Thursday, June 30, 2005

Three Indicted in $30M Mortgage Fraud

Rickard Arrested after Standoff with Authorities

Three New Jersey residents were indicted on June 14, 2005 in connection with a $30 Million mortgage fraud scheme where straw buyers purchased multi-million dollar homes in Bergen County, New Jersey and obtained loans based on inflated appraisals and falsified financial documents.  An attorney, mortgage broker, appraisal “consultant” and several straw borrowers have already plead guilty in connection with the scheme.

Those indicted were:

Jamila Davis aka Jamila Baker, 27, Teaneck, New Jersey

Arisma Theodore, 37, Teaneck, New Jersey

Brenda Rickard, 52, Montclair, New Jersey

Brenda Rickard, the alleged mastermind of the fraud scheme, was arrested yesterday at her home in New Jersey.  According to an article on NorthJersey.com:

Her day began before sunrise Wednesday, when police and federal agents brought an arrest warrant to Rickard’s Oxford Street home.

Rickard, who was at home with her 12-year-old son, refused to answer the door, and the officers saw through a window that she was carrying a kitchen knife, Drewniak [Michael Drewniak, spokesman for the U.S. Attorney’s Office] said. Using a battering ram, they broke down the door and arrested Rickard, he said.

“They were concerned for the safety of the defendant and the 12-year-old boy in the house,” Drewniak said.

Davis owned and controlled Diamond Star Financial (Leonia and Fort Lee, New Jersey) which purported to provide assistance to individuals seeking to invest in real estate.  Davis’ responsibilities in the scheme included identifying individuals willing to pose as straw buyers, establishing relationships with other industry professionals, identifying and negotiating for purchases of property, preparing fraudulent sales constructs, loan applications and false financial documents, causing submission of false documents to lenders and directing distribution of proceeds.

Rickard owned or controlled, M.S. Financial Services, Inc. (Montclair and Verona, New Jersey) which purported to manage and oversee real estate investment transactions.  Rickard’s responsibilities included preparing fraudulent documents for closings on parcels of real property, managing the property after purchase and distributing loan proceeds.

Theodore was an accountant and tax preparer who prepared letters falsely representing that she was the accountant for straw buyers and that the straw buyers were wealthy business owners with substantial income.

According to the indictment, between February and October 2002, Davis, Nicholas Infantino and Shaheer Williams recruited straw buyers to act as purchasers of the properties in exchange for a fee.  Davis would enter into purchase contracts with property sellers, in the names of the straw buyers.  Another sales contract was also prepared without the authorization of the property sellers that reflected inflated sales prices. While the actual sales prices of the properties were between $1.1 and 3.8 million dollars, the second contracts reflected sales prices of between $2.05 and $5.9 million dollars. (Unlike many schemes, most of the properties were located in affluent neighborhoods.)

Infantino would submit fraudulent loan applications to lenders including at times false W-2 forms, accountant letters stating they were successful business owners (in fact two of the borrowers for whom these letters were submitted were actually bartenders), fraudulent bank statements reflecting inflated balances (actual balances overdrawn to $65,000 – bank statements reflected balances from $795,000 to 2.7 Million).  Williams caused real estate appraisals to be obtained that supported the inflated property values.

The loans were approved based on the falsified information and funds were wired to the trust account of attorney Daniel Ellis. Rickard and Ellis prepared and submitted closing and mortgage loan documents knowing the mortgages were obtained based on false and fraudulent information. Loans were obtained on the properties for both first and second lien positions. Approximately $10M in ‘profits’ from the scheme were distributed to the participants.

Davis and Rickard made mortgage payments on the loan in order to avoid discovery but eventually they were unable to sustain the payments.

Click here to view the indictment

The conspirators not named in this indictment were:

Daniel Ellis was indicted and plead guilty to conspiracy to commit bank fraud and bank fraud on December 15, 2004.  Ellis was a New Jersey attorney employed by Rickard at M.S. Financial and was responsible for preparing false and fraudulent closing documents, conducting real estate closings and acting as settlement agent.

Nick Infantino was indicted and plead guilty to conspiracy to commit bank fraud and tax evasion on January 31, 2005.  Infantino was a mortgage broker and was responsible for identifying nominee buyers, obtaining basic identifying and financial information, causing the preparation of fraudulent loan applications in the names of the nominee buyers and submitting the applications to lenders.

Shaheer Williams was indicted and plead guilty to conspiracy to commit bank fraud and tax evasion on April 27, 2005.  Williams owned and controlled the operations of New Life Investments (East Orange, New Jersey).  New Life Investments purported to purchase, refurbish and resell homes.  Williams would identify nominee buyers, obtain inflated appraisals on the subject properties and manage construction on the properties after purchase.

Nominee buyers agreed, in exchange for a fee, to serve as purchasers of real property.  The nominee (straw) buyers were:

James Campbell aka Thomas Goldson (plead guilty on February 24, 2004 to conspiracy)

Brian Togneri (plead guilty on February 11, 2004 to conspiracy)

Brandi Mohammed (plead guilty on February 25, 2004 to conspiracy)

Anel Mendez (plead guilty on February 10, 2004 to conspiracy)

Carl DiMasi

The properties were located at:

15 Schaffer Road, Alpine, New Jersey

497 Piermont Road, Cresskill, New Jersey

66 Chestnut Ridge Road, Saddle River, New Jersey

21 Christopher Place, Saddle River, New Jersey

71 Woodcliff Lake Road, Saddle River, New Jersey

133 Chestnut Ridge Road, Saddle River, New Jersey

Additional properties against which mortgages were obtained were:

7 Cassandra Drive, Alpine, New Jersey – Loans for $2.97M and $600,000

21 Schaffer Road, Alpine, New Jersey – Loans for $2.925M, $885,000 and $2.925M

mortgage fraud

1. I WAS ALSO FRAUDED BY MR. WILLIAMS. IN 2003 I WAS WORKING WITH HIM ON PURCHASING 3 PROPERTIES IN NEW JERSEY. I GAVE HIM A CHECK FOR $80,000. SINCE THEN I NEVER GOT ANY PROPERTIES, AND NEVER RECIEVED ANY MONEY FROM HIM. I HAVE NO CONTACT INFORMATION FROM HIM. CAN SOMEONE HELP ME? HOW14

   Posted by  on  11/13  at  02:14 PM