Thursday, November 30, 2006
Guilty Plea in Washington Flipping Scheme
Joshua Kebede pled guilty to one count of conspiracy to commit wire fraud. Kebede was indicted in the Federal Court for the Western District of Washington along with Akram Aswad Almussa on October 20, 2005. Kebede was indicted on two counts and Almussa was initially indicted on six counts of conspiracy and wire fraud. Two additional counts were added against Almussa by way of superseding indictments.
Kebede admitted in his guilty plea that he conspired with Almussa, John Gonzalez and others (including W.A., M.K. and P.W.) to cause others to obtain fraudulent mortgage loans using materially false information. Some of the proceeds were diverted to or used to acquired residential property for Kebede and other conspirators. It was Kebede‘s intent, according to the plea, to gain control of single family residences, renovate and remodel the residences and sell them for a profit. As he was unable to legitimately obtain financing and pay for the remodeling using his own credit, he set forth to do so illegally.
Kebede and his co-conspirators would identify properties that were for sale. They would enter into real estate purchase and sale agreements to purchase the properties in their names or the names of their companies (including Samuel and Associates and E.C. and Associates.)
While the purchase transactions were pending, the conspirators would flip the property by recruiting a third party – often a straw buyer or ‘credit investor’ – typically at a purchase price significantly higher than the amount reflected in the pending purchase. Recruiters, including John Gonzalez, would be paid a fee for their assistance in locating straw buyers and straw buyers were typically told they would not be required to live in the homes.
The conspirators would then cause the straw buyer to apply for a loan to finance the purchase price. Materially false information was submitted to obtain financing, including inflated income levels or fictitious employment information, false certifications of occupancy, and false statements inflating buyer assets.
Once the loan was obtained in the name of the straw buyer, the loan would be used to purchase the property from the original legitimate seller for the original lower sales price. The excess loan funds would be used to pay the closing costs and straw buyer and the excess funds would be remitted to the conspirators.
On October 20, 2003, Kebede entered into a contract to purchase 4398 Somerset Blvd, SE, Bellevue, Washington from W.K. for $480,000. Kebede recruited K.K. to purchase the property for $580,000. K.K. was paid approximately $8,500 to act as purchaser. The loan for this purchase was placed by a mortgage brokerage where Almussa was employed and he acted as the account executive on the transaction. The property purchases and sale were closed as same day flips on November 26, 2003 at the law offices of Stephen K. Araki, according to the guilty plea.
Kebede entered into a contract to purchase the home of C.M. and O.M. at 15800 71st Street, Kenmore, Washington (as Joshua Kebede or assigns) for $380,000. The property was ultimately purchased by EC and Associates. Kebede and Almussa recruited C.E. to act as straw buyer and purchase the property for $483,000. C.E. was paid $5,000 for her role in the transaction. Almussa was likewise the account executive on this transaction and were also closed as same day flips at the law offices of Stephen K. Araki, according to the Plea Agreement.
In the guilty plea, Kebede further admitted that he contacted a witness while on bond and instructed the witness to lie to federal agents.
Kebede is scheduled to be sentenced on January 18, 2007.
mortgage fraud
It is overwhelming how this goes on and on, state by state. I am glad to see that finally those involved in fraud are being sentenced. One of the areas that a fellow realtor who use to do loans expressed to me is when a loan is being processed as if it were a single family house and instead is a land with a mobile home. Of course, as you have stated, an appraiser goes along with the whole scenario and the Lender is left holding the bag once the buyers default. This is an ongoing problem and one that I certainly hope will land those found guilty in prison.
I would be interested in knowing what the sentence is for some of those indicted...broken down in terms of each area of indictment.
Posted by
Gena Riede on 11/30 at 06:20 AM
We write articles on sentencing as the defendants are sentenced. We don’t generally break down the sentences per offense because, for the most part, the sentences are concurrent. In other words, the court may sentence the defendant to five years for bank fraud, five years for wire fraud and five years for mail fraud but orders that the sentences be served concurrently thus making the actual prison term only five years rather than 15.
Posted by
Rachel Dollar on 12/28 at 11:14 AM
Post a Comment
The trackback URL for this entry is:
Trackbacks:
|
Some Sources require Registration.
Erie Area Mortgage Broker Gets Prison in Fraud Case
GoErie.com - Erie, PA
Shortly before receiving a nearly three-year federal prison sentence, former mortgage office manager Francis R. Conti told the judge he never meant to defraud any of the homeowners caught up in a widespread local mortgage-fraud scheme.
Three Former Portland-Area Mortgage Brokers Face Fraud Charges
OregonLive.com - Portland, OR
Joel D. Surprenant, Michael Duc Han and Benjamin Lucian Lucescu all were charged with one count of obtaining mortgage loans through materially false and fraudulent pretenses.
Shaker Pair Pleads Guilty to Mortgage Fraud Charges
Cleveland.com - Cleveland, OH
Two Shaker Heights residents recently pleaded guilty to charges involving a mortgage scheme with seven area houses and $3 million in fraudulent loans.
Feds File Charges in Five Mortgage Fraud Cases
Chicago Breaking News - Tribune - Chicago, IL
Federal charges were filed today against 37 people and four companies in five separate mortgage fraud cases.
Feds Fighting Back
Contra Costa Times - Walnut Creek, CA
Mortgage fraud has increased so dramatically in the San Joaquin Valley that a task force of federal, state and local agencies has been formed to fight back.
Private Investigator Sees Rise in Mortgage Fraud Due to Economy
PR Web - Ferndale, WA
In the past 12 months his firm has been retained to conduct over 300 mortgage fraud investigations, a 100% increase from 2007.
Former UGA, NFL Football Player Arthur Marshall Charged With Mortgage Fraud Claims
WJBF-TV - Augusta, GA
He is also accused of defrauding three banks in obtaining loans for seven different properties in Columbia and Richmond Counties.
Cuomo Subpoenas Loan Modification Companies
New York Times - United States
“The entire industry is a scam, in my opinion,” Mr. Cuomo said Tuesday. “These are services that homeowners don’t need to pay for in the first place.”
Defendant Pleads Guilty to Wire Fraud Relating to Mortgage Fraud Scheme
Imperial Valley News - Holtville, CA
Scavitti admitted that between 2003 and August 2008 he unlawfully diverted mortgage funds that were wire transferred into his client office account to his own personal benefit, resulting in losses in excess of $2.5 million.
Fed Drug Report: Double Trouble for Metro Chicago
ABC7Chicago.com - IL
...Chicago street gang members run a network of legitimate businesses and have engineered mortgage fraud schemes, both to launder drug proceeds...
Previous Articles
|
Trial coverage provided by Anne Mitchell, Crazy Fish Realty.
Update - US v. F. Jeffrey Miller, et al.
Miller II: Judge Julie Robinson has ruled in favor of the defense motion granting a continuance for sentencing of the 3 convicted defendants: F. Jeffrey Miller, Steve Vanatta and Hallie Irvin. The three will now be sentenced after ruling on post trial motions set for August 10, 2009.
Vanatta has been in custody for over 2 years. Vanetta filed a motion for his release pending sentencing. That motion was denied.
Miller remains free pending his sentencing. He has hired a new attorney who filed a motion to delay Miller's sentencing. In one post trial motion, the defense argues as to what assets are subject to seizure.
Defendant Todd Earnshaw is a Kansas City real estate Broker (and brother in law of Miller). Earnshaw has been indicted in what is commonly referred to as Miller I. A trial date for that matter has been set for January, 2010 in Topeka, Kansas.
The Government filed a motion to revoke Earnshaw's bond and remand him to custody while he awaits trial after learning that he allegedly committed the state crimes of Driving Under the Influence, Handicap Parking Violation and Failure to Control Speed to Avoid a Collision while on pretrial release. Notwithstanding finding that probable cause existed to believe that Earnshaw committed the aforementioned state crimes, Judge Robinson denied the motion, but ordered several strict conditions that Earnshaw must follow pending his trial.
More Trial Coverage
|
|
|
|
|
|
|
|
|