Tuesday, June 23, 2009
19 Indicted for Mortgage and Appraisal Fraud Involving 70 Homes
Richard Lisnek, 56, a licensed mortgage broker and president of K&L Real Estate, Inc., and American Eagle Mortgage, Inc., and his wife, Judy Kien, 50, an attorney and president of D&J Properties II, Inc., both of Buffalo Grove and who had offices in Arlington Heights, together with 13 other individuals and two other businesses, were charged with various counts of mail fraud and wire fraud in a 22-count indictment that was returned June 23, 2009, by a federal grand jury. Other defendants include another mortgage broker, three real estate appraisers, a title company and one of its vice presidents. The additional defendants listed in the indictment include:
Alfredo Hilado, 50, Bloomington, Illinois - straw buyer recruiter;
Mark Vargo, 53, Elmhurst, Illinois - straw buyer recruiter;
James Heiland, 63, Barrington Hills, Illinois - appraiser;
Brandon Bradford, 37, Chicago, Illinois - appraiser;
Vlad Ostromogilsky, 38, Glenview, Illinois - appraiser;
Alex Bulmash, 32, Lincolnwood, Illinoise - broker;
Michael Bulmash, 29, Norridge, Illinois - processor;
Allen Bulmash, 29, Chicago, Illinois - processor;
Anthony Navickas, 28, Chicago, Illinois - processor;
Lynn Liskiewicz, 48, Chicago, Illinois, title company vice president;
Joanne Ruiz, 47, Elmhurst, Illinois - buyer;
Kenneth Turner, 32, Woodridge, Illinois - buyer; and
Antoinette Laws, 47, Chicago, Illinois - buyer.
In one of the most comprehensive mortgage fraud schemes ever charged in Chicago, the Lisneks, acting through two real estate investment companies they controlled, allegedly directed a scheme in which 15 individual defendants and four businesses purchased distressed properties, including from the U.S. Department of Housing and Urban Development, and then resold them for fraudulently inflated prices approximately two to three times the purchase price. Between 2002 and 2007, the defendants allegedly fraudulently obtained mortgage loans in excess of $10 million on approximately 70 residential properties throughout Chicago, including many on the city's south side in and around the Englewood neighborhood. As part of the alleged scheme certain defendants paid other defendants to make homes "camera ready," by making them appear as though they had been rehabilitated.
Lisnek and Kien allegedly provided funds to buyers, which they falsely represented to lenders were the buyer's own funds for down payments. Various other defendants allegedly made false representations concerning the buyer's employment, financial condition, contribution towards the purchase price and intention to occupy the home, and the sales price, condition and value of the property. After fraudulently obtaining the loans, the victim lenders incurred losses totaling approximately $5.8 million because they were unpaid, causing the residences to be foreclosed upon and resold for amounts less than the outstanding mortgage loan balance. The indictment seeks forfeiture of the alleged loss amount.
According to the indictment, Lisnek solicited individuals with good credit to buy distressed properties from K&L Real Estate and D&J Properties by promising that they would not have to invest any of their own money and promising to repair the property and make the mortgage payments until the home was restored or provide funds to rehabilitate the property and assist in obtaining tenants under HUD's Section 8 subsidized housing program.
Lisnek recruited Hilado and Vargo to recruit other buyers, knowing the transactions would be financed by making false statement to mortgage lenders. Lisnek paid Vargo and others to make the distressed properties appear what Lisnek called "camera ready" or "picture ready" by making cosmetic repairs to front and rear exteriors so the homes would look fully restored or better than their actual condition.
Three licensed real estate appraisers, Heiland, Bradford and Ostromogilsky allegedly prepared inflated appraisals, falsely representing that those properties were fully rehabilitated, knowing that they would be used to support fraudulent loan applications.
Lisnek and licensed mortgage broker Bulmash, president of Investment Group, Inc., which operated as Investment Mortgage Group (IMG) in Lincolnwood and Skokie, Illinois, allegedly caused employees of IMG including Bulmash's brothers, Michael and Allen Bulmash as well as Navickas to prepare and submit false loan applications and supporting documents, such as verifications of deposit and rent and property leases, on behalf of buyers of distressed properties from K&L and D&J.
Liskiewicz, a vice president and regional manager of LaSalle Title Company, located at 100 North LaSalle St., Chicago, allegedly caused LaSalle Title to close sales by K&L, D&J and Lisnek by creating false closing documents concealing that the down payments represented as the buyer's funds were actually provided by the sellers, that the purchase price was inflated, and that lenders were being deceived into financing all or a greater portion of the sale than portrayed for buyers with little or no equity in the property being purchased. The fraudulent closings included Kien signing settlement statements, known as HUD-1s, on behalf of sellers falsely representing the source of the buyer's funds.
Hilado, Vargo, and additional defendants Ruiz, Turner and Laws purchased property from K&L and D&J knowing that they and others signed false loan applications to fraudulently obtain mortgages.
The indictment seeks forfeiture of $5.8 million from the defendants. All defendants will be ordered to appear for arraignment in U.S. District Court.
The Government is being represented by Assistant U.S. Attorneys Brian Netols and Steven Block.
mortgage fraud
Keep Guantanamo open for RE “Professionals”. We’re gonna need the space. Go Feds!!!!!
Posted by on 06/23 at 07:55 PM
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Trial coverage provided by Anne Mitchell, Crazy Fish Realty.
F. Jeffrey Miller Update - October 20, 2009
A hearing was held in Topeka, Kansas in front of Judge Julie Robinson. Miller is currently being held pending his sentencing which is set for December 22nd, 2009 at 9:00 a.m.. Steve Vanatta and Hallie Irvin, Miller's codefendants, will be sentenced at that time also.
Several motions were heard this week. One was a motion for Miller to be released pending his sentencing. Miller's attorney, Jeff Morris, argued that the court had dismmissed with predjudice the matter involving Miller's purchase of a commercial lawnmower, violating the court ordered monitoring agreement. He also argued that Miller was not a flight risk and should be released. This motion was denied.
Another motion heard by Judge Robinson was that of an escrow account containing proceeds from the sale of Miller's forfeited assets. This account has a balance of $143,000. Attorney Morris argued that his firm was due $100,000 for work done in the Miller matter, to date. The government argued that his 'un-itemized fees' were 'exhorbitant'. The balance of the funds, Morris argued, should be released to the Miller family to help pay for mounting household expenses.
The government argued that the 'Asset Forfeiture Provision' applies down to 'the last penny' and that 'the rights of the victims to made whole are of paramount immportance' and that no routine household expenses like Visa bills, are allowed.
Attorney Morris argues that there is more than enough assets to satisfy the jury's judgement of $2.65 million dollars. The government argues that the estimated value of his assets are only $1.4 million.
The government also stated that Miller has been paid dividends from a company Miller has an ownership interest in; Boreflex. From July, 2008 to present, Miller has been paid $330,509.30 from Boreflex, unbeknownst to the court appointed monitor.
Present in the courtroom was Todd Earnshaw. Earnshaw was indicted along with Miller and others in what is commonly referred to as 'Miller I'. That trial is scheduled to begin on January 11, 2010 in Topeka, Kansas.
More Trial Coverage
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Rachel Dollar, the editor of Mortgage Fraud Blog, is an attorney and Certified Mortgage Banker who handles litigation for lending institutions and secondary market investors. She is an author and a nationally recognized speaker on the topic of mortgage fraud. Ms. Dollar is a shareholder with the law firm of 
