Garret Griffith Gililland III, 28, formerly of Chico, California, now in federal custody, Nicole Magpusao, 30, also formerly of Chico, California, and now in federal custody, and eight additional defendants, in connection with a large mortgage fraud scheme in the Chico, California area. As previously reported on Mortgage Fraud Blog, defendants Gililland and Magpusao were originally charged in 2008 on mail fraud and other charges relating to a multi-million dollar “builder bailout” mortgage fraud scheme in Chico, California and successfully extradited back to the United States following their flight to Spain.
The second superseding indictment now charges Chico, California area home builder William E. Baker, 65, Chico, California with knowingly inflating sales prices on homes and routing sales proceeds back to Gililland and other buyers of his homes. According to court documents, Baker routed the checks to bank accounts controlled by Gililland and others on approximately six homes sales. On May 28, 2010, Chico, California home builder Anthony G. Symmes pleaded guilty in a related case (criminal number 10-200 EJG). As part of his plea and cooperation agreement, Symmes admitted that he engaged with Gililland and others in approximately 62 fraudulent home sales involving aggregate loans of $21 Million and losses to lenders of approximately $5 Million. In his plea hearing in district court, Symmes admitted that he sold homes at artificially inflated prices to buyers recruited by Gililland and others. According to Symmes, he then rebated significant monies back to the buyers and their recruiters, knowing that the rebates would not be disclosed to the lenders financing the purchases.
In addition to home builder Baker, the second superseding indictment now charges seven former associates of Gililland in connection with the builder-bail-out scheme, including: Shane Burreson, 38, Orland, California, the president of Nor Cal Innovative Investments, Inc.; Leonard Williams, 48, Sacramento, California, a licensed real estate professional; Christopher M. Chiavola, 31, Chico, California; Brandon Resendez, 31, Chico, California; Niche Fortune, 38, Chico, California; Kesha Haynie, 39, Chico, California a licensed real estate professional; and Remy Heng, 30, Elk Grove, California. The new indictment also alleges that defendant Gililland and his associates acted as the mortgage broker and real estate agent in connection with the transactions. According to the new indictment, defendants Gililland , Burreson, and others, assisted in obtaining residential loans for the transactions causing materially false loan applications to be prepared on behalf of the purchasers, including false statements concerning income, employment history, and intent to occupy the properties as primary residences.
United States Attorney Benjamin B. Wagner made the announcement.
“This ongoing investigation reveals the scope and audacity of mortgage fraud in our communities,” said U.S. Attorney Wagner. “We are dedicated to rooting it out.”
The second superseding indictment charges the following crimes: 42 counts of mail fraud, three counts of making false statements to financial institutions; four counts of money laundering, and bulk cash smuggling. The money laundering charges against Gililland, Burreson, and Chaivola concern their alleged transfers of fraud proceeds through federally insured banks. The bulk cash smuggling charge relates to the shipment of $20,000 in cash in a Pringle’s can to Gililland in Spain, according to other court documents.
The maximum statutory penalty for mail fraud is twenty years in prison, a $250,000 fine, and three years of supervised release. The maximum statutory penalty for making false statements to a federally insured financial institution is 30 years in prison, a $1million fine, and five years of supervised release. The maximum statutory penalty for money laundering is 10 years in prison, a $250,000 fine, and three years of supervised release. The maximum penalty for bulk cash smuggling is 5 years in prison, a $250,000 fine, and three years of supervised release. The actual sentence, 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.
This case is the product of a joint investigation by the Federal Bureau of Investigation, the Internal Revenue Service-Criminal Investigation, and the Butte County District Attorney’s Office. Assistant United States Attorney Russell L. Carlberg is prosecuting the case.
The charges are only allegations and the defendant is presumed innocent until and unless proven guilty beyond a reasonable doubt.