duncan, who orchestrated the fraud, testified against Montecastro and Pedrino after making a deal with prosecutors. He is going to be sentenced for his crimes this month, along with Maurice McLeod, who also played a prominent role. A third man, Christopher Oetting, hanged himself on February 16, 2010 in his home, after admitting he to charges of conspiracy, money laundering and multiple counts of filing fraudulent tax returns.

The remaining defendants: Charlie Choi, Cindy Kelly and Thuan Nhan Du pleaded guilty to selling securities without a license and received probation.

As with all Ponzi schemes, this one worked well because friends and relatives convinced each other that the defendants’ “real estate investment” program was profitable. Good judgment was suspended and people refinanced their homes to draw out equity, cashed in their retirement plants and charged up their credit cards. Almost all of the victims were completely ruined as no monies have been recovered.

In a nutshell, the real estate investment fraud worked by the use of two companies set up by the defendants: Jovane Investments and Stonewood Consulting. The investors placed their money into Jovane, a shell company. The investors paid the seller the asking price or close to it and Jovane Investments funded the loans, but at 20-25% more than the appraised value.

The investors were unaware that Stonewood would locate the properties, also arrange financing and do so also at inflated values.

To understand the depth of this real estate fraud, refer to the article published in the Press Enterprise.

Part of Hendrix Montecastro’s defense was that he was a victim of James Benjamin Duncan too, but Prosecutor Hightower showed that Montecastro was anything but poor, spending $500,000 just before the Ponzi scheme collapsed on a non-profit called the Biocybernaut Institute.

FBI Arrests Two Men for Accepting Bribes on Fraudulent Loan Applications

December 17th, 2012 at 10:31am
Swift work by FBI agents in Southern California has resulted in the arrests of Tony Phan of Little Saigon and Troy Chattariyangkul of Los Angeles County for accepting bribes on falsified loan applications (loan fraud) while they were employed at Homecomings Financial in 2007-2008.

Phan, 35, works as a senior underwriter at Stearns Lending, Inc. in Santa Ana. Chattariyangkul, 34, is a USC graduate who worked first at Homecomings Financial, where Phan once worked. Another alleged co-conspirator, Chang Park, was a co-worker of Phan and Chattariyangkul, where the latter two are allged to have taken bribes to overlook fraudulent loan applicaitons.
 
According to court filings, Park eventually joined George Zevada, who owned and operated Silverline Mortgage Pasadena, where they are alleged to have targeted the Seeno Homes and Discovery Homes in Northern California.
 
Park was arrested last August and explained how the scheme worked to the FBI agent, including providing supporting documentation. Among other information he provided was that George Zevada allegedly used a CPA named Miguel Arenas Sr. and his Miro Accounting firm to forge pay stubs of prospective buyers.
 
All four men appear to have ignored the common-sense rule to not conduct allegedly illegal business via email, which helped the FBI build its case against them and spur the arrests.
 
Read the original article in the OC Weekly.
 

Real Estate Agent Pleads Guilty in Elk Grove Mortgage Fraud Case

November 8th, 2012 at 8:22pm

A Sacramento man who was a licensed real estate agent and appraiser has pleaded guilty to two counts of bank fraud in a mortgage fraud he orchestrated to enrich himself.

Dameen Dedrick, 39, entered his guilty plea in federal court in Sacramento in front of  U.S. District Judge Morrison C. England Jr.

Dedrick was charged as a result of loan applications he submitted in 2005-2006 to purchase three Elk Grove homes. The loan apps contained false statements and Dedrick submitted fraudulent income and other financial statements to convince the lenders to grant him the mortgages, which totaled $1.1 million. The homes were purchased at no risk to him (100% financing) and he stated each was his primary residence in order to obtain lower interest rates.

Dedrick’s co-defendant, Roy L. Rice, 46, of Concord, of Concord, pleaded guilty in September for his participation in the scam. Roy Rice was also a licensed real estate agent; both he and Dameene Dedrick allowed their licenses to expire.

The case was investigated by the Internal Revenue Service-Criminal Investigation and the FBI.

Read the original article in the Sacramento Bee and the FBI’s press release.

 

Sherman Oaks Woman Indicted for Mortgage Fraud

November 26th, 2010 at 11:37am

A federal grand jury has indicted Monica Elizabeth Frommer, 33, on charges of 12 counts of bank fraud, loan fraud, wire fraud, and making unlawful monetary transactions. According to the indictment, Frommer submitted stated income loan applications to National City Bank and Washington Mutual Bank from 2004 through 2007, indicating that she and her husband earned almost $50,000 per month. She also is alleged to have submitted falsified bank records to confirm their assets, and as a result, was funded almost $2 million in mortgage loans.

If convicted of all the charges, Frommer could face up to 290 years in federal prison.

Read the full article in the National Mortgage Professional.

Stanislaus County D.A. shifts its prosecutorial focus

March 25th, 2010 at 10:22am

Deputy District Attorney W.R. McKenzie, who is a prosecuter of real estate fraud with the Stanislaus County District Attorney’s office, says the D.A. is moving away from prosecuting people who took out “liar’s loans” and setting its sights instead on con artists who victimize people in real estate investment scams and other real estate fraud schemes.

Here are some of the cases that have been prosecuted by the Stanislaus County D.A.:

– Bounthavy Manivong, convicted of stealing $1 million from roughly 35 victims who believed they were investing in properties purchased by Manivong.

– Hector Leonel Picart, sentenced to four years in prison for stealing $18,500 from an elderly victim.

– Selena Corral, who pleaded no contest to one count of grand theft.

– David George and Lorna Martin forged documents to take out fraudulent loans at a brokerage where they worked.

Read the full article in the Modesto Bee.

© 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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