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Archive for March, 2014

San Diego Couple Sentenced for Mortgage Fraud

March 28th, 2014 at 10:12am

A married couple who worked in the loan industry received sentences of three years and five months for participating in a multimillion dollar mortgage fraud.

Eric Elegado and Charmagne Elegado pleaded guilty in October 2013 to conspiracy to commit wire fraud in a mortgage sche. The Elegados, both 49 and well-known in the Filipino community were very successful in San Diego real estate.  Eric was on the flamboyant side, putting his face on bus benches and billboards and parking Bentleys, Ferraris and Rolls Royce cars he owned outside his real estate seminars.

According to the prosecution, the Elegado’s crimes occurred from  December 2005 to February 2007, when Charmagne was working for New Century Mortgage. New Century Mortgage, based in Irvine, was considered by some experts to be the Ground Zero for the housing bubble, with its novel subprime loans, aka “liar’s loans”, where borrowers could get a mortgage on stated income, meaning no documentation was required. The prosecution had contended that not only had the couple procured loans for unqualified buyers, they also obtained some mortgages for the borrowers that were higher than the actual price of the homes. The excess was skimmed and then run through shell corporations.

The couple’s defense was that they were just trying to help the borrowers buy homes.

According to the FBI, the couple earned $3.5 million on over 100 fraudulent loan transactions and the losses to lenders amounted to approximately $10.4 million.

Read the original article in UT-San Diego.


Irvine Man Sentenced to Prison for Southern California Mortgage Fraud

March 28th, 2014 at 9:52am

A Southern California man has been sentenced to prison for his role in a mortgage fraud scheme that involved residential properties in Rocklin, Roseville and San Clemente.

Alexander Romaniolis, 48, an Irvine man, has been sentenced to 30 months in prison by U.S. District Judge Troy R. Nunley to 30 months in prison. Judge Nunley also fined Romaniolis $17,500 and ordered him to forfeit over $400,000 for his part in a mortgage fraud case.

According to the prosecution, Romaniolis was responsible for recruiting straw buyers to purchase homes in Rocklin, Roseville and San Clemente. His role in the fraud was to help the straw buyers with falsifying their income, asset and employment information that was submitted to lenders. The losses to the lenders was over $2 million, since all the properties were eventually foreclosed.

The case was investigated by the FBI and California Department of Justice.

Read the original article in the Sacramento Bee.


Bakersfield Man Pleads Guilty in Real Estate Development Fraud Case

March 28th, 2014 at 9:37am

 U.S. Attorney Benjamin Wagner announced that Antonio Perez-Marcial, 41, a Bakersfield man, has entered guilty pleas to conspiracy to commit bank fraud, mail fraud, and wire fraud in a large mortgage fraud conspiracy case in Bakersfield.

In this case, Perez-Marcial admitted conspiring with other persons to procure straw buyers to purchase Bakersfield homes developed by Jara Brothers Investments and Pershing Partners LLC. Jara Brothers is owned by Eliseo Jara and Sergio Jara and Pershing Partners is owned by Lucia Chavez, all of whom are defendants who have pleaded not guilty.

According to Perez-Marcial, he was paid a “consulting fee” of $20,000 to $30,000 for finding the straw buyers and funding their down-payments, which, along with false income and asset information, was used to obtain loans. He admitted his role cost the lenders approximately $3,455,250 in losses.

Read the original article in the Central Valley Business Times.


Crisp & Cole Defendant Gets 6+ Year Prison Sentence

March 28th, 2014 at 9:20am

Jayson Peter Costa, 41, of Bakersfield, who was a loan officer in the largest mortgage fraud prosecution in Bakersfield, was sentenced to 78 months in federal prison.

Costa worked for David Crisp and Carl Cole at their Tower Lending mortgage brokerage. He admitted in his plea agreement  that he submitted fraudulent loan applications for his co-conspirators and straw buyers and for himself acting as a straw buyer. He also admitted that the frauds he committed resulted in losses to the lenders of at least $7,580,019.

The mortgage fraud conspiracy operated from January 2004 to September 2007.

You can read many articles about the Crisp & Cole mortgage fraud conspiracy, which was prosecuted by the office of U.S. Attorney Benjamin Wagner, by searching for them on the California Real Estate Fraud Report.

Read the original article in the Central Valley Business Times.

OIG Says U.S. DOJ, FBI Put Mortgage Fraud at Low Priority

March 19th, 2014 at 6:20pm

The Office of the Inspector General has released a report charging that the U.S. Justice Department did not match its public statements that mortgage fraud was a priority with actual action, something millions of Americans have figured out on their own.

In its report, it said “The OIG further found significant deficiencies in DOJ’s ability to report accurately on its mortgage fraud efforts.”

The OIG found that the FBI, which received $196 million in taxpayer money from 2009 through 2011, ranked mortgage fraud as the lowest criminal threat in its lowest crime category. This occurred at the same time that mortgage servicing companies were committing massive fraud against homeowners in distress by implementing “robo-signing” to hasten foreclosures, something for which, to my knowledge, there have been no criminal convictions brought by the U.S. DOJ.

In addition, the OIG said it could not accurately verify the scope of the U.S. DOJ’s prosecutorial efforts against mortgage fraud because it was not provided with sufficient data.

“DOJ could not provide readily verifiable data related to its criminal enforcement efforts because of underreporting and misclassification of mortgage fraud cases in the case management system used by the Executive Office for United States Attorneys (EOUSA),” the report reads.

According to an article published on CNBC, “One glaring example of inaccurate reporting was cited by the OIG. Specifically, it says, the Justice Department inflated the number of criminal defendants by five-fold during an October 2012 highly publicized press conference. The event was held to tout the success of the Distressed Homeowners Initiative, a mortgage fraud program involving the Justice Department and the Financial Fraud Enforcement Task Force. It took a year for the Justice Department to correct the mistake.”

An August 2013 article in Mother Jones reports the same self-serving inflating by U.S. DOJ.

In its defense, Department of Justice spokesperson Ellen Canale said: “The facts regarding the department’s work on mortgage fraud tell a much different story than this report. In the time period in question, the number of mortgage fraud indictments nearly doubled, and the number of convictions rose by more than 100 percent. As the report itself notes, even at a time of constrained budget resources, the department has dedicated significant manpower and funding to combatting mortgage fraud.”

Note: if mortgage fraud itself rose 10,000% during the indicated time period, how meaningful is it to say that convictions rose 100%?

Petaluma Man Pleads No Contest in Ponzi Scheme, Elder Financial Fraud

March 19th, 2014 at 6:01pm

A Petaluma man was pleading no contest in Sonoma County Superior Court Wednesday morning to bilking dozens of investors of $20 million through a Ponzi scheme.

Aldo Baccala, 73, a former real estate agent, has pleaded no contest to 141 charges of making false statements to sell securities, grand theft, and elder financial abuse and dependent financial abuse. He entered his plea in front of Sonoma County Superior Court Judge Gary Medvigy, who indicated he would sentence Baccala to 20 years or less of prison time in exchange for making his plea.

Baccala was charged with defrauding over 50 investors, many of them elderly, of over $20 million in a Ponzi scheme that promised returns for investing in assisted living facilities, a car wash and other businesses in California, South Carolina and other states. His company was called Baccala Realty and was based in Petaluma.

Instead of investing his victims’ money as promised he spent it on risky stock market investments, including covering margin calls.

Read the original article in

JPMorgan Chase Whistleblower Gets $63.9 Million

March 19th, 2014 at 5:51pm

Keith Edwards, a former assistant vice president supervising a government insuring unit for JPMorgan, will be paid $63.9 million for providing the information that led to the banking giant’s agreement to pay the U.S. government $614 million. JPMorgan also promised (don’t hold your breath) to change the procedures and oversight that resulted in it being charged with defrauding the government into insuring toxic home loans.

The settlement was filed with the U.S. District Court in Manhattan and besides indicating the amount paid to Edwards, included an admission by JPMorganthat for over a decade it had submitted thousands of mortgages to be insured with the FHA and VA that did not qualify for guarantees by the government. The bank also admitted that when its own internal auditing turned up these problems, it did not inform the agencies.

Keith Edwards originally filed his lawsuit in January 2013 under the False Claims Act. His attorney, David Wasinger, also represented Edward O’Donnell, whose tips regarding defective mortgages by Countrywide led to a verdict against Bank of America in October 2013, for which the government is seeking $2.1 billion in penalties.

The case is U.S. ex rel. Edwards v. JPMorgan Chase Bank NA et al, U.S. District Court, Southern District of New York, No. 13-00220.

Read the original article in MSN Money.

Tustin Woman Sentenced to Prison for Defrauding San Diego Nuns

March 19th, 2014 at 5:32pm

An Orange County woman who was found guilty in November 2012 of cheating a group of San Diego nuns out of $285,000 has been sentenced to three years in federal prison and ordered to repay the nuns.

Linda Rose Gagnon, 59, of Tustin had approached the nuns from the U.S. Province of the Religious of Jesus and Mary Inc. about purchasing the retirement home in San Diego. After she convinced them to give her the $285,000 she spent the money on herself instead of making the purchase.

Assistant U.S. Attorney Rob Keenan said Gagnon does not possess either a real estate salesperson’s or broker’s license.

Gagnon must surrender on or before June 13 to begin serving her 37-month sentence.

There are two earlier postings on the California Real Estate Fraud Report about this case, which you can find by using the Search feature on the left side of the blog.

Read the original article in San Diego 6.

Two Defendants Plead Guilty in Loomis Mortgage Fraud, Ponzi Case

March 19th, 2014 at 5:20pm

United States Attorney Benjamin B. Wagner announced that both John Hagener, 77, of Granite Bay, and Dawn C. Powers, 43, of Lincoln, have pleaded guilty to conspiracy charges.

John Hagener is the father-in-law of Lawrence Lee Loomis, aka Lawrence Leland Loomis. Loomis and others were charged in a federal indictment with operating a Ponzi scheme and mortgage fraud conspiracy back in 2007 that relieved over 100 people of more than $7 million of their investment money. Loomis’ investment business was called the Naras Funds.

Lawrence Loomis and three of his co-defendants are set for trial in October 2014 in front of Judge John A. Mendez in Sacramento. Mendez will be the sentencing judge this June for John Hagenerr and Dawn Powers.

Read the original article in the Imperial Valley News.

Bank of America Employee Accused of Participating in Short Sale Fraud

March 12th, 2014 at 9:38am

Kevin Lauricella, 28, a former Bank of America employee, has pleaded not guilty after being accused of falsifying bank records, according to a 28-count grand jury indictment.

Bank of America fired Lauricella in 2011 after learning that he had allegedly taken bribes of more than $1 million to approve short sales in Southern California at below-market values.

Read the original article in the Los Angeles Times.


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