Wednesday, October 08, 2008

Woman Indicted For Massive Fraud Scheme

Magile Cruz, a/k/a Maggie Cruz, a/k/a Magile Cruz-Rodriguez, a/k/a Magile Araujo, a/k/a Ros Rodriguez was charged for her participation in a multi-million fraud scheme that resulted in more than $24,000,000 in fraudulent mortgage loans, and losses of more than $5,000,000 to lenders.  Cruz was charged with conspiracy to commit mail fraud and wire fraud, and with substantive counts of mail and wire fraud.  If convicted, she faces a maximum sentence of 20 years on the conspiracy charge and on each substantive charge of mail and wire fraud. 

According to the Indictment, Cruz was the de facto owner of Star Lending Mortgage, State Mortgage Lending, Sherley Title Services, Doral Title Services, and Professional Title Express.  Star Lending Mortgage was a mortgage brokerage company; State Mortgage Lending was a mortgage lending business.  Both were licensed to do business in the State of Florida.  Sherley Title Services, Doral Title Services, and Professional Title Express were title agencies and were not licensed by the State of Florida.  Cruz is alleged to have used employees and friends as the nominee owners for all five companies, and personally managed the businesses, including all the financial affairs of the companies.

Between 2005 through 2007, Cruz was engaged in a scheme to obtain fraudulent mortgage loans for the purchase of 79 properties in Miami-Dade and Broward Counties, Florida.  To execute the scheme, Cruz would identify residential properties for sale through Star Lending Mortgage and State Mortgage.  Cruz and other co-conspirators would recruit and pay straw buyers for the selected properties.  Cruz and her co-conspirators would then prepare and cause to be prepared fraudulent mortgage loan applications on behalf of the straw buyers.  The applications included false employment verifications, pay stubs, verification of income and funds on deposit, and IRS Forms W-2. 

Thereafter, Cruz and her co-conspirators, including the straw buyers, would create and submit to the banks and lending institutions false HUD-Settlement Statement Forms, also known as HUD-1s, which concealed from the lending institutions, among other things, the existence of a second HUD-1 prepared for the same transaction with a lower sales price for the property.  In other instances, Cruz would fraudulently obtain multiple loans from various lenders for the same parcel of property, all unbeknownst to the lenders involved.  Finally, Cruz would similarly seek and obtain fraudulent loans on properties for which there was no true sale by stealing the identity of the seller and fabricating a transaction with a straw buyer.

According to the charges, the straw buyers 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. Cruz and her co-conspirators would create and submit to banks and lending institutions fraudulent title documentation, including false closing protection letters, falsely representing that Sherley Title Services, Doral Title Services and Professional Title Express were agents for Fidelity National Title and/or Old Republic.  In fact, however, these companies were not authorized by Fidelity National Title and/or Old Republic to act as their agents and to issue such documentation. 

Once the mortgage applications were approved, the lenders would wire the loan proceeds to Sherley Title Services, Doral Title Services, and Professional Title Express for closing.  At closing, Cruz and her co-conspirators would receive a credit for the difference between the inflated price and the actual selling price of the property. Cruz and her co-conspirators would then execute and file Change of Address forms with the United States Postal Service on behalf of the straw buyers, thus concealing from the individual actually living at the address that the subject property had been fraudulently sold.

Cruz 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 she failed to make payments on the loans, some properties went into foreclosure, resulting in substantial losses to the lending institutions. 

mortgage fraud

1. Anybody know if this horrible excuse for a human is/was legally present in the U.S. or if she’s an illegal immigrant?

   Posted by  on  10/08  at  09:51 AM

2. Crimmeny!  What a horrible story!  And then we wonder why there are so many real estate related problems!  How could the banks/lending institutions catch this.  Just glad they eventually did catch them.

   Posted by  on  10/08  at  10:11 AM

3. Landers can easily catch this type of fraud. All it requires is for requested mortgages to be underwritten prior to funding by thoroughly trained, competent underwriters who have access to the proper tools that follow a well devised underwriting criteria. Unfortunately, too many lenders under estimated the importance of quality underwriting. Additionally, many lenders have/had incompetent executives in charge that are/were oblivious to both the potential threats to mortgage lenders as well as oblivious to the simple business practices that could prevent these frauds.

   Posted by  on  10/08  at  04:25 PM

4. The problem is when you have a good underwriter, who raised questions about these transactions, you were told to shut up because your job was at stake. 

   However, I have seen some of the work done by underwriters, and many of them sacrificed quality for speed to meet ridiculous expectations by their employer.  Or to avoid being harassed. 

   One sales manager I worked for, told me in a meeting, that if the underwriters don’t do what he wants he gets new underwriters.  I reported to the head underwriter in corporate office and they ignored me.  They eventually lost a whistleblower / retaliation suit with me.  I didn’t get much, but I made a point.  Their president of the mortgage company was recently indicted for embezzlement and fraud not only at this company, but the one he worked prior for.

   Posted by  on  10/15  at  04:42 AM