Fraudster Pleads Guilty to Land Fraud Scheme

admin —  March 16, 2010 — Leave a comment

Daniel Stephen, 43, Miami Shores, Florida and Patricia De Pons, 54, Miami Shores, Florida pled (Stephen, De Pons) guilty to conspiracy to commit mail fraud in connection with a vacant land sale scheme that defrauded more than 1,000 victims out of $10.6 million.

According to the indictment and as previously reported on Mortgage Fraud Blog, this case arose out of the sale of land in various counties in North Florida and in Georgia by First Loan Solution, a company owned and operated by Daniel Stephen. Stephen advertised the sale of the land to the Haitian community in Miami Dade County, Florida, using First Loan Solution’s website, Stephen’s radio program on Haitian radio, and the distribution of flyers. Stephen organized bus trips for prospective buyers to view the land in North Florida. During these trips, Stephen falsely represented that First Loan Solution owned the land. Stephen made similar false representations in individual meetings with the buyers.

Based upon these false representations, the prospective buyers agreed to enter into land sale contracts with First Loan Solution to purchase the land in one-acre increments. Upon signing the land sale contracts, Daniel Stephen required buyers to make down-payment deposits. Stephen falsely assured the prospective buyers that First Loan Solution would maintain the deposits in escrow accounts to be released only when authorized by the parties to the contract. Contrary to his representations, Stephen fraudulently diverted a significant portion of these buyers’ deposits to pay business expenses of First Loan Solution and for his personal enrichment.

Daniel Stephen failed to purchase the land that he had agreed to sell, causing significant delays in closing the land sales to the buyers. Stephen sent letters to the buyers purporting to explain the reason for the delays, fraudulently representing that the delay resulted from the lengthy time required to survey the land without disclosing that First Loan Solution did not own the land. Stephen also falsely assured the buyers that their deposits were being held in escrow accounts. Stephen used these letters to conceal the fraud and lull the buyers into a false sense of security about the status of the land transactions and the safety of their deposits.

Daniel Stephen hired a law firm with initials of E.T. to serve as the closing and escrow agent in the land sale transactions between the prospective buyers and First Loan Solution. Patricia De Pons was the public face of E.T. in connection with these First Loan Solution transactions. Many buyers attempted to terminate the land sale contracts and obtain refunds of their deposits. Patricia De Pons, on behalf of E.T, and Daniel Stephen, on behalf of First Loan Solution, refused requests to obtain refunds, offering repeated excuses for failing to refund the deposits and referring the increasingly frustrated buyers back and forth between First Loan Solution and E.T. In some instances, De Pons and Stephen did provide refund checks, although several of the refund checks issued by Stephen were returned for lack of sufficient funds.

Without explanation, Patricia De Pons presented the buyers with limited liability company (“LLC”) agreements for signature. De Pons failed to disclose to the buyers that, through these LLC agreements, the buyers were agreeing to purchase an interest in a limited liability company, with the company as the title owner of the property, and that the buyers were not purchasing land in their own names as Stephen had represented to them at the time the buyers signed their land sale contracts.

Patricia De Pons conducted false and fraudulent closings purporting to transfer title of the land tracts from First Loan Solution to the buyers. As part of the closing, De Pons demanded payment from the buyers of the balance purportedly owed on the land purchases. De Pons then sought to establish the legitimacy of these transactions by sending fabricated, unrecorded warranty deeds to the buyers. De Pons sent letters to the buyers representing that closings on their land had taken place and that a recorded copy of the warranty deed would be returned to the buyers upon receipt from the county where the land was located.

Despite conducting hundreds of closings purportedly transferring the land to the victim buyers, the buyers were left without any land and without a refund of the monies they provided to First Loan Solution and E.T. In excess of 1,000 victim buyers fell prey to this scheme with losses to the victims of $10,600,000.

Jeffrey H. Sloman, United States Attorney for the Southern District of Florida, John V. Gillies, Special Agent in Charge, Federal Bureau of Investigation, Miami Field Office, and J. Thomas Cardwell, Commissioner, State of Florida’s Office of Financial Regulation, made the announcement.

This case was investigated by agencies participating in the Federal-State Mortgage Fraud Strike Force. Mr. Sloman commended the investigative efforts of the Mortgage Fraud Strike Force with particular commendation to the Federal Bureau of Investigation and the State of Florida Office of Financial Regulation. The case was prosecuted by Assistant U.S. Attorneys Peter A. Forand and Michael Sherwin.

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