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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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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.
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.
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.
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.
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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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