California Real Estate Fraud Report

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Archive for the 'Straw Buyers' Category

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.

 

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.

 

 

Sonoma Valley Bank Fraud Trial for Former Executives Begins

October 27th, 2017 at 8:59am

Federal prosecutors began presenting their case against two former Sonoma Valley Bank executives and a Santa Rosa attorney, accusing them of “throwing good money after bad” by extending tens of millions of dollars to a now-deceased developer through third parties.

The defendants are former president Sean Cutting, 48, former VP and Chief Loan Officer Brian Melland, 48, and attorney David Lonich, 63. Lonich was the chief counsel to Bijan Madjlessi, a Marin County developer accused of using straw buyers to get $44 million in construction loans.

Cutting, Melland and former CEO and director Mel Switzer settled with the FDIC last year for $5.4 million.

The alleged scheme put the bank out of business and cost 1,000 shareholders steep losses.

Assistant U.S. Attorney Alex Tse is prosecuting the case for the U.S. Attorney’s Office for the Northern District of California.

Read the original article in the Santa Rosa Press Democrat.

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.

Navy FCU Hit by Home Equity Loan Fraud (HELOC Fraud)

October 5th, 2017 at 8:16am

Atlanta business owner Thomas Scott Brown, 47 was sentenced to three years in prison last week for operating a home equity loan fraud (HELOC fraud) scheme that cost losses of almost $3 million for the $82 billion Navy Federal Credit Union.

In addition to his prison sentence, U. S. District Judge Claude M. Hilton also ordered Brown to pay $2.7 million in restitution and to serve five years of supervised released. Brown pleaded guilty in May to one felony count of bank fraud and one felony count to making a false statement to a financial institution.

Brown’s scheme – which involved over 50 properties – centered on him purchasing properties with his own money and putting them in the name of straw buyers. Ownership was transferred to the straw buyers, who were then directed to apply for HELOC loans and to pay those proceeds to him. For his efforts, he earned profits of $1.4 million.

Read the original article in Credit Union Times.

 

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.

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.

Sacramento Loan Processor Sentenced for Participation in Widespread Mortgage Fraud

July 7th, 2017 at 11:08am

Loan processor Sergey Shchirskiy, 41, has been sentenced to seven years and 10 months in prison for his role in a mortgage fraud conspiracy that caused losses of $2.7 million to lenders.

Shchirskiy was the target of a joint investigation by the FBI and IRS for white-collar crimes that began as early as 2007. According to U.S. Deputy District Attorney Phillip A. Talbert, Shchirskiy’s role was to recruit straw buyers and to prepare fraudulent loan applications for the straw buyers. He and his 15 co-conspirators took out equity lines of credit and all the properties were foreclosed.

U.S. District Judge Troy Nunley imposed sentence.

Read the press release from the U.S. Attorney for the Eastern District of California.

 

Sacramento Man Sentenced in Mortgage Fraud Csae

June 16th, 2017 at 8:43am

Sergey Shchirskiy, 41, a loan processor in Sacramento, has been sentenced to seven years and 10 months in prison for his role in two mortgage fraud schemes and one tax fraud scheme, according to the U.S. Attorney for the Eastern District of California.

Between April and November 2007, Shchirskiy and his co-conspirators purchased properties with straw buyers and took out home equity lines of credit using fraudulent documents and statements that Shchirskiy created. He also recruited the straw buyers and the loan applications he submitted contained untrue information about the buyers’ income, assets and intent to occupy the houses.

Read the original article in the Central Valley Business Times.

© 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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