3 Admit Roles in Scheme Involving Straw Buyers, Inflated Appraisals, Flipping and Extracting Equity

Allison Tussey —  November 8, 2013 — 4 Comments

Carlyle “Carl” Lee Cole, 66, and Caleb Lee Cole, 37, and Sneha Ramesh Mohammadi, 41, all of Bakersfield, California, pleaded guilty to charges stemming from their involvement in an extensive mortgage fraud scheme that ran from January 2004 to September 2007.

Carl Cole pleaded guilty to conspiracy to commit mail fraud, wire fraud, and bank fraud. Caleb Cole pleaded guilty to mail fraud. Co-defendant Mohammadi pleaded guilty to conspiracy to commit mail fraud, wire fraud, and bank fraud. Jayson Costa has a change of plea hearing on November 12, 2013, at 9:00 a.m. before Judge O’Neill.

According to the plea agreements, Carl Cole, along with co-defendant 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. Carl Cole was a licensed real estate broker. 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 straw buyers typically received a payment ranging from several thousand dollars to $20,000 or more per property purchase, while CCRE and the conspirators received the profits upon the sale of the property.

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. Certain of the conspirators tracked the properties and for a time made mortgage payments on them using CCRE funds. 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. Carl Cole admitted in his plea agreement that he and the co-conspirators caused losses of at least $29,884,498 to the defrauded lenders due to the conspiracy.

Sneha Mohammadi, who worked as the office manager at Tower Lending and then as a financial officer at CCRE between March 2005 and April 2007, admitted causing lenders losses of at least $11,197,811 based on her involvement in the conspiracy. In addition to her role as an employee of CCRE, Mohammadi also admitted purchasing properties as a straw buyer based on false and fraudulent applications, in furtherance of the conspiracy.

According to his plea agreement, Caleb Cole purchased 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.

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.

Carl Cole and Caleb Cole are scheduled to be sentenced by U.S. District Judge Lawrence J. O’Neill on February 18, 2014. Sneha Mohammadi is scheduled to be sentenced by Judge O’Neill on June 9, 2014. Carl Cole and Sneha Mohammadi face a maximum statutory penalty of 30 years in prison and a $1 million fine. Caleb Cole faces a maximum statutory penalty of 20 years in prison and a $250,000 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.

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.

“Today’s guilty pleas come after years of careful, thorough investigation into the illegal activities of many in and around the Crisp, Cole & Associates real estate firm. The defendants falsely inflated real estate prices knowing that the foreclosures that followed would do harm to local builders, consumers, and lenders,” said U.S. Attorney Wagner. “Crisp & Cole was emblematic of the recklessness and lawlessness in the mortgage industry in the mid-2000s that caused the financial crisis that led to so much devastation in the Central Valley of California. Since that crisis hit, this office has charged more than 350 people with crimes related to mortgage fraud schemes, and our work is not yet done.”

“Carl and Caleb Cole’s greed fueled an egregious, large-scale conspiracy that cost the mortgage industry more than $29 million,” said Special Agent in Charge Monica M. Miller of the Sacramento Field office of the Federal Bureau of Investigation. “These individuals fraudulently obtained large sums to support lavish lifestyles. Unfortunately, these crimes are not victimless and the damage to the community is lasting. The conspiracy artificially inflated home values that, in turn, raised purchase prices of comparable homes, forcing innocent homebuyers to pay well above true market value for their homes.”

Allison Tussey

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4 responses to 3 Admit Roles in Scheme Involving Straw Buyers, Inflated Appraisals, Flipping and Extracting Equity

  1. Believe me, the appraisers were in on the scam from the start. Appraisers learn from their “Supervisors” during the training period to play ball or disappear.

  2. I was charged $1200 for an appraisal. Why are appraisers not responsible for their actions?

  3. The totally sad part of this case was it took 7 years and no appraisers were indicted even as they charged the fraudsters $1,000 per report.

  4. Reminiscient of the total anarchy I told the FBI about in 2004.

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