Mortgage Fraud Blog is the premier website for news and information on mortgage fraud and real estate fraud throughout the United States.
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 Smith Dollar, PC, is licensed to practice law in California and maintains offices in Santa Rosa, California. Email Ms. Dollar
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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.
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.
Failed Mortgage Firm Trustee Allowed $50,000 in Fees Union Leader
U.S. Bankruptcy Court Judge J. Michael Deasy will approve $50,000 in legal fees for the trustee of failed mortgage brokerage businesses Financial Resources Mortgage Inc. and CL&M Inc.
Bend Oregon Event to Help Homeowners Prevent Foreclosures Oregon.Gov
As part of an ongoing effort to help homeowners avoid foreclosure, state agencies are organizing a foreclosure-prevention event in Bend on Saturday, March 27, 2010.
Shelbyville Man Gets 2-Year Sentence For Loan Fraud Chattanoogan.Com
Prosecutor Gary Humble said the lost was approximately $2.3 million in the mortgage fraud involving hundreds of homes in the Shelbyville area.
Lend America, VP Ashley Banned from FHA Housing Wire
Michael Ashley, the embattled former vice president of Federal Housing Administration (FHA)-backed mortgage originator Lend America, and the company he worked for, were permanently banned from doing business in the industry last week.
Countrywide Tries to Pin Blame on Insurer Court House News
Countrywide Home Loans demands $111 million from Triad Guaranty Insurance, claiming Triad is trying to blame mortgage lenders for the insurer's role in the housing bubble and collapse.
Investors Say They Were Swindled in Property Scheme Fox 13 Now
Utah Division of Consumer Protection is joining forces with a few investors who claim they have been cheated by an agency called "Utah Mini Ranches.
Greenfield Man Accused of Housing Scam The Republic
A former real estate agent conned at least eight people by renting them properties actually owned by a federal agency and then running off with their deposits, prosecutors said.
Appraisal Institute Opposes Obama Administration's Plan for Homeowner 'Short Sales' PR News Wire
Citing concerns about increased mortgage fraud, four organizations representing more than 35,000 real estate appraisers today voiced their opposition to changes to an Obama administration program that will encourage "short sales" of homes.
Ownership Rights to Get Another Look TBO.Com
State lawmakers may beef up protections of property owners' rights by rewriting a law this spring that is at the center of a case of alleged fraud in Pasco County.
Thursday, February 18, 2010 F. Jeffrey Miller Trial Continued Testimony
As reported by Anne Mitchell, who viewed the trial:
Angela Parenza worked for Jeff Miller as the office manager for 7 or 8 years beginning in 1998. Parenza was indicted along with Miller and pled guilty to conspiracy to commit bank fraud and money laundering. Parenza testified that Miller or his contractors allegedly preferred to build all the...
Wednesday, February 10, 2010 F. Jeffrey Miller Trial Coverage Continued - Witness Testimony
Steve Middleton Testimony - Coverage Provided by Anne Mitchell
The Government continued in its cross examination of Steve Middleton. He was shown several HUD-1 statements involving sales of homes located in Overland Park, KS, and Olathe, KS. The HUD statements each allegedly showed line items of payments to (James) Moser & Associates, LLC's...
Monday, February 01, 2010 F. Jeffrey Miller Trial Coverage - Continued Witness Examination
According to Anne Mitchell, who is present in court for the trial:
Next Witness: Kelly Sanford
Kelly Sanford of the Federal Reserve was a short witness for the Government. Sanford manages electronic payments between banks and member financial institutions. He was shown copies of wire transfers and asked whether they coincided with the counts in...
Wednesday, January 27, 2010 F. Jeffrey Miller Trial - Prosecution Witnesses Continued
According to Anne Mitchell, who is viewing the trial:
January 13, 2010
Witness: Rick Hayes
Rick Hayes testified that on the day that he closed on his Miller Enterprise home, he received a phone call from the Kansas Banking Commission informing him that his loan was fraudulent. After the Hayes responded to a classified ad, they met with John...
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The information and notices contained on Mortgage Fraud Blog are intended to summarize recent developments in mortgage fraud cases and mortgage banking matters nationwide. The posts on this site are presented as general research and information and are expressly not intended, and should not be regarded, as legal advice. Much of the information on this site concerns allegations made in civil lawsuits and in criminal indictments. All persons are presumed innocent until convicted of a crime. Readers who have particular questions about mortgage banking, mortgage fraud matters or who believe they require legal counsel should seek the advice of an attorney. The creators, editors and sponsors of Mortgage Fraud Blog do not intend to create a confidential relationship or an attorney-client relationship by communication via or arising from this site.
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 
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