California Real Estate Fraud Report

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Archive for the 'Short Sale Fraud' Category

Arizona Attorney General Gets Conviction of Real Estate Agent in Short Sale Fraud Scheme

February 14th, 2018 at 9:55am

The following is a press release from the Office of Arizona Attorney General Mark Brnovich:

PHOENIX – Attorney General Mark Brnovich announced a jury found James Thornton, a real estate agent, guilty of Fraudulent Schemes and Theft after defrauding two banks in a short sale home scam.

In 2012, Thornton was the listing real estate agent for the owner of a home who was in default on both mortgages in Mesa, AZ. Thornton sold the property via short sale to his parents’ LLC for $580,000. There had been other offers to purchase the home for hundreds of thousands of dollars more, including offers for $870,000, $707,000, and $650,000. Both banks approved the short sale price to Thornton’s parents not knowing about any of the other offers to purchase the property for significantly more.

Four days after Thornton’s parents purchased the home, Thornton became their listing agent and tried to sell the home “off the market” for $1,100,000. Thornton eventually sold the home to a third party for $1,050,000 cash approximately two months later. Thornton’s parents earned $540,722 in profit on the sale for $1,050,000, only having owned the home for two months.

In the course of his fraud scheme, Thornton made false statements and misrepresentations to bank representatives, potential buyers, and other real estate agents. To discourage buyers on the short sale and devalue the home, Thornton misrepresented the true number of rooms and bathrooms in the home, pointed out a code violation that didn’t exist to an appraiser, and removed all of the high end, custom appliances from the home. Thornton also falsely told the $1,050,000 cash buyer that the reason there was a substantial gap between his parents’ purchase price of $580,000 and the new list price of $1,100,000 was because there had been a “lien paid outside of escrow.”

Sentencing is set for March 16, 2018. Thornton faces 3 to 12.5 years in prison.

The FBI Phoenix Field Office investigated this case.

Assistant Attorney General Maura Quigley and Scott Blake prosecuted this case.

Methuen Real Estate Broker Pleads Guilty to Role in Short Sale Fraud Conspiracy

January 19th, 2018 at 10:10am

Methuen real estate broker Greisy Jimenez, 50, pleaded guilty to participating in a short sale fraud scheme to defraud banks and mortgage companies.

Jimenez is scheduled to be sentenced by Senior U.S. District Court Judge Mark Wolf April 24.

In March 2017, her co-conspirators Jasmin Polanco, 37, a real estate closing attorney, and Vanessa Ricci, 40, a mortgage loan officer, each pleaded guilty to one count of conspiracy to commit bank fraud; they will also be sentenced in March. Hyacinth Bellerose, 51, a real estate closing attorney, was sentenced last March to time served and one year of supervised release to be served in home detention after she pleaded guilty to conspiracy to commit bank fraud.

The defendants began their conspiracy in August 2007 and it continued through June 2010. They submitted false and misleading documents to the lenders in order to induce their to approve the fraudulent short sales. The short sales were not only not arm’s-length but the straw buyers were frequently related. In most cases, the purported sellers never moved out of their properties and in fact, the short sale fraud was intended to provide them with a large reduction in their mortgages, I scheme I call “mortgage laundering.”

The case was prosecuted by Assistant U.S. Attorney Stephen Frank, chief of the Economic Crimes Unit of the U.S. Attorney’s Office, and Assistant U.S. Attorneys Sara Miron Bloom and Victor Wild.

Read the previous post about Greisy Jimenez in the California Real Estate Fraud Report from March 2017.

Massachusetts Attorney Has License Suspended after Fraud Conviction

December 29th, 2017 at 12:16pm

 

Massachusetts’ Board of Bar Overseers has suspended the license of Jasmin Polanco, who pleaded guilty this year for a federal mortgage fraud charge, specifically, conspiracy to commit bank fraud.

Polanco, 37, was a real estate closing attorney in the Greater Lawrence area, was one of several individuals who pleaded guilty in connection with a “sweeping conspiracy to defraud banks and mortgage companies by engaging in sham short sales of residential properties in the Merrimack Valley,” according to the Department of Justice.

In this case, fraudulent short sales were conducted in which the lenders were duped into approving short sales, yet the remained in their homes, their mortgages substantially reduced.

Imprisonment, fines and restitution in Polanco’s case have yet to be determined for Polanco, as well as for Vanessa Ricci, 40, a mortgage loan officer who pleaded guilty to the same charge as Jasmin Polanco.

According to federal charging documents:

– The conspirators falsely led banks to believe that the sales were arms-length transactions between unrelated parties, when in fact, the transactions were not arms-length; the buyers and sellers were frequently related and the sellers retained control of (and frequently continued to live in) the properties after the sale;

– The conspirators submitted phony earnings statements in support of loan applications that they submitted to banks in order to obtain financing for the purported sales.

Read the original article in the Eagle-Tribune and the United States Attorney’s Office for the District of Massachusetts.

Chatsworth Father and Daughter Convicted in $30 Million Family-Owned Mortgage Relief Fraud Scheme

December 15th, 2017 at 9:17am

Jamie Matsuba, 33, and Thomas Matsuba, 67, were found guilty in Los Angeles federal court of conspiracy to commit wire fraud, making false statements to federally insured banks and committing identity theft, according to the U.S. Department of Justice. They were also convicted of one count of making false statements to federally insured banks.

Dorothy Matsuba, 66, of Chatsworth, who is the mother of Jamie Matsuba and Thomas Matsuba‘s wife, and their daughter, Jane Matsuba-Garcia, 41, of Camarillo, both previously pleaded guilty. A fifth defendant, Young Park, of Los Angeles, is a fugitive.

Dorothy MatsubaJamie Matsuba, and Jane Matsuba all hold either current or expired licenses with the California Bureau of Real Estate.

The family ran business named Ownership Management Service LLC and Trust Holding Service LLC from January 2005 to August 2014. The companies promised homeowners get help for distressed homeowners by doing short sales with the lenders. The homeowners were told to deed their homes to trust controlled by the Matsubas, who further promised the homeowners they would pay their mortgages during the negotiation period with the banks.

Read the original article in SatPRNews and MyNewsLA.com

 

New Jersey Attorney and Real Estate Agent Charged with Running Short Sale Fraud Ring

December 7th, 2017 at 9:38am

New Jersey attorney Christopher Goodson, 44, and Anthony Garvin, 47, have been charged with one count of conspiracy to commit bank fraud with respect to multiple short sale frauds in a criminal complaint that was filed in U.S. District Court in Newark.

According to an article in Credit Union Times, the pair were thought to have caused over $30 million in losses to the victim financial institutions.

According to the complaint, Goodson, Garvin and others targeted multiple New Jersey properties that were in default. After acquiring the listings, the conspirators convinced the lenders to accept a short sale to a co-conspirator or entity controlled by the group. They did not disclose to the lenders that they were in business with each other or the entities. Once the sales were complete, they allegedly flipped the properties to a second buyer using phony loan applications, bank statements and employment records generated by members of the group.

 

Former Los Angeles Lakers Player Pleads Guilty in Short Sale Fraud

November 30th, 2017 at 9:03am

Sam Jacobson, a basketball player with three NBA teams, pleaded guilty to residential mortgage fraud in the short sale of his Apple Valley (Minnesota) home.

In an August 2016 complaint  filed by Dakota County, prosecutors accused Jacobson of persuading his lender, JPMorgan Chase, to agree to a short sale of his property in 2011. As part of the transaction, he and his girlfriend, Trace Quam, whom he later married, signed an affidavit that the same was arm’s length. This was not true, as Traci Quam was the purchaser.

After the short sale was approved, Traci Quam sold the house later in the year at a profit of $226,793.06, according to the criminal complaint. She used the proceeds to proceeds to purchase another house, also in Apple Valley.

The short sale fraud was uncovered when Jennifer Jacobson, Sam Jacobson’s ex-wife, reported it to Apple Valley police in 2013.

As part of his plea agreement, Jacobson has agreed to pay restitution to the bank. He and Trace are scheduled to be sentenced in January 2018.

Read the original article in the Minnesota Star Tribune.

Attorney-President of the Stanislaus County Bar Association Convicted in Short Sale Fraud Case

November 17th, 2017 at 9:15am

It is rare in California to see prosecutions for short sale fraud in California. This case was prosecuted successfully, with a quick conviction from the jury, after a novel defense by the defendant’s attorneys.

The following is a press release from the U.S. Attorney’s Office for the Eastern District of California:

FRESNO, Calif. — Robert Farrace, 53, of Modesto, was convicted today of three counts of wire fraud in connection with a fraudulent short-sale scheme, U.S. Attorney Phillip A. Talbert announced.

According to court documents, Farrace, an attorney specializing in real estate law and the current President of the Stanislaus County Bar Association, owned two properties in Modesto with substantial mortgage loans. By early 2010, Farrace was in default and received foreclosure notices for the two properties. In order to keep the properties and avoid foreclosure, Farrace formed an entity called “Dignitas LLC” to purchase the properties. Farrace controlled Dignitas, but listed a friend’s name on the paperwork as a nominal manager because he knew the bank would not sell the property to a related party. Farrace then submitted short sale offers to the bank that serviced the loans on both properties listing Dignitas and the nominee manager as the purchaser. Farrace misrepresented his relationship to Dignitas to induce the bank to approve the short sale. Because the servicing bank did not know of the true relationship, it went forward and completed one of the short sales. The short sale on the second party was stopped after law enforcement informed the bank of Farrace’s scheme.

This case is the product of an investigation by the Federal Housing Finance Agency–Office of Inspector General, the Federal Bureau of Investigation, and the Stanislaus County District Attorney’s Office. Assistant U.S. Attorneys Michael G. Tierney and Shelley D. Weger are prosecuting the case.

Farrace is scheduled to be sentenced on February 12, 2018, by U.S. District Judge Lawrence J. O’Neill. Farrace faces a maximum statutory penalty of 20 years in prison and a $250,000 fine. The actual sentence, however, will be determined at the discretion of the court after consideration of any applicable statutory factors and the Federal Sentencing Guidelines, which take into account a number of variables.

You can read more details about this case in the Modesto Bee.

 

 

Atwater Couple Indicted in Federal Mortgage Fraud Probe

October 20th, 2017 at 8:58am

John Ballard, 55, and Judy Calderon Ballard, 54, are two of the four people named in a federal indictment by the U.S. Attorney for the Eastern District of California.  The Ballards are charged with conspiracy, wire fraud and bank fraud with respect to an alleged short-sale scheme, according to U.S. Attorney Phillip Talbert.

The other two defendants are Sherry Herbert, 54, and Andrea Todd, 53.

John and Judy Ballard were licensed real estate salespersons according to prosecutors. When they defaulted on their home in Atwater, they asked their lender to permit them to sell their home to Herbert and Todd but had no intention of actually transferring the property to them.

Read the original article in the Modesto Bee.

Bay Area Man Sentenced to 15 Prison in Short Sale Fraud Scam

August 18th, 2017 at 10:24am

Mahendra Prasad, 55, pleaded guilty on May 22, to one count of mail fraud affecting a financial institution in connection with a fraudulent short sale (short sale fraud), according to a Justice Department press release. On August 14, U.S. District Judge Lawrence J. O’Neill sentenced him to 15 months in prison and ordered him to pay $328,000 in restitution to the lending institution that was defrauded.

According to court documents, in 2006, Prasad allegedly submitted falsified documentation to a lender so that he could purchase a property in Sacramento. Following the purchase, he rented the property as Section 8 housing.

In 2013, Prasad completed a short sale of the property to another person, claiming that the sale was “arm’s length, which was a requirement of the lender.

His co-defendants Jyoteshna Karan, Praveen Singh, Sunita Singh and Nani Isaac are going to trial in U.S. District Court in Fresno, on Dec. 11.

Read the original article in News India Times.

Nevada Men Indicted in Fraudulent Short Sale

August 18th, 2017 at 9:55am

Acting U.S. Attorney Steve Myhre for the District of Nevada announced that two men have been indicted in connection with the sale of one man’s property to a family member of his friend (short sale fraud).

The indictment alleges that Dustin Lewis (Henderson, NV) and Brian Sorensen (Las Vegas, NV) conspired to defraud OneWest Bank when Lewis submitted a fraudulent short sale application to the bank to sell the home to a relative of Sorensen. The plan was to prevent a foreclosure so that Lewis could keep possession of the 5,331-square foot, five-bedroom home in Henderson. It is further alleged that Lewis did not disclose to the bank that he and Sorensen had an agreement that Lewis would remain on the property and that later it would be sold back to him.

The case was investigated by the Federal Bureau of Investigation (FBI), the Internal Revenue Service-Criminal Investigation (IRS-CID) and the U.S. Department of Interior-Office of the Inspector General. Assistant U.S. Attorney Patrick Burns is the prosecutor.

Read the original article in Mortgage Professional America.

© 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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