2 Plead Guilty to Submitting Fraudulent Loan Applications to Lenders

Allison Tussey —  November 21, 2013 — Leave a comment

Michael Angelo Munoz, 34, Bakersfield, California, pleaded guilty today to two counts of mail fraud relating to his involvement in an extensive mortgage fraud scheme that ran from January 2004 to September 2007. On November 12, 2013, co-defendant Jayson Peter Costa, 40, also of Bakersfield, pleaded guilty to conspiracy to commit mail fraud, wire fraud, and bank fraud relating to the same mortgage fraud scheme.

According to the plea agreements, Carl Cole, who pleaded guilty earlier this month, and David Crisp, owned and operated real estate brokerage firm Crisp, Cole & Associates, also known as Crisp & Cole Real Estate (CCRE), and Tower Lending, an affiliated mortgage brokerage. Munoz was employed at CCRE as a licensed real estate agent, while Costa was employed at Tower Lending as an unlicensed loan officer.

According to court documents, between January 2004 and September 2007, these defendants and others at CCRE and Tower Lending carried out a conspiracy to defraud mortgage loan companies and federally insured financial institutions, in part by using straw purchasers to acquire properties at inflated prices with funds borrowed from lenders, often using 100 percent financing, based on false and fraudulent loan applications. The properties were nominally owned in the names of the straw buyers, but were controlled by the conspirators and held for the benefit of the conspirators and CCRE.

The conspirators frequently resold the properties from one straw buyer to another, each time at an inflated, higher price so that the conspirators and CCRE could extract the purported increased “equity” from the property for their benefit. Ultimately, and in many cases after the properties were flipped several times through various straw purchasers, most of the properties were foreclosed upon after the defendants failed to make the mortgage payments when due. According to court documents, the conspiracy caused close to $30 million in losses to mortgage loan companies and other financial institutions.

According to his plea agreement, Munoz purchased or refinanced numerous real properties as a straw buyer for CCRE and knowingly made material misstatements and omitted material information in loan applications he submitted to lenders to obtain funds to purchase the properties. Munoz also admitted rendering services to CCRE as a real estate agent in connection with straw purchases by other CCRE employees and co-defendants and earning a commission for those services.

Costa admitted to knowingly causing numerous false and fraudulent loan applications to be submitted to lenders, and also knowingly purchasing properties as a straw buyer, all in furtherance of the conspiracy. Costa admitted causing lenders losses of more than $7.5 million based on his involvement in the conspiracy.

Munoz and Costa are scheduled to be sentenced by U.S. District Judge Lawrence J. O’Neill February 18, 2014. Munoz faces a maximum statutory penalty of 20 years in prison and a $250,000 fine for each mail fraud count. Costa faces a maximum statutory penalty of 30 years in prison and a $1 million fine. The actual sentences, however, will be determined at the discretion of the court after consideration of any applicable statutory factors and the Federal Sentencing Guidelines, which take into account a number of variables.

Co-defendants Carl Cole, Caleb Cole, and Sneha Ramesh Mohammadi pleaded guilty to their involvement in the conspiracy earlier this month. Co-defendant Robinson Nguyen, a former CCRE real estate agent, previously pleaded guilty to his role in the conspiracy and was sentenced to 27 months in prison. The remaining co-defendants have pleaded not guilty and are currently set for trial on January 28, 2014.

United States Attorney Benjamin B. Wagner announced the guilty pleas.

This case is the product of an investigation by the Federal Bureau of Investigation. Assistant U.S. Attorneys Kirk Sherriff, Henry Carbajal III, and Christopher Baker are prosecuting the case.

Allison Tussey

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