Archives For Mortgage Fraud

Aston Wood, 56, New Richmond, Wisconsin and Miami, Florida, was sentenced today to 12 years in federal prison for a mortgage rescue scheme that defrauded more than 70 Wisconsin homeowners.

Between 2014 and 2019, Wood defrauded more than 70 Wisconsin homeowners out of approximately $390,000.  Many homeowners unfortunately lost their homes in connection with the scheme.  Using the names ASC Financial, LLC and Maywood Capital II, LLC, Wood solicited people facing the possibility of foreclosure and represented to them that he could help them stay in their home by obtaining loan refinancing or modification.  He told customers that to stop foreclosures, they needed to immediately begin making mortgage payments towards a new loan as part of a trial period while he worked out the details of the loan with the mortgage lenders.  Wood instructed customers to make these mortgage payments to businesses he controlled under the premise that he would forward the payments to the customers’ mortgage lenders.

Wood was able to collect mortgage payments from homeowners for months, even years, by falsely reassuring them that their payments were going to their mortgage lenders and that new loans were being finalized.  In fact, Wood’s bank records confirmed he deposited the customers’ mortgage payments and spent their money on his own travel and living expenses.  When customers eventually lost their homes in foreclosure, Wood told them that it was due to the mortgage lenders’ greed or negligence.

Wood defrauded some homeowners out of additional money even after they lost their homes by falsely telling them that he would use the money to help them buy back their foreclosed property or use the money to sue the mortgage companies.

As part of his fraud scheme, Wood advised many customers to file bankruptcy in the Western District of Wisconsin.  The automatic stay triggered by the bankruptcy filings temporarily stalled the foreclosures, which extended the time in which Wood could collect the monthly mortgage payments.  In November 2016, the U.S. Trustee’s Office began investigating Wood and in October 2017, U.S. Bankruptcy Judge Catherine J. Furay issued an injunction permanently barring Wood from soliciting, offering to perform, or performing services relating to mortgage foreclosure and debt relief.  Despite the court order, however, Wood continued to engage in mortgage rescue fraud under a new business name.

Wood pleaded guilty to wire fraud and bankruptcy fraud on January 6, 2020.

Scott C. Blader, United States Attorney for the Western District of Wisconsin, made the announcement.

U.S. District Judge James D. Peterson handed down the sentence.

At the sentencing, Judge Peterson called the defendant a professional conman, said that this was “a particularly heartless crime,” and told the defendant that his crime “stands apart from anything I’ve come across in my six years on the bench.”

U.S. Attorney Blader praised the work of the U.S. Trustee’s Office and the law enforcement agents who investigated the criminal case.  U.S. Attorney Blader also urged Wisconsin residents to be alert to this type of fraud.

U.S. Attorney Blader was joined in making the announcement by Robert E. Hughes, Special Agent in Charge of the FBI’s Milwaukee Field Office; Kathy A. Enstrom, Special Agent in Charge of the Chicago Field Office of IRS Criminal Investigation; Catherine Huber, Special Agent in Charge, Central Region, Federal Housing Finance Agency – Office of Inspector General; and Patrick S. Layng, United States Trustee for Region 11.

The following are tips to avoid being a victim of mortgage fraud schemes from the U.S. Department of Treasury and the U.S. Department of Housing and Urban Development:

  • Beware of anyone seeking to charge you in advance for mortgage modification services.  In most cases, charging fees in advance of a mortgage modification is illegal.
  • Only your mortgage company has the discretion to grant a loan modification. Therefore, no third party can guarantee or pre-approve your mortgage modification application.
  • Beware of individuals and companies claiming that your payments should be sent to an alternate contact or address that is different from the information in your mortgage statement.
  • Beware of individuals or companies that offer money-back guarantees or insist on upfront fees and can only accept payment by cash, cashier’s check, or wire transfer.
  • Beware of private individuals claiming to be affiliated with government-backed refinancing programs.

For additional information, see https://www.makinghomeaffordable.gov/get-answers/Pages/get-answers-how-avoid-scams.aspx.

The charges against Wood were the result of an investigation conducted by the Federal Bureau of Investigation, IRS Criminal Investigation, and the Federal Housing Finance Agency – Office of Inspector General, with assistance from the Office of the United States Trustee.  The prosecution of the case has been handled by Assistant U.S. Attorney Meredith P. Duchemin.

 

Isaac DePaula, 40, Brazil, was arrested this morning for his role in a long-running mortgage fraud scheme based in New Jersey.

DePaula was charged by complaint in 2012, indicted in 2016, and has been a fugitive. He returned via Newark Liberty International Airport this morning to face a four-count indictment charging him with conspiracy to commit bank fraud and three counts of bank fraud.

According to documents filed in this and other cases and statements made in court:

From September 2006 to May 2008, DePaula and his conspirators engaged in a long-running, large-scale mortgage fraud conspiracy through a company called Premier Mortgage Services (PMS). The conspirators targeted properties in low-income areas of New Jersey. After recruiting straw buyers, the conspirators used a variety of fraudulent documents to make it appear as though the straw buyers possessed far more assets, and earned far more income, than they actually did. The conspirators then submitted these fraudulent documents as part of mortgage loan applications to financial institutions. Relying on these fraudulent documents, financial institutions provided mortgage loans for the targeted properties. The conspirators then split the proceeds from the mortgages among themselves and others by using fraudulent settlement statements (HUD-1), which hid the true sources and destinations of the mortgage funds provided by financial institutions. In reality, the straw buyers had no means of paying the mortgages on the properties, many of which entered into foreclosure proceedings.

DePaula was a loan officer at PMS and recruited straw buyers, provided false and fraudulent documents to the straw buyers, and incorporated false and fraudulent documents into loan applications to induce financial institutions to fund mortgage loans. The loan officers profited illegally by receiving a commission from PMS for each mortgage loan that they closed, and also profited illegally by diverting portions of the fraudulently obtained mortgage proceeds for themselves, often via shell corporations or nominee bank accounts.

DePaula faces a maximum potential penalty of 30 years in prison and a fine of $1 million per count. His co-defendant, Rodrigo Costa, remains at large. All of the remaining conspirators have previously pleaded guilty and been sentenced for their roles in the scheme.

DePaula made his initial appearance before U.S. Magistrate Judge James B. Clark III in Newark federal court and was released on his own recognizance.

U.S. Attorney Craig Carpenito made the announcement.

U.S. Attorney Carpenito credited special agents of the FBI, under the direction of Special Agent in Charge Gregory W. Ehrie; special agents of the IRS, under the direction of Special Agent in Charge John R. Tafur; and special agents of the Federal Housing Finance Agency’s Office of the Inspector General, under the direction of Special Agent in Charge Robert Manchak, for the investigation leading to today’s arrest.

The government is represented by Assistant U.S. Attorneys Rahul Agarwal and Zach Intrater.

The charges and allegations contained in the indictment are merely accusations, and the defendants are presumed innocent unless and until proven guilty.

Defense counsel: Joshua Cohn Esq., Saddle Brook, New Jersey

 

BoostMyScore.net (BMS), a Colorado-based credit repair company and its owner have agreed to settle Federal Trade Commission charges they mislead consumers with promises to “drastically and immediately” improve credit scores and increase access to lower rates on mortgages.

In its complaint, the FTC alleges that the defendants guaranteed consumers that, in exchange for fees ranging from $325 to $4,000, they could “piggyback” on unrelated consumers’ good credit, artificially inflating their own credit score in the process.

In piggybacking, a consumer pays to be listed on another person’s well-maintained credit account, ostensibly receiving the benefit of the good account on their own credit even though they can’t access the account. In this case, the FTC alleges, defendants charged struggling consumers steep, illegal fees and made unsupported promises about how piggybacking would pave the way to new credit, including mortgages and other loan products.

According to the complaint, BMS made unwarranted promises in various advertisements that consumers’ credit scores would increase by anywhere from 100 to 120 points over two to six weeks. BMS also allegedly charged consumers upfront for the credit repair services they offered, which is illegal under the Credit Repair Organizations Act (CROA). The complaint alleges that the defendants violated the FTC Act, CROA, and the Telemarketing Sales Rule (TSR).

Under the terms of the proposed settlement with the FTC that will soon be filed with the court, BoostMyScore, LLC, BMS, Inc., and William O. Airy will be prohibited from selling fake access to another consumer’s credit as an authorized user and from collecting advance fees for credit repair services, as well as other violations of CROA. They will also be prohibited from misrepresenting a product or service as being legal, as well as from misrepresenting the terms of a refund or return policy. The defendants also will be banned from further violations of the TSR. The settlement also includes a monetary judgment of $6,630,678, which will be partially suspended upon payment of $64,863 due to the defendants’ inability to pay. Should the defendants be found to have misrepresented their financial condition, the full judgment would be immediately payable.

Good credit isn’t for sale,” said Andrew Smith, Director of the FTC’s Bureau of Consumer Protection. “This company charged people thousands of dollars based on hollow promises that ‘piggybacking’ on a stranger’s good credit would raise their credit score or help them get a mortgage.

The Commission vote authorizing the staff to file the complaint and stipulated final order was 5-0. The FTC filed the complaint and final order in the U.S. District Court for the District of Colorado.

NOTE: The Commission files a complaint when it has “reason to believe” that the named defendants are violating or are about to violate the law and it appears to the Commission that a proceeding is in the public interest. Stipulated final orders have the force of law when approved and signed by the District Court judge.

The Federal Trade Commission works to promote competition, and protect and educate consumers. You can learn more about consumer topics and file a consumer complaint online or by calling 1-877-FTC-HELP (382-4357). Like the FTC on Facebook, follow us on Twitter, read our blogs, and subscribe to press releases for the latest FTC news and resources.

 

Ruben Diaz and Rodrigo Diaz, who were accused of deceiving dozens of Spanish-speaking consumers in a variety of real estate-related transactions have been put out of business by court order. As a result of the injunctive relief, Ruben and Rodrigo Diaz are banned permanently from advertising, offering, or providing services in connection with the sale, purchase, lease, or financing of real property in Arizona.

The lawsuit filed by the Attorney General’s Office alleged that Ruben and Rodrigo Diaz (father and son team), used several companies, including ProSolutions LLC, to prey upon Spanish-speaking families who wanted to purchase a home. The Defendants promised to find the families homes to purchase and arrange financing. The Defendants then took tens of thousands of dollars in down payments and had Spanish-speaking consumers sign documents in English under false pretenses.

Families who believed they were purchasing a home eventually discovered, sometimes years later, that they were only renters with no equity or ownership rights. In other instances, consumers gave the Defendants thousands of dollars as a down payment for a home, with the promise that it would be returned to them if they did not make a home purchase. In reality, the Defendants spent the down payments and never made the promised refunds.

Ruben and Rodrigo Diaz were not licensed lenders, real estate agents, or mortgage brokers.

In addition, Ruben Diaz owes $425,313 in restitution to consumers, as well as $100,000 in civil penalties to the State.

Attorney General Mark Brnovich made the announcement.

Buying a home is part of the American dream, but Ruben and Rodrigo Diaz turned that process into a nightmare and robbed dozens of home buyers of that experience,” said Attorney General Mark Brnovich.

Consumers can help protect themselves from real estate and mortgage fraud by working only with licensed professionals and by ensuring that they read and understand contracts before signing them. The public can access the Arizona Department of Real Estate‘s and the Arizona Department of Financial Institutions‘ public databases to determine if a lender or realtor is licensed in the State of Arizona.

Assistant Attorneys General Rebecca Salisbury and Kaitlin Hollywood handled this case.

If you believe you have been the victim of consumer fraud, you can file a consumer complaint by visiting the Attorney General’s website. If you need a complaint form sent to you, you can contact the Attorney General’s Office in Phoenix at (602) 542-5763, in Tucson at (520) 628-6648, or outside the Phoenix and Tucson metro areas at (800) 352-8431. Nuestros formularios de quejas están disponibles en inglés o español.

 

Anthony T. Williams, 48, Nashville, Tennessee was found guilty yesterday of 32 counts of wire and mail fraud in connection with fraudulent mortgage debt reduction scheme.

According to the evidence presented at trial, Williams marketed a fraudulent mortgage debt reduction scheme to distressed homeowners, who were mostly non-native English speakers in the Filipino immigrant community in Hawaii. Williams created two companies, Mortgage Enterprise Investments (MEI) and Common Law Office of America (CLOA), neither of which was licensed to service or modify mortgages. Through MEI, Williams made conflicting promises to clients that he could eliminate their existing mortgage obligations to their lenders, or reduce their mortgage obligations by half. Through CLOA, Williams promised legal representation in mortgage-related litigation and foreclosure proceedings. To give himself the appearance of credibility, Williams told prospective clients he was a “private attorney general” and brandished an official-looking law enforcement badge and credentials, despite not having a law license or any affiliation with law enforcement.

The evidence at trial demonstrated that Williams falsely promised victims that he could eliminate their existing home mortgage obligations by filing bogus documents with the Hawaii Bureau of Conveyances. These documents included new MEI mortgages and notes obligating homeowners to make monthly payments to MEI. Williams then advised homeowners to stop making their mortgage payments to their lenders and to pay him instead.

The government presented evidence that between 2012 and 2015,Williams enlisted 112 victims in Hawaii into his MEI program and fraudulently obtained over $218,000. Furthermore, several victims testified at trial that they relied upon Williams’s representations and went into foreclosure as a result of the MEI program and lost their homes.

The verdict followed a four-week trial before United States District Judge Leslie E. Kobayashi. Sentencing is scheduled for June 24, 2020

The investigation was led by the Federal Bureau of Investigation. Assistant U.S. Attorneys Kenneth M. Sorenson and Gregg Paris Yates handled the prosecution.

Jacqueline Graham, 54, formerly of Antioch, California, and Levittown, Pennsylvania was sentenced today to 132 months in prison in connection with a $38 million fraudulent mortgage debt elimination scheme.

According to the Indictment in the case, the evidence presented at trial, and statements made in public court filings and proceedings, including Graham’s sentencing hearing:

From at least 2011 to at least 2012, Graham partnered with Bruce Lewis, 67, formerly of Alaska and Washington State, and John Ruzza 49, formerly of Mahopac, New York in operating the Valhalla, New York-based Terra Foundation, which held itself out as a business that would investigate and eliminate mortgage loans in exchange for fees, soliciting clients who were having difficulties making their mortgage payments.  In fact, however, Terra engaged in a wide-ranging scheme to defraud clients, county clerks’ offices, and banks.

The fraudulent scheme, which was created by Graham and Lewis, involved Terra performing “audits” of clients’ mortgages, sending pseudo-legal paperwork to the banks and/or lenders holding the mortgages, and ultimately filing purported mortgage discharges with the relevant county clerks’ offices.  As a result, anyone doing a title search for one of Terra’s clients would see that the client’s mortgage had been satisfied.  The mortgages had not, however, been discharged, and the mortgages were eventually reinstated, after the clients paid their fees.

In order to effectuate the scheme, Graham, Lewis, and Ruzza involved others, including Rocco Cermele, 57, Yonkers, New York the director of operations, Paula Guadagno, 62, Verplanck, New York, who filed discharges on behalf of Terra, and Anthony Vigna, 61, Thornwood, New York, a lawyer and CPA who worked in Terra’s offices.  Vigna was formerly an Assistant Corporation Counsel for the City of Yonkers, and a college accounting and law professor, including stints on the faculties of Mercy College, Iona College, SUNY Maritime College, College of Mount St. Vincent, and Westchester Community College.

In total, Graham and her co-conspirators filed over 60 fraudulent discharges in Westchester and Putnam Counties in New York, and in Connecticut.  The fraudulent discharges claimed to discharge mortgages with a total loan principal of nearly $38 million. http://www.mortgagefraudblog.com/?s=Jacqueline+Graham

In addition to her prison term, Graham was sentenced to five years of supervised release and ordered to pay restitution to her victims in the amount of $694,450 and forfeiture of $138,941.86.

Lewis was previously was sentenced by Judge Román to seven years in prison, three years of supervised release, and forfeiture of $149,408.

Vigna was previously was sentenced by Judge Román to one year and one day in prison, three years of supervised release, and $250,500 of restitution.

Ruzza was previously pled guilty before U.S. District Judge Cathy Seibel to one count of participating in a conspiracy to commit mail fraud, wire fraud, and bank fraud relating to the Terra scheme, as well as one count of participating in a conspiracy to commit wire fraud, two counts of bank fraud, two counts of wire fraud, and one count of obstruction of justice.

Cermele and Guadagno previously pled guilty to their participation in the scheme.

Graham previously was convicted in June 2019 after a two-week trial before U.S. District Judge Nelson S. Román, who also imposed today’s sentence.

Geoffrey S. Berman, the United States Attorney for the Southern District of New York, made the announcement.

Manhattan U.S. Attorney Geoffrey S. Berman said:  “Jacqueline Graham brazenly defrauded vulnerable homeowners during the housing crisis by falsely promising that, for substantial fees, she could make millions of dollars of their mortgage debt disappear.  In reality, she pilfered her victims’ money, leaving them far worse off, and some ended up losing their homes.  Now Graham will spend 11 years in federal prison for preying upon her many victims.”

Mr. Berman praised the outstanding investigative work of the Federal Bureau of Investigation.  Mr. Berman also thanked the Westchester County District Attorney’s Office and the Department of Housing and Urban Development for their assistance in the case.

This case is being handled by the Office’s White Plains Division.  Assistant United States Attorneys David Felton, Michael Maimin, and James McMahon are in charge of the prosecutions.

Shenandoah Adams Sr., a/k/a “Shane Adams Sr.,” 54, New Providence, New Jersey, was charged today by indictment with six counts of wire fraud and two counts of making false statements in connection with a mortgage loan.

According to the indictment:

Adams was a principal of Adams Property Management and Investment Group Limited Liability Company (Adams Property Management), which purchased property on Hilton Street, East Orange, New Jersey, in 2014. The following year, Adams arranged for a close associate (Individual 1) to obtain a $153,562 loan from a mortgage lender to purchase the Hilton Street property from Adams Property Management. Adams knew that Individual 1 did not have the money to pay the balance of the purchase price of $225,000. At the closing on March 25, 2015, Adams directed Individual 1 to issue a fraudulent check in the amount of $90,280.47 (the balance of the purchase price) to give the false impression that Individual 1 had paid the closing balance. Adams reassured Individual 1 that Adams would not negotiate the check. Adams signed a settlement statement, falsely certifying that Individual 1 paid the closing balance and that the settlement statement was a true and accurate statement of all receipts and disbursements made in connection with the sale of the Hilton Street property, when Adams knew that Individual 1’s check was fraudulent. Adams used Individual 1’s loan proceeds to pay off Adams Property Management’s $100,000 mortgage loan to purchase the Hilton Street Property and to obtain a $26,335.30 check for Adams Property Management.

Although Adams reassured Individual 1 that Adams would fund Individual 1’s mortgage payments, by May 2016 Individual 1’s mortgage payments on the Hilton Street property were substantially in arrears. Adams arranged for Individual 1 to sell the property to another associate for a price of $255,000. The closing on that sale commenced on May 31, 2016; the total amount to pay off Individual 1’s mortgage was $210,565.34. On June 1, 2016, Adams and Individual 1 had a telephone conversation with an out-of-state representative of the mortgage servicer for Individual 1’s lender, during which Adams made false and fraudulent statements to induce the lender to reduce the payoff amount. The lender agreed to reduce Individual 1’s payoff amount to $190,000. At Adams’s direction, Individual 1 cashed the check for the amount of the reduction, $20,665.34, and delivered the cash proceeds to Adams.

Adams also was a principal of VH Electrical and Plumbing Limited Liability Company (VH). On March 11, 2015, Adams, on behalf of VH, entered into a contract with the Orange Public Library to replace the library’s HVAC/Chiller unit for a price of $49,000. The project was funded by a U.S. Department of Housing and Urban Development (HUD) Community Development Block Grant to the library and Orange.

Before getting the contract with the library, Adams sent the library’s executive director, Timur Davis, two fake quotes purportedly from two vendors to give the false impression that VH would replace the library’s chiller for less than those other vendors. After VH had been hired, Adams sent Davis records to give the false impression that Adams was taking steps to order a replacement chiller. Adams received $40,000 from the library, but did not replace the chiller. Davis pleaded guilty on Feb.13, 2020 to making false statements to HUD in connection with the project.

He is scheduled to appear this afternoon before U.S. Magistrate Judge Leda Dunn Wettre in Newark federal court.

The charges of wire fraud carry a maximum potential penalty of 20 years in prison and a maximum $250,000 fine. The charges of making false statements in connection with a mortgage application carries a maximum potential penalty of 30 years in prison and a maximum potential fine of $1 million.

U.S. Attorney Craig Carpenito made the announcement.

U.S. Attorney Carpenito credited special agents of the FBI, under the direction of Special Agent in Charge Gregory W. Ehrie in Newark; special agents of the U.S. Department of Housing and Urban Development, Office of Inspector General, under the direction of Special Agent in Charge Christina Scaringi; and special agents of IRS-Criminal Investigation, under the direction of Special Agent in Charge John R. Tafur, with the investigation leading to today’s arrest.

The government is represented by Assistant U.S. Attorneys J Imbert and Cari Fais of the U.S. Attorney’s Office’s Special Prosecutions Division.

The charges and allegations contained in the indictment are merely accusations, and the defendant is presumed innocent unless and until proven guilty.

Defense counsel: TBD

Craig Hecht, 52, Mount Sinai, New York, was sentenced today for stealing a vacant brownstone worth over $1 million in a deed fraud scheme targeting an 80-year-old Bedford-Stuyvesant homeowner.

According to the evidence, Hecht and an unapprehended co-defendant stole the deed to 260 Clifton Place, Bedford-Stuyvesant, New York, a brownstone owned by an 80-year-old retired teacher. The victim and her family lived in the residence for over three decades. In 2010, the family vacated the property after a fire made the building uninhabitable.

Hecht formed an entity called Ernestina Thomas LLC that he filed with the New York State Department of State on April 20, 2015. Ten days later, the co-defendant opened a bank account called Ernestina Thomas LLC (ET). The victim did not know about or consent to any of this.

On September 18, 2015, according to the evidence, Hecht set up a closing where 260 Clifton Place was transferred to an entity called TDA Development. A deed with the victim’s forged signature, which transferred the property from her to TDA, was filed and recorded with the City Register. The bulk of the proceeds of the sale went into an ET account which the co-defendant controlled.

Shortly thereafter, Hecht offered 260 Clifton Place to a prospective buyer. On November 5, 2015, the co-defendant opened a bank account for TDA and the following day the property was transferred from TDA to the buyer at a closing for $850,000, with most of the proceeds of that sale going into the co-defendant’s TDA account. From the funds stolen out of the two closings, the co-defendant wired $190,000 to an account he had in Athens, Greece, withdrew another $120,000 in a series of cash withdrawals and transferred over $250,000 to an account held by Hecht’s wife. http://www.mortgagefraudblog.com/man-indicted-for-forging-deed/

The victim was notified of the theft when a neighbor called to tell her that someone was working on the house and introduced himself as the new property owner. She then notified the District Attorney’s Office.

Hecht was sentenced to one-and-a-half to four-and-a-half years in prison by Brooklyn Supreme Court Justice Danny Chun, who nullified the deed the defendant forged and issued a judgment order of restitution for $850,000 to the title insurance company for losses it incurred reimbursing the home buyer. The defendant pleaded guilty to second-degree grand larceny and second-degree money laundering on December 4, 2019.

Brooklyn District Attorney Eric Gonzalez made the announcement.

District Attorney Gonzalez said, “This defendant targeted an elderly homeowner, forging her signature and capitalizing on her absence in an underhanded effort to steal her home. I remain committed to protecting Brooklyn homeowners and I hope today’s sentence sends a clear message to those trying to take advantage of seniors or those considering selling their homes —you will be prosecuted and held fully accountable for your crimes.”

The case was investigated by Detective Investigators assigned to the KCDA Investigations Bureau. Supervising Financial Investigator Vincent Jones, of the District Attorney’s Investigations Division, assisted in the investigation.

The case was prosecuted by Senior Assistant District Attorney Linda Hristova, with assistance from Senior Assistant District Attorney Elliott Wertheim and Senior Assistant District Attorney Patrick Cappock, of the District Attorney’s Frauds Bureau, under the supervision of Assistant District Attorney Richard Farrell, Chief of the District Attorney’s Real Estate Fraud Unit and Assistant District Attorney Michel Spanakos, Deputy Chief of the District Attorney’s Investigations Division, and the overall supervision of Assistant District Attorney Patricia McNeill, Chief of the District Attorney’s Investigations Division.

Jaime L. Mulvihill, 40, North Andover, Massachusetts, the principal and co-founder of a mortgage short sale assistance company was sentenced yesterday in connection with defrauding mortgage lenders and investors out of nearly $500,000 in proceeds from about 90 short sale transactions.

Mulvihill and her co-defendant Gabriel T. Tavarez founded and operated Loss Mitigation Services, LLC. The charges arise out of the defendants’ scheme to steal undisclosed and improper fees from mortgage lenders in connection with short sales of homes. A short sale occurs where the mortgage debt on the home is greater than the sale price, and the mortgage lender agrees to take a loss on the transaction.

Loss Mitigation Services, purportedly acting on behalf of underwater homeowners, negotiated with mortgage lenders for approval of short sales in lieu of foreclosure. Mortgage lenders typically forbid short sale negotiators, such as Loss Mitigation Services, from receiving any proceeds of a short sale.

From 2014 to 2017, Mulvihill and, allegedly, Tavarez, directly or through their employees, falsely claimed to homeowners, real estate agents and closing attorneys that mortgage lenders had agreed to pay Loss Mitigation Services fees known as “seller paid closing costs” or “seller concessions” from the proceeds of the short sales. In reality, the mortgage lenders had never approved Loss Mitigation Services to receive those fees. When the short sales closed, at the instruction of Mulvihill, or others working with her and Tavarez, settlement agents paid Loss Mitigation Services the fees, which typically were 3% of the short sale price above and beyond any fees to real estate agents, closing attorneys and others involved in the transaction. To deceive mortgage lenders about the true nature of the fees, Mulvihill or Tavarez filed, or caused others to file, false short sale transaction documents with mortgage lenders, including altered settlement statements and fabricated contracts and mortgage loan preapproval letters. Mulvihill and, allegedly, Tavarez, fabricated the transaction documents, or caused them to be fabricated, in order to justify the additional fees and conceal that they were being paid to Loss Mitigation Services. http://www.mortgagefraudblog.com/?s=Jaime+L.+Mulvihill

The defendants defrauded the Federal National Mortgage Association, the Federal Home Loan Mortgage Corporation and the U.S. Department of Housing and Urban Development.

Mulvihill was sentenced by U.S. Senior District Court Judge Rya W. Zobel to six months in prison, two years of supervised release, and ordered to pay restitution in the amount of $478,458 and forfeiture of $239,229. In November 2019, Mulvihill pleaded guilty to conspiracy to commit wire fraud.

Tavarez has pleaded not guilty and is presumed to be innocent unless and until proven guilty beyond a reasonable doubt in a court of law.

United States Attorney Andrew E. Lelling; Joseph R. Bonavolonta, Special Agent in Charge of the Federal Bureau of Investigation, Boston Field Division; Robert Manchak, Inspector General of the Federal Housing Finance Agency; Christina Scaringi, Special Agent in Charge of the U.S. Department of Housing and Urban Development, Office of Inspector General, Northeast Regional Office; and Kristina O’Connell, Special Agent in Charge of the Internal Revenue Service’s Criminal Investigation in Boston made the announcement today. Assistant U.S. Attorneys Sara Miron Bloom and Brian M. LaMacchia of Lelling’s Office are prosecuting the case.

 

Yorce Yotagri, 53, Freeport, New York, today admitted participating in a conspiracy to carry out a $9 million scheme to use bogus information and simultaneous loan applications at multiple banks to fraudulently obtain home equity lines of credit, a scheme known as “shotgunning,”

According to documents filed in the case and statements made in court:

Yotagri was a business partner of Jorge Flores ,Oakdale, New York, and Jose Piedrahita,  Freeport, New York, two conspirators also charged in the indictment. From 2010 through February 2018, Yotagri, Flores, Piedrahita, and others conspired to fraudulently obtain multiple home equity lines of credit (HELOC) from banks on residential properties in New Jersey and New York.

In August 2016, Yotagri lived at a property in Freeport, New York. A quitclaim deed was prepared that facilitated the transfer of ownership of the property to Yotagri and Piedrahita even though Piedrahita did not own the property.

In September 2016, with the Freeport property now in the names of Yotagri and Piedrahita, the conspirators applied for a $290,000 HELOC from a victim bank in Yotagri’s and Piedrahita’s names using the property as collateral. Piedrahita’s contact information appeared on the HELOC application on the Freeport property, which also contained inflated income and assets for Piedrahita. On Dec. 2, 2016, based on the false representations contained in the application, the victim bank issued a HELOC to Piedrahita for $290,000. Piedrahita then disbursed the $290,000 to himself, Yotagri, and Flores. The HELOC funds were never repaid.

In January 2017, Flores called another victim bank and applied for a second HELOC in Piedrahita’s name for $250,000 – again using the Freeport property as collateral. This time Flores’ email address and phone number appeared on the HELOC application on the Freeport property. To demonstrate to the second victim bank that the property was unencumbered by any senior mortgages, Flores and Piedrahita sent several fraudulent documents to the victim bank to conceal the existence of or amounts owed on senior mortgages. The false documents the defendants submitted included a series of false payoff letters and fake checks from other banks, all submitted to deceive the victim bank into believing that the remaining value of the senior mortgages on the Freeport property was far less than what was actually owed.

On March 22, 2017, the second victim bank issued a HELOC to Piedrahita for $250,000. Piedrahita then disbursed nearly the entirety of the HELOC funds to himself and Yotagri. The funds obtained by Piedrahita and Yotagri from the HELOC were not repaid and were overdrawn, causing losses to the second victim bank totaling approximately $290,000.

At the time the applications for the two HELOCS were made, there was not sufficient equity in the Freeport property to support the $540,000 in HELOC applications made by Flores, Piedrahita, and Yotagri.

The overall scheme, which included HELOC loans for approximately 17 different properties, resulted in over $9 million in losses to the victim banks. http://www.mortgagefraudblog.com/?s=Yorce+Yotagri

Yotagri faces a maximum potential penalty of 30 years in prison and a $1 million fine, or twice the gross gain or loss from the offense. Sentencing is scheduled for June 25, 2020.

Yotagri pleaded guilty before U.S. District Judge John Michael Vazquez in Newark federal court to an indictment charging him with one count of conspiracy to commit bank fraud.

U.S. Attorney Craig Carpenito made the announcement.

U.S. Attorney Carpenito credited special agents of the Federal Housing Finance Agency – Office of Inspector General (FHFA-OIG), under the direction of Special Agent in Charge Steven Perez in Newark; and special agents of the FBI, under the direction of Special Agent in Charge Gregory W. Ehrie in Newark, with the investigation leading to today’s guilty plea.

The government is represented by Assistant U.S. Attorney Jason S. Gould of the U.S. Attorney’s Office Criminal Division in Newark and Special Assistant U.S. Attorney Kevin DiGregory of the FHFA-OIG.

The charges and allegations against Yotagri’s co-defendants contained in the indictment are merely accusations, and they are presumed innocent unless and until proven guilty.

Defense counsel: Randy Scott Zelin Esq., New York