Lillian Marquez, 38, and Michael Keatts, 56, both of Stockton, California, were arrested in their homes for a mortgage fraud scheme. A federal grand jury indictment charged them with conspiring to commit mortgage fraud and with nine counts of mail fraud. The indictment was unsealed upon their arrests.
According to the indictment, from February 2006 through at least August 2012, Marquez and Keatts operated Colonial Home and Business Services, Stockton, California. Both defendants were licensed real estate agents who assisted clients in purchasing and selling homes.
The indictment alleges that both defendants participated in supplying false information to mortgage lending institutions indicating that clients were employed by various businesses set up and controlled by the defendants. In fact, these clients were not employed by those businesses and their actual income from their true employment was far less than what was represented to lending institutions. To support these false claims, the defendants created and submitted fraudulent paystubs and tax documents falsely stating that their clients were so employed.
According to the indictment, both defendants engaged in short-sale fraud. The defendants would assist clients facing default on their current loans to arrange for short sales of their properties. Unbeknownst to the lending institutions, the defendants would arrange for the properties to be sold to straw buyers. The original owners would remain in the properties, and enjoy the benefits of the new loans that the lenders assumed were made to other individuals.
If convicted, Marquez and Keatts face a maximum statutory penalty of 30 years in prison and a $1 million fine. Any sentence, however, would 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. The charges are only allegations; the defendant is presumed innocent until and unless proven guilty beyond a reasonable doubt.
United States Attorney Benjamin B. Wagner announced the charges.
This case is the product of an investigation by the Federal Bureau of Investigation and the U.S. Department of Housing and Urban Development’s (HUD) Office of Inspector General (OIG). Assistant United States Attorney Philip Ferrari is prosecuting the case.