California Real Estate Fraud Report

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Archive for the 'Short Sale Fraud' Category

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.

NY Cop and His Friend in Hot Water over Alleged Short Sale Fraud

August 18th, 2017 at 8:50am

Retired NYPD police officer Michael Rizzi and his friend Edward Monahan have been charged with bank fraud and conspiracy to commit bank fraud with an allegedly fraudulent short sale the two men committed.

Rizzi and Monahan are accused of submitting false documentation to Rizzi’s bank in order to do a short sale of a multi-family building on Lafayette Avenue in New Brighton, for which Monahan was the buyer.

The men, both 45 years old, signed affidavits affirming that they had no business, personal or family relationships with each other. But the criminal complaint alleges that Rizzi withdrew $17,500 from his bank accounts and altered one of his bank statements to make it look like the money came from Monahan’s bank account.

In addition, Rizzi was paid $10,000 in relocation assistance money from the Home Affordable Foreclosure Alternatives (HAFA) federal program.

The bank lost $250,000 as a result of the transaction.

In the meantime, Michael Rizzi is serving a 15-month federal prison sentence for laundering the proceeds from a multimillion-dollar prostitution ring.

Read the press release from the Office of the U.S. Attorney for the Southern District of New York (U.S. Attorney for Manhattan) and SI Live.

 

 

Crime Didn’t Pay for This Short Sale Fraud in Florida

July 20th, 2017 at 4:04pm

Casey Padula, a Charlotte County businessman, received a sentence of nearly five years in prison on charges of conspiring to commit tax and bank fraud.

In addition to transferring almost $2.5 million from Demandblox Inc., his marketing business to offshore accounts in Belize, Padula, 48, committed short sale fraud. He sent a letter to his lender Bank of America saying he could no longer afford his $1.5-million Port Charlotte home. Investigators say Padula gave Robert Robinson, 43, money from Padula’s Belize accounts to “buy” Padula’s home in a short sale at the sweet price of $625,000. Two months after the short sale closed, Robinson transferred title back to Padula for $1.

Lucky Robert Robinson only received five years of probation for his role in defrauding Bank of America.

Casey Padula was ordered to pay a $100,000 fine, restitution of $728,609 to the IRS and $739,459.90 to Bank of America.

Read the original article in NBC2 News.

New York Attorney Sentenced to 4 Years for Short Sale Fraud Scheme

May 11th, 2017 at 3:27pm

New York attorney Helene Stetch, 53, of Lindenhurst, has been sentenced Wednesday to  a prison term of 16 months to four years, according to a press release by the Queens County District Attorney.  In a novel form of short sale fraud, Stetch was accused of selling homes to new owners without paying off both the existing mortgages and obtaining approval from all lien holders.

The homeowners who thought they were conducting legitimate short sales were later surprised to receive foreclosure notices.

Stetch had worked at the law office of Kenneth Schwartz at Carle Place in New York and wrote most of the disbursement checks, which Schwartz, 67, signed.

Helene Stetch executed eight confessions of judgment totaling about $2.3 million, while Kenneth Schwartz executed confessions of judgment in favor of two homeowners totaling about $129,000.

Read the original article in the ABA Journal.

Three From Long Island Arrested In $1 Million Mortgage Fraud Scheme

May 5th, 2017 at 8:45am

Nine people were indicted, and three arrested for an alleged mortgage fraud scheme that included some short sale fraud purchases. The scheme spanned two boroughs of New York City and resulted in more than $1 million in fraudulent gains.

The persons arrested were Janelle Defreitas, 37, of Uniondale; Lester Wayne Mackey, 63, of Wyandanch; and Darren Downes, 36, of Baldwin. Also named in the indictment were Raymond McKayle, 53, of East Flatbush; Jaipaul Persaud, 54, of Fresh Meadows; Roxanne Harmon, 51, of Jamaica; June Whyte, 54, of Ozone Park; Rickley Gregoire, 33, of Brooklyn; and Paula Blackwood-Sambury, 50, of Cambria Heights.

“Our investigation uncovered a brazen and elaborate scheme to defraud mortgage lenders and steal over $1 million,” said Attorney General Eric Schneiderman. “We have zero tolerance for anyone who tries to cheat the system — and we won’t hesitate to bring them to justice.”

Ironically, Roxanne Harmon is an investigator for the New York City Department of Investigation. One of the properties involved was apparently her own.

Read the original article, which includes the charges and details of the alleged mortgage fraud scheme, in The Patch.

 

Husband And Wife Convicted in Fraudulent Short Sale of Property Later Sold to Sacred Heart Academy

April 6th, 2017 at 1:58pm

On March 30, Joseph Atias and Sofia Atias were convicted of bank fraud, conspiracy to commit bank fraud and Medicaid fraud by a jury in federal court in Central Islip, New York.

According to a press release by the U.S. Attorney for Eastern District of New York,

The fraud was designed to, and did, defraud Bank of America of over half a million dollars.  The defendants face penalties of up to 35 years’ imprisonment, the forfeiture of $560,000, and restitution of over $700,000.  After the verdicts, Joseph Atias was remanded to custody pending sentencing by United States District Judge Denis R. Hurley.

The convictions were announced by Bridget M. Rohde, Acting United States Attorney for the Eastern District of New York, and William F. Sweeney, Jr., Assistant Director-in-Charge, Federal Bureau of Investigation, New York Field Office.

“Through a web of lies and false documentation, these defendants stole more than half a million dollars from Bank of America and from Medicaid, which they used to line their own pockets,” stated Acting United States Attorney Rohde.  “The fine work of the FBI to bring these defendants to account for these crimes sends a clear message to anyone who contemplates engaging in mortgage fraud or Medicaid fraud: Do not even attempt it, because you will be caught and held responsible.”  Ms. Rohde extended her grateful appreciation to the Federal Bureau of Investigation, the agency responsible for leading the government’s investigation.

The defendants were convicted of bank fraud and conspiracy to commit bank fraud in connection with the sale of property adjacent to Sacred Heart Academy for $925,000, after the defendants had sold the property in a short sale for $480,000 to discharge their mortgage debt.  In the short sale process, the defendants and a co-conspirator, an attorney who pleaded guilty and testified against the defendants at trial, concealed the offer from Sacred Heart Academy from the Bank of America.  In the short sale process, the defendants submitted a fraudulent contract of sale and other documents with false statements to Bank of America, and obtained approval of a short sale, wherein the proceeds from the sale of the property were less than the total amount of the mortgages on the property.  The defendants submitted these documents to Bank of America, falsely representing that there were no funds to pay the mortgages when, in fact, the defendants knew that Sacred Heart Academy, a high school in Hempstead, New York, had offered to buy the property for an amount sufficient to cover the mortgages on the property.  To accomplish the fraudulent short sale scheme, the defendants used a relative as a straw buyer of the property to create the appearance of an arms-length sale.  Shortly after that sale, the defendant’s straw buyer sold the property to Sacred Heart Academy for approximately half a million dollars in profit.

Two Plead Guilty in Massachusetts Short Sale Fraud

March 30th, 2017 at 3:17pm

Four persons are facing the justice system for their involvement in a short sale fraud scheme that occurred in Essex County in Massachusetts.

Jasmin Polanco, 37, a real estate closing attorney, and Vanessa Ricci, 40, a mortgage loan officer, each pleaded guilty yesterday to one count of conspiracy to commit bank fraud. Both women have not yet been sentenced.

In the same alleged scheme, Methuen real estate broker Greisy Jimenez, 49,  was indicted this week on two counts of bank fraud and one count of conspiracy to commit bank fraud.

On March 22, 2017, U.S. District Court Judge Rya W. Zobel sentenced a fourth person, Hyacinth Bellerose, 51, a real estate closing attorney from Dunstable, to time served and one year of supervised release to be served in home detention.

Jimenez, Polanco, Ricci, Bellerose and others allegedly submitted materially false and misleading documents to different banks so that the lenders would approve short sales. Approved short sales are required to be arms-length transactions where the seller and buyer are not acquainted through familial, business or other pre-existing relationships with one another. Also, the seller/borrower is almost always required to move out of the property following the sale.

Read the original article in The Patch.

© Copyright 2007-2017 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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