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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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Illinois Undercover Operation Nets Two Arrests in Appraisal Scam
Dariusz Przybylek, 36, Highland Park, Illinois and Erwin Espe, 68, Wilmette, Illinois were named in a federal criminal complaint filed on April 10, 2006. The complaint alleges that from February 2005 through the filing of the complaint, the two committed mail fraud and wire fraud while engaged in a scheme to defraud First NLC Financial Services LLC. The affidavit filed with the complaint alleges that the scheme involved appraising real property at an inflated price, securing financing from a lender for the sale of the property, splitting the proceeds between the participants including the buyer and seller and then defaulting on the loan. They are alleged to have engaged in this scheme with regard to 1054 N. Lorel Avenue, Chicago, Illinois.
According to the affidavit filed in support of the complaint:
The United States Secret Services hac been working with a confidential source who was convicted of a felony fraud offense in Wisconsin. In February 2005, the informant provided information that Przybylek was looking for people to participate in a mortgage fraud and or credit card scheme. The mortgage fraud scheme as described by Przybylek involved Przybylek making an offer to a homeowner to purchase the homeowner’s property at an inflated price. Once the homeowner agreed to sell, Przybylek would get an appraiser to value the property at an inflated price and then find a buyer who would agree to purchase at the appraised value. Przybylek would then keep the difference as profit. The buyer would make a couple payments and then disappear.
The informant met with Przybylek to discuss the scheme and agreed to participate – all the while wearing a wire. Most of the subsequent conversations were also recorded.
In July 2005, the Secret Service obtained the use of a piece of property (1054 N. Lorel Avenue, Chicago, Illinois) The property was in very poor condition and was valued at $105,000. It had last been sold in 2000 for $72,000 and HUD took the property after the owner defaulted on the mortgage. At the time the property was put to use in the sting operation, the front and back doors didn’t latch properly or lock, a few of the windows were broken, the kitchen was gutted, with missing or broker floor tiles, there were no appliances or fixtures, water and gas pipes were sticking out of the wall, one of the bathrooms did not have an installed sink, there was no electricity or water to the house, much of the wood floors were dated and in poor condition, the carpet was old and stained, the attic did not have internal walls or a ceiling and portions of the exterior siding were falling off.
The informant contacted Przybylek and informed him that he had a friend who wanted to be involved in the scheme and who had a home he had purchased for $110,000. The informant introduced Przybylek to an undercover agent posing as the property owner and seller. Przybylek told the agent in a recorded conversation, that some minor work would be done to the property to justify the appraisal and that the appraiser was a friend.
Both the informant and agent were promised proceeds. Przybylek told the agent that he would create a fraudulent construction invoice for work that was never done and would show the invoice to his appraiser friend. He estimated that the appraised value would be $180,000 to $200,000. Przybylek provided the agent with a partially completed sales contract reflecting a sales price of $257,800. Espe acted as the appraiser and met Przybylek and the agent at the house. Espe said he forgot his camera and would use the photo from the assessor’s office. According to the affidavit, Espe told the agent that his job was to “play with the paperwork,”
Two mortgage applications were submitted to First NLC by Quotemearate.com, Houston, TX. The mortgage packages contained a verification of employment signed by Przybylek verifying the borrower’s employment with Professional Home Builders. Other information was also incorrect in the loan package.
The package also contained an appraisal by E.R. Espe, Aaron Company, Wilmete Illinois, signed by Erwin R. Espe valuing the property at $257,800.
The appraisal stated “House now has new electrical, plumbing was upgraded, significant amount of dry wall was replaced. Hardwood floors on first and second floors were refinished. Kitchen has new ceramic floor, a new front door to be installed immediately prior to move in or closing, new insulated windows on first and second floors, new carpeting in third floor bdrm and study, new carpeting in the family room.”
A few weeks after the appraisal, the agent inspected the house and although a few windows were placed in the front and back of the house and new siding was affixed to a portion of the back of the house, no other work had been done.
The affidavit further states that the closing attorney indicated that the lien for the construction work would not be recorded but that a check would be issued from closing for the payment with the remaining proceeds to the seller.
Przybylek was arrested last month at the closing on the property, according to media reports.
First NLC cheated me of my rebate but I’ll see them in court. Let me know if they cheated you.
Posted by on 12/29 at 07:13 PM
Finaly, you’ve caught him!!! Since 1997 he owes me 5’000 USD (converting polish zloty into USD) and he even never wanted to pay it back. He is criminal and he has many criminal records in Poland, that’s why he escaped to USA. You should never set him free because this is way of his living and it’s better for people to leave him in jail. I’m not alone in his frauds, I know few people which have been commited a frauds by PrzybyĹ‚ek…
Posted by on 07/19 at 01:28 AM
Finaly you’ve cought him!!! Since 1997 he owes me 5’000 USD (converting polish zloty into USD) and he even never wanted to pay it back. He has many criminal records in Poland, that’s why he escaped to USA. You should never set him free because this is his way of living and it’s better for other people to leave him in jail. I’m not alone and know few people that he commited a frauds on them…
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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