Archives For Mortgage Fraud

Kwame Insaidoo 60, Bay Shore, Long Island, New York, the former executive director of United Block Association (“UBA”), a New York-based non-profit organization, and his wife Roxanna Insaidoo, 63, Bay Shore, Long Island, New York, were found guilty in Manhattan federal court of embezzlement from a federally funded program, money laundering, and defrauding their mortgage lender. Kwame Insaidoo was also found guilty of defrauding the City of New York in connection with UBA’s contracts to operate senior centers in Upper Manhattan. The jury convicted Kwame and Roxanna Insaidoo on all counts in the superseding indictment following a one-week trial before U.S. District Judge Valerie E. Caproni.

In 2011, Kwame and Roxanna Insaidoo engaged in a scheme to defraud their mortgage lender, in connection with a modification of their mortgage under the federally sponsored Home Affordable Modification Program, by underreporting their income and assets. This scheme led to a write-off of almost $200,000 from Kwame and Roxanna Insaidoo’s home mortgage.

Joon H. Kim, the Acting United States Attorney for the Southern District of New York, announced the verdict and praised the outstanding investigative work of the New York City Department of Investigation and the Criminal Investigators of the United States Attorney’s Office for the Southern District of New York.

The case is being prosecuted by the Office’s Public Corruption Unit. Assistant U.S. Attorneys Eli J. Mark, David Zhou, and Tatiana Martins are in charge of the prosecution.

Drew Alia, 40, Philadelphia, Pennsylvania, attorney, was sentence to a 12 month and 1 day term of imprisonment for willfully failing to file federal income tax returns for tax years 2010 through 2013 . Alia operated a home mortgage rescue service that was designed to assist home owners who were facing foreclosure.

During the sentencing hearing before United States District Court Judge Paul Diamond, the Court noted that Alia had received approximately $1.6 million in gross income. Alia was charged, by Information, with four counts of failing to file returns resulting in a tax loss of $127,037. In addition to a term of imprisonment, Judge Diamond also ordered Alia to pay restitution to the Internal Revenue Service for the tax loss he caused after he is released from prison.

The sentenced was announced Acting United States Attorney Louis D. Lappen.  The case was investigated by Internal Revenue Service’s Criminal Investigation Division and was prosecuted by Assistant United States Attorney Floyd J. Miller.

Thomas L. Boyd, 44, Memphis, Tennessee, are real estate investor, pled guilty to bank fraud.  In September 2016, Boyd was indicted by a federal grand jury in connection with a scheme to fraudulently obtain mortgage loans. The indictment alleged that Boyd, the owner of Wonderful Properties, LLC made false statements and presented false documents to Regions Bank, First Tennessee Bank, Bank of America and Oak Tree Funding on behalf of persons who were financing the purchase of properties from Boyd and Wonderful Properties.

According to the indictment, Boyd often made false statements on the loan closing documents by failing to disclose to the lenders on HUD-1 settlement statements that he was kicking back a portion of the loan proceeds to borrowers. Boyd’s scheme caused the lenders to disburse approximately $635,000 in loan proceeds.

At his plea hearing, Boyd admitted making false statements to Regions Bank in connection with a mortgage loan being made to an individual who was financing the purchase of a property from Boyd.

Boyd faces a maximum penalty of 30 years of imprisonment on the bank fraud charge and a fine of up to $1,000,000 and 5 years supervised release and a mandatory special assessment of $100.

The defendant is scheduled to be sentenced on August 9, 2017, by U.S. District Judge Sheryl H. Lipman.

Lawrence J. Laurenzi, Acting U.S. Attorney for the Western District of Tennessee, announced the guilty plea. The case was investigated by the FBI; Federal Housing Finance Agency (FHFA) – OIG; Department of Housing and Urban Development (HUD); Postal Inspection Service and IRS. Assistant U.S. Attorney Carroll L. Andre III is prosecuting this case on the government’s behalf.

David W. Schwarz, 60, Orlando, Florida, the former  Chief Financial Officer of Cay Clubs Resorts and Marinas (Cay Clubs), was sentenced to 40 years in prison.  Schwarz was convicted at trial by a federal jury on March 3, 2017 of conspiracy to commit bank fraud, two counts of bank fraud, and one count of interference with the administration of the IRS.  Chief U.S. District Judge K. Michael Moore, sitting in Key West, sentenced Schwarz to 40 years in prison. Judge Moore found that the criminal conduct resulted in $303 million in fraudulent proceeds and approximately $170 million in victim losses. A restitution hearing has been set for July 10, 2017, in Key West.

According to evidence at trial, Schwarz was the Vice President and Chief Financial Officer of Cay Clubs, which operated purported luxury resorts in the Florida Keys, Clearwater, Orlando, Las Vegas, and elsewhere. Between 2004 and 2008, Cay Clubs grew to more than 1,000 employees and became one of the largest employers in the Florida Keys. Schwarz, who was the one-third owner, and Fred Davis Clark, Jr., a/k/a Dave Clark,  59, formerly a resident of Tavernier, Florida, who was the two-thirds owner, began Cay Clubs in 2004 with fraudulent sales of Cay Clubs units to insiders, using money from Cay Clubs bank accounts to fund the cash to close for purchases, while obtaining mortgage financing from lending institutions. These fraudulent sales were used in marketing materials to falsely show demand for Cay Clubs units and to inflate prices, as Cay Clubs was in reality purchasing units from itself. Proceeds of these sales were diverted to Schwarz and Clark.

Trial evidence established that Cay Clubs raised more than $300 million from approximately 1,400 investors, who purchased units in Cay Clubs developments. Schwarz and Clark failed to remodel the dilapidated properties as they promised investors, while taking millions of dollars out of the company for their own benefit. During the operation of Cay Clubs from 2004 through 2008, Schwarz and Clark diverted more than $30 million in proceeds for themselves, including millions of dollars in cash transfers that were used to purchase property and other businesses, including a gold mine, a rum distillery, aircraft, and a coal reclamation business.

Trial evidence further showed that as Cay Clubs faced dwindling sales due to its failure to upgrade the dilapidated properties in 2006, Schwarz, Clark, and others engaged in additional fraudulent sales of Cay Clubs units to insiders, including Clark’s family members. These mortgage loans were used to prevent Cay Clubs from defaulting on commercial debts. The documents used to obtain these mortgages included falsified signatures and notary attestations, and had Cay Clubs acting as the seller while Schwarz provided the cash to close so that mortgage loans could be obtained to fund the sales.

During the course of this scheme, Schwarz and Clark did not file any corporate tax return for $74 million in income generated by the Cay Clubs entities. Furthermore, neither Schwarz or Clark filed any individual tax return for these years until after an investigation of Cay Clubs by the U.S. Securities and Exchange Commission. In 2010 and 2011, Schwarz filed false individual tax returns for tax years 2004, 2005 and 2006, respectively, in which he substantially underreported his income for these tax years and concealed his receipt of millions of dollars in proceeds.

On December 11, 2015, Clark was convicted by a federal jury in connection with related bank fraud charges and obstruction of the SEC. He was sentenced on February 21, 2016, to 40 years in prison by U.S. District Judge Jose E. Martinez. Former Cay Clubs sales executives Barry Graham, 59, formerly of Ft. Myers, Florida,and Ricky Lynn Stokes, 54,formerly of Ft. Myers, Florida, previously pled guilty to conspiracy to commit bank fraud in related cases and were sentenced to 60 months, and 30 months, respectively.

Benjamin G. Greenberg, Acting United States Attorney for the Southern District of Florida, Kelly R. Jackson, Special Agent in Charge, Internal Revenue Service, Criminal Investigation (IRS-CI), and Timothy Mowery, Special Agent in Charge, Federal Housing Finance Agency, Office of Inspector General (FHFA-OIG), made the announcement. Mr. Greenberg commended the investigative efforts of the IRS-CI and FHFA-OIG, and the extensive assistance of the SEC’s Miami Regional Office. This matter was prosecuted by Assistant U.S. Attorneys Jerrob Duffy, James V. Hayes, and Alison Lehr.

Karim Akil, also known as Scott Kinney, 50, Vallejo, California, was sentenced to 120 months in prison for conspiracy to commit mortgage fraud and money laundering.  Akil pled guilty on July 10, 2012, admitting his role as the organizer and leader of a mortgage fraud scheme.

According to Akil’s plea agreement, he knowingly conspired with others to commit wire fraud, involving the purchase of properties located in the Northern and Eastern Districts of California.  Akil acknowledged he directed co-defendants to create and submit loan applications that contained materially false information to financial institutions.  Akil acknowledged that the conspiracy involved using the names of fictitious persons and straw buyers, the creation of purchase contracts that reflected inflated sale properties above the original sales price, and the submission of fraudulent loan applications for 100 percent financing based upon the properties’ inflated purchase prices.  Akil agreed that more than 18 properties were involved in the conspiracy to defraud, and agreed that he was an organizer and leader of five or more participants in the conspiracy.  Akil directed an escrow officer to distribute “profits” to co-conspirators and to businesses that he owned or controlled, including Hiddenbrooke Mortgage and Marsh Group.

Mr. Akil enjoyed a lavish lifestyle, with outrageous expenditures,” said Michael T. Batdorf, Special Agent in Charge, IRS-CI. “Akil left a path of destruction, from properties that went into default and foreclosure, to straw buyers whose credit was ruined, to an escrow company that went out of business.  Although this sentence cannot reverse the damage caused by Akil and his co-conspirators, it highlights the ongoing commitment of IRS-CI and our law enforcement partners to hold accountable those involved in these types of crimes.”

On October 29, 2009, a federal grand jury indicted Akil and six co-conspirators, for their alleged roles in this extensive scheme.  For his part, Akil was charged with one count of conspiracy to commit mail fraud, in violation of 18 U.S.C. § 1349, 34 counts of wire fraud, in violation of 18 U.S.C. § 1343, and 16 counts of money laundering, in violation of 18. U.S.C. § 1957(a).  On July 10, 2012, Akil pleaded guilty to the conspiracy charge and one count of money laundering.

While out on pretrial release, between late 2012 and early 2013, Akil became involved in a series of new acts, which involved violating the terms of his plea agreement.  During the sentencing hearing, the Honorable Phyllis J. Hamilton, Chief U.S. District Judge, found that Akil breached his plea agreement in seven different ways.  These acts constituting breaches of the plea agreement included convincing a San Francisco property owner to take out a loan against a valuable property she had inherited.  The lender foreclosed on the property after Akil received $493,514 in net proceeds from the loan and loan payments were not made.  In a second alleged scheme, Akil also defrauded a victim in Southern California by promising to provide a $1.1 million stand-by letter of credit.  Akil received $197,600 in fraudulent proceeds from that victim.  That victim never received a legitimate letter of credit and never got his money back from Akil or anyone else involved in the alleged scheme.  In a third alleged scheme, Akil also forged numerous documents to gain control of a Southern California property and did a cash-out finance without the owner’s knowledge or permission.  Akil channeled almost $270,000 in net proceeds from the alleged fraudulent activity in that scheme through his other financial accounts, and spent all the money.

Judge Hamilton emphasized at the sentencing hearing that “individuals’ lives [  ] are ruined or significantly impacted by people who are gaming the system in some way, who are gaming the individuals.” Judge Hamilton found Akil’s “behavior to be entirely disturbing and suggestive of not only a failure to accept responsibility for his criminal conduct but a level of incorrigibility.”   The judge also stated, “I ponder whether or not any sentence will deter Mr. Akil.”  Judge Hamilton voice her concern that Akil’s statements to the Court during the sentencing hearing did not reflect true remorse for having ruined people’s financial lives.

In additional to the prison term, Judge Hamilton ordered Akil to serve a three-year period of supervised release, and ordered him to submit his person, residence and any property under his control to a search by Probation Officers or law enforcement officers at any time, with or without cause.  Akil will begin serving the sentence immediately.  The restitution hearing, scheduled for July 12, 2017, will determine the amounts Akil will be ordered to pay to the victims of his crimes.

Co-defendants Amy Schloemann (Akil’s former wife), Darnell Thomas, and Louisa Wonda Kidd each pleaded guilty to related crimes and were sentenced for their respective roles in the scheme.  On June 12, 2013, Schloeman was sentenced to 36 months for her role in the scheme and on November 7, 2012, Thomas was sentenced to 36 months of imprisonment for his role in the scheme.  On November 20, 2013, Kidd received a sentence of 36 months of probation for her role.  Co-defendants Michelle McGuire and Kashka Clay have entered guilty pleas and are scheduled to be sentenced on June 28, 2017.

U.S. Attorney Brian J. Stretch and Internal Revenue Service, Criminal Investigation (“IRS-CI”), Special Agent in Charge Michael T. Batdorf made the investigation. Assistant U.S. Attorney Christina McCall prosecuted the case with the assistance of Allen Williams, Noble Hughes, Vanessa Vargas, and Kathleen Turner.  The prosecution is the result of an investigation by IRS-CI with the assistance of the Alameda County District Attorney’s Office.

Ross D. Pickard, 63, Naples, Florida, pleaded guilty to conspiracy to commit loan and credit application fraud. He faces a maximum penalty of five years in federal prison.

According to the plea agreement, Pickard was a senior loan officer at JP Morgan Chase Bank. He conspired with others in a scheme to defraud the bank by completing, certifying, and submitting mortgage loan applications on behalf of borrowers that contained false and fraudulent statements. The false statements included overinflated income and assets, understated liabilities, and false occupancy. By relying on Pickard’s false and fraudulent statements on the loan applications, JP Morgan Chase funded mortgage loans for otherwise unqualified borrowers.

The approximate loss suffered by JP Morgan Chase Bank associated with Pickard’s criminal conduct exceeds $33 million.

The announcement was made by Stephen Muldrow, the acting United States Attorney for the Middle District of Florida.  The case was investigated by the Federal Housing Finance Agency – Office of Inspector General and the Internal Revenue Service – Criminal Investigation. It is being prosecuted by Special Assistant United States Attorney Chris Poor.

A businessman will get a new trial on mortgage fraud charges because his defense attorney was seen sleeping by the judge, witnesses and the federal court jurors who convicted him last year. U.S. District Judge Donetta Ambrose ruled James Nassida was denied a fair trial because Stan Levenson dozed during the October trial. Levenson has acknowledged that he fell asleep because he was taking cold medicines that made him drowsy.

Source: Man gets new mortgage fraud trial because of sleeping lawyer – ABC News

Benjamin Bland, 41,  Richmond, Virginia, was convicted by a federal jury of conspiracy to commit wire fraud, wire fraud, and social security fraud.

According to evidence presented at his five day trial, Bland was the owner and registered agent of a company headquartered in Richmond, Virginia that hosted a website that purported to provide individuals with a legal means to start a new credit file through the issuance of a “secondary credit number.” Bland falsely told his customers that these “secondary credit numbers” were “100% legal” and issued “by lawyers.” However, Bland had invented the term “secondary credit number,” there were no lawyers involved with his business, and the “secondary credit numbers” were actually social security numbers that had been previously issued to other individuals, predominantly children.

According to the trial evidence, one of the primary purposes of the fraud scheme was to obtain bank loans, private loans, auto loans, and lines of credit using the stolen social security numbers, counterfeit social security cards, and personal identity information (“PII”) of actual persons to create a false (improved) credit score.

The trial evidence also established that Bland obtained and sold the misappropriated social security numbers to Michael Westbrook and at least 20 others located throughout the country, whom Bland called his “affiliates.” These “affiliates” in turn sold those numbers to buyers. For an additional fee, Bland would provide fraudulent social security cards bearing the stolen number and the name of the “buyer.” Bland also provided fraudulent driver’s licenses to the “customers.” These items were provided so that “customers” could defraud banks and other lenders by drawing upon lines of credit using the stolen social security numbers.

According to the trial evidence, Bland compromised the social security numbers of at least 1,500 people during the conspiracy. The majority of the stolen social security numbers belonged to children all over the United States.

A co-conspirator, Michael Westbrook, also pled guilty to conspiracy to commit wire fraud and aggravated identity theft. He is awaiting sentencing.

Bland faces a maximum sentence of 20 years in prison on each of the wire fraud counts and a maximum of 10 years in prison on each of the social security fraud counts. Senior U.S. District Judge J. Frederick Motz has scheduled sentencing for July 14, 2017 at 10:00 am.

The conviction was announced by United States Attorney for the District of Maryland Rod J. Rosenstein and Special Agent in Charge Andre R. Watson of U.S. Immigration and Customs Enforcement’s (ICE) Homeland Security Investigations (HSI).

United States Attorney Rod J. Rosenstein commended HSI Baltimore for their work in the investigation. Mr. Rosenstein thanked Assistant U.S. Attorneys Lauren Perry and Aaron Zelinsky, who are prosecuting the case.

Timothy W. Burke, also known as “Bill Burke,” “William Burke,” “Kerry Saunders,” “Pat Riley,” “Jim Caldwell,” “Jim Saunders,” “Tom Morrisey,” “Jimmy,” “Phil Burke,” “Phil,” “Burt,” “James Burke,” and “M. Soler,” 65, formerly of Easton, Connecticut, was sentencedby U.S. District Judge Michael P. Shea in Hartford to 108 months of imprisonment, followed by three years of supervised release, for defrauding distressed homeowners, and tax evasion.

According to court documents and statements made in court, between approximately 2010 and November 2015, Burke engaged in a scheme to defraud individuals, mortgage lenders and the U.S. Department of Housing and Urban Development (HUD) by falsely representing to homeowners who were in, or facing, foreclosure on their homes that he would purchase their homes and pay off their mortgages. The distressed homeowners agreed to sign various documents, including quitclaim deeds, indemnification agreements, management agreements and third party authorization letters, which Burke presented to them on the understanding that, by signing the documents, they would be able to walk away from their homes without the burdens of their mortgage or other costs associated with home ownership. Burke also told homeowners that the process of negotiating with the lenders can take time and that, in the meantime, to ignore any notices regarding foreclosure. After he gained control of these houses, Burke rented out the properties to tenants by advertising the properties on craigslist.com and other means and falsely representing to tenants that Burke owned the property.

Burke or one of his agents then collected rent from tenants, in person, and Burke used the funds for his own benefit. Burke failed to negotiate with the homeowners’ mortgage lender or pay expenses associated with the home, including the homeowner’s mortgages and property taxes, and he failed to pay any rental income he was collecting to the homeowners. Many of the properties Burke purportedly purchased were ultimately foreclosed upon by the mortgage lender.

Burke undertook extensive efforts to disguise his true identity, and hide his criminal past, from his victims through the use of multiple aliases and business entities, and to conceal the sources of and expenditures from his criminal proceeds. Burke has been associated with multiple entities, including Quality Asset Management Services, LLC; Birmingham Investments, LLC; the Birmingham Group of Companies; Saunders Associates; New Haven Investments; Realty Partners Group; Preston Associates II; Landlord Maintenance Services, LLC; Turnkey Construction Services LLC; The Complete Handyman, LLC; and Woodbridge Associates.

Dozens of distressed homeowners, property renters and mortgage lenders were victimized during this scheme. Judge Shea will determine the amount that Burke will be ordered to pay in restitution after further court proceedings.

In addition, between 1994 and 2012, Burke evaded paying approximately $403,726 in federal taxes. He now owes the Internal Revenue Service more than $1 million in back taxes, interest and penalties.

Burke has been detained since his arrest on November 19, 2015. On January 24, 2017, he pleaded guilty to one count of mail fraud and one count of tax evasion.

In 2002, Burke was indicted by a federal grand jury in New Jersey on charges of conspiracy, mail fraud, and equity skimming. Burke subsequently pleaded guilty to conspiracy to commit both equity skimming and mail fraud, and he was sentenced to 60 months in prison, followed by three years of supervised release. Burke was released from federal custody in approximately August 2007 and began his federal supervised release at that time. One of the special conditions of Burke’s supervised release was that he refrain from employment in the real estate business or mortgage industry. Based on his motion for early termination of his supervised release, the New Jersey federal court terminated his supervised release approximately one year early in August 2009.

Bradford Barneys, a Bridgeport-based attorney who assisted Burke in this scheme, previously pleaded guilty to one count of conspiracy to commit mail and wire fraud. In pleading guilty, Barneys admitted that participated in numerous meetings with Burke and homeowners during which Burke represented to homeowners that he would purchase their properties. Barneys represented that these were legitimate transactions ever though he knew that Burke had no intention of buying the properties and paying the outstanding mortgages on the properties, and that Burke was renting the properties to tenants. Barneys also represented Burke and his companies in eviction proceedings against tenants.

Barneys awaits sentencing.

Deirdre M. Daly, United States Attorney for the District of Connecticut, announced the sentence. This matter has been investigated by Internal Revenue Service – Criminal Investigation Division, the U.S. Department of Housing and Urban Development – Office of Inspector General, and U.S. Postal Inspection Service, with the critical assistance of the Middletown, Plainville, Easton and Coventry Police Departments, the Connecticut State Police and the Bureau of Alcohol, Tobacco, Firearms and Explosives.

This case is being prosecuted by Assistant U.S. Attorneys David T. Huang and Sarah P. Karwan.

Oscar Cantalicio Ortiz, 53, Kingwood, Texas, a Houston-area contractor, failed to appear for sentencing in a $16 million loan fraud scheme, and has been charged with failing to appear. Ortiz pleaded guilty June 30, 2016, to conspiring to commit bank, mail and wire fraud. He was set for sentencing in that case Monday, April 24, 2017, but failed to appear at the hearing. A federal grand jury returned a new indictment against him for failure to appear.

He is considered a fugitive and a warrant remains outstanding for his arrest. Anyone with information about his whereabouts is asked to contact the FBI at 713-693-5000.

His codefendant – Houston realtor Seung Min Santillan, aka Suzy, 57, Houston, Texas – pleaded guilty to the conspiracy and making false statements on a loan application in September 2016. She was sentenced to 168 months in federal prison and ordered to pay $5,299,500 in restitution.

Ortiz and Santillan operated a mortgage fraud scheme in which they recruited straw borrowers to purchase residential properties in the Houston area. Loans were obtained from lending institutions to purchase these properties in the names and using the credit of the straw borrowers. The lenders were provided materially false information to induce them to fund these residential loans. The loans were funded and ultimately fell into default when Ortiz and Santillan failed to make all the mortgage payments as promised.

Ortiz and Santillan utilized several business entities during the execution of the scheme to defraud including Uptown Builders LLC, Americorp Builders LLC, Luxury Quality Homes LLC and Santi Investments. In recruiting straw borrowers during the scheme, the borrowers were told the residential property would be in their name for a short period while Ortiz made modifications to the property prior to reselling the house. Ortiz and Santillan promised the straw borrowers that they would handle all the costs associated with purchasing and holding these properties.

Once the loans to purchase the residence funded, one or more of the business entities Ortiz utilized would receive a large portion of the loan proceeds. This occurred even when the same property was purchased for the second time in the name of a new straw borrower. The defendants were able to take a large portion of the loan proceeds since the value of the residence was inflated with fraudulent appraisal reports.

The announcement was made by Acting U.S. Attorney Abe Martinez. The FBI conducted the investigation. Assistant U.S. Attorney Melissa Annis is prosecuting the case.