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Archive for January, 2013

Three Arrested for Luring Struggling Homeowners by Promising to “Kill” Their Mortgages

January 31st, 2013 at 11:25am

Two men and a woman in the Santa Rosa area are facing serious charges by the Office of the California Attorney General for allegedly defrauding struggling homeowners (foreclosure fraud).

Ronald Cupp, 58, of Santa Rosa; Randall Heyden, 69, of San Rafael; and Angelle Wertz, 38, of Santa Rosa were arrested  and charged with 57 counts that theft, forgery, notary fraud and recording of false documents through their “wekillyourmortgage.com” website. Randall Heyden is a licensed real estate broker in Rohnert Park.

The three entrepreneus are alleged to have collected thousands of dollars in upfront fees from $1,000 to $10,000. Cupps’ mortgage company, North Bay Trust Services, was used to fabricate documents that delayed the homeowners’ foreclosure, but according to spokesman Nick Pacillo of the California AG’s Office, did not “kill” the mortgage.

The alleged crimes first were reported to prosecutors in Marin and Sonoma counties but it is still unknown how many homeowners may have been victimized.

” wekillyourmortgage.com” has been seized by the California Attorney General’s Office in order to both announce the State’s action and to provide a portal through which victims can file complaints. So has North Bay Trust Services.

Read the original article in the Mercury News. There is an updated article in the Press Democrat.

Elk Grove Real Estate Broker Found Guilty in Mortgage Fraud

January 23rd, 2013 at 7:37pm

Hoda Samuel, a (still) licensed real estate broker and the owner of Liberty Real Estate & Investment Co., has been found of a conspiracy to commit mortgage fraud, as well as 30 counts of mail fraud.

Prosecutors apparently proved to the jury that Samuel, 60,  acted as the broker on 30 transactions between April 2006 and February 2007, which defrauded lending institutions due to the file of false information on the loan applications (loan fraud, mortgage fraud). Samuel kept tight control of the transactions by representing both the seller and buyer (dual agency) in about have the sales and obtaining funding in all but one. Unfortunately for the lenders, 28 of the 30 properties went into foreclosure, causing losses to the lending institutions of over $5.5 million. The straw buyers were the employees of her brokerage and other persons.

In a decidedly unique angle, Samuel overstated the values of the homes from $15,000 to $40,000 (appraisal fraud) in order to pay for “repairs” to the homes that included making homes wheelchair accessible for (non-existent) family members of the buyers.

When she is sentenced on April 30, Hoda Samuel could get up to 20 years in prison.

The case was prosecuted by Assistant U.S. Attorneys Philip Ferrari and Todd Pickles out of the Eastern District of California and by the Federal Bureau of Investigation and the IRS-Criminal Investigation Unit.

Read the original articles in News10 ABC and the Sacramento Business Journal.

Michigan Supreme Court Justice Facing Federal Bank Fraud Charges in Addition to Short Sale Fraud Accusation

January 20th, 2013 at 10:11am

Michigan Supreme Court Justice Diane Hathaway, who is already the subject of a civil forfeiture complaint detailed in an earlier posting on the California Real Estate Fraud Report, has more troubles on her personal docket.

The U.S. District Court in Detroit filed a federal bank fraud charge this past Friday against Justice Hathaway, alleging she fraudulently transferred her debt-free Windermere, Florida home to her husband’s daughter using a quit claim in order to avoid having to declare the asset in a hardship letter to ING Direct, to which she had made an application to short sell her Grosse Pointe Park home in Michigan. Failing to fully disclose assets on an application is considered short sale fraud by lenders. By approving the short sale, Hathaway and her husband, Michael Kingsley, erased almost $600,000 in mortgage debt on their Michigan home and per the Mortgage Debt Relief Act, were also spared paying the Internal Revenue Service taxes on the personal gain.

Justice Hathaway’s hearing in federal court is January 29.

After the short sale, the Florida property was transferred back into their names.

Hathaway, who previously had refused to resign her position, decided to retire after the Michigan Judicial Tenure Commission, citing “blatant and brazen” misconduct, filed its own complaint against her and recommended suspension.

Sounding relieved, Michigan Supreme Court Chief Justice Robert Young Jr. said that Justice Hathaway’s retirement will “bring to a close an unhappy, uncharacteristic chapter in the life of this court.” In an interview with the Detroit Free Press, Chief Justice Young said “When any elected official is charged with serious misconduct, the public’s faith in its government institutions can suffer. This court, as an institution, will do what we have always strived to do: to uphold the highest ethical standards, render the best public service in promoting the rule of law for everyone, and do our utmost to deserve the trust the public has placed in us.”

In a unique and, in my opinion, transparent argument, Justice Hathaway’s attorneys have advanced the notion that she and Kingsley saved the bank money by keeping the house from falling into foreclosure. If such was the case, they certainly could have argued that viewpoint to their lender, ING, for its consideration and they certainly wouldn’t have felt the need to allegedly hide their other residential assets.

In the related civil case, U.S. Attorney Barbara McQuade is attempting forfeiture of Hathaway and Kingsley’s second home in Orlando (one of the ones she had allegedly concealed via quit claim). The home, valued at $664,000 in 2010, would compensate ING for the $600,000 in mortgage debt Hathway and Kingsley are alleged to have defrauded the lender.

Michael Kingsley was not named in the federal bank fraud charge, for which the maximum penalty is 30 years in prison.

Read the original article in the Detroit Free Press and the Huffington Post.

Senior Citizen Sues Daughter for Elder Abuse

January 18th, 2013 at 12:35pm

Law enforcement and advocates for the elderly often state matter-of-factly that many cases of elder financial abuse are committed by the senior citizen’s relatives.

In the Ventura County suburb of Newbury Park, the daughter and son-in-law of 88-year-old June Untalan have been found liable for elder abuse by a jury. The judgement, which will be entered January 22, may result in the couple being ordered to give up their home and pay more than $30,000 in damages.

June Untalan sued Marie and Charles Gutierrez after the couple refused to transfer title to the home she had made payments on since 1985 and for which the Gutierrez’ had loaned her the down-payment. The down-payment was repaid in 1992 and the Gutierrezes subsequently transferred the property from their names into a family trust that omitted June.

In December 2012, a jury  found Marie and Charles Gutierrez liable for elder abuse. They awarded June Untalan the house, now worth about $500,000, $25,000 for emotional suffering and $9,000 for economic damages, and attorney’s fees, said Untalan’s attorney Christoph Nettesheim.

A local resource for elderly victims is the Ventura County Financial Abuse Specialist Team (FAST). They can be reached at (805) 407-5886 or FASTofVC@gmail.com.

Read the original article in the Thousand Oaks Acorn.

Multi-Agency Task Force Arrests Five in Orange County Condo Real Estate Fraud

January 18th, 2013 at 11:51am

Special agents with the FBI, the Federal Housing Finance Agency’s Office of Inspector General (HUD-OIG), and IRS-Criminal Investigation arrested five people who were alleged to have orchestrated a “builder bailout” scam involving over 100 condominium properties around the country after a federal indictment charged them with various counts of bank fraud and wire fraud.

According to an FBI press release, the scheme, which was operated out of Excel Investments and related companies that were based in Irvine and then Santa Ana, allegedly targeted new condominium developments which the defendants identified the builders as having trouble selling the units. The defendants entered into agreements with the builders, whose project were located in California, Arizona and Florida, and agreed to buy the units in exchange for large commissions. They recruited the straw buyers and fabricated the loan applications (loan fraud, mortgage fraud) by submitting altered or fraudulent W-2 forms, income and asset statements. The lenders were not aware of the excessive commissions because they were disguised as “marketing fees” which were concealed in the form of false HUD-1 Settlement statements by the defendants.

The five defendants who were arrested and taken into custody are as follows:

  • Aref Abaji, 31, of Aliso Viejo, a real estate agent
  • Maher Obagi, 26, of Huntington Beach, the brother of Aref Abaji
  • Jacqueline Burchell, 52, of Orange, an escrow agent
  • Mohamed Salah, 37, of Mission Viejo
  • Mohamed El Tahir, 35, of Glen Burnie, Maryland

Many of the loans obviously went into default and there were subsequent foreclosures. The taxpayer is the ultimate loser because of the $6.2 million in losses suffered, $2.37 million were loans backed by Federal Home Loan Mortgage Corporation (Freddie Mac) and the Federal National Mortgage Association (Fannie Mae).

Defendant Jackie Burchell was named in a previous post on the California Real Estate Fraud Report in June 2012 in which the FBI was investigating cases of short sale fraud in Los Angeles and Orange Counties.

Defendant Angie Cachu in California City Real Estate Fraud Sentenced

January 18th, 2013 at 11:21am

A complex real estate fraud scheme in California City that was investigated starting in November 2008 ended when the last defendant was sentenced to jail.

Angie Cachu, 45, received a one year sentence from Kern County Superior Court Judge Colette M. Humphrey along with five years’ felony probation. The prosecutor, Gordon Isen, was satisfied with the sentence and said Cachu deserved it because she had been uncooperative and lied aobut her active role in the conspiracy.

The case began when California City police received a report of an identity theft. The case expanded greatly and led investigators to a ring of conspirators who used straw buyers to purchase $2.7 million of newly-built homes using fraudulent loan applications (loan fraud, mortgage fraud, notary fraud) and inflated appraisals (appraisal fraud) in order to enrich themselves.

The other defendants pleaded no contest to various crimes and were sentenced as follows:

Appraiser Nathaniel Acree of Long Beach: two years in prison

Broker Jay Langner, of San Juan Capistrano: four years in prison. Jay Langner’s license with the California Department of Real Estate (DRE) is still in good standing as of this writing.

Khalid Malik Abdul Ali, of California City: five years in prison

Notary Elizabeth Torres, of Santa Ana: 10 days in jail.

Read the original article in the Bakersfield Californian.

California Homeowners’ Bill of Rights

January 3rd, 2013 at 8:53pm

This Bill comes too late to save many homeowners who were bent over the table by corrupt and inept tactics by the major banks, but it will help many homeowners and possibly save many more from improper, unethical foreclosure practices.

Here is the new law, as copied verbatim from the Office of the California Attorney General’s website:

The California Homeowner Bill of Rights became law on January 1, 2013 to ensure fair lending and borrowing practices for California homeowners.

The laws are designed to guarantee basic fairness and transparency for homeowners in the foreclosure process. Key provisions include:

  • Restriction on dual track foreclosure: Mortgage servicers are restricted from advancing the foreclosure process if the homeowner is working on securing a loan modification. When a homeowner completes an application for a loan modification, the foreclosure process is essentially paused until the complete application has been fully reviewed.
  • Guaranteed single point of contact: Homeowners are guaranteed a single point of contact as they navigate the system and try to keep their homes – a person or team at the bank who knows the facts of their case, has their paperwork and can get them a decision about their application for a loan modification.
  • Verification of documents: Lenders that record and file multiple unverified documents will be subject to a civil penalty of up to $7,500 per loan in an action brought by a civil prosecutor. Lenders who are in violation are also subject to enforcement by licensing agencies, including the Department of Corporations, the Department of Real Estate and the Department of Financial Institutions.
  • Enforceability: Borrowers will have authority to seek redress of “material” violations of the new foreclosure process protections. Injunctive relief will be available prior to a foreclosure sale and recovery of damages will be available following a sale. (AB 278, SB 900)
  • Tenant rights: Purchasers of foreclosed homes are required to give tenants at least 90 days before starting eviction proceedings. If the tenant has a fixed-term lease entered into before transfer of title at the foreclosure sale, the owner must honor the lease unless the owner can prove that exceptions intended to prevent fraudulent leases apply. (AB 2610)
  • Tools to prosecute mortgage fraud: The statute of limitations to prosecute mortgage-related crimes is extended from one to three years, allowing the Attorney General’s office to investigate and prosecute complex mortgage fraud crimes. In addition, the Attorney General’s office can use a statewide grand jury to investigate and indict the perpetrators of financial crimes involving victims in multiple counties.
    (AB 1950, SB 1474)
  • Tools to curb blight: Local governments and receivers have additional tools to fight blight caused by multiple vacant homes in their neighborhoods, from more time to allow homeowners to remedy code violations to a means to compel the owners of foreclosed property to pay for upkeep.
    (AB 2314)

The California Homeowner Bill of Rights marked the third step in Attorney General Harris’ response to the state’s foreclosure and mortgage crisis. The Mortgage Fraud Strike Force was created in May 2011 to investigate and prosecute misconduct at all stages of the mortgage process. In February 2012, Attorney General Harris secured a commitment from the nation’s five largest banks for up to $18 billion for California borrowers.

Real Estate Agent Surrenders His License for Short Sale Fraud

January 3rd, 2013 at 8:39pm

In the Fall 2012 edition of its Real Estate Bulletin, the California Department of Real Estate (DRE) writes of an agent who lost his license as a result of extorting a pittance of a kickback from an unwilling buyer in a short sale. The agent, unsatisfied with the 7% gross commission limit agreed to in his listing agreements, created an addendum which remained undisclosed to the sellers and their lenders; just the buyers, the purpose of which was to extract an additional 1% payable to his Nevada corporation for “negotiating” the short sale.

Click here to read the published article by the DRE, which does not name the Realtor®.

Inquiring minds, of course, wanted to know who the Realtor® was who pleaded guilty to two counts of grand theft: one count for each buyer he defrauded in two home short sales, a novel form of short sale fraud. So, without further delay, here are the details and a link at the bottom to the administrative Accusation filed on October 5, 2010 against the now-formerly licensed real estate agent:

In October 2008, real estate agent Matthew Wayne Stewart took a listing agreement from Eric and Julie Harvey on behalf of his brokerage Dance Hall Investors to sell their home located in Auburn, California. As the current value of their homes was insufficient to cover the  $578,574.24 owed by the Harveys on both of their loans as well as property taxes owed, it was necessary to obtain the permission of J.P. Morgan Chase Bank in order to conduct a short sale.

On May 4, 2009, buyers Tom and Leslie Daley submitted an offer to purchase the Harvey’s property for $665,000 through their agent John Renwick. The offer was accepted by the sellers, but on May 22, Stewart submitted a “S S Buyer Fee Agreement,” which, according to the Accusation, was done with the “approval or ratification” of Wayne Thomas Hall, the designated broker for Dance Hall Investors. This Fee Agreement required the buyers to accept a 3% “seller’s credit” to the buyers, which would then be paid to Pardus Ventures, Inc., a Las Vegas corporation owned by Matthew Wayne Stewart for the purposes of paying Pardus for “negotiating” the short sale with the lender. The Daleys were told that their offer would not be submitted to Chase if they did not sign the  “S S Buyer Fee Agreement,” which they subsequently did in order to purchase the home. They Harveys were never told or made aware of this ex-post document and that Stewart’s compensation would exceed the maximum 7% called for in the listing agreement they had executed with him seven months prior.

Having successfully closed one fraudulent short sale, Stewart repeated his scheme in May 2009. This time the sellers were identified as “Morrow” and their property was located in Folsom, California. Stewart not only represented the Morrows, he was a dual agent acting for the buyer named Sadiq Mohuiddin and the lenders were Aurora (1st lien) and Bank of America (2nd lien). As with the Auburn property, the buyer was presented with a “S S Buyer Fee Agreement,” which he was told was not negotiable if he wanted to purchase the property. The Morrows, like the Harveys, were unaware of this document and that their agent would “earn” fees greater than the 7% indicated in their listing agreement with him through his employing brokerage Riverside Corporation and its designated officer Rory Lee Hoelker.

Key to each Cause of Action articulated in the Accusation was that Pardus Ventures and Matthew Wayne Stewart were one and the same, a fact which Stewart never to disclosed to the buyers to each transaction.

Matthew Wayne Stewart pleaded guilty on August 18, 2012 to two counts of grand theft and one count of conspiracy to commit grand theft. His sentence was to spend 90 days in jail (that’s all for short sale fraud?), pay restitution of $25,000 (what, no penalty?), surrender his license and be placed on formal probation for three years following his 90 day sentence.

On October 12, 2011, Dance Hall Investors, Inc. and Wayne Thomas Hall signed a stipulation that both would accept 60 day suspensions for their roles in this case.

On March 27, 2012, the real estate licenses for both Riverside Corporation and Rory Lee Hoelker were changed to restricted status, also by stipulation. Click here to read the associated filings.

Click here for a link to the Accusation on the DRE’s website.

Another Reason Los Angeles is Broke: Appraisal Fraud Inside the County Assessor’s Office

January 3rd, 2013 at 12:36pm

Assessing property taxes accurately is essential to local municipalities being able to plan their budgets into the future.

Short sale fraud is one means by which government is robbed of revenues to which it is entitled.

Now, public employees whose salaries and generous pensions are paid for by taxpayers have invented another way to steal from taxpayers: appraisal fraud.

Scott Schenter, a property appraiser for the Los Angeles County Appraiser’s Office,  was the lowest man on the totem pole arrested in a large-scale public corruption scandal in that office. He has pleaded not guilty to the 60 felony counts with which he has been charged and is probably hoping for the best by squealing to the L.A. District Attorney’s Office against his former boss County Assessor John Noguez, Deputy Assessor Mark McNeil and private tax consultant Ramin Salari. The three men have all been arrested and charged in the case and all have pleaded not guilty.

The L.A. County D.A.’s Office has charged all four with allegedly shaving hundreds of millions of dollars from high-priced properties owned by clients of Ramin Salari. Court records indicate that Scott Schenter, who performed many of the property appraisals, received at minimum $275,000 for his “work.”

According to an interview with Schenter (assuming it was with the L.A. Times) in 2012 this year, Schenter responded to John Noguez’ request to “look into” expensive Westside properties after the latter had campaign debt to pay off in 2010 after being elected for L.A. County Assessor. Schenter then reduced the values of the homes by a whopping $172 million.

The scheme fell apart when Schenter’s supervisor in the Culver City office of the County Assessor discovered the lowered appraisal values.

The Los Angeles Times reported that its review of Schenter’s County emails from 2004 to 2011 following a public records request, showed that most of those emails were not related to his work for the County. As a taxpayer, I think an audit of how Schenter and possibly other County Assessor employees were spending significant amounts of their time on private business that “somehow” escaped the attention of their supervisors, is in order.

The LA Weekly has followed this story closely and published a number of articles.

Studio City Man Indicted for Real Estate Investment Fraud

January 3rd, 2013 at 12:00pm

David Williams, a San Fernando Valley businessman who operated three businesses in Studio City, was arrested and arraigned on federal charges December 20, 2012 following a 10-count indictment by a grand jury. The charges against Williams, 52, include eight counts of wire fraud, and two counts of tax evasion and are for allegedly running a fraudulent real estate investment program that cost the investors more than $3.75 million.

David Williams is a licensed securities dealer and investment advisor. The names of his three businesses are WFG Holdings, Inc., Williams Financial Group, LLC, and Sherwood Secured Investment Fund, LLC (SSIF). The charges arise out of what federal authorities allege was a private placement offering, in which Williams was to use the investment money via SSIF to purchase real estate primarily and less than 10 percent in non-real estate products.

The indictment charges that instead of investing as promised, David Williams used more than 10 percent of the SSIF funds for non-real estate related business during the period July 2007 and March 2008. These included $896,000 for business expenses incurred by his broker-dealer firm, Morgan Peabody, as well as $569,000 to lease with an option to buy his personal residence; $173,000 for construction and furnishings in his personal residence; $75,000 for clothing and jewelry; $69,000 for family travel; and $35,000 for private school tuition for his children.

Wire fraud charges carry steep sentences if the defendant is convicted – up to 20 years per count – and the penalty for a conviction for tax fraud can be as much as 10 years per count.

Read the original article in the San Fernando Sun.

© 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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