California Real Estate Fraud Report

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Archive for July, 2013

Karma Time for Real Estate Agent Who Ran Ponzi Scheme

July 31st, 2013 at 6:14pm

Celia Gallardo, the real estate agent from the North Hills section of the San Fernando Valley who pleaded guilty to wire fraud in a Ponzi scheme, is going to prison.

United States District Court Judge Dean D. Pregerson sentenced Gallardo, 42, to five years in federal prison for defrauding her victims out of over $2 million. Judge Pregerson also ordered her to return almost $2.4 million to them.

Gallardo’s businesses were Gold Feather Realty, Gold Credit Investments, Gallardo Property Management and Casa Bella Mortgage. She solicited persons to invest in her real estate program but just used the monies she received to pay earlier investors.

Although Celia Gallardo’s real estate license with the Bureau of Real Estate is still active, the BRE has filed a disciplinary action against her.

Read the original article in the San Fernando Valley Business Journal.

Four Orange County Men Get Jail Time for Loan Modification Fraud

July 31st, 2013 at 5:57pm

The Orange County District Attorney’s Office announced that four men who were prosecuted for operating a phony loan modification business have been sentenced to jail time and probation.

1. Justin Dennis Koelle, 23, of Costa Mesa – nine months in jail and five years of formal probation.

2. Dominic Adam Nolan, 32, of Irvine – six months in jail and five years of formal probation.

3. Jacob John Cunningham, 26, of Irvine – eight months in jail and five years formal probation.

4. John D. Silva, 28, of Irvine – eight months in jail and five years formal probation.

Andrew Michael Phalen, 26, of Mission Viejo, skipped trial and pleaded guilty in June 2012. His sentence was one year in jail and five years of formal probation.

According to prosecutors, the defendants sent out letters to borrowers that appeared to come from their lenders, offering loan modifications. This occured from January 2009 to March 2012.

No loan modifications were ever performed but the homeowners who were duped paid up to $4,600 to the fraudsters.

Read the original article in the Daily Pilot.

Heritage Oaks Bank Settles with Investors on Paso Robles Development

July 31st, 2013 at 5:26pm

Plaintiffs who claimed in a civil lawsuit that Heritage Oaks Bank, Stewart Title and Cuesta Title knew that they were involved in a fraudulent scheme operated by Hurst Financial Corp., its owner James Hurst Miller, and developer Kelly Gearhart have reached a settlement with Heritage Oaks Bank.

The case against the bank and the two title companies was set to be heard in San Luis Obispo Superior Court next week. James Neudecker, attorney for Heritage Oaks Bank, did not disclose the settlement terms. The 500 investors/plaintiffs claimed that the bank was an active participant in the fraud – a Ponzi scheme – because it was “fully aware of, and assisted in, the fraudulent re-conveyances of the deeds of trust by Hurst.” They further claimed that “Gearhart helped Miller solicit about $73 million from private investors for 25 separate real estate developments, all of which eventually failed,” according to the court documents.

Heritage Oaks had loaned Kelly Gearhart approximately $1.5 million to develop the Vista Del Hombre project in Paso Robles.

Both Gearhart and Miller were charged criminally. Kelly Gearhart has been indicted on 16 counts of fraud and money laundering. James Hurst Miller has already pleaded guilty to four counts of fraud and money laundering.

Read the original article in the San Luis Obispo Tribune

Eight Arrested in Ventura County Fraudulent Mortgage Brokerage

July 31st, 2013 at 4:52pm

The following is a joint press release from the U.S. Attorney for the Central District of California and the Ventura County District Attorney’s Office:

   Federal and local authorities this morning arrested eight individuals linked to a mortgage fraud scheme that filed loan applications on behalf of lower-income, primarily Spanish-speaking individuals, generating substantial loan fees and commissions and causing lending institutions to suffer millions of dollars in losses when homes went into foreclosure.
   This morning’s arrests are the result of a grand jury indictment that charges the eight defendants in a conspiracy to commit bank fraud and wire fraud. The investigation, which was started by the Ventura County District Attorney’s Office, determined that members of the scheme generated dozens of mortgage loans for unqualified borrowers. The indictment specifically outlines a series of allegedly fraudulent loans worth more than $11 million.
   The federal investigation that resulted in the indictment unsealed this morning was conducted by the Federal Bureau of Investigation; the Federal Housing Finance Agency, Office of Inspector General; the U.S. Department of Housing and Urban Development, Office of the Inspector General; and the United States Secret Service.
   The indictment details a scheme led by Camarillo resident Jose Garcia and run out of an Oxnard-based company called New Concepts Home Loans (NCHL), where members of the alleged conspiracy prepared mortgage applications that contained false information about borrowers’ income, employment and assets. As part of the scheme, according to the indictment, Jose Garcia’s wife and others obtained bogus “CPA letters” from tax preparers that falsely stated the mortgage applicants were engaged in a particular business.
   The defendants in these cases generated huge commissions and fees through the mortgage application process – typically at least $10,000 per mortgage.
   The victim lenders who suffered losses as a result of the alleged scheme include Washington Mutual Bank, Wells Fargo Bank, Countrywide Bank, IndyMac Bank, SunTrust Bank, World Savings Bank and JPMorgan Chase Bank.
   “Jose Garcia and his cohorts are alleged to have lured unsophisticated borrowers with promises of putting them into homes they clearly could not afford,” said United States Attorney André
Birotte Jr. “But this American dream quickly turned into a nightmare for these borrowers when they realized they could not afford their new homes. All the while, real estate professionals like
Jose Garcia reaped huge profits from the fraudulent loans that they brokered.”
   District Attorney Gregory D. Totten stated: “These arrests for serious federal crimes illustrate the tenacity of state and federal law enforcement to continue our years-long effort to
bring to justice those who perpetrated real estate fraud-based crimes against unsuspecting, often monolingual, victims in our communities.”
   FBI Assistant Director in Charge Bill L. Lewis commented: “Mr. Garcia allegedly directed his workforce, including unlicensed individuals acting as realtors, to peddle the dream
of home ownership in the poorest neighborhoods of Oxnard, where they easily found people eager to buy. This case and others were made based on the cooperative relationship among
federal and local investigators working as a team to combat mortgage fraud in Ventura County.”

   The indictment charges:
Jose Bautista Garcia, 46, of Camarillo, a real estate broker who in addition to NCHL owned Century 21 Premier Realty, who allegedly directed agents to go door-to-door and “cold call” unqualified borrowers in Ventura County;
Lucy Ann Garcia, Jose Garcia’s wife, 46, also of Camarillo, who co-owned NCHL;
Jose Fernando Murguia, 47, of Oxnard, a loan officer at NCHL;
Sesilia Garcia, one of Jose Garcia’s sisters, 30, of Oxnard, a loan officer at NCHL;
Lili Ayala Hernandez, 41, of Oxnard, a loan officer at NCHL;
Lidubina “Lido” Mendoza Perez, 41, of Moreno Valley, a loan officer who worked at NCHL’s office in Bakersfield;
• Gregg Scott Quinn, 40, of Camarillo, a loan officer at NCHL; and
• Cesar Rodriguez Azamar, 36, of Santa Paula, an employee of NCHL.

   All of the defendants in this case face a statutory maximum sentence of 30 years in prison if they are convicted of the conspiracy count in the indictment.
   An indictment contains allegations that a defendant has committed a crime. Every defendant is presumed innocent until and unless proven guilty beyond a reasonable doubt.
   The defendants arrested today will begin making their initial court appearances this afternoon in United States District Court in Los Angeles.
   The investigation was conducted by the Federal Bureau of Investigation; the Ventura County District Attorney’s Bureau of Investigation; the Federal Housing Finance Agency, Office of Inspector General; the U.S. Department of Housing and Urban Development, Office of the Inspector General; and the United States Secret Service.

USAO News Release No. 13-098

Alameda County Real Estate Agent Arrested, Charged with Defrauding Couple

July 31st, 2013 at 3:50pm

A long-time estate agent is in hot water with authorities for allegedly defrauding a couple out of $270,000 in a real estate fraud scheme.

Judy T. Gong, 53, was arrested and charged with two counts of grand theft by embezzlement, two counts of forgery, fraudulent filing of a tax return, failure to file a legitimate return, and perjury after a Lafayette couple filed a complaint with the Contra Costa District Attorney’s Office. After conducting their initial investigation the DA’s office contacted the state Franchise Tax Board, which initiated its own investigation.

Gong is accused of twice convincing the couple to take out a home equity line of credit (HELOC), from which she then allegedly siphoned the funds after forging their names on bank documents.

 The Franchise Tax Board’s investigation found that Gong underreported her income by over $500,000 in 2008 and failed to report $418,000 of bank deposits in 2009.

Contra Costa District Attorney Mark A. Peterson was quoted in his office’s press release as saying, “This office will prosecute anyone who robs victims of their hard-earned money in a real estate fraud scheme. Swindlers and con-artists will not be tolerated and will continue to be prosecuted to the fullest extent of the law.”

Read the original article in the Mercury News.

 

42-Year Prison Sentence for James Koenig for Operating Ponzi Scheme

July 29th, 2013 at 1:09pm

James Koenig, 60, a Redding man who owned Assent Real Estate Corporation (AREI), has been sentenced to 42 years in prison for operating a Ponzi scheme, according to Attorney General Kamala D. Harris. AG Harris’ press release states that “more than 400 investors, most of them elderly,” were defrauded out of over $90 million.

Koenig, who had pleaded not guilty, was convicted last May of 35 felony counts, including conspiracy, use of a scheme to defraud in connection with sales of securities, sales of securities by means of false statements, and residential burglary relating to the sales of fraudulent investments. The jury also found special enhancements for “great takings” because of the large amount of loss involved.

AREI’s business was the acquisition, management and resale of commercial property and elder care facilities.

Gary Armitage, one of Koenig’s co-defendants, was sentenced last April to 10 years in prison after pleading no contest to four felony charges of conspiracy and securities fraud. You can find many posts about this case on the California Real Estate Fraud Report by searching his name using the tool bar on the left side of this blog.

In his dealings with his investor-victims, Koenig did not tell them that he had a previous federal conviction for mail fraud or that AREI was in financial trouble. Many were elderly persons (elder financial fraud, elder financial abuse) who gave Koenig their life’s savings and home equity, causing devastating losses to those victims.

James Koenig, as was Gary Armitage, was sentenced in Shasta County Superior Court, where he will later face a restitution hearing.

Appraiser Kyle Grasso’s Conviction in Beverly Hills Mortgage Fraud Case Upheld

July 29th, 2013 at 12:02pm

A three-judge panel of the U.S. 9th Circuit Court of Appeals in Pasadena has refused to overturn the convictions of a real estate appraiser for his role in a multimillion-dollar Westside of Los Angeles mortgage fraud ring.

Kyle Grasso was convicted in 2009 of multiple charges of bank fraud, conspiracy, money laundering and loan fraud in a case that prosecutors said cost lenders over $40 million from loans of over $142 million. Grasso’s sentence was one year in federal prison and five years of supervised release. He was also ordered to pay a share of $13 million in restitution.

Rejecting Grasso’s claim that the government presented insufficient evidence to prove money laundering, Judge Sandra S. Ikuta, writing the opinion for the federal appellate panel, said that “We conclude that the evidence (presented) at trial, taken in the light most favorable to the government, was adequate to enable a rational trier of fact to find the essential elements of each conviction.”

There are numerous articles in the California Real Estate Fraud Report regarding this fascinating true story of greed and corruption, which involved, real estate agents, developers, appraisers and loan processors. Use the search bar at the left of this blog to find and read those articles.

Read the original article in the Beverly Hills Courier. The BH Courier also has earlier articles on this topic.

Calif. Assemblyman Ed Chau to Hold Meeting about Elder Financial Abuse on August 1

July 29th, 2013 at 11:28am

On August 1, the Arcadia Chamber of Commerce will hold a Government Affairs Forum.

49th District Assemblyman Ed Chau will be speaking about AB 477, the legislation he introduced to fight financial elder abuse. AB 477  adds notaries public to the list of persons mandated to report possible elder financial abuse and fraud. Reporting parties may also make a claim to the California Victim Compensation and Government Claims Board for reasonable attorney’s fees for any costs they incurred when filing their report.

The public is invited to attend and ask questions of Assemblyman Chau.

For more information or to RSVP, please call the chamber 626-447-2159 or info@arcadiacachamber.org.

The chamber is located at 388 W. Huntington Dr., Arcadia 91007.

Read the original article in the Pasadena Star News.

Rancho Santa Fe Broker Arrested for Mortgage Fraud in San Diego Area

July 29th, 2013 at 11:14am

A mortgage broker has been arrested and charged by the U.S. Attorney’s Office in San Diego for allegedly operating a scheme that defrauded lenders, including Fannie Mae and Freddie Mac.

Donald V. Totten, 56, now a resident of Oakland, operated Integrated Home Loans, Integrated Lending, Money World, Island Financial and Little Angels Living Trust.

According to prosecutors, between 2002 and 2007 Donald Totten allegedly received $2.2 million in loans by falsifying the loan applicatons of a straw buyer, including inflating income and assets. He used the same straw buyer to purchase four homes simultaneously, so that each lender was not aware that the buyer was purchasing multiple properties. After the escrows closed, he then allegedly had the straw buyer sign over the deeds into a trust that he controlled. All four properties eventually were foreclosed, causing losses to the lenders.

This case was investigated jointly by the FBI, Internal Revenue Service and Federal Housing Finance Agency / Office of Inspector General.

Read the original article in the Rancho Santa Fe Review.

California Man Sentenced to Prison for Double-Escrow Fraud in Las Vegas

July 29th, 2013 at 9:59am

A California man who operated what authorities said was a double-escrow fraud scheme has been sentenced to 5 1/2 years in federal prison after pleading guilty to commit wire fraud.

George Anderson, 55, of Copperopolis, California, admitted he sold his Henderson and Las Vegas properties to straw buyers and recruited a co-defendant Andrew Swan to buy the houses back in exchange for a kick-back.

U.S. Attorney Daniel Bogden said that loan applications to Anderson Financial Group and Swan’s firm Creative Capital Group contained deliberately false information in order to receive funding for the loans (mortgage fraud).

Swan, 38, pleaded guilty in January 2013 to wire fraud and conspiracy and was sentenced this June to 2 1/2 years in prison.

Anderson and Swan were ordered by U.S. District Judge Roger Hunt to provide resitution ot $3.5 million to the lenders they defrauded.

Read the original article in Businessweek.

© 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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