Monday, June 30, 2008

Indictments Announced In Chicago Mortgage Fraud Scams

Bobbie L. Brown, Jr., 44, Country Club Hills, Illinois, and 20 co-defendants were charged with various counts of mail, wire and bank fraud and using false identification documents in a 26-count indictment that was recently unsealed. Other defendants include an attorney, a tax practitioner, seven loan officers, two realtors, and a new home builder. Between August 2004 and May 2008, the defendants allegedly fraudulently obtained 150 mortgage loans on homes in the Chicago, Illinois area, from which they obtained more than $95 million in loan proceeds from lenders for themselves and others. The victim lenders incurred losses totaling approximately $19 million on the loans, the indictment alleges, because they were unpaid, causing the residences to be foreclosed upon and resold for amounts less than the outstanding mortgage loan balance.

According to the indictment, Brown operated several businesses, including Chicago Global Investments, Inc., B&M Customs Homes, Inc., Brown Trucking, Inc., and World Wide Investments, Inc., which he used to facilitate the purchase and sale of real estate. The residences that were the subject of the alleged fraud scheme were located in various Chicago suburbs, including Country Club Hills, Flossmoor, Frankfort, Mokena, Woodridge, Elmhurst, Lemont, Orland Park, Addison, Homewood, Naperville and Aurora. The victim lenders included First Magnus Financial Corp., Accredited Home Lenders, Inc., Argent Mortgage Company, Midwest Funding Bancorp, American Home Mortgage, Long Beach Mortgage Co., First Franklin Financial Company, and Countrywide Home Loans, Inc.

The fraud scheme alleges that Brown individually acquired several residences using false personal identification information, such as stolen social security numbers. It further alleges that Brown – together with defendants Barry Adams, 52, Lansing, Illinois, field manager for Chicago Global; Leslie Love, 42, Country Club Hills, Illinois, a licensed real estate agent and owner of Total Real Estate; Calvin Townsend, 49, Homewood, Illinois, a licensed realtor and owner of Custom Home Service Corp.; and Gwendolyn Jackson, 43, Flossmoor, Illinois, who oversaw Chicago Global‘s financial affairs – purchased and caused to be purchased residences, individually or through nominees, including defendants David Jackson, 57, Justice, Illinois; Prentice Mason, 30, Dyer, Indiana; Buford Peteet, 64, Sauk Village, Illinois; Jean Hernal, 48, her husband, Edgardo Hernal, 51, Westchester, Illinois; Bozidar Kelic, 40, Chicago, Illinois; and Donald J. Felton, 57, Oak Park, Illinois, owner of Donald J. Felton Accounting and Tax Services. The nominees, or straw purchasers, were recruited by the others to buy multiple residences with promises of “no money down” and “cash back at closing” if they agreed to participate. The nominees were also promised that the residences would be rented out by Brown, Love, Gwendolyn Jackson and Townsend or their agents; that they would not have to make any mortgage payments; and that their names would be removed from the title after approximately 12 months. Brown, Adams, Love, Gwendolyn Jackson and Townsend referred the nominee buyers to loan originators, including defendants Brandon Ellington, 27, Country Club Hills; Wayne Harris, 39, Chicago; Shalonda Sloan, 33, Chicago; Tiffany Thurman, 37, Naperville; Charquette Christine Campbell, 29, Chicago; Dominic Moscato, 34, Darien, Illinois; and Latonja Spencer, 43, Country Club Hills, to prepare allegedly fraudulent loan applications.

The indictment alleges that Brown, Adams, Love, Gwendolyn Jackson and Townsend paid the nominees and some loan originators, using the proceeds from real estate transactions, and allegedly concealed that information from lenders. These same five defendants provided and caused to be provided down payments, earnest money checks and funds used by the nominees for the real estate deals, falsely representing the nominees as the source of the funds, which, in fact, the straw buyers had not contributed toward the purchase of various homes. All 21 defendants allegedly received proceeds of mortgage loans that lenders issued to the nominees and used the funds to enrich themselves and to buy and sell additional residences.

Brown, Adams, Love, Gwendolyn Jackson and Townsend and their associates, friends and relatives lived in the Brown residences without making mortgage payments, causing the loans to go into default, according to the indictment. The same five lead defendants allegedly solicited James Garofalo, 38, Homewood, coowner of Madison Homes Partnership, and other new home builders, as well as other sellers, to sell their newly-constructed and existing residences to Brown‘s nominees at inflated prices. Garofalo and other sellers allegedly agreed to pay Brown, Love, Gwendolyn Jackson, Townsend and Moscato finders fees and commissions, ranging from 5 to 30 percent of each sale price, knowing that a portion of those funds were to be kicked-back to the nominees to complete the purchases of the new homes.

Meanwhile, the loan originators that Brown and other defendants steered the nominee purchasers to allegedly prepared and caused to be prepared false mortgage applications to ensure that the nominees qualified for loans. The loan packages allegedly contained a variety of false statements to induce the lender’s approval, including information about the particular nominee’s employment, income, assets, liabilities, and intention to occupy the residences as a primary or secondary home. In some instances, the applications failed to disclose that the nominees had recently purchased multiple residences and had obtained loans from other lenders.

Defendant Harry DeForneau, 66, Chicago, an attorney, allegedly participated in the fraud scheme by representing the nominees at several real estate closings at the request of Brown and Love, knowing that the closing and mortgage documents contained false information material to the lending decisions. A licensed notary public, Allen Robinson, who was not charged in this case but was indicted in a companion case, allegedly notarized documents on behalf of Brown and the nominees, knowing they contained false statements material to lending decisions. The indictment seeks forfeiture of $19 million from the defendants. All 21 defendants will be ordered to appear for arraignment in U.S. District Court.

The investigation, code-named Operation Model Home, was conducted by the FBI and the U.S. Postal Inspection Service. The Government is being represented by Assistant U.S. Attorney Daniel May.

Alleged ring-leader Bobbie L. Brown, Jr., was indicted in a second case, together with 12 different co-defendants, on federal charges of mail, wire and bank fraud in a seven-count indictment that was recently unsealed. Similar to the companion case, but involving different participants, this indictment alleges that between August 2006 and April 2007, Brown and the others fraudulently obtained approximately 33 home mortgage loans – in this case on homes in Nevada and one in California, from which they obtained more than $16 million in loan proceeds from lenders for themselves and others. The victim lenders incurred losses totaling approximately $5.3 million on the loans, the indictment alleges, because they were unpaid, causing the residences to be foreclosed upon and resold for amounts less than the outstanding mortgage loan balance.

The fraud scheme alleges that Brown, together with defendants Treyonda Towns, 38, Country Club Hills, Illinois, an employee of B & M Custom Homes, Inc.; Jennifer Lorenzen, 39, Las Vegas, Nevada, a licensed real estate agent in Nevada, and others purchased and caused to be purchased residences in Las Vegas and Henderson, Nevada, and one in Santa Cruz, California, individually or through nominees, including defendants Steven Anderson, 40, his wife, Jeanette Anderson, 41, Country Club Hills; and Kenneth Smith, 44, of Chicago. Brown and Lorenzen allegedly recruited the nominees, or straw purchasers, to buy multiple residences with promises of “no money down” and “cash back at closing” if they agreed to participate. The nominees were also promised that the residences would be rented to others by Brown and Lorenzen or their agents; that they would not have to make any mortgage payments; and that their names would be removed from the title after approximately 12 months. Brown and Lorenzen referred the nominee buyers to loan originators, including defendant Brian Barss, 30, Corona Del Mar, California, to prepare allegedly fraudulent loan applications.

The indictment alleges that Brown and Lorenzen paid the nominees, using the proceeds from real estate transactions, and allegedly concealed that information from lenders. Brown and Lorenzen also provided and caused to be provided down payments, earnest money checks and funds used by the nominees for the real estate deals, falsely representing the nominees as the source of the funds, which, in fact, the straw buyers had not contributed toward the purchase of various homes. All 13 defendants allegedly received proceeds of mortgage loans that lenders issued to the nominees and used the funds to enrich themselves and to buy and sell additional residences.

Brown, Lorenzen and others controlled the Brown residences and they, as well as their associates, friends and relatives lived in them without making mortgage payments, causing the loans to go into default, according to the indictment. Brown, Lorenzen and others allegedly solicited Timothy Mudd, 41, Paradise Valley, Arizona, owner of 3 to 5 LLC and ALL NV, LLC, which renovated and sold homes in Nevada and Arizona, and other sellers, to sell their residences to Brown‘s nominees at inflated prices. Mudd and other sellers allegedly agreed to inflate their prices to pay Brown and Lorenzen finder’s fees and commissions, ranging from 3 to 16 percent of the sales price of each residence, knowing that a portion of those funds were to be paid to the nominees to complete the home purchases.

As part of the alleged scheme, Barss and others allegedly prepared and caused to be prepared false mortgage applications to ensure that the nominees qualified for loans. The loan packages allegedly contained a variety of false statements to induce the lender’s approval, including information about the particular nominee’s employment, income, assets, liabilities, and intention to occupy the residences as a primary or secondary home. In some instances, the applications failed to disclose that the nominees had recently purchased multiple residences and had obtained loans from other lenders.

Brown, Towns and Barss, together with defendants Tracy Green, 33, San Francisco, California, and Jotawn Draper, 30, Chicago, Illinois, both of whom were employees of JP Morgan Chase Bank; and Carolyn Thompson, 34, Normal, Illinois, an accountant and owner of Thompson Tax and Accounting Services, created and caused to be created false verifications of employment, accountant letters and verifications of deposit to support the false loan applications submitted by and on behalf of the nominee purchasers. Thompson and defendant Jason Jones, 31, Apple Valley, California, a tax practitioner and owner of Pacific Tax Consultants, allegedly prepared and caused to be prepared false documents claiming they had prepared tax returns for nominees, knowing that the false statements were material to the lenders’’ decisions and were made to induce the lenders to issue loans to unqualified nominees. Defendant Allen Robinson, 42, Chicago, a licensed notary public, allegedly notarized closing documents on behalf of Brown and the nominees, knowing they contained false statements material to lending decisions.

The indictment seeks forfeiture of $5.3 million from the defendants. All 13 defendants will be ordered to appear for arraignment in U.S. District Court. 

This case is also part Operation Model Home investigation conducted by the FBI and the U.S. Postal Inspection Service. The Government is being represented by Assistant U.S. Attorney May.

Defendant Darrell Rodgers, 43, Burr Ridge, also known as ”D," controlled New Family Mortgage, located at 1234 South Michigan Ave., Chicago, where co-defendants Henry Tate, 48, Olympia Fields, aka ”June," and Sandra Bowden, 45, Chicago, were loan officers and Bowden was also the office manager. All three were charged with multiple counts of mail, wire and bank fraud in a 25-count indictment returned by a federal grand jury. Between at least 2003 and 2006, they allegedly schemed to fraudulently obtain more than $40 million in mortgage loan proceeds from more than a dozen large banks and mortgage companies, which ended up losing approximately $6 million when the loans were unpaid and the properties were foreclosed. The properties securing these loans included 28 residences in Chicago, Bolingbrook, Richton Park, Hazel Crest, Aurora, Country Club Hills, Homewood and Skokie, Illinois.

According to the indictment, at first through Express Mortgage, where they were loan officers, and later through New Family Mortgage, Rodgers, Tate and Bowden submitted, and caused to be submitted, loan applications to lenders falsely representing that the individual applying for the loan was the true purchaser of the property, when, in fact, the applicant was acting as a nominee, or straw purchaser, for the defendants. The defendants recruited nominees by promising them that they would not have to make any down payments or mortgage payments, or pay any other costs; that the properties would be in their names only temporarily until the properties were resold; and that they would be paid between $2,500 and $5,000 for each property for which they allowed their name to be used as a purchaser.

The defendants allegedly prepared and caused others to prepare fraudulent mortgage loan applications on behalf of the nominees, knowing they contained a variety of false statements, including information regarding the nominees’ intent to occupy the property, employment, income, and assets, all of which were intended to induce lenders to approve mortgage loans to purchasers who were otherwise unqualified. As part of the scheme, the defendants allegedly purchased and caused the purchase of down payment checks with New Family Mortgage funds, falsely listing the nominees as remitters, when, in fact, the nominees had not contributed any money toward down payments. Rodgers and Tate profited from the sale of the properties to the nominees from the broker’s fees paid as a percentage of the fraudulently obtained loans, the indictment alleges, and Bowden profited from her loan commission.

After initially paying directly, or providing nominees with funds to make monthly mortgage payments, Rodgers and Tate fraudulently obtained new loan proceeds by using a nominee purchaser as a nominee seller in a subsequent transaction in which the property was sold to a second nominee purchaser, the charges allege. The two men allegedly forged and caused to be forged the signature of the nominee seller on the title company checks payable to the nominee seller, and Bowden allegedly assisted by depositing those checks into a New Family Mortgage bank account.

The indictment seeks forfeiture of $5.7 million in proceeds from mail and wire fraud and $1.5 million in bank fraud proceeds. All three defendants will be arraigned later in U.S. District Court.

The investigation, code-named This Old House, was conducted by the IRS Criminal Investigation Division and the Chicago Police Department. The Government is being represented by Assistant U.S. Attorneys Christina Egan and Matthew Getter.

mortgage fraud

1. Pg.1.)
   …………………………………………………………………………………………………………
   MORTGAGE FRAUD, MOTGAGE FRAUD
   ……………………………………………………………………………………………

   ENGLISH:

   This is important information regarding the practice(s) of one Annette Norton, of Aurora, Illinois.

   The matter involves both identity theft, mortgage application deception(s) and other fraudulent practices, on the part of this employee of Washington Mutual.

   To date, only some of those individuals targeted, in the past (indentified here), have been able to be contacted; in order to alert them to the need for them to check both their credit reports for erroneous entries, and financial information, in general.

   Also, anyone may use the contact information provided here, in order to allow for these and any other persons to personally contact www. WaMu.com, for purposes of assisting with the investigation of the wrongdoing.

   Home Equity and Personal Account Information:
   (800) 788- 7000 (888) 800-8738
   …………………………………………………………………………………….

   SPANISH:

   Ye para todos cual saber ante estas gente, estas importante informacion con respecto a las a practicar anto uno Annette Norton, ante Aurora, Illinois.

   Los material acerca ambos robo ante financiero propio informacion hipteca aplicacion impropio.

   Hastaenora Annette Norton, colaborador ante Washington Mutual hipteca compania.

   Pora data, singular unas ante esos individuo meta es nombre aqui - en lo pasado un pocos poseer contacto, adentro a alerta les ante el necesitar para cheque su credito reportaje pues desperfectp exposicion.

   Tombien, vinculo informacion es donar a caber persona victima anto banditos, presura rapido.

   WWW. WaMu.com, por favor, assitir con investigacion anto impropio actus.

   Asilo ahorro, cassa e personal calculo informacion ….

   Seccion: (800) 778-7000
   (888) 800-8738

   Pg. 2.)

   Likely victims of “fraudulent Mortgage practices”:
   (Presumible sacrificios anteo “hipoteca fraude, sequir”):

   1.) Ms. Kate Simmons … (708) 357-3455 26.) Mr. & Mrs. John Bradley …. 687-2917

   2.) Mr. Thomas Etherly … (708) 343-1337 27.) Miss Lucillea Lovely ….  681-2918

   3.) Miss Carolyn Hart … 223-8934 28.) Mr. & Mrs. J. Sanchez …. (630) 541-1108

   4.) Mr. & Mrs. Wood … 442-5519 29.) Mr. Sammy Wallace …..  345-0345

   5.) Mr. & Mr. Smith … (847) 288-1610 30.) Ms. Seymore …..  344-7673

   6.) Mr. .Paul Harmentor … 373-1437 31.) Mr. & Mrs. Flores ….  419-1902

   7.) Ms. Bertha Gorden … 681-5076 32.) Miss Flowers …….  (630) 983-8676

   8.) Mr. & Mrs. Calhoun … 386-3020 33.) Mr. Carlos Mardios …..  (708) 482-3842

   9.) Mrs. Carla Jackson …. 649-9129 34.) Ms. Phyllis Trotter ….  (630) 451-1419

   10.) Ms. Stephanie Reed … 223-8715 35.) Ms. Paula Johnson ….  343-9045

   11.) Mr. & Mrs. Cecil Thomas … 449-1033 36.) Mr. Conrad Jones …..  (847) 260-7214

   12.) Miss barbera Madlock … 865-7033 37.) Mr. Nevils Caldwell … 216-7050

   13.) Rev. M. Louise ….  865-7032 38.) Mr.& Mrs. Juan Hernadez ..  366- 3589

   14.) Mr. Bennett Adams … 938-5446 39.) Mr. Theodore Blackwell …..  223-0774

   15.) Mr. Trevor Griffin …. 345-8125 40.) Ms. Francine Adams …..  “Unlisted now”

   16.) Ms. Stacey Rivers … 223-8032 41.) Mr. Andre Hart …..  223-8934

   17.) Mr. Gilda Lilder … (708) 343-3039 42.) Ms. Terri Strong …..  496-8018

   18.) Ms. Ava Smith … (708) 202-2145 43.) Mr. Juachim Bradshaw …..  771-5741

   19.) Mr. & Mrs. Mitchell ....  466-6497 44.) Mr. & Mrs. Julio Adeo… (312) 793-7210

   20.) Mrs. Bradey ….  344-6232 45.) Ms. Fran Thompson …… 547-0264

   21.) Mr. & Mrs. Jose Alverez … (708) 466-6997 46.) Ms. Christina Chase… (847) 451-9486

   22.) Mr. & Mrs. Julio Gomez … 547-7354 47.) Ms. V. Ballet … 547-6094

   23.) Miss C. Bowman ….  562-0798 48.) Mr. Charles Palmeroy … (630) 238-1642

   24.) Mr. & Mrs.  Juan Gonzalez “Now Unlisted ” 49.) Mr. J. Martinez … “Presently, Unlisted.

   25.) Mrs. Guadilupe Fernandez … “Now Unlisted”

   Posted by  on  07/01  at  11:48 AM

2. Most fraud of this nature is orchestrated by the loan officer who typically is working as a broker, not the real estate agents. Real estate agents are typically oblivious to the lending process (I’ve owned a RE/MAX franchise and an in-house mortgage operation; agents are truly clueless when it comes to loans). The allegations in this case support this scenario in that, according to the Feds, forged documents including VOD’s, VOE’s, false tax returns, etc. were created to do the loans. Coincidentally, I happen to know one of the agents involved, Jennifer Lorenzen. I have not talked to her in a number of years, but I think the Feds are off base in indicting her. She is simply a real estate agent and this was obviously engineered by someone who intimately understands the lending process.

   Posted by  on  07/09  at  11:10 PM