5th Person Pleads Guilty in Mortgage Fraud Case

admin —  July 6, 2010 — Leave a comment

Christopher Stovall, 37, Bakersfield, California, pleaded guilty to four counts of mail fraud in connection with a mortgage fraud scheme involving Crisp & Cole Real Estate. Four other persons, including Megan Balod, Leslie Sluga, Kevin Sluga, and Jerald Teixeira, have previously pleaded guilty in related cases.

In pleading guilty, Stovall admitted from July 2005 to August 2006, he and certain individuals at Crisp & Cole and Tower Lending, and other individuals, executed a scheme to defraud mortgage lenders, including Long Beach Mortgage Co., Kirkwood Financial Corp., Wells Fargo Home Mortgage, SunTrust Mortgage Inc., and Fremont Investment & Loan, by submitting materially false and fraudulent statements in mortgage loan applications and related documents to obtain loans for straw buyers and others purchasing real property. At that time, Stovall was employed as a loan officer with Tower Lending, a mortgage brokerage affiliated with Crisp & Cole.

According to the plea agreement, Stovall admitted that he knowingly caused materially false and fraudulent statements to be made in loan applications and related transaction documents, including false and fraudulent statements by the borrowers and by Crisp & Cole and Tower Lending employees. He also admitted that he obtained and processed loans to finance the purchases of real properties by straw buyers for the benefit of Crisp & Cole. The false and fraudulent statements in the loan applications frequently included material misstatements and omissions concerning the borrowers’ income, assets, and employment, and false statements concerning the borrowers’ intent to reside in the properties as owner-occupiers. Based on his experience in the industry, Stovall admitted that he knew and expected that the lenders would rely on such misstatements and omissions in approving the funding of the mortgage loans. Many of the properties purchased with the loan proceeds were subsequently foreclosed upon after loan payments were not made when due. Stovall admitted that he caused lenders to be defrauded of approximately $2,479,290.

This case is the product of an extensive investigation by the FBI’s Bakersfield Resident Agency, Sacramento Division. To further the prosecution of mortgage fraud cases arising out of the southern half of the Central Valley, in 2009 the U.S. Attorney’s Office and the FBI created the San Joaquin Valley Mortgage Fraud Task Force in Fresno, composed of both federal and local law enforcement agents and prosecutors. Assistant U.S. Attorneys Kirk E. Sherriff and Stanley A. Boone are prosecuting the case.

United States Attorney Benjamin B. Wagner made the announcement.

This law enforcement action is part of the work being done by President Barack Obama’s Financial Fraud Enforcement Task Force. President Obama established the inter-agency Financial Fraud Enforcement Task Force to wage an aggressive, coordinated and proactive effort to investigate and prosecute financial crimes. The task force includes representatives from a broad range of federal agencies, regulatory authorities, inspectors general, and state and local law enforcement who, working together, bring to bear a powerful array of criminal and civil enforcement resources. The task force is working to improve efforts across the federal executive branch, and with state and local partners, to investigate and prosecute significant financial crimes, ensure just and effective punishment for those who perpetrate financial crimes, combat discrimination in the lending and financial markets, and recover proceeds for victims of financial crimes. One component of the FFETF is the national Mortgage Fraud Working Group, co-chaired by U.S. Attorney Wagner.

Stovall is scheduled to be sentenced by Judge Oliver W. Wanger on December 6, 2010, at 1:30 p.m. The maximum statutory penalty on each mail fraud charge is 30 years in prison and a criminal fine of $1 million. The actual sentence, however, will be determined at the discretion of the court after consideration of any applicable statutory sentencing factors and the Federal Sentencing Guidelines, which take into account a number of variables.

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