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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Barry C. Westergom, 60, Jacksonville, Florida, pleaded guilty to conspiring to commit wire and bank fraud. Westergom faces a maximum penalty of thirty years in federal prison and a fine of $1million.
According to court documents, the charges arise out of Westergom's involvement in a scheme in which a co-conspirator, Juan Carlos Gonzalez, negotiated the purchase of higher-end houses and entered into contracts with the sellers of the properties. Westergom was a licensed real estate appraiser and Gonzalez retained him to appraise the properties. Westergom used inappropriate comparable properties and other fraudulently means to appraise the properties. The appraised value was significantly higher than the agreed purchase price and the true market value of the property. The inflated appraisals were submitted to lenders in support of mortgage loan applications that reflected the higher appraisal price as the actual sales price. Westergom knew that Gonzalez intended to submit the appraisal reports to lenders in support of mortgage loan applications. The lenders were not informed that the price listed in the loan documents was higher than the actual price negotiated with the seller. The conspiracy operated in 2004 and 2005.
In some of the transactions, Westergom acted not only as the appraiser but also as a real estate broker for Gonzalez. For those transactions, Westergom received not only an appraisal fee but also a percentage of the sales price as a broker's commission. Westergom's acting as both an appraiser and a broker in the same transaction created a conflict of interest, and Westergom's acting in both capacities in the same transaction was improper. Lenders were not informed that Westergom was acting in both capacities in the same transaction.
Also at Gonzalez's direction, fraudulent financial documents and information, including such things as altered bank statements and payroll records, were submitted in support of loan applications. The false financial information and the inflated appraisals were submitted to lenders to convince them to lend money on the properties to buyers who would not have qualified for the loans, or who would have qualified for loans in a lesser amount, if true financial information was disclosed. On at least one occasion, Westergom altered a bank statement for Gonzalez to reflect that the account contained much more money than was actually in the account.
At the closings on the properties, Gonzalez received the difference between the loan amount, which was based on the inflated appraisal, and the actual purchase price, usually described with terms such as "assignment fee" or "payoff of second mortgage" that did not exist. This difference was the proceeds of the fraud.
The plea agreement details one transaction in which Westergom acted as a buyer's agent through an entity called Property Associates, which was controlled by Westergom. On behalf of Gonzalez, Westergom negotiated with the sellers' agent to purchase a house for $490,000. Westergom then appraised the property and issued a report valuing the property at $625,000, which he knew was significantly higher than the fair market value of the property.
Gonzalez submitted first and second mortgage loan applications to a lender stating that the sales price of the property was $625,000. Gonzalez also submitted altered bank account statements showing significantly larger cash balances in the account than were actually there. Based upon this information, the lender approved the first and second mortgage loans. At the closing on the property, a check for $134,000 was issued to an entity controlled by Gonzalez. This amount was listed on closing documents as an "Assignment of Contract Fee." Also at the closing, a check for $12,250 was issued to Property Associates, Westergom's real estate company, as a broker's fee and another check for $550 was issued to Jax Appraisals, Inc., Westergom's appraisal company, as an appraisal fee.
Court documents reflect that Gonzalez fraudulently obtained loans on 55 properties, victimizing numerous buyers and lenders, including federally insured banks. The fraudulent acts resulted in lenders extending more than $29,272,000 in first and second mortgage loans. Over the course of the scheme, the total amount paid to Gonzalez was $6,296,303.65. Gonzalez has pleaded guilty and is scheduled to be sentenced on November 9, 2009.
United States Attorney A. Brian Albritton announced the guilty plea.
The case was investigated by the Federal Bureau of Investigation. The case was prosecuted by Assistant United States Attorney Arnold B. Corsmeier. This case is part of the Middle District of Florida's Mortgage Fraud Surge, a joint effort by the U.S. Attorney's Office for the Middle District of Florida, the Federal Bureau of Investigation, Tampa and Jacksonville Divisions, and numerous other federal, state, and local law enforcement agencies. The Surge focuses intensive investigative and prosecutorial resources on the mortgage fraud crisis that plagues middle Florida and has contributed to the current economic situation nationwide. It is designed to accelerate mortgage fraud cases, to bring perpetrators to justice quickly, and to provide maximum deterrence. For more information on the Middle District of Florida's Mortgage Fraud Surge, please contact Steve Cole, Public Affairs Officer for the United States Attorney's Office.
i have been in the real estate business for over a decade in Jacksonville and this is sad, but not unexpected news. I recognize most of the names of the people that are involved in this mess. There was a time when I was jealous of these people and their uncanny ability to make a lot of money for doing nothing but “Flipping Paper”. All I can say is that most of these people used and abused other people and the banking system. They are the reason this whole country is in an economic nightmare. These people are :"serial killers” of the American Dream.
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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