Wednesday, June 25, 2008

Houston Announces Mortgage Fraud Indictments

Six individuals have been charged in a 10-count indictment with conspiracy to commit wire and mail fraud, wire fraud, conspiracy to commit money laundering and engaging in financial transactions with criminally derived funds in relation to a mortgage fraud scheme. The defendants were charged as a result of a national initiative unveiled by federal authorities, “Operation Malicious Mortgage”. The six charged in this district represent a portion of the 60 arrests made in mortgage fraud-related cases yesterday in 15 districts.

Frankthea Annette Williams, Ishmael Boyd Laryea, Charles Joseph-DeShawn Wilson, Kristen Anne Way and Robert Wilfred Stanley, and Tasha Rene Bellow, of Burbank, California, were indicted on charges of engaging in a scheme to defraud by providing false and fraudulent information to residential lenders to induce the lenders to fund the purchase of single family homes and condominium units. Bellow made her initial appearance in California yesterday following her arrest, while Williams, Wilson and Stanley appeared in Houston, Texas. Laryea and Way are expected to make their initial appearances on a date to be set by the court either later this week or early next week.

According to the indictment, various bank accounts were established in the names of business entities created during the course of the scheme, which were used to receive loan proceeds and to promote the ongoing criminal activity. Bellow operated under the name Nu Management and Development, while Williams used the business names Cornerstone Financial Services and First Capital Medical Supply, among others. Williams also operated under IBL Investment Group as did Laryea, while Wilson used the names Anointed Properties and Anointed Management. Way and Stanley worked as loan officers at Consumer Direct Mortgage during the scheme. Each defendant is accused of recruiting individuals with good credit to act as borrowers in applications for residential mortgage loans to purchase one or more of the properties. The indictment further alleges that the defendants then caused loan applications and other supporting documentation to be provided to the lenders which contained false and misleading information concerning the borrower’s ability and incentive to repay the loans. The loan proceeds generated during the scheme exceeded $24 million dollars.

This case was investigated by the FBI, Housing and Urban Development-Office of Inspector General and the Internal Revenue Service and is being prosecuted by Assistant United States Attorney Melissa Annis.

“One of the greatest American dreams is the ability to own a home, and the process which enables anyone to mortgage that dream must be achieved through integrity,” DeGabrielle said. “Those who violate this trust are facing and will continue to face the very real prospect of federal prison.”

“Mortgage Fraud is a significant crime problem in Houston and an area of tremendous concern because of the deleterious impact on the mortgage industry and the local housing market,” Bland said. “Through the significant arrests today, the FBI and the Houston Mortgage Fraud Task Force send a clear message that these types of crimes will not be tolerated in the Houston area, and those persons and enterprises engaging in mortgage fraud will be held accountable for their actions.”

From March 1 to June 18, 2008, Operation Malicious Mortgage resulted in 144 mortgage fraud cases in which 406 defendants were charged. In the Southern District of Texas, charges have been filed against 20 individuals, including the six indicted this week as a result of the operation. As previously reported by Mortgage Fraud Blog, on April 2, 2008, former real estate agent John Turner was sentenced to 18 months in prison following his guilty plea to bank fraud and money laundering after he arranged for a straw borrower to purchase a resident on Cherry Ridge Drive, Houston, Texas. In another case, Craig Curtis, Carlin Joubert, Tiffany Narcisse, Kelton Lyons, Trevor Cherry, Dedrick Johnson, Viktor Ly, Michaal Nunnerly and Chi Van Nguyen were charged in a 12-count federal indictment May 21, 2008, for their roles in an alleged mortgage fraud scheme that obtained more than $9 million in fraudulent loans for townhomes in Houston Texas’ Midtown area. Also as reported by Mortgage Fraud Blog, in February 2008, a nine-count indictment was returned against Carlos Gonzalez, Ken Browder, Machell Halstead and Jannice Bonner. The defendants allegedly obtained more than $15 million in fraudulently-obtained residential loan proceeds. Bonner pleaded guilty June 9, 2008, to conspiracy to commit wire fraud, while Browder entered a plea of guilty on the same date to conspiracy to commit mail and wire fraud.

Operation Malicious Mortgage cases have been brought in every region of the United States and in more than 50 judicial districts by U.S. Attorneys’ Offices based upon the law enforcement and investigative efforts of participating law enforcement agencies. The FBI estimates that approximately $1 billion in losses were inflicted by the mortgage fraud schemes employed in these cases.

The Department of Justice and the FBI announced the national takedown today, and the culmination of substantial coordinated efforts during the last three and a half months to identify, arrest and prosecute mortgage fraud violators through the United States. Operation Malicious Mortgage highlights the strong enforcement response undertaken by the Department of Justice and its law enforcement partners to combat the threat mortgage fraud poses to the U.S. housing industry and worldwide credit markets

“Mortgage fraud and related securities fraud pose a significant threat to our economy, to the stability of our nation’s housing market and to the peace of mind of millions of American homeowners,” said Deputy Attorney General Mark R. Filip. “Operation Malicious Mortgage and our other mortgage-related enforcement actions demonstrate the Justice Department’s commitment and determination to combat these criminal schemes, hold their perpetrators accountable and help restore stability and confidence in our housing and credit markets.”

Operation Malicious Mortgage represents the joint collaborative efforts of the FBI, U.S. Postal Inspection Service, Internal Revenue Service-Criminal Investigation Division, U.S. Immigration and Customs Enforcement, U.S. Secret Service, U.S. Trustee Program, Department of Housing and Urban Development Office of the Inspector General, Department of Veterans Affairs Office of the Inspector General, and Federal Deposit Insurance Corporation Office of the Inspector General. Operation Malicious Mortgage is the most recent coordinated sweep in an ongoing law enforcement effort to combat mortgage fraud, which also included Operation Continued Action in 2004 and Operation Quick Flip in 2005.

Mortgage frauds employ a variety of tactics including misrepresentations, deceit and other criminal abuses to fund, purchase or insure mortgage loans. Operation Malicious Mortgage addresses primarily three types of mortgage fraud schemes:  lending fraud, foreclosure rescue scams and mortgage-related bankruptcy schemes. Lending fraud frequently involves multiple loan transactions in which industry professionals construct mortgage transactions based on gross fraudulent misrepresentations about the borrower’s financial status, such as overstating the borrower’s income or assets, using false or fictitious employment records or inflating property values. Foreclosure rescue scams involve criminals who target legitimate homeowners in dire financial circumstances and fraudulently collect fees for foreclosure prevention services or obtain ownership interests in residential properties. Both of these fraudulent mortgage schemes may be furthered by filing bankruptcy petitions that automatically stay foreclosure.

The President’s Corporate Fraud Task Force, chaired by Deputy Attorney General Filip, is also responding to issues raised by mortgage fraud in the corporate sector. Created in 2002 to investigate and prosecute significant financial crimes, the Task Force includes representatives from 10 federal departments, commissions and agencies, in addition to seven U.S. Attorney’s Offices and two Divisions within the Department of Justice, combining the experience of thousands of investigators, attorneys, accountants and regulatory experts. Since July 2002, the Department of Justice has obtained nearly 1,300 corporate fraud convictions, including the convictions of more than 200 chief executive officers and corporate presidents, more than 120 corporate vice presidents and more than 50 chief financial officers.

An indictment is a formal accusation of alleged criminal conduct, not evidence. Each defendant is presumed innocent unless convicted through due process of law.

mortgage fraud

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   Posted by  on  06/25  at  12:35 PM

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   Posted by  on  06/25  at  11:14 PM