Ronald J. McCord, 69, Oklahoma City, Oklahoma, was charged yesterday with defrauding two locally-based banks, Fannie Mae, and others. The charges include bank fraud, money laundering, and making a false statement to a financial institution.

McCord was the former President of First Mortgage Company, LLC (“FMC”), an Oklahoma City, Oklahoma based mortgage lending and loan servicing company.  The Indictment alleges a broad range of fraudulent conduct spanning approximately three years.

McCord is charged in Counts 1 through 7 with defrauding Spirit Bank (“Spirit”) and Citizens State Bank (“Citizens”), two state-chartered financial institutions, as well as their respective residential mortgage subsidiaries, American Southwest Mortgage Corporation (“Mortgage Corp.”) and American Southwest Mortgage Funding Corporation (“Funding Corp.”).  According to the Indictment, in approximately June 2016, an independent audit discovered that McCord had sold more than $14,100,000.00 in Spirit/Mortgage Corp., and Citizens/Funding Corp., loans “out of trust” by failing to repay Spirit/Mortgage Corp., when certain Spirit/Mortgage Corp., initiated loans were refinanced or otherwise paid off.  At the time of this discovery, FMC carried outstanding balances of about $200,000,000.00 and $140,000,000.00 on the Spirit/Mortgage Corp. and Citizens/Funding Corp. lines of credit, respectively.

According to the Indictment, this discovery prompted further internal review.  An internal audit revealed that McCord had misappropriated additional Spirit/Mortgage Corp. and Citizens/Funding Corp. loans by: (1) using FMC’s warehouse line of credit with (i.e., obtaining mortgage loans from) Spirit/Mortgage Corp. or Citizens/Funding Corp., selling those Spirit/Mortgage Corp. or Citizens/Funding Corp. loans to Fannie Mae, then resubmitting the loan documents to Spirit/Mortgage Corp. or Citizens/Funding Corp. to receive additional money from the Spirit/Mortgage Corp. or Citizens/Funding Corp. line of credit; (2) using FMC’s warehouse line of credit with Spirit/Mortgage Corp. or Citizens/Funding Corp. to refinance the resulting loans without repaying Spirit/Mortgage Corp. or Citizens/Funding Corp. the originally loaned funds; (3) using FMC’s Spirit/Mortgage Corp. or Citizens/Funding Corp. line of credit to fund mortgages to borrowers, receiving payments from those borrowers, but never repaying Spirit/Mortgage Corp. or Citizens/Funding Corp.; (4) obtaining funds from Spirit/Mortgage Corp. or Citizens/Funding Corp. for loans that never closed, then failing to return the funds to Spirit/Mortgage Corp. or Citizens/Funding Corp.; and (5) using FMC’s warehouse lines of credit with Spirit/Mortgage Corp. and Citizens/Funding Corp. to “double fund” loans by obtaining funds from both financial institutions to fund the same loans.

The Indictment alleges that McCord’s actions involved Spirit/Mortgage Corp. and Citizens/Funding Corp. loans that totaled approximately $40,000,000.00, in addition to the more than $14,100,000.00 in Spirit/Mortgage and Citizens/Funding Corp. loans that McCord had sold out of trust.

The Indictment further alleges that, upon learning of McCord’s conduct, Spirit/Mortgage Corp., and Citizens/Funding Corp., terminated future warehouse lending to FMC, and instituted new notification requirements that required McCord to assign FMC-funded mortgages to Spirit/Mortgage Corp. and Citizens/Funding Corp., to ensure that the title companies handling those mortgages sent payoffs directly to the banks.  Though McCord filed the assignments as required, his employees contacted the title companies handling the mortgages and directed payments to FMC, not Spirit/Mortgage Corp. and Citizens/Funding Corp.  McCord continued to collect loan payoffs without repaying Spirit/Mortgage Corp. and Citizens/Funding Corp.  He then signed releases on the assigned mortgages after receiving the payoffs, subjecting the properties to potential foreclosure should Spirit/Mortgage Corp. or Citizens/Funding Corp. try to collect payments on the mortgages, to which they held title.

According to Count 8 of the Indictment, Spirit/Mortgage Corp., and Citizens/Funding Corp.’s refusal to fund new FMC mortgages prompted McCord to seek out a new warehouse lender.  In early 2017, McCord began negotiating with CapLOC, LLC, a North Carolina based mortgage lending business, and offered to sell FMC’s mortgage lending business in exchange for quick funding from CapLOC.  In the course of those negotiations, McCord made false statements and representations to obtain CapLOC funds.  McCord then used the money to repay Spirit/Mortgage Corp. part of his outstanding $40,000,000.00 debt.

Finally, the Indictment alleges that, in 2017, FMC serviced approximately 12,000 loans worth a total of approximately $1,800,000,000.00 for the Federal National Mortgage Association (“Fannie Mae”).  Counts 9 through 24 of the Indictment allege that McCord defrauded Fannie Mae by diverting escrow monies intended to pay homeowners’ taxes, insurance, principal, and interest, to cover FMC’s operating expenses.  As a result, McCord bounced checks to more than sixty taxing authorities and borrowers throughout the Oklahoma City area and elsewhere missed making their tax payments.  The Indictment further alleges that McCord laundered the stolen escrow monies by using the funds to write himself checks, pay more than half the purchase price of his son’s $900,000.00 Oklahoma City home, and build a custom vacation home in Colorado.

With regard to the bank fraud and false statement to a financial institution charges in the Indictment, McCord faces up to 30 years in prison and a fine of up to $1,000,000.00 on each count.  He also faces up to 10 years in prison and a $250,000 .00 fine on to each of the money laundering counts. Furthermore, the Indictment seeks forfeiture from McCord in the amount of the proceeds of the fraudulent schemes and in the amount of the property involved in the offenses.

The announcement was made by Timothy J. Downing, United States Attorney for the Western District of Oklahoma.

This case is the result of an investigation by the Federal Housing Finance Agency Office of the Inspector General, Federal Deposit Insurance Corporation Office of Inspector General, and the Federal Bureau of Investigation Oklahoma City Field Office.  It is being prosecuted by Assistant U.S. Attorney Julia E. Barry.

Reference is made to the Indictment and other public filings for further information.  An indictment is only a charge and is not 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.  To download a photo of U.S. Attorney Downing, click here.

Gabriel T. Tavarez, 40, the principal and co-founder of a North Andover, Massachusetts mortgage short sale assistance company pleaded guilty today in connection with defrauding mortgage lenders and investors out of nearly $500,000 in proceeds from about 90 short sale transactions.

Tavarez founded and co-operated Loss Mitigation Services, LLC, with co-conspirator Jaime L. Mulvihill, 40, North Andover, Massachusetts who previously pleaded guilty and was sentenced in February 2020 to six months in prison.

The charges arise out of the defendants’ scheme to steal undisclosed and improper fees from mortgage lenders in connection with short sales of homes. A short sale occurs where the mortgage debt on the home is greater than the sale price, and the mortgage lender agrees to take a loss on the transaction.

Loss Mitigation Services, purportedly acting on behalf of underwater homeowners, negotiated with mortgage lenders for approval of short sales in lieu of foreclosure. Mortgage lenders typically forbid short sale negotiators, such as Loss Mitigation Services, from receiving any proceeds of a short sale.

From 2014 to 2017, Tavarez and Mulvihill, directly or through their employees, falsely claimed to homeowners, real estate agents, and closing attorneys that mortgage lenders had agreed to pay Loss Mitigation Services fees known as “seller paid closing costs” or “seller concessions” from the proceeds of the short sales. In reality, the mortgage lenders had never approved Loss Mitigation Services to receive those fees. When the short sales closed, at the instruction of Tavarez or Mulvihill, or others working with them, settlement agents paid Loss Mitigation Services the fees, which typically were 3% of the short sale price above and beyond any fees to real estate agents, closing attorneys and others involved in the transaction. To deceive mortgage lenders about the true nature of the fees, Tavarez or Mulvihill filed, or caused others to file, false short sale transaction documents with mortgage lenders, including altered settlement statements and fabricated contracts and mortgage loan preapproval letters. Tavarez and Mulvihill fabricated the transaction documents, or caused them to be fabricated, in order to justify the additional fees and conceal that they were being paid to Loss Mitigation Services. In addition, Tavarez created, or directed others to create, fake letters from mortgage brokers claiming that the brokers had approved buyers for financing, in order to convince mortgage lenders to approve the additional fees. http://www.mortgagefraudblog.com/?s=Gabriel+T.+Tavarez

The charge of conspiracy to commit wire fraud provides for a sentence of up to 20 years in prison, three years of supervised release, and a fine of $250,000 or twice the gross gain or loss. The charge of aggravated identity theft carries a mandatory two-year sentence that must run consecutively to any other sentence imposed, one year of supervised release, and a fine of $250,000, or twice the gross gain or loss. Sentences are imposed by a federal district court judge based upon the U.S. Sentencing Guidelines and other statutory factors.

Tavarez is scheduled for sentencing on October 7, 2020.

United States Attorney Andrew E. Lelling; Joseph R. Bonavolonta, Special Agent in Charge of the Federal Bureau of Investigation, Boston Field Division; Robert Manchak, Special Agent in Charge, Federal Housing Finance Agency, Office of Inspector General, Northeast Region; Christina  Scaringi, Special Agent in Charge of the U.S. Department of Housing and Urban Development, Office of Inspector General, Northeast Regional Office; and Kristina O’Connell, Special Agent in Charge of the Internal Revenue Service’s Criminal Investigation in Boston made the announcement today. Assistant U.S. Attorneys Sara Miron Bloom and Brian M. LaMacchia of Lelling’s Office are prosecuting the case.

James Lee Clark, 59, Wilton Manor, Florida has been charged with one count of conspiracy to commit bankruptcy fraud, seven counts of bankruptcy fraud, one count of making a falsification of records in a bankruptcy proceeding, and eight counts of wire fraud.

According to the indictment, from January 2010 through February 2017, Clark conspired with his paralegal, Eric Liebman, to defraud mortgage creditors and guarantors, such as Fannie Mae, who were holding mortgage notes on properties that were in foreclosure. The indictment further charges that Clark and Liebman falsely and fraudulently represented to the distressed homeowners facing foreclosure that, in exchange for executing quitclaim or warranty deeds for their properties to an entity controlled by Liebman, they would negotiate with the mortgage creditors to prevent foreclosures. Clark and Liebman convinced the distressed homeowners to pay them rent, or agree to put their houses up for sale. In order to continue to collect ill-gotten rents, or profit from the sale of the properties, Clark allegedly filed fraudulent bankruptcy petitions in the names of the homeowners to prevent the mortgage creditors from lawfully foreclosing and taking title to the property. In some instances, Clark filed multiple fraudulent petitions in the names of distressed homeowners.

Additionally, it is further alleged that, from January 2012 to February 2017, Clark, who was a licensed attorney, defrauded his clients out of approximately $1.3 million. As part of his practice, Clark would act as a trustee for his clients and also hold their money in various bank accounts depending on the purpose of trust.  Instead of using the funds for the purpose intended by his clients, Clark would divert the money into his law firm’s bank accounts and pay for personal expenses, such as gambling, travel, and automobiles.

Liebman pleaded guilty to one count of conspiracy to commit bankruptcy fraud on September 24, 2019. His sentencing hearing is scheduled for January 14, 2021.

United States Attorney Maria Chapa Lopez made the announcement.

If convicted, Clark faces up to 20 years’ imprisonment for the falsification of records count and for each wire fraud count. He faces up to 5 years in federal prison for the conspiracy count, and for each bankruptcy fraud count. The indictment also notifies Clark that the United States is seeking a money judgment of $1.3 million, the proceeds of the charged criminal conduct.

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.

This case was investigated by the Federal Bureau of Investigation and the Federal Housing Finance Agency – Office of Inspector General. The Office of United States Trustee for the Middle District of Florida, Tampa Division provided substantial investigative assistance. It will be prosecuted by Special Assistant United States Attorney Chris Poor.

 

Tina Brown, 45, Bronx, New York, who was convicted of conspiracy to commit wire fraud affecting a financial institution, was sentenced today to six months home detention.

Between about June 2008 and February 2009, the defendant conspired with others to devise a scheme to commit mortgage fraud and obtain eight loans for unqualified borrowers for homes in the Bronx, New York. As part of the scheme, Brown used a relative to purchase a property located at 4087 Edson Avenue, Bronx, New York. The defendant falsely verified that the purchaser worked for her own company in order fraudulently to inflate the purchaser’s income so that she would qualify for a mortgage for that property. Brown knew that these false loan documents were submitted to The Funding Source, a mortgage bank, in order to secure a loan insured by the Federal Housing Administration. Based on that false application and supporting documentation, the loan was approved. The Funding Source sold the loan on the secondary market to M &T Bank, which wired funds from New York through the State of Ohio to purchase the loan.

The defendant and her co-conspirators arranged for additional fraudulent loans to be approved. These fraudulent transactions caused losses of approximately $244,000 to M&T Bank, Citibank, and the U.S. Department of Housing and Urban Development.

Four co-defendants were previously convicted and sentenced: Gregory Gibbons, a mortgage broker, was sentenced to time served; Laurence Savedoff, an attorney, was sentenced to serve four months in prison; Julio Rodriguez, an appraiser, was sentenced to serve six months in prison; and Daniel Badu, a borrower, was sentenced to time served. Defendant Alagi Samba has been convicted and is awaiting sentencing.

The defendant was also ordered to pay restitution totaling $220,042.17 to the U.S. Department of Housing and Urban Development and Citibank.

U.S. Attorney James P. Kennedy Jr. made the announcement.

The sentencing is the result of an investigation by the United States Postal Inspection Service, Boston Division, under the direction of Inspector-in-Charge Joseph W. Cronin, Boston Division, the Department of Housing and Urban Development, under the direction of Special Agent in Charge Brad Geary, and the Federal Bureau of Investigation, under the direction of Special Agent-in-Charge Gary Loeffert.

Aston Wood, 56, New Richmond, Wisconsin and Miami, Florida, was sentenced today to 12 years in federal prison for a mortgage rescue scheme that defrauded more than 70 Wisconsin homeowners.

Between 2014 and 2019, Wood defrauded more than 70 Wisconsin homeowners out of approximately $390,000.  Many homeowners unfortunately lost their homes in connection with the scheme.  Using the names ASC Financial, LLC and Maywood Capital II, LLC, Wood solicited people facing the possibility of foreclosure and represented to them that he could help them stay in their home by obtaining loan refinancing or modification.  He told customers that to stop foreclosures, they needed to immediately begin making mortgage payments towards a new loan as part of a trial period while he worked out the details of the loan with the mortgage lenders.  Wood instructed customers to make these mortgage payments to businesses he controlled under the premise that he would forward the payments to the customers’ mortgage lenders.

Wood was able to collect mortgage payments from homeowners for months, even years, by falsely reassuring them that their payments were going to their mortgage lenders and that new loans were being finalized.  In fact, Wood’s bank records confirmed he deposited the customers’ mortgage payments and spent their money on his own travel and living expenses.  When customers eventually lost their homes in foreclosure, Wood told them that it was due to the mortgage lenders’ greed or negligence.

Wood defrauded some homeowners out of additional money even after they lost their homes by falsely telling them that he would use the money to help them buy back their foreclosed property or use the money to sue the mortgage companies.

As part of his fraud scheme, Wood advised many customers to file bankruptcy in the Western District of Wisconsin.  The automatic stay triggered by the bankruptcy filings temporarily stalled the foreclosures, which extended the time in which Wood could collect the monthly mortgage payments.  In November 2016, the U.S. Trustee’s Office began investigating Wood and in October 2017, U.S. Bankruptcy Judge Catherine J. Furay issued an injunction permanently barring Wood from soliciting, offering to perform, or performing services relating to mortgage foreclosure and debt relief.  Despite the court order, however, Wood continued to engage in mortgage rescue fraud under a new business name.

Wood pleaded guilty to wire fraud and bankruptcy fraud on January 6, 2020.

Scott C. Blader, United States Attorney for the Western District of Wisconsin, made the announcement.

U.S. District Judge James D. Peterson handed down the sentence.

At the sentencing, Judge Peterson called the defendant a professional conman, said that this was “a particularly heartless crime,” and told the defendant that his crime “stands apart from anything I’ve come across in my six years on the bench.”

U.S. Attorney Blader praised the work of the U.S. Trustee’s Office and the law enforcement agents who investigated the criminal case.  U.S. Attorney Blader also urged Wisconsin residents to be alert to this type of fraud.

U.S. Attorney Blader was joined in making the announcement by Robert E. Hughes, Special Agent in Charge of the FBI’s Milwaukee Field Office; Kathy A. Enstrom, Special Agent in Charge of the Chicago Field Office of IRS Criminal Investigation; Catherine Huber, Special Agent in Charge, Central Region, Federal Housing Finance Agency – Office of Inspector General; and Patrick S. Layng, United States Trustee for Region 11.

The following are tips to avoid being a victim of mortgage fraud schemes from the U.S. Department of Treasury and the U.S. Department of Housing and Urban Development:

  • Beware of anyone seeking to charge you in advance for mortgage modification services.  In most cases, charging fees in advance of a mortgage modification is illegal.
  • Only your mortgage company has the discretion to grant a loan modification. Therefore, no third party can guarantee or pre-approve your mortgage modification application.
  • Beware of individuals and companies claiming that your payments should be sent to an alternate contact or address that is different from the information in your mortgage statement.
  • Beware of individuals or companies that offer money-back guarantees or insist on upfront fees and can only accept payment by cash, cashier’s check, or wire transfer.
  • Beware of private individuals claiming to be affiliated with government-backed refinancing programs.

For additional information, see https://www.makinghomeaffordable.gov/get-answers/Pages/get-answers-how-avoid-scams.aspx.

The charges against Wood were the result of an investigation conducted by the Federal Bureau of Investigation, IRS Criminal Investigation, and the Federal Housing Finance Agency – Office of Inspector General, with assistance from the Office of the United States Trustee.  The prosecution of the case has been handled by Assistant U.S. Attorney Meredith P. Duchemin.

 

Isaac DePaula, 40, Brazil, was arrested this morning for his role in a long-running mortgage fraud scheme based in New Jersey.

DePaula was charged by complaint in 2012, indicted in 2016, and has been a fugitive. He returned via Newark Liberty International Airport this morning to face a four-count indictment charging him with conspiracy to commit bank fraud and three counts of bank fraud.

According to documents filed in this and other cases and statements made in court:

From September 2006 to May 2008, DePaula and his conspirators engaged in a long-running, large-scale mortgage fraud conspiracy through a company called Premier Mortgage Services (PMS). The conspirators targeted properties in low-income areas of New Jersey. After recruiting straw buyers, the conspirators used a variety of fraudulent documents to make it appear as though the straw buyers possessed far more assets, and earned far more income, than they actually did. The conspirators then submitted these fraudulent documents as part of mortgage loan applications to financial institutions. Relying on these fraudulent documents, financial institutions provided mortgage loans for the targeted properties. The conspirators then split the proceeds from the mortgages among themselves and others by using fraudulent settlement statements (HUD-1), which hid the true sources and destinations of the mortgage funds provided by financial institutions. In reality, the straw buyers had no means of paying the mortgages on the properties, many of which entered into foreclosure proceedings.

DePaula was a loan officer at PMS and recruited straw buyers, provided false and fraudulent documents to the straw buyers, and incorporated false and fraudulent documents into loan applications to induce financial institutions to fund mortgage loans. The loan officers profited illegally by receiving a commission from PMS for each mortgage loan that they closed, and also profited illegally by diverting portions of the fraudulently obtained mortgage proceeds for themselves, often via shell corporations or nominee bank accounts.

DePaula faces a maximum potential penalty of 30 years in prison and a fine of $1 million per count. His co-defendant, Rodrigo Costa, remains at large. All of the remaining conspirators have previously pleaded guilty and been sentenced for their roles in the scheme.

DePaula made his initial appearance before U.S. Magistrate Judge James B. Clark III in Newark federal court and was released on his own recognizance.

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 Gregory W. Ehrie; special agents of the IRS, under the direction of Special Agent in Charge John R. Tafur; and special agents of the Federal Housing Finance Agency’s Office of the Inspector General, under the direction of Special Agent in Charge Robert Manchak, for the investigation leading to today’s arrest.

The government is represented by Assistant U.S. Attorneys Rahul Agarwal and Zach Intrater.

The charges and allegations contained in the indictment are merely accusations, and the defendants are presumed innocent unless and until proven guilty.

Defense counsel: Joshua Cohn Esq., Saddle Brook, New Jersey

 

BoostMyScore.net (BMS), a Colorado-based credit repair company and its owner have agreed to settle Federal Trade Commission charges they mislead consumers with promises to “drastically and immediately” improve credit scores and increase access to lower rates on mortgages.

In its complaint, the FTC alleges that the defendants guaranteed consumers that, in exchange for fees ranging from $325 to $4,000, they could “piggyback” on unrelated consumers’ good credit, artificially inflating their own credit score in the process.

In piggybacking, a consumer pays to be listed on another person’s well-maintained credit account, ostensibly receiving the benefit of the good account on their own credit even though they can’t access the account. In this case, the FTC alleges, defendants charged struggling consumers steep, illegal fees and made unsupported promises about how piggybacking would pave the way to new credit, including mortgages and other loan products.

According to the complaint, BMS made unwarranted promises in various advertisements that consumers’ credit scores would increase by anywhere from 100 to 120 points over two to six weeks. BMS also allegedly charged consumers upfront for the credit repair services they offered, which is illegal under the Credit Repair Organizations Act (CROA). The complaint alleges that the defendants violated the FTC Act, CROA, and the Telemarketing Sales Rule (TSR).

Under the terms of the proposed settlement with the FTC that will soon be filed with the court, BoostMyScore, LLC, BMS, Inc., and William O. Airy will be prohibited from selling fake access to another consumer’s credit as an authorized user and from collecting advance fees for credit repair services, as well as other violations of CROA. They will also be prohibited from misrepresenting a product or service as being legal, as well as from misrepresenting the terms of a refund or return policy. The defendants also will be banned from further violations of the TSR. The settlement also includes a monetary judgment of $6,630,678, which will be partially suspended upon payment of $64,863 due to the defendants’ inability to pay. Should the defendants be found to have misrepresented their financial condition, the full judgment would be immediately payable.

Good credit isn’t for sale,” said Andrew Smith, Director of the FTC’s Bureau of Consumer Protection. “This company charged people thousands of dollars based on hollow promises that ‘piggybacking’ on a stranger’s good credit would raise their credit score or help them get a mortgage.

The Commission vote authorizing the staff to file the complaint and stipulated final order was 5-0. The FTC filed the complaint and final order in the U.S. District Court for the District of Colorado.

NOTE: The Commission files a complaint when it has “reason to believe” that the named defendants are violating or are about to violate the law and it appears to the Commission that a proceeding is in the public interest. Stipulated final orders have the force of law when approved and signed by the District Court judge.

The Federal Trade Commission works to promote competition, and protect and educate consumers. You can learn more about consumer topics and file a consumer complaint online or by calling 1-877-FTC-HELP (382-4357). Like the FTC on Facebook, follow us on Twitter, read our blogs, and subscribe to press releases for the latest FTC news and resources.

 

Ruben Diaz and Rodrigo Diaz, who were accused of deceiving dozens of Spanish-speaking consumers in a variety of real estate-related transactions have been put out of business by court order. As a result of the injunctive relief, Ruben and Rodrigo Diaz are banned permanently from advertising, offering, or providing services in connection with the sale, purchase, lease, or financing of real property in Arizona.

The lawsuit filed by the Attorney General’s Office alleged that Ruben and Rodrigo Diaz (father and son team), used several companies, including ProSolutions LLC, to prey upon Spanish-speaking families who wanted to purchase a home. The Defendants promised to find the families homes to purchase and arrange financing. The Defendants then took tens of thousands of dollars in down payments and had Spanish-speaking consumers sign documents in English under false pretenses.

Families who believed they were purchasing a home eventually discovered, sometimes years later, that they were only renters with no equity or ownership rights. In other instances, consumers gave the Defendants thousands of dollars as a down payment for a home, with the promise that it would be returned to them if they did not make a home purchase. In reality, the Defendants spent the down payments and never made the promised refunds.

Ruben and Rodrigo Diaz were not licensed lenders, real estate agents, or mortgage brokers.

In addition, Ruben Diaz owes $425,313 in restitution to consumers, as well as $100,000 in civil penalties to the State.

Attorney General Mark Brnovich made the announcement.

Buying a home is part of the American dream, but Ruben and Rodrigo Diaz turned that process into a nightmare and robbed dozens of home buyers of that experience,” said Attorney General Mark Brnovich.

Consumers can help protect themselves from real estate and mortgage fraud by working only with licensed professionals and by ensuring that they read and understand contracts before signing them. The public can access the Arizona Department of Real Estate‘s and the Arizona Department of Financial Institutions‘ public databases to determine if a lender or realtor is licensed in the State of Arizona.

Assistant Attorneys General Rebecca Salisbury and Kaitlin Hollywood handled this case.

If you believe you have been the victim of consumer fraud, you can file a consumer complaint by visiting the Attorney General’s website. If you need a complaint form sent to you, you can contact the Attorney General’s Office in Phoenix at (602) 542-5763, in Tucson at (520) 628-6648, or outside the Phoenix and Tucson metro areas at (800) 352-8431. Nuestros formularios de quejas están disponibles en inglés o español.

 

Anthony T. Williams, 48, Nashville, Tennessee was found guilty yesterday of 32 counts of wire and mail fraud in connection with fraudulent mortgage debt reduction scheme.

According to the evidence presented at trial, Williams marketed a fraudulent mortgage debt reduction scheme to distressed homeowners, who were mostly non-native English speakers in the Filipino immigrant community in Hawaii. Williams created two companies, Mortgage Enterprise Investments (MEI) and Common Law Office of America (CLOA), neither of which was licensed to service or modify mortgages. Through MEI, Williams made conflicting promises to clients that he could eliminate their existing mortgage obligations to their lenders, or reduce their mortgage obligations by half. Through CLOA, Williams promised legal representation in mortgage-related litigation and foreclosure proceedings. To give himself the appearance of credibility, Williams told prospective clients he was a “private attorney general” and brandished an official-looking law enforcement badge and credentials, despite not having a law license or any affiliation with law enforcement.

The evidence at trial demonstrated that Williams falsely promised victims that he could eliminate their existing home mortgage obligations by filing bogus documents with the Hawaii Bureau of Conveyances. These documents included new MEI mortgages and notes obligating homeowners to make monthly payments to MEI. Williams then advised homeowners to stop making their mortgage payments to their lenders and to pay him instead.

The government presented evidence that between 2012 and 2015,Williams enlisted 112 victims in Hawaii into his MEI program and fraudulently obtained over $218,000. Furthermore, several victims testified at trial that they relied upon Williams’s representations and went into foreclosure as a result of the MEI program and lost their homes.

The verdict followed a four-week trial before United States District Judge Leslie E. Kobayashi. Sentencing is scheduled for June 24, 2020

The investigation was led by the Federal Bureau of Investigation. Assistant U.S. Attorneys Kenneth M. Sorenson and Gregg Paris Yates handled the prosecution.

Jacqueline Graham, 54, formerly of Antioch, California, and Levittown, Pennsylvania was sentenced today to 132 months in prison in connection with a $38 million fraudulent mortgage debt elimination scheme.

According to the Indictment in the case, the evidence presented at trial, and statements made in public court filings and proceedings, including Graham’s sentencing hearing:

From at least 2011 to at least 2012, Graham partnered with Bruce Lewis, 67, formerly of Alaska and Washington State, and John Ruzza 49, formerly of Mahopac, New York in operating the Valhalla, New York-based Terra Foundation, which held itself out as a business that would investigate and eliminate mortgage loans in exchange for fees, soliciting clients who were having difficulties making their mortgage payments.  In fact, however, Terra engaged in a wide-ranging scheme to defraud clients, county clerks’ offices, and banks.

The fraudulent scheme, which was created by Graham and Lewis, involved Terra performing “audits” of clients’ mortgages, sending pseudo-legal paperwork to the banks and/or lenders holding the mortgages, and ultimately filing purported mortgage discharges with the relevant county clerks’ offices.  As a result, anyone doing a title search for one of Terra’s clients would see that the client’s mortgage had been satisfied.  The mortgages had not, however, been discharged, and the mortgages were eventually reinstated, after the clients paid their fees.

In order to effectuate the scheme, Graham, Lewis, and Ruzza involved others, including Rocco Cermele, 57, Yonkers, New York the director of operations, Paula Guadagno, 62, Verplanck, New York, who filed discharges on behalf of Terra, and Anthony Vigna, 61, Thornwood, New York, a lawyer and CPA who worked in Terra’s offices.  Vigna was formerly an Assistant Corporation Counsel for the City of Yonkers, and a college accounting and law professor, including stints on the faculties of Mercy College, Iona College, SUNY Maritime College, College of Mount St. Vincent, and Westchester Community College.

In total, Graham and her co-conspirators filed over 60 fraudulent discharges in Westchester and Putnam Counties in New York, and in Connecticut.  The fraudulent discharges claimed to discharge mortgages with a total loan principal of nearly $38 million. http://www.mortgagefraudblog.com/?s=Jacqueline+Graham

In addition to her prison term, Graham was sentenced to five years of supervised release and ordered to pay restitution to her victims in the amount of $694,450 and forfeiture of $138,941.86.

Lewis was previously was sentenced by Judge Román to seven years in prison, three years of supervised release, and forfeiture of $149,408.

Vigna was previously was sentenced by Judge Román to one year and one day in prison, three years of supervised release, and $250,500 of restitution.

Ruzza was previously pled guilty before U.S. District Judge Cathy Seibel to one count of participating in a conspiracy to commit mail fraud, wire fraud, and bank fraud relating to the Terra scheme, as well as one count of participating in a conspiracy to commit wire fraud, two counts of bank fraud, two counts of wire fraud, and one count of obstruction of justice.

Cermele and Guadagno previously pled guilty to their participation in the scheme.

Graham previously was convicted in June 2019 after a two-week trial before U.S. District Judge Nelson S. Román, who also imposed today’s sentence.

Geoffrey S. Berman, the United States Attorney for the Southern District of New York, made the announcement.

Manhattan U.S. Attorney Geoffrey S. Berman said:  “Jacqueline Graham brazenly defrauded vulnerable homeowners during the housing crisis by falsely promising that, for substantial fees, she could make millions of dollars of their mortgage debt disappear.  In reality, she pilfered her victims’ money, leaving them far worse off, and some ended up losing their homes.  Now Graham will spend 11 years in federal prison for preying upon her many victims.”

Mr. Berman praised the outstanding investigative work of the Federal Bureau of Investigation.  Mr. Berman also thanked the Westchester County District Attorney’s Office and the Department of Housing and Urban Development for their assistance in the case.

This case is being handled by the Office’s White Plains Division.  Assistant United States Attorneys David Felton, Michael Maimin, and James McMahon are in charge of the prosecutions.