Thursday, December 04, 2008

Metro Denver Realtor Sentenced for Mortgage Fraud and Witness Tampering

Arvin Weiss, 58, Englewood, Colorado, was sentenced to serve 84 months (7 years) in federal prison by Senior U.S. District Court Judge Lewis T. Babcock for mortgage fraud and witness tampering.  Judge Babcock also ordered Weiss to pay restitution totaling approximately $853,000 to HUD as well as approximately $5,000 to two victim banks.  Weiss, who is free on bond, was ordered to report to a Bureau of Prisons facility within 15 days of designation.

Arvin Weiss was indicted by a federal grand jury in Denver on April 20, 2005.  The indictment was superseded on September 27, 2005.  On July 16, 2008, Weiss was found guilty by a jury of 8 counts of mail fraud, 5 counts of wire fraud, and 3 counts of witness tampering, following a 14-day trial.

According to the indictment, as well as facts presented during trial, from June 1998 through February 2002, Weiss devised a scheme to fraudulently obtain money and property from mortgage companies which funded federally insured loans.  Weiss was a licensed real estate broker buying and selling properties as Reserve Capital Funds, Inc.  He acquired numerous single-family residences in the Denver area at low prices.  Within a few months, Weiss resold the properties at substantially higher prices to unsophisticated low-income buyers.  The buyers Weiss targeted were Hispanics who knew little or no English, many of whom were living in the United States illegally.

Many of Weiss’ buyers did not understand the mortgage loan process, but wanted to purchase their own homes even though they could not legitimately qualify for mortgages.  Weiss arranged for buyers to acquire mortgages insured by the Federal Housing Administration (FHA), so they could purchase homes his company owned.  Knowing that the buyers he targeted could not afford to buy houses or legitimately qualify for home loans, Weiss allegedly arranged for false information about the buyers’ qualifications and the sources of their down payments to be provided to various mortgage companies and HUD, making it appear that the buyers were qualified to receive FHA insured loans when they were not.

Operating under the name of Fairfax Homes, Ltd., Fairfax Express Corporation, or Fairfax, all entities controlled by Weiss, the defendant would represent to prospective buyers that he had houses or could find houses the buyers could purchase, and that he and his assistant, Jesus Guevara, would take care of all the necessary paperwork.  They believed he was acting as their agent in the process.

The buyers would provide their personal information directly to him or Guevara.  Weiss would then falsify numerous documents to support the borrowers’ applications in order to meet HUD’s underwriting requirements.

Weiss would secretly provide the funds for the down payments.  Weiss signed numerous false certifications that he had not and would not pay or reimburse the borrowers for any part of their cash down payments.

Weiss usually sold his properties for two or three times what Reserve Capital had recently paid for them.  The buyers typically did not have the option of competitive pricing and did not contest his asking price, because they could not legitimately qualify for the loans.  In some cases, Weiss did not disclose the true purchase price to the buyers until closing. 

The Court found that Weiss’ witness tampering behavior stuck at the heart of truth-seeking process of the criminal justice system, that he employed sophisticated means in the execution and concealment of his offenses, and that the crime which included 41 properties, was extensive.  The Court also found that the risk of loss far exceeded the actual loss to HUD. 

Co-defendant, Jesus Guevara, has pled guilty to mail fraud, wire fraud and witness tampering and awaits sentencing.

“Mortgage fraud strikes at the integrity of financial markets, as Americans have learned all too well,” said U.S. Attorney Troy Eid.  “Mr. Weiss must now face the consequences.”

U.S. Department of Housing and Urban Development Inspector General Kenneth Donohue stated that “the sentencing today of Arvin Weiss should send a strong message to anyone connected with fraudulently originating FHA insured loans that the United States Department of Housing and Urban Development, Office of Inspector General, will aggressively investigate loan origination fraud and that witness tampering will not be tolerated.”

“Extensive work went into the investigation of Arvin Weiss’s sophisticated mortgage fraud scheme,” said U.S. Postal Inspector in Charge of the Denver Division Shawn Tiller.  “The Postal Inspection Service is appreciative of the combined efforts of our agency with Housing and Urban Development (HUD); and the perseverance of the U.S. Attorney’s Office in overcoming the various obstacles presented to us during this investigation.”

“The FBI will continue to address significant fraud as a priority and work with our law enforcement partners to address the problem,” said FBI Special Agent in Charges James Davis.

mortgage fraud

1. This clown got 7 years and is still out on bail with a check-in date? Give me a freakin break! If he can afford bail on the um-teen felony charges he’s facing, he can afford a one-way ticket out of the country too. Nice! Yeah let me just hurry up and get up there so I can kiss 7 years of my life goodbye.

   Posted by  on  12/04  at  06:48 PM

2. Talk about an unassuming criminal. This guy bought one of my houses in Denver and was absolutely the most normal looking and unassuming guy you would ever meet. I used to see him at Home Depot all the time, go figure, and he was about as nice a guy as you could ever meet. When I heard what he did with my old house it was shocking. He bought it from me for 135K and refinanced it for about 350K. No way was it worth that. HUD called me during the investigation and I had to send over my closing file but they were investigating the appraiser at that time.

   Posted by  on  05/23  at  02:00 PM