California Real Estate Fraud Report

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Archive for August, 2014

Sacramento Jury Acquits Four in Unique Mortgage Fraud Defense

August 29th, 2014 at 11:18am

Four people who were charged in a mortgage fraud case were acquitted at trial after defense attorneys convinced jurors that the lenders were not victims and that the loans would have been approved anyway.

It’s a huge loss for U.S. Attorney Benjamin Wagner, who is not accustomed to losing prosecutions in the U.S. Attorney’s Office for the Eastern District of California.

The defendants – Yevgenity Charikov, Vitaliy Tuzman, Nadia Talybov and Juliet Romanishin – had been accused of using straw buyers to purchase properties and then reselling them to different straw buyers at inflated prices using fraudulent loan documentation. Defense counsel had successfully argued via expert witness William Black that it was the “elite bankers” who were responsible for the mortgage crisis.

Read the original article in the Sacramento Bee.

Addendum to this posting, which I cross-posted on LinkedIn under my account:

There is a lot of “buzz” about the acquittal of 4 people of mortgage fraud in Sacramento. The successful defense was that the banks underwrote loans they knew were probably fraudulent; hence, the banks aren’t victims. This is guaranteed to be a new defense in almost every future prosecution of mortgage fraud. What is left out in this analysis is that almost all of the no doc, subprime loans were sold off to Fannie/Freddie. They banks made their money upfront from points and fees, but the GSEs and taxpayers were left with the losses.


Sacramento Attorney Arraigned on Financial Elder Abuse Charges

August 29th, 2014 at 10:59am

Delbert Joe Modlin, 63, has been practicing law since 1987. Earlier this week, he was arraigned on felony charges of financial elder abuse, grand theft and securities fraud in the case of a 90-year old and and his 66-year old daughter.

Court papers show that Modlin became their estate planner last year. He allegedly told the father to liquidate all his investments and convinced the daughter to invest $120,000 in a new cat litter box Modlin allegedly had invented.

What he didn’t tell either of them was that he is awaiting felony charges in Placer County after being accused of defrauding an elderly Auburn couple and selling their real estate and other assets without their approval. Modlin also didn’t disclose he had a a “severe gambling problem”  and that in 2004 and 2012 he had filed bankruptcy, information that an investigator from the State had determined a “reasonable prudent investor would consider significant.”

The criminal cases were filed by he California Attorney General’s Bureau of Medi-Cal Fraud and Elder Abuse and are being prosecuted by Steven Muni.

Read the original article in the Sacramento Bee.



Redux on Bank of America $16.65 Billion Settlement

August 29th, 2014 at 10:38am

Bank of America‘s historic settlement with the U.S. Department of Justice shows a pattern of misrepresentations by both itself and the predecessors it purchased, according to an article published in National Mortgage News.

The US DOJ released a Statement of Facts that showed Countrywide had a “Structure Loan Program” for loans that failed to meet its normal underwriting criteria. Loans referred to this department were subjected to looser “shadow guidelines” designed to be able to prove more loans.

Regarding Merrill Lynch‘s underwriting practices, “Due diligence providers conducting compliance and credit reviews found as much as 50% of loan samples were not compliant with laws and regulations or applicable underwriting guidelines, lacked the sufficient offsetting compensating factors, or had a loan file missing a key piece of documentation.”

Investors for the three lending institutions were never clearly informed that underwriting standards had changed dramatically, according to the Statement of Facts.

Read the earlier article on the settlement on the California Real Estate Fraud Report.

Countrywide’s Angelo Mozilo May Be Facing U.S. Lawsuit

August 22nd, 2014 at 9:45am

DS News (Default Servicing News) reports that former Countrywide Financial CEO and co-founder Angelo Mozilo may soon be on the receiving end of a civil lawsuit by the U.S. Attorney’s Office in Los Angeles.

Bloomberg also reports on the speculation and includes a video in which Nobel Laureate Robert Shiller and others are interviewed on StreetSmart about federal reserve policy and the civil lawsuit against Mozilo, who, according to compensation-research firm Equilar Inc., earned $535 billion between 1999 and 2008 and received another $4 billion from the sale of Countrywide to Bank of America in 2008.



US DOJ Indicts Five Men for Short Sale Fraud / Property Flipping Scheme

August 22nd, 2014 at 9:25am

United States Attorney Nicholas A. Klinefeldt announced the indictment of five people for bank fraud based on their participation in a fraudulent property flipping scheme. The defendants are Nathan Smith, Patrick Steven, Jason Springer, Rick Makohoniuk, and Jerod Hogan.

The indictment alleges that the defendants engaged in a scheme to defraud financial institutions from approximately March 2009 to March 2011, in a scheme involving approximately eighteen homes in and around Des Moines, Iowa, and a loss of approximately $400,000.

According to the indictment, Smith and Steven were property flippers who negotiated short sales with lenders on behalf of homeowners. The indictment alleges that, without the lenders’ knowledge, Smith and Steven also purchased the homes in the short sales, and that they and the other defendants deceived the lenders into believing that the price Smith and Steven paid in the short sale was the fair market value. In fact, according to the indictment, without the lenders’ knowledge, Smith and Steven immediately resold the homes for a profit. Springer, a Des Moines attorney, is alleged to have furthered the scheme by conducting the fraudulent real estate closings and collecting a commission for his work. Makohoniuk, a realtor, is alleged to have submitted false documents to a lender with respect to one of the homes involved in the scheme, and Hogan, a mortgage broker, is alleged to have provided Smith and Steven with false documents that were used to deceive lenders.

Steven, Springer, Makohoniuk, and Hogan were arraigned today in federal court, and the trial has been scheduled for September 29, 2014. Smith’s arraignment is scheduled for August 29, 2014.

The investigation was conducted by the Department of Housing and Urban Development – Office of Inspector General (HUD-OIG) and Federal Bureau of Investigation.

In accordance with the Iowa Rules of Professional Conduct, the public is reminded that an indictment is merely accusations, and that the defendants are presumed innocent until and unless proven guilty. Additionally, because this matter is pending in the United States District Court, the United States Attorney’s Office does not anticipate making any further comment or statement at this time.

Press Release

Bank of America Settles Mortgage Fraud Claims for $16.65 Billion

August 22nd, 2014 at 8:58am

Bank of America has agreed to pay $16.65 billion in a settlement with the U.S. Justice Department over its role in the sale of mortgage-backed securities in the run-up to the financial crisis.

The settlement, which includes BofA subsidiaries Countrywide Financial Corp. and Merrill Lynch, is the largest to-date having to do with the real estate market meltdown that cost many Americans their homes and jobs.

Important to the settlement is the admission by Bank of America that it and its subsidiaries made “serious misrepresentations” to the public about mortgages and mortgage-backed securities, according to York Attorney General Eric Schneiderman. New York will get $800 million, of which $300 million will be cash and $500 million in mortgage modifications, new loans, donations to communities, financing for affordable rental housing and funds to groups that provide legal, housing and community development programs.

According to the State of California Department of Justice website, California will get $300 million in damages, which will replenish the state’s pension funds, CalPERS and CalSTRS, for losses on investments in mortgage-backed securities of Bank of America and its affiliates. California is also guaranteed at least $500 million in consumer relief credits.

Read the original article in the Post-Standard.

Garden Grove Man Charged with Operating Fraudulent Loan Modification Company

August 15th, 2014 at 10:56am

Duy Khac Nguyen, 34, Garden Grove, has been charged with 37 felony counts of grand theft, five felony counts of theft from elder, including a sentencing enhancement for property loss over $65,000. The charges involve 42 alleged victims and $92,000 of their money in a loan modification fraud case.

The scheme Nguyen is alleged to have run operated only between February and July 2010. His loan modification company was called HAMP Resources, which he is accused of claiming falsely of having an association with the federal government’s HAMP program. Instead of offering loan modification services, prosecutors allege that Nguyen deposited the money from homeowners into his personal bank account and then moving out of the area.

He was apprehended  by the Riverside County Sheriff’s Department with assistance from the Garden Grove Police Department after United States Postal Inspection Service (USPIS) received complaints. USPIS along with the Special Inspector General for the Troubled Asset Relief Program (SIG-TARP) conducted the investigation.

“Nguyen is charged on 42 counts with swindling struggling homeowners, including the elderly, by falsely claiming that his company ‘HAMP Resources’ was part of the federal government,” said Christy Romero, Special Inspector General for SIGTARP. “He allegedly sold a money-backed guaranteed service to lower homeowners’ mortgage payments and interest rates under TARP’s housing program known as HAMP. He is alleged to have taken the money from his victims, without providing any service, then disconnecting his phone and shutting down his mailbox, website, and bank account while some of his victims lost their homes to foreclosure. SIGTARP and our law enforcement partners will aggressively investigate allegations of crime related to TARP.”

Loan modification scams are proliferating at a rapid pace,” said B. Bernard Ferguson, Inspector in Charge of the USPIS – Los Angeles Division. “The U.S. Postal Inspection Service is continuing to investigate and will pursue such criminal activity when the nation’s mail system is used for illegal or dangerous use.”

Senior Deputy District Attorney Pete Pierce of the Orange County District Attorney’s Major Fraud Unit is prosecuting this case.

Read the Press Release for this case.

Guilty Pleas in Santa Barbara County Loan Modification Prosecution

August 15th, 2014 at 10:39am

Santa Barbara County District Attorney Joyce E. Dudley announced guilty pleas in a case where the defendants promised to obtain loan modifications for struggling homeowners.

Ismael Cancinos, age 56, of Palmdale, CA pleaded guilty to 34 felony counts that included charges of first degree residential burglary, grand theft and fraudulent practices of a foreclosure consultant. Mercedes Alvarez, age 48 of Palmdale, CA, pleaded guilty to 7 felony charges that included fraudulent practices of a foreclosure consultant. She also admitted the special allegation of committing an aggravated white collar crime. They were ordered to pay full restitution to their victims and Mercedes Alvarez has been ordered to surrender her real estate license.

Read the original article in Santa Barbar Edhat.

Three People Charged in SoCal Short Sale Fraud Case

August 15th, 2014 at 10:28am

A common short sale scheme with a twist may land three people in a lot of trouble.

Prosecutors said Nelly Luz Rubiano, 57, of Ojai, and Orange County residents Sergio Sanchez Santibanez, 32, and Alejandra Rodriguez, 31, allegedly operated a foreclosure rescue program that may have incorporated short sale fraud into the business model.

The three worked for Foreclosure Legal Services in the city of Orange and were arrested on allegations they charged homeowners in distress upfront fees, which are illegal in California. They were alleged to have promised the homeowners to save their homes by offering to buy the homes in a short sale and then re-selling the properties to those homeowners at a discounted market value, courtesy of the lenders.

Prosecutors said that from 2011 to 2012, Rubiano, Santibanez and Rodriguez lured struggling homeowners in Ventura County with a promise to save their homes that were undergoing foreclosure. The three allegedly promised to buy the distressed properties in a short sale and said they would then sell the properties back to the homeowners at a reduced market value, prosecutors said.

Read the original article in the Ventura County Star.

U.S. Attorney Charges 3 Men in $18.5 Million Mortgage Modification Scheme

August 8th, 2014 at 9:17am

In an announcement made by Christy Romero, Special Inspector General for the Troubled Asset Relief Program (SIGTARP), and Preet Bharara, the U.S. Attorney for the Southern District of New York, three men have been arrested and charged in relation to what may be one of the largest mortgage modification schemes ever committed.

Charged with one count each of wire fraud and conspiracy to commit wire fraud are Ped Abghari, aka “Ted Allen”, 37, of Irvine, California; Dionysius Fiumano, aka “D”, 43, of Irvine, California; and Justin Romano, 40, of Blue Point, New York. The three are alleged to have taken up to $18.5 million from over 8,000 financially distressed homeowners in all 50 states by falsely promising them pre-approval for lower payments through the Home Affordable Modification Program (HAMP) and aggressive legal representation.

“This was all a purported ruse used to trick vulnerable homeowners into paying the defendants thousands of dollars in up-front fees for which zero meaningful work was ever actually done,” Romero said. “SIGTARP has aggressively pursued these allegations, working closely with Preet Bharara’s office, to protect homeowners in New York and across our nation from becoming victims of this crime and to bring perpetrators to justice.”

Read the original article in DSNews.

© 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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