Kathy Chen, 49, Westminster, California, a real estate broker, was convicted of conspiring with her boyfriend and his brother to commit $17.5 million in real estate fraud by purchasing 35 properties using stolen identities and intentionally defaulting on loans in order to steal the loan money. Chen was found guilty by a jury of 136 felony counts including one count of conspiracy, 47 counts of grand theft, one count of attempted grand theft, 37 counts of forgery, 27 counts of recording false documents, 15 counts of identity theft, one count of elder financial exploitation, four counts of forging an official seal, and three counts of filing false tax returns. Chen’s boyfriend, Richard Salgado Gonzalez, 60, and his brother, Daniel Gonzalez, 57, face the same charges and sentence as Chen. Fugitives Richard and Daniel Gonzalez have outstanding arrest warrants. Both may currently be living in Puerto Vallarta, Mexico.
The People presented the following information to the jury during the trial against Chen:
As previously reported on Mortgage Fraud Blog, Chen worked as a real estate broker and owned several businesses including Chen Financial, Western Escrow, Nationwide Tax Services and SBC Financial. She conspired with her then-boyfriend, Richard Gonzalez, and his brother, Daniel Gonzalez, to commit over $17.5 million in fraud by using the identities of unsuspecting or unqualified victims to obtain mortgage loans for the purchase of multiple properties. Chen and her co-defendants recruited these victims in order to hide their own identities. These victims often spoke little or no English, were unemployed or had limited incomes, and had no intention of ever residing in or repaying any loan on properties in their names.
Between January 13, 2005, and July 10, 2007, the defendants obtained 47 fraudulent loans from 13 lenders on 35 properties in excess of $17.5 million through the use of the fraudulently obtained identities. These properties included 13 in Orange County, California, 16 in San Bernardino County, California and six in Kern County, California. The defendants are being prosecuted in Orange County, California for all 35 properties.
The defendants used the fraudulently obtained personal and credit information of some of the fake buyers, including a 92-year-old woman, on several occasions without their knowledge or consent. Chen, Richard Gonzalez, and Daniel Gonzalez acquired city business licenses using the stolen identities for nonexistent businesses in order to obtain higher income loans. They fabricated loan applications to reflect higher incomes for the fake buyers, forged the fake buyers’ names and signatures on various deeds and loan documents, and forged seals and notary stamps on a variety of notarized documents and deeds. They fraudulently filed these fabricated and forged documents with the Orange County, California Clerk-Recorder’s Department.
Acting as the escrow company, the defendants made some monthly payments on the loans to prevent suspicion by the lender. They then defaulted on the loan and kept the remaining loan money.
The sentencing enhancements for causing loss in excess of $2.5 million and $100,000 were found true. Chen faces a sentence up to 111 years in state prison at her sentencing July 9, 2010.
This case was investigated by the Orange County District Attorney’s Office. The California Franchise Tax Board assisted in the investigation into the filing of false tax returns. Deputy District Attorney Bill Overtoom of the Major Fraud Unit is prosecuting this case.