Tuesday, October 21, 2008
SEC Charges Five Brokers with Fraud
The Securities and Exchange Commission charged five Los Angeles-area brokers, Guillermo Haro, Kederio Ainsworth, Jesus Gutierrez, Gabriel Paredes and Angel Romo, with securities fraud, alleging that they put their customers at risk by refinancing their homes with subprime mortgages that they could not afford in order to fraudulently sell them unsuitable securities. The SEC alleges that the five registered representatives, who worked for World Group Securities Inc., paid themselves high commissions on both the subprime mortgages and the securities purchases. The customers generally were of modest means, had little prior investment experience, and had little or no formal education beyond high school. Some of the investors did not speak English fluently or at all.
The SEC alleges that Guillermo Haro, Kederio Ainsworth, Jesus Gutierrez, Gabriel Paredes and Angel Romo sold unsuitable securities to customers, primarily variable universal life policies (VUL). Most investors who bought these securities lacked the cash or income to do so, but were urged by their brokers to raise the money to pay for the purchases and the monthly payments required for these products by refinancing their fixed-rate mortgages into subprime adjustable-rate negative amortization mortgages.
“This case demonstrates the SEC’s commitment to halting fraudulent sales practices by brokers and others in the securities industry,” said Linda Chatman Thomsen, Director of the SEC’s Division of Enforcement. “At a time when investors were already losing their homes in record numbers, the SEC alleges that these brokers pushed their customers into risky and unsustainable subprime mortgages as a means of financing a fraud. Not only was the whole scheme fraudulent, but the brokers profited by charging commissions at each stage. The SEC will relentlessly pursue unscrupulous brokers and other securities industry professionals who seek to line their own pockets at their customers’ expense.”
Ken Israel, Director of the SEC’s Salt Lake Regional Office, said, “The defendants’ willingness to take advantage of their customers’ lack of sophistication to fraudulently sell them unsuitable securities products and expose them to possible loss of their homes is egregious misconduct that will not be tolerated by the Commission.”
According to the SEC’s complaint, filed in federal district court in Los Angeles, each defendant was a mortgage broker as well as a registered representative and collected compensation from the mortgage refinancings as well as the sales of securities. In making the sales, the brokers allegedly misrepresented the expected returns from the securities, the liquidity of VULs, the nature of the VULs, and the terms of the new mortgages while failing to disclose material facts about the products. The defendants also allegedly falsified client account forms and order tickets relating to the securities sales.
The SEC’s complaint charges Haro, Ainsworth, Gutierrez, Paredes and Romo with violating the antifraud provisions of the Securities Act of 1933, and the Securities Exchange Act of 1934, and aiding and abetting violations of the broker-dealer books and records provisions of the Securities Exchange Act. The SEC seeks injunctions, disgorgement, and financial penalties.
mortgage fraud
This is the TRUE cause of the financial crisis.
Posted by on 10/21 at 08:25 AM
These sound like a bunch of Mexicans, anybody know if these scammers where legally present in the US? I’m curious to know if we have holes in our process that allow illegals to sell securities. God forbid if illegals are not blocked from selling securities.
Posted by on 10/21 at 06:12 PM
All of the people mentioned above are US citizensor Naturalized citizens. Not defending them, but i’m of Mexican decent and I find your, “these sound like a bunch of Mexicans” comment offensive.
All races have there flaws, not one can be excluded. It is the people them self that have given the race or races a bad name.
Also before we buy anything or invest we should take it upon ourself to research the person or the company itself. We should even try to ask someone within friends and family a second opinion. We have the power to research.
But what the persons mention above in the blog did is unforgiving.
Posted by on 04/13 at 10:37 AM
deLA,
I agree with you that hearing a Mexican immigrant’s behavior described is disturbing. The crimes these Mexicans commit against those of us legally present here is very offensive, that’s why the prosecutors here refer to their crimes as “offenses”.
You claim to know these fraudster’s legal status. You claim that none of these fraudster’s are legal resident aliens with green cards but instead they all are citizens. Which of these fraudsters were naturalized and on what date? And which of these fraudsters were born here in the U.S. and on what date and in what specific state and county were the American born fraudsters born?
If you can’t answer the above, then you are not in any position to attest to these fraudster’s legal status. On the other hand though, if you do know these fraudster’s legal status, you would have to be fairly close to these crooks. If this is the case, then you hang with such a slimy group of people. Are you yourself guilty of any felonies? Do you have a history of steeling from American financial institutions?
Posted by on 04/13 at 11:12 AM
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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...
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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.
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