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Archive for May, 2012

Three Bay Area Men Indicted for Real Estate Investment Fraud

May 31st, 2012 at 11:15pm

Three men who lured investors, including elderly ones (elder financial abuse), into placing their funds with their firm on the fraudulent claim that their real estate developments benefitted charities, have been charged with conspiracy and fraud.

The investors to S3 Partners, which had offices in San Jose, Campbell, Palo Alto and North Carolina, may lose $21 million by the time the dust settles.

The three partners are Michael Sims, 58, of Gilroy, Sam Stafford, 56, of Campbell, and Melvin Russell “Rusty” Shields, 42, of Granite Falls, N.C. Federal prosecutors are accusing the men of promising rates of return between 10 and 16 percent for their developments in Arizona, Texas and Florida. While presenting themselves as experienced professionals, Shields has a conviction for felony larceny and Michael Sims’ real estate license was “suspended indefinitely” in 1978 by the California Department of Real Estate (DRE).

Sam Stafford has pleaded not guilty and Michael Sims has yet to enter a plea. No word yet as to the pleading status of Rusty Shields.

Read the original article in the Silicon Valley Mercury News.

CitiMortgage Employee Sues Her Employer – and Wins Big

May 31st, 2012 at 11:00pm

Sherry Hunt, a 55-year old Missouri woman who joined CitiMortgage in 2004 as a vice-president in order to oversee its acquisition of loans underwritten by other banks, has struck gold for making honesty her first priority.

Hunt’s job was to audit the outside loans for fraud or other irregularities. In the mid-2000s, the hottest commodity was securitized mortgages and CitiMortgage, which was the sixth biggest lender at the time, was buying loans at breakneck speed. Before selling the mortgages to investors or vouching that they were eligible for government mortgage insurance, the loans had to be reviewed for complete signatures and documentation, the latter of which had to be verified. Citi’s guarantee to its investors was serious: it promised to pay on loans if the borrowers defaulted.

In March 2011, Hunt and another employee were ordered by Citi executive Jeffery Polkinghorne to lower the amount of loans they were classifying as defective – or else (bank fraud).  Hunt refused and sued Citigroup in Manhattan federal court under the federal Whistleblower’s Act. Her lawsuit, which accused the lender of violating U.S. home mortgage regulations, attracted the attention of the U.S. Justice Department, which joined the suit because Citigroup had accepted $45 billion in bailout (TARP) money from both the U.S. government and the Federal Reserve. Citigroup not only did not challenge her allegations, it did not defend itself in court and agreed to pay $158.3 million to settle the case. Of that amount, Sherry Hunt will receive $31 million.

Read the original article in Businessweek.

Man Receives Settlement Against BofA in Whistleblower Case for Appraisal Fraud

May 31st, 2012 at 10:19pm

Two whistleblowers whose lawsuits against Bank of America played a role in the recent settlement agreement between the bank and the Attorneys General for the 50 states, have received settlements.

Appraiser Kyle Lagow’s complaint is said to have initiated the investigation by the U.S. Department of Justice into mortgage fraud at Countrywide Financial, which was purchased by Bank of America in 2008. Countrywide was one of many subprime lenders that were accused of pressuring appraisers to over-value properties (appraisal fraud) in order to inflate commissions and bonuses for its loan offices, management and executives (mortgage fraud). Lagow’s share of his claim, which was filed under the federal False Claims Act, is $14.5 million.

A second whistleblower, Gregory Mackler, has also reached an undisclosed settlement after challenging Bank of America’s management of the federal HAMP (Home Affordable Mortgage Program). Both men were represented by the Hagens Berman law firm.

Read the original article in Reuters and the Hagens Berman website.

Tiburon Realtor Goes to Jail for $5.6M Loan Fraud

May 31st, 2012 at 9:55pm

A real estate salesman who admitted lying about his income in order to build a mansion on land he had purchased (loan fraud, mortgage fraud), was sentenced to 18 months in prison for wire fraud and money laundering. The sentence was imposed by U.S. District Judge Jeffrey White in San Francisco.

In a novel plea for mercy, Abraham Valentino, a Tiburon resident who is originally from Iran, told the court he had already suffered due to the loss of his reputation, his pride (=ego) and his right to vote. He also claimed that he might not survive prison at his age (53).

Valentino’s attorney, Jay Weill, while conceding his client lied in order to obtain $5.6 million, nevertheless blamed Valentino’s account and mortgage broker for the fraud.

Abraham Valentino’s real estate license is still active with the California Department of Real Estate (DRE).

 Read the original article in the Marin Independent Journal.

Defendant in Hell’s Angels Mortgage Fraud Case Sentenced to Prison

May 31st, 2012 at 9:29pm

Justin Batemon, 34, one of the defendants in a $15 million mortgage fraud case that included members of the Hell’s Angels motorcycle club, was sentenced to three years in prison.

Bateman, a resident of Hayward, conned lenders by submitting loan documentation (loan fraud) that falsely claimed he owned a company and altered bank statements to show he earned more income that he did. He also referred some of his friends who were Hell’s Angels members to the loan officer, co-defendant Jacob Moynihan.

According to U.S. District Attorney Melinda Haag, Batemon pleaded guilty to all counts of wire fraud and conspiracy to commit bank and wire fraud. But that didn’t stop Judge William Alsup from slapping him with an enhanced sentence for obstruction of justice after prosecutors discovered he had forged a letter with respect to drug tests that had been ordered by the court.

The FBI and the IRS Criminal Investigations division performed the investigation.

Justin Batemon was also ordered to pay restitution after he has served his prison sentence.

Read the original article in the Silicon Valley Mercury News.

Italian Con Artist Who Dated Actress Deported

May 31st, 2012 at 9:12pm

An Italian national who once dated actress Anne Hathaway is being deported to his home country after serving time in a federal prison for various real estate fraud crimes.

Raffaello Follieri, who falsely claimed that he had ties to the Vatican in order to convince investors to purchase “historic” properties, pleaded guilty in 2008 to 14 counts of wire fraud, money laundering and conspiracy.

Read the original article in The Hollywood Gossip.

Sacramento Real Estate Agent Convicted for Mortgage Fraud

May 30th, 2012 at 10:08am

A Sacramento area real estate agent who conspired with two men and a group of closely-related straw buyers to deceive lenders (loan fraud, mortgage fraud) has been convicted of 13 counts of mail fraud after a six-day trial.

Behrooz Badie, 53, the broker and former owner of Above and Beyond Realtors, represented four straw buyers in the purchase of 16 homes. The straw buyers were procured by Derek Davis and were his ex-wife Harriette Davis, his girlfriend Kristina Harvey, his friend William Emmons and a creditor named Alan Bolton. The straw buyers never intended to occupy the properties, although they so indicated on their loan applications, because the properties were ultimately to be purchased by Derek Davis.

The mortgage broker for 15 of the transactions was Dino Rosetti. In each instance, the financial portrait of the borrowers (the straw buyers) was presented by overstating their incomes and understating their liabilities (loan fraud, mortgage fraud).

The creative part of this mortgage fraud conspiracy is that Behrooz Badie convinced the listing agents for the properties in which his buyers’ offers had been accepted, to alter their listings and increase the price above market value. This was done so that a phony surplus was created for the benefit of Derek Davis. Addenda were prepared – but never disclosed or shown to the lenders or their appraisers – to indicate that the surplus funds were for repairs or property improvements.

Derek Davis and Dino Rosetti have both previously pleaded for their part in this conspiracy and the real estate licenses of Badie and Rosetti have been revoked. No word on whether the listing agents have been disciplined by the California Department of Real Estate (DRE) or if any of the straw buyers have been charged. How these inflated home prices got approved by the appraisers is also worth exploring.

Read the original article in the Central Valley Business Times.

Couple Get Prison Sentences in Real Estate Fraud of Residential Care Homes

May 17th, 2012 at 11:05pm

Ronald Nelson, 76, and his wife Edith Nelson, 53, both of Pleasant Hill, are going to prison for a unique scam: the couple have pleaded guilty to defrauding banks out of $20 million in order to purchase residential care facilities using straw buyers. Both Nelsons entered guilty please to charges of bank fraud, money laundering and tax charges.

The Nelsons’ scheme involved paying/bribing the straw buyers from $5,000 to $10,000 to submit fraudulent loan applications (loan fraud, mortgage fraud) to purchase residential housing, which they converted to so-called residential care facilities.  Edith Nelson was sentenced to three years and 1 month in federal prison by U.S. District Judge Lowell Jensen and Ronald Nelson received 2 years and 8 months. They were ordered to pay restitution of $5.2 million.

Co-conspirators Nelda Asuncion, co-owner of Realty World Pacific West, 2 1/2 years in prison, and Cristeta Lagarejos, owner of Legacy Financing, received an 18 month sentence.

Read the original article in the San Francisco Chronicle.

Watsonville Real Estate Agent Pleads No Contest

May 17th, 2012 at 10:53pm

Grimaldo L. Sanchez, 29, of Watsonville was a real estate agent working for Quintero Realty. Facing almost 50 charges that accused him of stealing from Quintero’s clients, he pleaded no contest to 15 charges of forgery and embezzlement.

Assistant District Attorney William Atkinson said Sanchez was keeping money that his clients were giving him in order to pay their mortgages. He has already paid back one victim $48,000 and is on the hook for a civil judgment in a case pending against him and the president of Quintero Real Estate, Patricia Quintero, by Manuel Mora and Josefina Castrellon, who accuse Sanchez and Quintero of causing them to lose their home to foreclosure.

Read the original article in the Silicon Valley Mercury News.

San Diego Police Officer Charged with Vandalizing His Home after Foreclosure

May 17th, 2012 at 10:42pm

San Diego police offier Robert Acosta and his wife Monique are in hot water: the couple have been charged with removing items from a foreclosed property illegally. If they are convicted, each could fact up to four years in state prison.

San Diego Metropolitan Credit Union was the lender that foreclosed on the Acostas. The day after they moved out, the credit union’s representative went to the property and found that the walls and carpets had been spray-painted, shrubs were tossed into the pool and attached appliances, fixtures and doors had been removed, later to be found in rented storage space.

While the prosecutor opined that the home “looked like a war scene,” the Acosta’s attorney said they had merely removed property that belonged to them, including a mini-bar that was extracted using sledgehammers.

The Acostas might never have been prosecuted except that a neighbor who witnessed their move-out photographed it. As if the alleged assault on the property weren’t enough, one of the photos shows Monique Acosta chopping down a tree in her former backyard while her child watched.

Read the original article in National Mortgage News.

© 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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