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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 Smith Dollar, PC, is licensed to practice law in California and maintains offices in Santa Rosa, California. Email Ms. Dollar
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First Magnus files Civil Lawsuit Alleging Kansas City, Missouri Mortgage Fraud Scheme
First Magnus Financial Corporation (FMFC) filed a civil lawsuit in the Federal Court for the Western District of Missouri, Kansas City Division, against the following defendants whose roles, as indicated in the complaint, are also included:
Summit Mortgage, L.L.C, mortgage broker
Joe Richardson, principal/alter ego, member, employee and/or agent of Summit
Dwayne Maddy, principal, employee and/or agent of Summit
Frank Strauss, principal, employee and/or agent of Summit
Rob Adrian, principal, employee and/or agent of Summit
First American Title Missouri Agency, Inc. dba First American Title of Kansas City, title
Premier Title Company, title
Realty Title Company, title
Commonwealth Land Title Insurance Company, title
First American Title Insurance Company, title
Old Republic Ins Co, title
Chicago Title Insurance Company, title
Wade Rustici, property seller
Global Assets, property seller
Brian Valet, property seller
Judy Valet, property seller
Kathy Schilt-Richardson, property seller
Kory J. Oline, property seller
K.C. Rehab Inc. , property seller
Mark Owen, property seller
Mark Meirath, property seller
Becky Meirath, property seller
Paul Zarrillo, property seller
Vicki Zarrillo, property seller
Rebecca Case, property seller
In its complaint, FMFC alleges that the defendants conducted a ‘massive scheme of fraudulent real estate transactions’ involving 19 flip transactions involving FMFC, in the greater Kansas City, Missouri area. Summit acted as the mortgage broker for all of the transactions.
According to the complaint, each of the fraudulent transactions began with the acquisition of a subject property, usually through a foreclosure sale. After acquiring a subject property, the Defendantss made or claimed to have made cosmetic repairs and quickly flipped it to an unwitting buyer at a much higher price. The repairs were often nonexistent or nominal. In some cases, buyers were not creditworthy, requiring Defendants to misrepresent buyer financial information, employment history and other pertinent financial data.
In order to substantiate inflated contract prices, according to the complaint, the appraisers would manipulate the comps and chose comps that were ‘blatantly incomparable’ to the subject property in that the subject properties were smaller, shoddier and in less desirable areas than the properties used as comps. In some efforts, inaccurate property attributes were provided. Title companies are alleged to have ‘ratified the inflated appraisals’ and should have known that the closing statements misrepresented and concealed material facts, namely buyer’s financial information, source of the down payment and other material information.
The properties referenced in the complaint are:
419 Montgal, Kansas City, Missouri
2327 Cedar, Independence, Missouri
816 Monroe Avenue, Kansas City, Missouri
126 South Topping Avenue, Kansas City, Missouri
5218 College Avenue, Kansas City, Missouri
4041 Woodland, Kansas City, Missouri
3209 Jackson, Kansas City, Missouri
3015 Quincy, Kansas City, Missouri
2410 Spruce Avenue, Kansas City, Missouri
3426 Indiana Avenue, Kansas City, Missouri
2822 Bales, Kansas City, Missouri
5235 Highland, Kansas City, Missouri
3725 Higland, Kansas City, Missouri
2529 Askew, Kansas City, Missouri
2807 E. 38th Street, Kansas City, Missouri
8320 Sni-A-Bar Road, Kansas City, Missouri
2539 Olive Street, Kansas City, Missouri
1123 East 79th Street, Kansas City, Missouri
The complaint includes causes of action for RICO, RICO Conspiracy, fraud, negligent misrepresentation, negligence, breach of contract and civil conspiracy.
Brian Valet, and Judy Valet are innocent of all charges.
Posted by on 02/13 at 05:04 PM
This story is pure slander, one of the properties in question 3015 quincy, was not a flip. This property was owned for over three years. I think people should get their facts straight before they put this story on the internet.
Posted by on 02/15 at 03:15 PM
One more thing, I have never even heard of 90% of these people that I was listed with. The lender says rico, that is the most ridiculous thing that I have heard in a while. I know 5 people on that whole list. There are 35 people on that list that I have no clue who they are.
Posted by on 02/15 at 03:20 PM
I want to add one more thing. All my buyers had credit scores over 700, and stable, and successful jobs.
Posted by on 02/15 at 03:24 PM
brian and judy valet are innocent of these charges
Posted by on 02/19 at 02:34 PM
Brian and Judy should NOT even be on this list. They had one property that was owned 3 years so how the heck is that a flip??? Sounds like they threw anybody’s name out that happened to do business with that mortgage company. The buyer decides who to get their loan from NOT the seller! Just as the seller doesn’t pick the appraiser,the lender for the buyer does! As far as the title companies go, they mentioned they should’ve know financial info on the buyers. I’ve been to many closings and have never seen a title company have access to ANY buyer’s financial information, only the lender sees that. Last time I checked I thought a title co. was to insure clear title. They don’t set the price or confirm the value. I have a feeling many people and/or companies named in this lawsuit shouldn’t be on the list and will be cleared.
Posted by on 02/28 at 06:01 PM
How is it slander to report facts? It is a fact that First Mag filed the suit. It is up to the courts to determine the validity.
Posted by on 04/11 at 08:23 AM
well sean it did not go to court because there were no charges that would hold up. i did nothing wrong in this suit. in fact i am out of this suit all together. it may be a matter of public record, but the simple fact is it is all wrong, and frankly all bullshit. welcome to the world of lawyers and all of the lies that come with it.
Posted by on 06/15 at 06:01 AM
I wonder how many people were locked adn ready to close when first magnus went belly up? talk about a sham company!
Posted by on 08/30 at 09:46 AM
I have bought 3 houses from Brian Valet’s company (V & V). I wish I had seen this info before dealing with him. If my experience with this person and his company is any indication of what went on with this suit, he is lucky that the mortgage company went out of business. I would be a lot better off if I had never met him and have a lot more money. Your experience may be different but, I would be surprised. Do your homework!
Posted by on 12/03 at 06:10 PM
Rene bought these houses, I rehabbed these houses with everything new in them. They are rented section 8. This guy lives in New York, and owns 12 other properties here. He has a gripe about everything. My rehab were better than any of his other houses. it is not my fault the market flopped and he cannot sell his houses. I am very sorry I met this investor. I have been released from this suit, because I have done nothing wrong. Once again get your facts straight.
Posted by on 01/13 at 02:46 PM
I have the release from this lawsuit, I did nothing wrong. I have a great company with a lot of satisified investors. There are always a few people that you can never make happy, no matter what you do to make them happy.
Posted by on 01/13 at 03:03 PM
BRIAN VALET IS INNOCENT OF THIS CIVIL SUIT, AND HAS RELEASE PAPERS FROM THE LENDER TO PROVE IT. I WOULD BE HAPPY TO FAX THE PAPERS TO ANYONE TO SHOW THEM.
Posted by on 01/13 at 05:09 PM
I thought Brian was very professional. I bought 7 houses from him. He rehabbed the houses in perfect condition, and then he rented them as he said he would with section 8 renters. He still helps me out. I never had a problem with him, or his company ever.
Posted by on 01/15 at 10:14 PM
My comment about Brian Valet has nothing to do with the lawsuit above. My experience with him was horrible. If anyone wants documentation of what happened including copies of closing statements, financial records, e-mail correspondence or anything else related to my dealings with him, I will be more than happy to provide it to you so tht you can make your own educated and informed judgment. Brian takes absolutely no responsibility for anything. The release that he is so proud of gettting may be the result of the bank being burned so badly that they could no longer afford to pursue the case.
I can tell you that I am not the only person that he dealt with who has the same opinion of doing business with him. If you’d like that person’s name and e-mail address I’ll be happy to pass it along.
Caveat Emptor
Posted by on 02/03 at 12:22 PM
I truly believe I have been scammed
by Reis Enterprises, Gary Shartzer
We refinanced our home not so long ago
and Reis Enterprises was involved
along with Mr Gary Shartzer also
JS Appraisal may have done the appriasal
on our home for this refinance ...
What can I do ???
Please contact my wife Marilyn
ASAP @
913.458.4802
Posted by on 02/08 at 09:45 AM
It is so good to see that all the criminals that worked for this company are starting to get what is coming to them. I was a former employee of the company who never got my last pay check from this corrupt group of people. Any A.E. that says they did not create a fraud loan is full of SH**. Stated income, Stated assets, YOU KNOW YOU DID IT AND LIED ABOUT MAY LOANS.
GUILTY GUILTY GUILTY
Posted by on 02/27 at 04:18 PM
Jason Morgan Did not do enything ellegal nor did he know of eny dooings of the others, and for putting someone with stage 3 liver/collin some lung cancer in jail wich he may only live a few months behind bars is uterlly insane
Posted by on 03/01 at 06:47 PM
To whom ever wrote about Jason Morgan having certain ailments, is completely incorrect and Mr. Morgan was exonerated of all charges from the lawsuit without prejudice!
Posted by on 03/01 at 06:58 PM
I would haveto disagree,Jason Morgan Is Dying and has been given months to live. he will has a pickline in his arm witch is attached to a Chemo Pump . Wich Is Why He Lost Over 100LBS. And Is So White Looking |Due To The Chemo.
Posted by on 03/01 at 10:42 PM
WOW You ARe SO Mature, Typical, AND YES ITS JASON MORGAN WHO IS DYING
Posted by on 03/02 at 05:19 PM
i am looking for people who have been victums of mortgage fraud who went trough hometown equity mortgage and does any one know about lawsuits filed against them
Posted by on 06/06 at 11:52 PM
Account rep M. Parker of United Wholesale Mortgage in MI have made several unwelcome sexual advances towards one of our employees during their visit to our offices in MO. complains to United Wholesale Mortgage were ignored without even a response. We have since stop conducting business with UWM.
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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