Brian Roy Lozito, 51, Orange Park, Florida has been charged with conspiracy to commit wire fraud and 12 counts of wire fraud.

According to the indictment, Lozito owned and managed American Investigative Services (AIS). AIS purported to offer consumers mortgage auditing services in exchange for a fee. Lozito and his conspirators solicited customers nationwide through mailings and telephone calls. In these solicitations, Lozito and AIS employees under his direction made false and fraudulent representations to consumers, including that AIS would perform “forensic audits” of mortgage documents in order to uncover evidence of deficiencies in the mortgage documents. Lozito claimed AIS would obtain quitclaim deeds and other remedies, so the mortgage holders would be relieved of their mortgage debt and own their properties free and clear. If AIS could not help the consumer, Lozito promised to refund their money. In reality, AIS did not perform the services paid for by consumers and did not refund money to consumers. Money collected from consumers went to bank accounts controlled by Lozito, and he spent the money.

An indictment is merely a formal charge that a defendant has committed one or more violations of federal criminal law, and every defendant is presumed innocent unless, and until, proven guilty.

If convicted, Lozito faces a maximum penalty of 20 years in federal prison on each count and payment of restitution to the victims he defrauded. Lozito was arraigned on the charges on January 11, 2021. His trial is set for March 1, 2021.

United States Attorney Maria Chapa Lopez made the announcement.

This case was investigated by the U.S. Secret Service (Jacksonville Field Office) and the Office of the Florida Attorney General – Consumer Protection Division, with assistance from the Clay County Sheriff’s Office. It will be prosecuted by Assistant United States Attorney Kevin C. Frein.

 

Neal J. Vanderpoel II and Eileen P. Vanderpoel, Medford, New Jersey and their sons Ryan Vanderpoel, Medford, New Jersey and Neal J. Vanderpoel IV, Magnolia, New Jersey, as announced today, have been charged in a lawsuit to halt a scheme in which they operated multiple companies to defraud struggling homeowners by offering them mortgage adjustment services that provided no meaningful relief and often made their precarious financial situation even worse.

The State’s complaint alleges that the Vanderpoels’ advertised, offered for sale, and performed fraudulent or worthless loan modification and other debt adjustment services to New Jersey consumers through a web of corporate entities. The corporate entities include Financial Services for America; Financial Processing Services, LLC; Tri-State Financial Relief, LLC; and Mortgage Help and Loan Audits of America, LLC, which are also named as Defendants.

Through their corporate entities, most of which were not authorized to provide debt adjustment services in New Jersey, the Vanderpoels charged consumers up-front rates grossly in excess of the legal limits for permissible charges by licensed debt adjusters, netting them well over a million dollars in profits, the suit alleges.

After filling financially distressed consumers with false hope of guaranteed loan modifications, the Defendants failed to deliver, often causing consumers to fall further behind on their mortgage payments and making the threat of foreclosure more imminent, the suit alleges.

The State’s 18-count complaint alleges that the Defendants grossly exceeded the $25.00 fee cap imposed by the New Jersey’s Debt Adjustment and Credit Counseling Act by charging at least 556 New Jersey consumers $3,200 or more to prepare a “Forensic Audit Report,” which would purportedly assist consumers in their mortgage modifications.

The complaint also alleges that Defendants violated the New Jersey Consumer Fraud Act, advertising regulations, and the Nonprofit Corporations Act.

According to the complaint, the Defendants rarely if ever reviewed the consumers’ underlying notes or mortgage instruments and were not qualified to render opinions as to the legality of a consumer’s mortgage. The “Forensic Audit Report,” which Defendants generated using third-party compliance software, did not in fact assist consumers with their mortgage modifications, as promised by Defendants, and was largely worthless, the complaint alleges.

As a result of Defendants’ unconscionable and unlawful practices, consumers often forfeited all monies paid to Defendants, were forced to spend additional time and money to try to remain in their homes, were forced to file for bankruptcy, ended up losing their homes in foreclosure, and/or were forced to modify their loans on less favorable terms, the complaint alleges.

Today, the State also obtained a court order temporarily restraining Defendants from providing any loan modification or debt adjustment services, preventing Defendants from conducting business under unregistered assumed names, freezing all assets of Financial Services of America and the other corporate entities, and prohibiting Defendants from disposing of any assets derived from their purported mortgage modification businesses, among other relief.

The current action is brought against not only the current entities, but also against the family members individually. The State sought and secured temporary restraints in part to prevent the Vanderpoels and their companies from seeking to evade accountability as they had in the past.

Attorney General Gurbir S. Grewal and Department of Banking and Insurance (DOBI) Commissioner Marlene Caride made the announcement today.

We have zero tolerance for predatory practices targeting vulnerable consumers who want nothing more than to stay in their homes, especially in the midst of a pandemic,” said Attorney General Grewal. “And by partnering with the Department of Banking and Insurance, as we are today, we are sending a message that we won’t hesitate to bring the full range of the State’s consumer financial protection laws to bear when we crack down on unconscionable consumer abuses.”

Today was an important step in ending the deceitful practices perpetrated by these individuals and preventing other homeowners from falling victim to this scheme. These defendants took advantage of people already struggling financially and made their situations worse. The fact that they targeted our residents during a time when people are especially vulnerable makes their actions that much more reprehensible. With this action we are sending a message that those who engage in predatory and abusive practices will be held accountable,” said Commissioner Caride.

Today’s lawsuit reflects the Division of Consumer Affairs’ increased focus during the Murphy Administration on unconscionable practices in the markets for consumer financial products and services.

Those protections are especially important as the COVID-19 emergency enters its eleventh month. And the State’s complaint alleges that the Vanderpoels sought to capitalize on consumers’ financial insecurity by misleadingly suggesting that one of their companies offers services designed to address hardships caused by the COVID-19 pandemic.

For most homeowners, the prospect of losing their homes is a time of stress and fear. In this lawsuit, we allege that these defendants callously preyed on that vulnerability,” said Paul R. Rodríguez, Director of the Division of Consumer Affairs. “Instead of helping homeowners out of a financial crisis, as they promised, defendants made it worse by causing people to fall further into debt as they paid for undelivered services with money that could have been applied to their mortgages.”

For the Division of Consumer Affairs, Deputy Attorney Donna J. Dorgan, Assistant Section Chief John Regina and Section Chief Patricia Schiripo of the Consumer Fraud Prosecution Section in the Division of Law’s Affirmative Civil Enforcement Practice Group and Assistant Attorney General Jeremy Hollander of the Affirmative Civil Enforcement Practice Group are handling the matter, with assistance from attorney Andrew Esoldi.  Investigator Brian Penn and Loretta Creggett and Supervising Investigator Jennifer Micco of the Office of Consumer Protection are handling the investigation for the Division

For the Department of Banking and Insurance, the matter is being handled by Deputy Attorney General Garen Gazaryan, Assistant Section Chief Nicholas Kant, Section Chief Richard E. Wegryn, Jr., and Assistant Attorney General Raymond R. Chance, III, in the Division of Law’s Financial Affairs Practice Group.

Consumers who believe they have been cheated or scammed by a business, or suspect any other form of consumer abuse can file an online complaint with the State Division of Consumer Affairs by visiting its website or calling 1-800-242-5846 to receive a complaint form by mail.

Consumers who have any issue or complaint concerning any entity regulated by the Department of Banking and Insurance, can contact the Department’s Consumer Hotline at 1-800-446-7467 or go to the Department website and click on Consumer Assistance – Inquiries/Complaints, at https://www.dobi.nj.gov

The mission of the Division of Consumer Affairs, within the Department of Law and Public Safety, is to protect the public from fraud, deceit, misrepresentation and professional misconduct in the sale of goods and services in New Jersey through education, advocacy, regulation and enforcement. The Division pursues its mission through its 51 professional and occupational boards that oversee 720,000 licensees in the state, its Regulated Business section that oversees 60,000 NJ registered businesses, as well as through its Office of Consumer Protection, Bureau of Securities, Charities Registration section, Office of Weights and Measures, and Legalized Games of Chance section.

 

Iskyo Aronov (also known as “Isaac Aronov”) Middle Village, New York, Ron Borovinsky, Hollis Hills, New York and Michael Konstantinovskiy, Roslyn Heights, New York have been charged in a wide-ranging mortgage fraud scheme to defraud the government.

In a complaint unsealed today, Aronov, Borovinsky, Konstantinovskiy, and companies that they owned or controlled (175 Vernon Ave. Inc., 308 Linde St. LLC, 725 Management LLC, 1021 B Holdings LLC, 1083 Lafayette Ave. LLC, 1178 Gates Ave. Inc., 2320 Baeumont Ave Unit 3d LLC, 1S8C Holdings LLC , Ag2 Equities, Inc., Arbie Management Inc., Bedstuy Group LLC, Bert Holdings LLC, BNE Management LLC, Etuy Equities LLC, IA Investors LLC, IJ Development LLC, LL Fund Inc., LL Organization Inc., MI 1 Holdings LLC, MIP Management Inc., My Ideal Property Group LLC, My Ideal Property Rockaway Blvd. LLC, National Homeowners Assistance Inc., Phase 2 Development LLC, Pim Equities Inc., Settle NY Corp, ZOR Equities LLC, ZT Equities LLC), have been charged in engaging in a fraudulent short sales of residential properties insured by the Federal Housing Administration (FHA) of the United States Department of Housing and Urban Development (HUD).

Pursuant to HUD’s Pre-Foreclosure Sale Program, qualifying homeowners with defaulted, FHA-insured mortgages may sell their properties in a “short sale” for less than the balance of the mortgage if the sale is for the fair market value of the property.  If a homeowner obtains approval for a short sale, the lender releases the mortgage after the short sale and submits an FHA insurance claim to HUD to cover the outstanding mortgage balance net of the short sale proceeds, plus approved costs and interest.  HUD, in turn, pays the lender’s claim from federal funds.

Aronov was the founder, Chief Executive Officer and President of defendants My Ideal Property Inc., My Ideal Property Group LLC and MIP Management Inc., and also controlled other affiliated corporate entities that he allegedly established to help him fraudulently acquire residential properties.  Borovinsky identified himself as a co-founder with Aronov of My Ideal Property.  Konstantinovskiy worked as an agent for My Ideal Property where he allegedly conspired with others to fraudulently obtain properties.

As alleged in the complaint, from at least 2013 through 2016, the defendants defrauded HUD by manipulating the short sale process to acquire residential properties from numerous distressed homeowners for below-fair market value prices in non-arm’s-length transactions.  The individual defendants used various corporate entities in furtherance of the fraudulent scheme.  In the process, defendants made a host of material misrepresentations in critical transaction documents.  As a result, defendants not only acquired the properties for below-fair market value prices, but obtained broker fees in the transactions and induced lenders to release the FHA-insured mortgages at a loss.  In turn, HUD paid the lenders’ claims for FHA insurance from federal funds.  These payments by HUD were artificially inflated as a result of the defendants’ fraudulent conduct.

Seth D. DuCharme, Acting United States Attorney for the Eastern District of New York, Christina Scaringi, Special Agent-in-Charge, U.S. Department of Housing and Urban Development, Office of the Inspector General, Northeast Region (HUD-OIG), and Robert Manchak, Special Agent-in-Charge, Federal Housing Finance Agency, Office of Inspector General, Northeast Region (FHFA-OIG), announced the filing.

As alleged, these defendants fraudulently obtained homes at depressed prices at the expense of a taxpayer-funded program designed to assist borrowers seeking the American Dream of home ownership,” stated Acting U.S. Attorney Seth DuCharme.  “This Office is committed to protecting the integrity of the FHA insurance program from those who try to enrich themselves through predatory mortgage fraud schemes.

The defendants allegedly engaged in a scheme of wholesale deception when they provided false, misleading, and incomplete information to lending institutions, homeowners, and the Federal Housing Administration (FHA) causing millions of dollars in damages to the FHA, which typically results in higher premiums being charged to future first-time homeowners.  In addition, the artificial devaluation of residential properties will slow the recovery of market values at a time of economic challenge when affordable housing is at a premium,” stated HUD-OIG Special Agent-in-Charge Scaringi.

The Federal Housing Finance Agency, Office of Inspector General (FHFA-OIG) is committed to holding accountable those who waste, steal, or abuse the resources of the Government-Sponsored Enterprises regulated by FHFA.  We are proud to have partnered with the U.S. Attorney’s Office for the Eastern District of New York in this case,” stated FHFA-OIG Special Agent-in-Charge Manchak.

The suit is brought pursuant to the False Claims Act (FCA) and the Financial Institutions Reform, Recovery and Enforcement Act (FIRREA).

The government’s complaint intervenes in a lawsuit originally brought by under the qui tam provisions of the FCA.  Under the FCA, private citizens with knowledge of fraud against the government can bring a lawsuit on behalf of the United States and share in the recovery.  The act also permits the government to intervene in such actions, as the government has done in this case.  The government’s case is being handled by Assistant United States Attorney Michael J. Castiglione, with assistance from Affirmative Civil Enforcement Auditor Michael Gambrell.

 

Daniel R. Fruits, 46, Greenwood, Indiana, was charged today by a federal grand jury for his alleged role in three separate fraud schemes, including attempted mortgage fraud , a nearly $14 million fraud on an investor, and a vehicle title-washing scheme.

The Indictment alleges Fruits attempted to perpetrate a mortgage fraud scheme on Fifth Third Bank. Specifically, in late 2018, Fruits made false statements to Fifth Third Bank to secure a $432,000 mortgage. He twice submitted falsified paperwork purporting to show that loans from another bank had been paid off, when they had not been.

The Indictment also alleges that Fruits defrauded a Kentucky investor, who was also Fruits employer, out of nearly $14 million. In 2015, the investor founded a trucking company, Secure Transit, and hired Fruits to run it. Over the next four-and-a-half years, the investor would invest approximately $14 million in the business.

Fruits repeatedly lied about the company’s financial health, who its customers were, and what the money invested was being used for. On multiple occasions, Fruits allegedly sent the investor fictitious customer sales contracts and falsified financial statements that reported inflated company profits. At the same time, Fruits allegedly asked the investor for additional investments, sometimes in the millions of dollars, purportedly for the purchase of trucks or other business expenses.

Fruits spent a significant portion of the money on his own personal purchases and payments. He allegedly spent approximately $880,000 to purchase a horse farm and his personal residence, $560,000 on an RV and trailer, over $111,000 on a Corvette, approximately $90,000 on three Rolex watches, approximately $55,000 on a horse, $33,000 on a horse trailer, $23,000 on payments for two Ferraris, and $30,000 on payments for two escorts.

Finally, Fruits perpetrated a title-washing scheme to remove a bank’s lien from the title of a truck he purchased. He financed the truck with a loan from Ally Financial for over $69,000.  Several months later, he sent the Indiana Bureau of Motor Vehicles a falsified letter purportedly from Ally Financial stating that the loan had been paid off and the lien should be released.

The loan had not been paid off and Ally Financial never wrote that letter. As a result, the BMV issued Fruits a free-and-clear title for the truck, which Fruits then sold for $48,000, without repaying the loan to Ally Financial.

Acting United States Attorney John E. Childress made the announcement.

This financial investor gave his hard-earned money to someone whom he thought he could trust,” said Childress. “Instead, the victim’s money ended up in the hands of a self-absorbed thief who only cared about his interests. Living a life of fraud is inexcusable and always comes to an end.

This case was the result of an investigation by the Federal Bureau of Investigations, and Internal Revenue Service Criminal Investigation.

This indictment sends a strong message that the FBI will aggressively investigate those who commit such extensive financial fraud and steal from their employer to pad their own pockets to fund a lavish lifestyle,” said FBI Indianapolis Special Agent in Charge Paul Keenan. “The FBI and our law enforcement partners will always pursue those who take advantage of others through illegal and criminal behavior.

The IRS enforces the nation’s tax laws, but also takes particular interest in cases where someone, for their own personal benefit and greed, has taken what belongs to others,” said Acting Special Agent in Charge Tamera Cantu, of IRS Criminal Investigation, Chicago Field Office. “With our agent’s financial investigation expertise, we followed the money and helped to unravel the fraud and deceit conducted by Mr. Fruits. We are pleased with the successful resolution of this investigation due to the cooperative efforts of our law enforcement partner and the U.S. Attorney’s office in the Southern District of Indiana.”

An indictment is a set of allegations and is not itself evidence of guilt. A defendant is presumed innocent and is entitled to a fair trial at which the government must prove guilt beyond a reasonable doubt.

In November of 2020, Acting United States Attorney John E. Childress renewed a Strategic Plan designed to shape and strengthen the District’s response to its most significant public safety challenges. This prosecution demonstrates the Office’s firm commitment to prosecuting complex, long-running fraud schemes. (See United States Attorney’s Office, Southern District of Indiana Strategic Plan 5.1)

 

Nationstar Mortgage, the country’s fourth-largest mortgage servicer, has agreed to resolve parallel investigations by state attorneys general, state mortgage regulators, and the federal Consumer Financial Protection Bureau in a settlement that includes combined monetary relief valued at around $86.3 million.

The settlement resolves allegations that Dallas-based Nationstar, which does business as “Mr. Cooper,” violated consumer protection and banking laws in its servicing of residential mortgage loans. The New Jersey Department of Banking and Insurance is among the state mortgage regulators involved in the settlement.

The settlement provides for restitution to over 55,000 borrowers across the U.S. who suffered foreclosure and other harms due to a variety of mortgage loan servicing violations by Nationstar.

In New Jersey, the settlement affects 2,075 borrowers, and has a total value to those borrowers of approximately $3.45 million.

A complaint and consent judgment memorializing the settlement were filed today in the U.S. District Court for the District of Columbia by the participating attorneys general.

The consent judgment addresses conduct by Nationstar spanning the period from January 1, 2011 through December 31, 2017.

The complaint alleges a wide variety of unlawful acts and practices by Nationstar during those years, including:

  • failing to properly oversee and implement the transfer of mortgage loans;
  • failing to appropriately identify loans with pending loan modification applications when a loan was being transferred to Nationstar for servicing;
  • failing to timely and accurately apply payments made by certain borrowers;
  • threatening foreclosure and conveying conflicting messages to certain borrowers engaged in loss mitigation;
  • failing to properly process borrowers’ applications for loan modifications;
  • failing to properly review and respond to borrower complaints;
  • failing to make timely escrow disbursements, including the failure to timely remit property tax payments;
  • failing to timely terminate borrowers’ private mortgage insurance; and
  • collecting monthly modified payment amounts on certain loans where the amounts charged for principal and interest exceeded the principal and interest amount contained in the trial plan agreement.

In addition to providing for monetary relief for eligible borrowers, today’s settlement requires Nationstar to follow a detailed set of rules or “servicing standards” for its handling of certain mortgage loans going forward. These standards are more comprehensive than existing law, and take effect for three years starting January 1, 2021.

Among other things, the servicing standards require Nationstar to: ensure the accuracy of information it includes in foreclosure-related filings; apply any borrower payments that exceed the amount due in accordance with the borrower’s instructions; adopt more consumer-accessible procedures for handling billing disputes, such as a toll-free number and  email; and take prompt action to remediate inaccuracies in borrowers’ account information – including correcting information provided to credit reporting agencies, and providing refunds or account credits where appropriate.

The servicing standards also require Nationstar to offer loan modifications for eligible borrowers rather than initiate foreclosure when such loan modifications meet program and other requirements, and to periodically have the company’s primary system for recording account information independently reviewed for accuracy and completeness.

Attorney General Gurbir S. Grewal made the announcement today.

This settlement illustrates the benefits of state and federal partnership when it comes to consumer financial protection,” said Attorney General Grewal. “By working together, we were able to provide more relief for homeowners in New Jersey and around the country. And with many homeowners struggling to pay their mortgages in today’s economy, we’re sending a clear message that we’re here for them.

Homeownership is one of the most important investments our residents can make, and the Department is committed to ensuring that all New Jersey homeowners are treated fairly when seeking help from their mortgage servicer,” said Department of Banking and Insurance Commissioner Marlene Caride. “New Jersey worked in collaboration with state and federal partners on this case to reach a resolution which provides compensation for our residents and specific servicing requirements for Nationstar that enhance consumer protections.”

In addition to the Consumer Financial Protection Bureau and the state mortgage regulators, which filed separate settlement agreements, the settlement was signed by the attorneys general for all 50 states and the District of Columbia. The partners also collaborated with the U.S. Trustee Program, a component within the Department of Justice that seeks to promote the efficiency and protect the integrity of the bankruptcy system. The USTP is finalizing a separate agreement with Nationstar to address historical servicing issues impacting borrowers in bankruptcy.

This settlement not only provides over $3 million in financial relief for borrowers in our state, but also raises the bar in the mortgage market,” said Division of Consumer Affairs Acting Director Paul R. Rodríguez. “By requiring that businesses adhere to higher standards of care for their clients, we are ensuring that our residents are protected from sloppy practices that cause real damage to their financial wellbeing and our economy.”

In 2012, Nationstar began purchasing mortgage servicing portfolios from competitors and grew quickly into the nation’s largest non-bank servicer. As loan data was transferred to Nationstar, borrowers who had sought assistance with payments and loan modifications sometimes fell through the cracks, the lawsuit alleged. Borrowers in this category will receive a guaranteed minimum payment of $840 as part of the settlement.

Other borrowers suffered damages when Nationstar failed to oversee third-party vendors hired to inspect and maintain properties owned by delinquent borrowers and improperly changed locks on their homes, the lawsuit alleged. These borrowers will receive a guaranteed minimum payment of $250.

A settlement administrator, Rust Consulting, will send a claim form to eligible borrowers in 2021. Nationstar has already provided some of the relief outlined in the settlement.

The agreement also requires Nationstar to conduct audits and provide audit results to a committee of states to ensure compliance with the settlement.

Deputy Attorney General Donna J. Dorgan of the Consumer Fraud Prosecution Section in the Division of Law’s Affirmative Civil Enforcement Practice Group represented the State in the Nationstar matter.

 

Dennys A. Tapia, 54, Ridgefield Park, New Jersey, admitted today, his role in a scheme to defraud financial institutions of hundreds of thousands of dollars

According to documents filed in this case and statements made in court: From 2015 to 2018, Tapia conspired with others to fraudulently obtain mortgage loans from financial institutions, including “Mortgage Lender A” and “Mortgage Lender B,” to finance the purchase of properties by unqualified buyers. Applicants for mortgage loans are required to list their assets and income on their mortgage loan applications, and mortgage lenders rely on those applications when deciding whether to issue mortgage loans.

Tapia admitted to participating in a conspiracy in which he knowingly provided fraudulent documents to a loan officer at Mortgage Lender A for potential borrowers, including fraudulent lease agreements, bank statements, and a gift check and gift letter. Based on this false information, Mortgage Lender A issued mortgage loans to unqualified buyers, which caused Mortgage Lender A hundreds of thousands of dollars in losses. Tapia also admitted to conspiring with a straw borrower, “Individual A,” to submit an application to Mortgage Lender B for a cash-out refinance mortgage loan that contained multiple misrepresentations of material facts and fraudulent documents, including pay stubs and a verification of employment. Based on the false information submitted by Individual A and Tapia, Mortgage Lender B issued a false and fraudulent cash-out refinance mortgage loan, which resulted in Tapia earnings tens of thousands of dollars in profits.

The conspiracy charge to which Tapia pleaded guilty carries a maximum of 30 years in prison and a $1 million fine. Sentencing is scheduled for April 17, 2021.

Tapia pleaded guilty by videoconference before U.S. District Judge Stanley R. Chesler to an information charging him with one count of conspiracy to commit bank fraud.

U.S. Attorney Craig Carpenito made the announcement.

U.S. Attorney Carpenito credited special agents of the FBI, under the direction of Special Agent in Charge George M. Crouch Jr. in Newark, and special agents of the Federal Housing Finance Agency, Office of Inspector General, under the direction of Special Agent in Charge Robert Manchak, with the investigation leading to today’s guilty plea.

The government is represented by Assistant U.S. Attorney Jonathan Fayer of the Economic Crimes Unit of the U.S. Attorney’s Office, and Special Assistant U.S. Attorney Charlie Divine of the Federal Housing Finance Agency, Office of Inspector General.

Cherie Anne Washburn, 44, Lynchburg, Virginia, a former attorney who specialized in elder law and estate planning, was charged today with ten counts of wire fraud, two counts of making a false statement to a mortgage lender, and one count of mail fraud.

According to court documents, from around 2015 and continuing until 2018, Washburn engaged in a scheme to defraud and obtain money or property by fraudulent pretenses, representations or promises from elder victims C.A. and D.F. Washburn is alleged to have used the ill-gotten monies to enrich herself, including purchasing real estate and making donations to charities.

In or around March 2018, the indictment alleges, Washburn purchased a residence in Lynchburg, Va., for approximately $219,000 using monies belonging to victim C.A. and a mortgage lender. In order to complete the purchase, on or about April 22, 2018, Washburn submitted a letter to Quicken Loans falsely stating that victim C.A. provided Washburn with a gift of $40,000 for the purchase of 111 Wyndsong Place. The gift letter also falsely stated that victim C.A. was Washburn’s great-aunt. The next day Washburn deposited $45,000 from victim C.A.’s SunTrust Account to Washburn’s Wells Fargo account.

In 2015 and 2016, a senior care management service company referred victims C.A. and D.F. to Washburn for the purpose of obtaining elder legal services. Washburn subsequently entered separate Power of Attorney (POA) agreement with both victims. Under the terms of both POAs, Washburn was entitled to reasonable compensation and reimbursement for reasonable expenses for services rendered but could not use the personal property of the client to benefit the attorney.

The indictment alleges that despite the agreement, Washburn wrote multiple checks from victim C.A. and victim D.F.’s accounts to herself for personal benefit. These checks ranged in value from $4,200 to $40,000.

Additionally, the indictment alleges that in 2017, Washburn attempted to improperly make herself the beneficiary of two investment accounts held by C.A.. At the time, these accounts had a combined approximate value of $288,000.

Throughout 2017, the indictment alleges that Washburn made charitable donations using money fraudulently obtained from victims C.A. and D.F. These donations were made without the consent of the victims.

If convicted, Washburn faces up to 30 years in federal prison.

Acting United States Attorney Daniel P. Bubar and David W. Archey, Special Agent in Charge of the FBI’s Richmond Division made the announcement today following the defendant’s initial court appearance.

The investigation of the case was conducted by Federal Bureau of Investigation and the Lynchburg City Police Department. Acting United States Attorney Daniel P. Bubar, Assistant United States Attorney Michael Baudinet, and Special Assistant United States Attorney and Commonwealth Attorney for the City of Lynchburg Bethany Harrison are prosecuting the case for the United States.

An indictment is merely an accusation.  The defendant is presumed innocent until proven guilty in a court of law.

Mary Beyer Halsey, 59, Rising Sun, Maryland, the former President and Chief Executive Officer of Cecil Bank, was sentenced today for charges of conspiracy to commit bank fraud, receipt of a bribe by a bank official, and false statement in bank records, in connection with the straw purchase of a home in Rising Sun, Maryland, upon which Cecil Bank had foreclosed.

According to her plea agreement, from 2012 to 2013, Halsey conspired with Daniel Whitehurst, 36, Bel Air, Maryland, an employee of a real estate development company that did business in Maryland, to defraud Cecil Bank and another bank to purchase a home through false pretenses, representations and promises.  Specifically, on March 28, 2012, Halsey and Whitehurst met at a restaurant in Cecil County.  Whitehurst asked Halsey if she could help him and a business partner get a $500,000 line of credit from Cecil Bank.  Halsey agreed to help Whitehurst to obtain a line of credit from Cecil Bank, in exchange for Whitehurst agreeing to serve as the straw purchaser of 127 Ebenezer, Rising Sun, Maryland on behalf of Halsey.  Halsey suggested that she increase the line of credit for Whitehurst to $650,000 to include the funds needed to buy the house.  Whitehurst agreed to Halsey’s request to secretly buy 127 Ebenezer on Halsey’s behalf.  On May 9, 2012, Halsey participated in a loan committee meeting at Cecil Bank that considered and approved a $650,000 line for credit for Whitehurst and a $500,000 line of credit for his business partner.

Halsey admitted that at her request, on May 14, 2012, Whitehurst visited 127 Ebenezer and provided Halsey with an estimate of the costs to update the house.  Whitehurst determined that beyond replacing the kitchen sub-flooring at a cost of about $1,000, there were no significant repairs needed.  Whitehurst provided a letter of intent to purchase the home from the bank for $150,000 for Halsey to review.  Halsey suggested lowering the price to $145,000 to allow room to increase the offer later.  Halsey knew that an exterior-only appraisal of the property ordered by Cecil Bank on November 9, 2011, showed a market value of $263,000.  A full appraisal on September 10, 2012, reflected a market value of $295,000.  To support the below-market price that Halsey wanted to pay, Whitehurst included in the letter of intent a list of lower-priced home sales in the same area that were not comparable to 127 Ebenezer and therefore was not reflective of the property’s actual market value.

As detailed in the plea agreement, on May 23, 2012, Whitehurst e-mailed Cecil Bank his offer to purchase 127 Ebenezer for $145,000.  On the same day, during a meeting of the Cecil Bank Board of Directors, Halsey advised the Board that Whitehurst had made a purchase offer of $140,000 for 127 Ebenezer, $5,000 less the actual offer.  To support the below-market price of $140,000, Halsey falsely characterized the property as having “structural deficiencies [that] will require significant repairs.”  Halsey did not disclose her personal interest in the property, nor Whitehurst’s role as her nominee to acquire the property on her behalf.  The Board authorized Halsey to “negotiate the best price.”  Thereafter, Whitehurst submitted a contract for him to purchase 127 Ebenezer from Cecil Bank for $150,000, which Halsey signed on August 17, 2012 on behalf of Cecil Bank.

According to the plea agreement, subsequent to authorizing the sale of 127 Ebenezer, Halsey told Whitehurst that he should not use his line of credit from Cecil Bank to purchase the house, but should instead get the funds from a different source.  Whitehurst applied for and obtained a $100,000 loan from another bank to purchase 127 Ebenezer, fraudulently claiming that he was purchasing the property for himself and that the down payment was from an investment account.  On October 31, 2012, prior to 127 Ebenezer going to settlement, Halsey wired $75,000 to Whitehurst’s bank account to cover the cost of the down payment as well as closing costs and upgrades to the property that Halsey directed Whitehurst to arrange.  To conceal the true purpose of the wired funds, Whitehurst sent Halsey a fictitious real estate contract purporting to show that the $75,000 was the down payment for a different property that Whitehurst owned in Havre de Grace, Maryland.

On November 21, 2012, the settlement of 127 Ebenezer was held with Halsey representing Cecil Bank as the seller, and Whitehurst as the purported purchaser, selling the property to Whitehurst for $150,000.  Both signed the HUD-1 form which falsely represented that Whitehurst had paid approximately $52,566 at settlement, when in fact, the down payment and all related closing costs were paid from the $75,000 Halsey had wired to Whitehurst’s bank account beforehand.  From October 31, 2012 through March 29, 2013, Halsey transferred an additional $60,000 to Whitehurst to cover the cost the upgrades to the house that they had previously discussed, as well as to reimburse Whitehurst for mortgage payments he made on the property.  Halsey and Whitehurst also made plans to transfer title of the property to Halsey by selling the house to her at a price that would minimize the tax consequences of the sale for Whitehurst.

In December 2012, in response to a question from a bank examiner for the Federal Reserve Bank of Richmond inquiring about the sale of the property to Whitehurst, Halsey falsely stated that she was “not totally familiar with [that] property” and that the bank had difficulty marketing the property and had not listed it with a realtor because of “issues with the county over the bonds outstanding.”

In April 2013, federal agents began interviewing employees and other borrowers about banking irregularities at Cecil Bank.  Title to 127 Ebenezer was never transferred to Halsey.  Halsey never told the bank that she was the true purchaser of 127 Ebenezer, nor did the bank know that Halsey and Whitehurst had orchestrated the sale of the foreclosed property at the fraudulent price of $150,000, instead of the appraised pre-renovation price of $295,000.

As a result of Halsey’s misrepresentations and omissions, the bank lost approximately $145,000.

Whitehurst pleaded guilty under seal to the federal charge of mail fraud on April 6, 2018.  Whitehurst faces a maximum sentence of 30 years in federal prison for conspiracy to commit bank fraud.  Judge Chasanow has not scheduled a date for Whitehurst’s sentencing.

Halsey pleaded guilty on July 31, 2020, Judge Chasanow also ordered Halsey to forfeit her interest in the home in Rising Sun and to pay restitution in the amount of $145,000.

The sentence was announced by United States Attorney for the District of Maryland Robert K. Hur; Special Agent in Charge Mark P. Higgins of Federal Housing Finance Agency, Office of Inspector General (FHFA-OIG), Mid-Atlantic Region; Special Agent in Charge Patricia Tarasca of Federal Deposit Insurance Corporation, Office of Inspector General (FDIC/OIG), New York Region; Special Inspector General Christy Goldsmith Romero for the Troubled Asset Relief Program (SIGTARP); and Inspector General Hannibal “Mike” Ware of the Small Business Administration, Office of Inspector General (SBA/OIG).

Mary Beyer Halsey will now serve time in federal prison after she used her position as President and CEO of Cecil Bank for her personal benefit, causing a loss to the bank, which had already received federal taxpayer funds as part of the Troubled Asset Relief Program,” said U.S. Attorney Robert K. Hur.  “Corrupt bank officials undermine the public’s trust in our financial system.

The Federal Housing Finance Agency Office of Inspector General (FHFA-OIG) is committed to investigating allegations of fraud committed by officers of financial institutions which are members of the 11 Federal Home Loan Banks (FHLBanks) because their crimes strike at the heart of the FHLBank System,” said Mark Higgins, Special Agent in Charge of the FHFA-OIG’s Mid-Atlantic Region. “We are proud to have partnered with the U.S. Attorney’s Office for the District of Maryland and our law enforcement partners on this case.

Today the former CEO of Cecil Bank was sentenced to prison, becoming the 78th banker sentenced to prison resulting from a SIGTARP investigation,” said Special Inspector General Christy Goldsmith Romero. “Treasury wrote off $11 million from its TARP investment in Cecil Bank.  We commend U.S. Attorney Hur and his team of prosecutors in standing with SIGTARP to combat fraud that hurt banks during critical times.”

Cecil Bank, located in Elkton, Maryland, had received $11,560,000 in federal taxpayer funds in 2008, under the Capital Purchase Program, as part of the Troubled Asset Relief Program.  On April 20, 2011, Cecil Bank initiated the foreclosure of a single-family house located at 127 Ebenezer Church Road in Rising Sun.

United States Attorney Robert K. Hur commended the FHFA-OIG, Mid-Atlantic Region; FDIC/OIG; SIGTARP; and SBA/OIG for their work in the investigation.  Mr. Hur thanked Assistant U.S. Attorneys Martin J. Clarke and Harry M. Gruber, who are prosecuting the case.

 

Vontia Jones, 39, Philadelphia, Pennsylvania, was sentenced to eight and a half years in prison, three years of supervised release, and ordered to pay $2,319,278 in restitution for engaging in real estate fraud by purporting to sell properties to buyers using fraudulent documents and obtaining the personal identifying information of people and using that information to file more than 900 fraudulent tax returns with the IRS, netting her over $2,319,000 in fraudulent refunds.

The defendant pleaded guilty in August 2019 to more than 30 fraud charges, including conspiracy to make false claims to the IRS; making, and aiding and abetting the making of false claims to the IRS; wire fraud; and aggravated identity theft. Jones operated a business that she identified by various names including “Jones Tax Service,” “Earned Income Credit Unit,” “EIC Unit,” and “Eelysium,” out of her home in the 1400 block of West Cayuga Street, Philadelphia for a period of roughly seven years.

Jones also organized and operated a scheme to file phony deeds for multiple residential properties in Philadelphia, purporting to transfer ownership of the houses in order to sell them for a profit. The defendant would research homes on real estate websites, typically targeting those where the owner had died or moved away, and would charge several thousand dollars to sell someone else one of these houses that she “deeded up.”

Together with her co-conspirators, Jones solicited the personal information of individuals and their dependents under the guise of getting them “tax money,” even if they never worked. Jones designed flyers advertising her services that stated: “Don’t you deserve some income tax money too? $750 [per child] welfare social security unemployment disability even if you never had a job.” Each of the returns submitted to the IRS was submitted by the defendant or her conspirators as self-prepared, as if it had been done by the individual taxpayer whose information had been stolen.

Together, they filed or directed others to file over 900 fraudulent tax returns claiming fictious self-employment income resulting in tax refund payouts by the IRS of more $2,319,000.

United States Attorney William M. McSwain made the announcement.

In addition to the tax return scheme, “Jones’ greed impacted the lives of many hundreds of victims, and her shameful actions had severe consequences for these innocent people,” said U.S. Attorney McSwain. “Not only did she and her co-conspirators steal personal information in order steal tax return money from the government, but also she sold people’s houses right out from underneath them to other people who believed that they were buying property from her legitimately. For her actions, she will now spend the better part of a decade in prison.”

The degree to which Vontia Jones and her co-conspirators went in order to perpetrate this scheme is astounding,” said IRS Criminal Investigation Special Agent in Charge Thomas Fattorusso. “Not only did Vontia Jones steal the identities of unwitting individuals, she also stole millions of dollars from the US government; and ultimately US taxpayers. Today, she stands a convicted felon who will spend years in federal prison.”

The case was investigated by the Federal Bureau of Investigation and the Internal Revenue Service, and is being prosecuted by Assistant United States Attorney Anthony J. Wzorek.

Casey David Crowther ,35, North Fort Myers, Florida has been charged in a superseding indictment with two counts of bank fraud, two counts of making a false statement to a lending institution, and three counts of illegal monetary transactions.

According to the superseding indictment, as part of his scheme, beginning in June of 2020, Crowther submitted false and fraudulent Uniform Residential Loan Applications (URLA) to a mortgage broker and mortgage lender, causing the lender to disburse approximately $640,381 in loan funds. Specifically, Crowther intentionally misrepresented his liquid assets in the URLAs and created false and fraudulent bank statements which purported to show he had more assets than he actually had.

If convicted, Crowther faces a maximum penalty of 30 years in federal prison on each bank fraud and false statement count, and up to 10 years’ imprisonment for each illegal monetary transaction count.

The indictment also notifies Crowther that the United States intends to forfeit a 2020 40-foot catamaran, real property in St. James City, Florida, and $2,098,700, which are alleged to be proceeds of the offenses; the real property is also subject to forfeiture because it was involved in the illegal monetary transaction.

A federal grand jury had previously indicted Crowther for COVID relief fraud on September 23, 2020. The superseding indictment contains additional counts charging Crowther with mortgage fraud.

A superseding indictment is merely a formal charge that a defendant has committed one or more violations of federal criminal law, and every defendant is presumed innocent unless, and until, proven guilty.

United States Attorney Maria Chapa Lopez made the announcement.

This case was investigated by the United States Secret Service. It will be prosecuted by Assistant United States Attorney Trent Reichling.