Wednesday, December 19, 2007

31 Defendants Charged in Massive Mortgage Fraud Scheme

Juan Torrens, the de facto owner of Amsouth Trust & Investment Corp. (Amsouth) and president of Countryside Land & Development, Inc., Rachael Torrens, president of 1st Choice Realty of South Florida, Inc. and de facto owner of First United Mortgage USA Corp., Daniel Ramos, Alfonso A. Muxo, a State of Florida certified real estate appraiser and owner of Palm Bay Real Estate Appraisals, Inc., and Katherine Harris, former president and part owner of Floridian Home Title Corporation, were charged with conspiracy to commit wire fraud and/or wire fraud for their participation in a massive mortgage fraud scheme. 

This scheme involved fraudulent mortgage loans obtained for the purchase of 27 properties located in Miami-Dade and Broward Counties, and in the City of Marco Island, Florida. 

The Indictment also charges defendants Mario E. Diaz, Aurelio Pozo, Oscar Barreiro, Lellany Rordriguez, Jose Asensi, Carlos Morales, Damaris Jimenez, Lizabeth Perez, Mario Blanco, Rene Rodriguez, Tamaris Angulo, Alicia Loaiza, Ester Crespo, Jesus Enrique Guevara, Janette Lugo, Priscilla Fleitas, Erick Clavijo, Luis DeJesus Planas, Moises Llorens, Milva Roque, Aurora Ramentol, Gladys Lens, Nancy Fundora, Yanny Cruz Pavon, and Jacqueline Perez-Castillo (the straw buyer defendants) with wire fraud for their participation in this mortgage fraud scheme.

According to the Indictment, Juan Torrens would identify sellers of residential properties who were willing to overstate the true selling price of their properties.  Daniel Ramos and Juan Torrens would then recruit and pay the straw buyer defendants to pose as buyers and ostensibly participate in the purchase of the selected properties.  Defendants Rachael Torrens and Juan Torrens would prepare and cause to be prepared on behalf of the straw buyer defendants fraudulent mortgage loan applications.  The applications included false employment verifications, pay stubs, income and funds on deposit, and IRS Forms W-2.  These fraudulent loan applications would be signed by the straw buyer defendants. 

Thereafter, to support the overstated sales prices on the properties and the fraudulent mortgage applications for the straw buyer defendants, defendant Alonso A. Muxo would prepare, for a fee, fraudulent appraisals attesting to the inflated property values dictated by Juan Torrens.  Roger Rosario, an employee of Regions Bank, provided, on at least one occasion, a fraudulent verification of deposit in connection with a mortgage loan application for one of the straw buyer defendants.

To effectuate the scheme, defendants Juan Torrens and Rachael Torrens, together with the straw buyer defendants, would create and submit to the banks and lending institutions HUD-Settlement Statement Forms, also known as HUD-1s, which falsely stated that the straw buyers brought their own funds to the closings.  In truth, however, the straw buyer defendants brought no such funds to the closing.  The straw buyer defendants would allow their identities and credit information to be used in the mortgage loan applications, falsely representing themselves to be the true buyers of the properties and the individuals responsible for the loan.

Once the mortgage applications were approved, the lenders would wire the loan proceeds to the title company, Floridian Home Title, for closing.  At closing, Amsouth, a company owned and controlled by Juan Torrens, would receive a credit for the difference between the inflated price and the actual selling price of the property.  Defendant Katherine Harris would, for a secret fee, create and submit to the lender a false Settlement Statement form, HUD-1, concealing from the lender the existence of the credit given to the buyer from the seller and that Amsouth was also involved in the transaction.

Lastly, defendants Juan and Rachael Torrens would make the payments on the mortgage loans to maintain the loans afloat until the properties could be resold again, often to another straw buyer.  When the Torrenses failed to make payments on the loans, some properties went into foreclosure, resulting in substantial losses to the lending institutions.

The properties listed in the Indictment include:
70 South Seas Court;
990 Baltic Terrace;
1640 Barbarosa Court;116 Delbrook Way;
825 Willow Court;
1451 Jamaica Road;
1500 Galleon Avenue;
139 Balfour Drive;
203 Majorca Circle;
310 Worthington Street;
299 S. Heathwood Drive;
355 Yellowbird Street;
940 San Marco Road;
941 Sycamore Court;
1109 Dana Court, all of Marco Island, Florida;
931 NW 81st Avenue, Pembroke Pines;
1352 NW 41st Street, Miami;
7438 McKindley Street, Hollywood;
1311 N 72nd Avenue, Hollywood;
5201 W 27th Terrace, Dania Beach;
364 NW 47th Court, Oakland Park;
661 Branch Street, Hollywood;
9915 SW 140th Street, Miami, all of Florida.

United States Attorney Acosta stated, “Mortgage fraud cannot be ignored.  It has become a real and daily threat to the asset most important to most of us Floridians – our homes.  The United States Attorney’s Office and our law enforcement partners in this Initiative have made prosecution of mortgage fraud a top law enforcement priority.  To date, our Mortgage Fraud Initiative has resulted in the prosecution of 55 individuals responsible for more than $76 million in fraudulently obtained loans. Unfortunately, more prosecutions will follow.”

Michael Fithen, Special Agent in Charge of the U.S. Secret Service, noted, “The Secret Service Miami Field Office embraces this new initiative to address the full scope of mortgage fraud schemes that continue to emerge and victimize South Florida. We will bring to bear our expertise and that of law enforcement partners from our Electronic Crimes Task Force and Financial Crimes Task Force to assist in these significant investigations.”

Kenneth M. Donohue, Inspector General of the U.S. Department of Housing and Urban Development - Office of Inspector General, said, “The message here is clear: if you do business with HUD and try to defraud, we’re coming after you.  We are motivated to do so because, like most American taxpayers, we are appalled that some people try to manipulate these programs at the expense of families in need.”

Roger Reinke, Chief of the City of Marco Island Police Department, stated, “On behalf of the citizens of Marco Island, the Marco Island Police Department is proud to assist the United States Attorney’s Office, the U.S. Secret Service, the U.S. Department of Housing and Urban Development - Office of Inspector General, and all other law enforcement agencies involved in this investigation.  Of the twenty-four properties under investigation, fifteen were located in Marco Island.”

If convicted of conspiracy to commit wire fraud and/or wire fraud, the defendants face a statutory maximum sentence of twenty (20) years of incarceration, as to each count of conviction.  Substantial penalties and restitution would also be ordered.

mortgage fraud

1. I sincerely applaud this effort and hope to see the same in San Diego.  In reality, everybody could have benefited from lower interest rates, but the real estate industry had to run it into the ground.  The entire industry needs to be taken apart, piece by piece.

   Posted by  on  12/19  at  09:20 AM

2. this is a great article to show how many people can be involved in a fraud scheme and how an entire community can be effected.  I hope that this brings more attention to the problem and that local papers and newscasters pick up on this and report it.

   Posted by  on  12/26  at  06:44 AM

3. As an appraiser, it irritates me that lending institutions do not perform due diligence on their portfolios. The cost of a review appraisal is quite a bit less than the cost of a government investigation. Much of the white collar crime in the lending business could be nipped in the bud IF the industry was regulated properly. The taxpayer can’t foot the bill for corrupt and/or stupid business people ad infinitum. The mortgage meltdown may be in the infancy stage. Thank the corrupt mortgage brokers, hedge fund gamblers, incompetent and corrupt appraisers, Wall Street, greedy lenders, etc. et al. I suppose this is what is meant by the term “globalization”; the U.S. is exporting financial problems to the world.

   Posted by  on  12/27  at  09:47 AM

4. we now have to homes finance through countrywide, and are having problems we sent the payments monthly and they claim that payments were never received or that payments were made to late to be applied. this has created lots of prblems and they hab even tried forclosing my properties could you contact me, thank you.

   Posted by  on  01/22  at  04:47 AM