Comment on Sentencing of Kristen Ayala

Rachel Dollar —  March 15, 2017 — 12 Comments

A recent comment from Brandon on the blog post Mortgage Mod Case Results in 10+ Year Sentences stated:

“Couple of small pawns in a much larger game.kristen is a 32 year old first time,non violent offender mother of three.sentanced to over 12 years.not sure how these so called heros sleep at night .Wake The @%*&  Up !!!”

Kristen Michelle Ayala was sentenced to 135 months – 11 years and 3 months –  in prison in connection with a mortgage modification scheme. She is not currently in the custody of the Bureau of Prisons but that site does confirm that she is 32 years old and that her anticipated release date is March 9, 2025.  In the federal prison system, a defendant must serve at least 85% of their sentence which means that Ms. Ayala will serve at least 114 months, over 9 years, in prison.

So, what is it about this particular “white collar” crime that resulted in such a long prison sentence?  I have been writing about these cases for many years and there are a number of factors that influence sentencing that may not be readily apparent to readers.  So, let’s look at Ms. Ayala’s case.

Ms. Ayala pled guilty to one count of conspiracy to commit wire fraud which carries a maximum potential sentence of 30 years in prison. The maximum sentence is not, however, what the defendant will actually receive at sentencing.  The court works off sentencing guidelines which are advisory, not mandatory.  It uses these guidelines to add or subtract from the “base level” of the offense and then comes up with a “guideline range” and the sentence is generally within that range.

Many of the defendants that I have written about have either been convicted of or pled guilty to a significant number of counts and have been sentenced to less than ten years.  Ms. Ayala only pled guilty to one count so, again, what makes this situation different from those?

The sentencing process starts with a Presentence Investigation Report which is prepared by a probation officer.  The defendant is generally interviewed as part of this process. The Presentence Investigation report identifies the potentially applicable guidelines, calculates the offense level and criminal history category, identifies factors relevant to the appropriate kind of sentence or appropriate sentence within the guideline range and identifies any basis for departing from the applicable range (Federal Rule of Criminal Procedure 32).  It may also address the defendant’s history and characteristics along with the impact of the crime on the victim. The Presentence Investigation Report is generally sealed by the Court – which means we do not have access to it to review what the probation officer found or recommended.  In Ms. Ayala’s case, the Presentence Investigation Report was sealed and we do not have access to it.

The defendant can then submit an objection to the Presentence Investigation Report.  The objection might include arguments that the Presentence Investigation Report is incorrect, bring up items of information that were not included and that might reflect positively on the defendant or might argue with the recommended departures or guideline range conclusions or contain letters from character witnesses.  Ms. Ayala filed an objection to the Presentence Report but that document was sealed by the court so it is not possible for us to review the issues and arguments that she raised.

In this case, the government filed a “Position on Sentencing” which laid out its position on the sentence that should be imposed.  It is the only document that gives some insight into the sentence which is not sealed.  Although we cannot view the Presentence Investigation Report or Ms. Ayala’s objections, the Position on Sentencing addresses issues raised in both.

In its Position, the government refers to Ms. Ayala’s plea as related to a “ruthless and pervasive home mortgage modification scheme.” And goes on to state that Ms. Ayala’s actions “targeted extremely vulnerable individuals” and that the victims were “selected for the sole reason that they were in dire financial straits, desperate and literally on the verge of losing their homes.”   The Position states that the government had, at the time it filed the Position, identified 405 victims with a loss amount of approximately $3.8 million.  According to the Position, the victim impact statements showed that the scheme destroyed the lives of the victims, causing divorce, serious health issues and extreme despair to children, parents, combat veterans and people who were struggling.

The Position goes to state that Ayala and her co-conspirators analyzed the victims finances and arrived at a number that was designed to take their very last dollars. According to the Statement of Facts filed with the plea agreement, after the victim responded to a mass mailing that purported to be from a government related entity by calling a toll free telephone number and providing their financial information, another representative would call the homeowner back and tell them that their application for mortgage modification had been approved and that they needed to pay a “reinstatement fee” of thousands of dollars along with three trial payments.  These payments were diverted to the defendants.  No work was ever done to modify the mortgages.  The defendants also impersonated a legitimate federal program – HAMP, which was part of TARP and designed to help distressed homeowners. By doing so, they duped homeowners into thinking the program was legitimate.

The Position states “[w]e know from the investigation that Defendant and the co-conspirators would congratulate one another and demean the recently defrauded victims for their naiveté and stupidity in parting with their money.”

As to the history and characteristics of the defendant, the Position states that Ms. Ayala made poor choices in her early years but got her life together, gained an employable skill, started a family and lived a law abiding life.  However, when her marriage started to deteriorate, she started an affair with her co-defendant, Joshua Sanchez.  Once she was introduced to the scheme, she came on board as a full participant and was extremely helpful in convincing distressed homeowners that the scheme was legitimate.

The Position states that Ms. Ayala’s lack of a criminal history should be taken into account and therefore recommended a sentence of 160 months in prison – at the lower end of the guideline range.

Because the fraud scheme had a devastating effect on the lives of the victims, the Position also includes outtakes from some of the victim impact statements, some of which follow:

“My husband fought in two wars protecting all U.S. Citizens and assuring freedom remains in these United States, including for [Defendant]. He sacrificed his sight, most of his hearing and the ability to walk for this great Nation. I can’t find the words for the atrocities and the pain and suffering that [Defendant] have caused a man who already gave so much for all, even [Defendant].”

“They stole my money [and] I am 83 years old. I cannot many (sic) anymore income. My son & his family became homeless as a result of their actions & we lost the family property.”

“As a result of this crime, me and my children were homeless for a while…My daughter had to be admitted to a pediatric psychiatric unit for two weeks because she was affected when her friends saw all our belongings on the front lawn and we had no place to go….”

“Because of their actions, I went into a deep depression. I had to quit my job because of the stress I was going through….My marriage is not a marriage anymore, because my husband cannot forgive me for this. My family fell apart….The damage they did is unforgivable, I hope justice is done.”

The minute entry from the sentencing hearing indicates that Ms. Ayala requested a reduction for her minor role in the offense, requested a variance sentence of 12 months and 1 day, and requested the court take into account her background and history. The court rejected the request for a reduction based on a minor role and adopted the Presentence Investigation Report.  While Sanchez was sentenced to 151 months, Ms. Ayala received a sentence of 135 months.

In my years of reporting on mortgage fraud, I have discovered a few factors that really impact sentencing.  The first and probably most significant is the existence of real human victims whose lives were destroyed.  When the victim is a financial institution, unless the dollar amount is very high, there is a pattern of convictions or a wide-ranging scheme involving a lot of conspirators, the sentence is generally in the one to five year range.  And it seems, in those cases, that personal difficulties faced by the defendant have a significant impact on the sentence. Cooperation with authorities (pleading guilty, testifying against co-conspirators) also weighs heavily.

But where, as here, lives are permanently and irrevocably impacted as a result of an abuse of trust and confidence and the victims selected are vulnerable and in need of protection, the personal issues and prior ‘good character’ of the defendant seem to be given less weight.  Is it heartbreaking that a 32-year old mother of 3 will spend twelve and a half years in prison?  Yes.  But it is also heartbreaking to the victims.  In the end, it was Ms. Ayala’s decision to enrich herself by engaging with others to take over a million dollars from vulnerable homeowners who thought that they were applying for government assistance through HAMP.

When you stay with a company after you figure out that they are, in fact, a fraudulent scheme and are essentially stealing money from vulnerable people, you make a choice. At that point, you become part of a conspiracy to defraud and you become responsible for the results. It was this decision that ruined the lives of hundreds of people, whether she was doing it for the money, to impress her new boyfriend, because her “success” at her “job” felt good to her, because she needed her paycheck to live, or for any one of a hundred other reasons that people use to justify the purposeful decision to defraud others.  In the end, crime is a choice and Ms. Ayala made that choice.

What is the result when you place, on one side of the scales of justice, the weight of the result of her voluntary choice on her own life and, on the other side of the scales of justice, the weight of the effect of that choice on the 405 victims of her conduct?  Unfortunately for Ms. Ayala, the scales tip rather significantly toward eleven years.

*Ms. Ayala was also ordered to pay $1,217,411.45 in restitution to 404 victims.


Rachel Dollar

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12 responses to Comment on Sentencing of Kristen Ayala

  1. She got nothing that she didn’t earn and deserve. The sentence seems reasonable for what she did. I guarantee she won’t do that crime again.

  2. OH PLEASE….She deserves sympathy and leniency because why? She systematically screwed 405 victims (how many others did she try that on but failed take their money) and blatantly lied for her own profit. She deserves severe punishment. I spoke to people who had given multiple multiple Loan Mod Experts a total of $12,000 over a few years trying for some magic bullet to their situations. None of them did what they said.

    REALLY???? “not sure how these so called heros sleep at night .Wake The @%*& Up !!!”

    The person who wrote the above quote needs a critical thinking class! If you don’t punish someone that looks across the table and says give me your $$$$, blatantly knowing they will do nothing in return, knowing these people were giving you their last $$$$ (she was a hunter), knowing now they can’t even go get an apartment to have shelter for their children…..that is know as EVIL and deserves severe punishment. If we as a society don’t punish people like this what is the point of ANY law. And yes, I agree many of the big people needed to go down for their involvement in the meltdown and but lets not forget the borrowers and LO’s who signed loan applications STATING they made higher income than they really did (AKA: FRAUD), and the underwriters who called me and my loan officers back in the day, telling us to inflate the income knowing it wasn’t there and when I told them that is misrepresentation and an underwriter at a federally insured institution saying “don’t worry about it we do it all the time”, but to tell people since the big guys didn’t go down, neither should the little guy/gal, just says we don’t want any law and order (AKA Anarchy).

  3. Thank you for taking the time to share this information. As the BSA Officer for a large company, it really helped me understand the workings of this process. It sounds like she hit people at a time they were most vulnerable. In the end, it comes down to choices and consequences. She made the choice to scam these vulnerable people and now must face the consequence.

  4. if the people who are defrauded are Banks; the sentence is lower also: This signifies “an Individual can sue a Company or Individuals if they think they are being “fraudulent”; AR~

  5. Rachael Dollar wrote: In my years of reporting on mortgage fraud, I have discovered a few factors that really impact sentencing. When the victim is a financial institution, unless the dollar amount is very high, there is a pattern of convictions or a wide-ranging scheme involving a lot of conspirators, the sentence is generally in the one to five year range.

    The Banks get leniency; as a company. I agree with your summary. Thanks Rachael !!!

    • I believe she’s saying when the VICTIM is a bank, the PERPS receive the leiniancy. Whether the perp is an individual LO, borrower or another FI.

  6. Sandi Banducci March 22, 2017 at 5:13 am

    Good explanation, it is interesting to see how the justice system lays out the sentences. I work in mortgage banking, and I have left or been terminated due to the fact I can’t stand to be involved with fraud. When I started in the industry, it was mostly just savings and loans, and very honest. Glad I am at the retiring stage. I now work in mortgage compliance, reviewing files for securitization.

  7. It continues to amaze me that seemingly informed people perpetuate these schemes on others when the news is littered with stories of such criminals being apprehended, incarcerated, and disgorged of their gains. And, for the apologists out there, there is always a “reason” why an offender commits offenses. Regardless of the rationale for committing the crime, the problem is compounded by soothing the offender with soft words, piles of steaming empathy, and a gentle rebuke. Adults do not need to be educated that stealing from others is wrong. This basic understanding is already reinforced throughout life. Those who commit such crimes know that it is wrong, yet still find justification for proceeding. I would like to see these despicable human beings (despicable because they prey on the vulnerable) sentenced to a facility/duties that require production of goods/services that pay for the cost of incarceration, produce compensation for victims, and deliver a humanitarian benefit for society.

  8. She deserves a long sentence. When you see the victims and you calculate how you are going to steal their money and leave them high and dry with no conscience, then you deserve what you get. This didn’t happen once or twice. To say she is young and used poor judgement says you have not thought about the families. Young and stupid doesn’t repeat the same pattern of blatant fraud against 405 victims without a great deal of thought and effort ….she worked at it. She’s a special kind of person who deserves a special kind of sentence.

  9. Thank you for elaborating on that

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