Friday, November 09, 2007
6 Charged For Defrauding HUD And Private Lenders
Richard Elroy Giddens, 67, Riverside, John Richard Varner, 54, Hesperia, Stephen Ray Harper, 50, Ontario, and Katherine Ann Kilmer, 52, Hesperia, all of California, and all former officers with the now-defunct Inland Empire mortgage lender, were arrested by Federal Agents on charges of defrauding the United States Department of Housing and Urban Development and private lenders by fraudulently obtaining federally insured loans and selling those notes to private lenders.
Two more defendants charged in the case – Ricardo Bonilla, 46, Fontana, California, and Abraham Julian Rezex, 59, Downey, California – are expected to self-surrender later this month.
All six defendants are charged with conspiracy and bank fraud. Giddens and Varner are charged with subscribing to a false tax return. Harper is charged with willful failure to file a tax return.
The scheme, which ran from 1997 until 2002, was run out of the Mortgage One Corporation, which was based in Hesperia, California and M-1 Capital Corporation, which was based in Riverside and Rancho Cucamonga, California. The two companies were in the business of approving, funding and then selling home mortgage loans, typically obtaining mortgage insurance of the loans from the Federal Housing Administration, which is an agency within HUD.
The indictment alleges that the defendants engaged in a conspiracy to defraud HUD by submitting fraudulent loan application documents in order to qualify the loans for FHA insurance. The indictment further alleges that Mortgage One and M-1 Capital sold the funded loans to banks using the same fraudulent documents. HUD has identified more than 850 FHA-insured loans approved by Mortgage One and M-1 Capital that went into foreclosure and made insurance claims to HUD. Investigators estimate that the losses suffered by the government and the private lenders are at least $10 million.
Three of the defendants arrested are expected to make their initial appearances before a United States Magistrate Judge in Riverside, California. Giddens is expected to make his initial appearance before a United States Magistrate Judge in Los Angeles, California.
The maximum penalty for the conspiracy charge is five years in federal prison. The maximum penalty for the bank fraud charge is 30 years in prison. The maximum penalties for the tax charges range from one to three years in prison.
An indictment contains allegations that a defendant has committed a crime. Every defendant is presumed to be innocent until proven guilty in court.
This case is the result of an investigation by the Federal Bureau of Investigation, HUD’s Office of Inspector General, and IRS-Criminal Investigation. The investigation received assistance from the Social Security Administration’s Office of Inspector General.
mortgage fraud
Good article Rachel. I’m from Canada and when I read things like this it’s no wonder the real estate market is on a downswing.
This is a great blog, Can’t wait to read your other articles!
Posted by on 11/09 at 09:23 AM
I say to all these frauds and swindlers....I hope you get locked up and the keys thrown into the sea…
Posted by on 11/11 at 03:01 PM
Elroy Giddens had a charge of identity theft dismissed against him in Arizona, shortly before this arrest in California. He tried to pass himself off as an attorney briefly in Arizona, then went to work for a local bail bondsman (now out of business). He is a disbarred California lawyer, around for a very long time involved in all sorts of various “activities.” Check his record with the California State Bar. Prison time in Texas as well for weapons possession.
Posted by on 12/04 at 02:56 PM
I was mislead down a merry path, on a non-prime loan in Arizona. The lender claims they lend nationwide, and sent this flyer out stating they can do all theses different types of mortgages. Once I contacted them and send all information to them, they shot me back some terms penciled out on my same fax cover sheet. Communication was poor to say the least. Then they asked for $2,500. UPFRONT prior to looking at the appraisal, and prelim, along with credit and application. We wasted 3+ weeks, on this loan, going back in forth. Come to find out after I researched them, they are NOT LICENSED IN THE STATE OF NEW YORK FOR WHICH THEY CLAIM THEY ARE LICENSED. VERIFIED BY THE STATE OF NEW YORK. THESE PEOPLE NEED TO BE STOPPED. WE, DO NOT COLLECT ANY MONEY UPFRONT IN OUR STATE. ALL FUNDS WE COLLECT ARE AT THE CLOSING. PLEASE PAST THIS INFO ON AND DON’T LET OTHERS BE TAKEN ADVANCE OF.
Posted by on 03/24 at 06:56 AM
Should would like to know what happened with this fraud case in California!
Prison is too good for Giddens.
Posted by on 08/29 at 09:54 AM
My identity was used fraudgulently to purchase a property and the company in question to assist in carrying out the fraud was Omega in Downey. How can I get assistance in getting the loan agent and or loan processor reported for fraud. I got stuck with the property, my credit is ruined and now I’m in foreclosure. The worst of it all it was my parent that made this transaction with the help of Omega in Downey.
Posted by on 05/28 at 05:40 AM
Diana, I suggest contact your state’s attorney general’s office - they may be able to guide you from there.
Posted by on 05/28 at 02:15 PM
Elroy Giddens today was sentenced to 6 years for defrauding HUD for $10,000.00.
Giddens sentenced was lowered because he testified against his co-defendants.
The funny thing was Giddens was the main target. If the other defendants had been smarter they would have testified against Giddens. Giddens is a good conman who was able to con his co-defendants into trusting him.
Posted by on 09/11 at 08:05 PM
I meant to say Elroy Giddens today was sentenced to 6 years for defrauding HUD for $10 million dollars.
Posted by on 09/11 at 08:07 PM
Fantastic! Thanks for the update. Too short of a sentence, I agree, but better than letting him go free. CON MAN—right! Disbarred lawyer, explains a lot! I had personal experience with this loser - not related to any of this business, but while he was pretending to be a lawyer in Arizona. He took the Arizona bar exam, but the ethics committee picked up on his California disbarment and refused admission.
Posted by on 09/12 at 06:38 AM
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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.
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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 
