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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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Kansas Mortgage Fraud and Conspiracy Trial Postponed
Trial in the case against F. Jeffrey Miller has been postponed due to its complexity. The Judge has not yet set a new trial date. Miller, a developer, and his co-conspirators in Kansas were indicted for an alleged scheme involving the sale of homes constructed by Miller to homebuyers that would otherwise not qualify, through the use of false documents and inflated appraisals. The charges include one count of conspiracy, 52 counts of bank fraud, five counts of money laundering, and forfeiture. Angela Parenza and Elizabeth L. Hessel, both formerly loan officers with one of Miller‘s companies, entered guilty pleas to count one of the indictment and agreed to testify against the other defendants.
On October 16, 2006, Angela Parenza entered a guilty plea to count 1 of the indictment, stating in the petition to enter the plea that she ”provided down payments to homebuyers from Jeff Miller without disclosing that to lending institutions, among other over acts.” Elizabeth Hessel entered a plea of guilty as to count 1 of the indictment.
The guilty pleas of both Parenza and Hessel state that the object of the conspiracy was to enrich the conspirators by manipulating home buyers, manipulating appraisal and submitting materially false and fraudulent loan applications to obtain loan proceeds from federally insured financial institutions.
According to the pleas, as part of the scheme, the coconspirators:
Advertised in newspapers that homes would be sold to home buyers with poor credit and financial problems for little or no down payment. They established a “One Stop Shop” for home buyers by establishing Associated Capital and Associated Finance to go along with Miller’s building company, Miller Enterprises. Homebuyers that went to Miller Enterprises to pick out a home could also obtain financing Miller thereby controlled the flow of information to the lender.
The One Stop Shop was turned into a fraudulent real estate machine as Miller manipulated the appraisal process. He obtained intentionally inflated appraisals by (1) refusing to pay the appraisers if his price was not met and (2) manufacturing comparables by selling homes in subdivisions to his employees at inflated prices and then agreeing to forgive the second mortgagees on the homes. Miller also falsified loan applications and accompanying documents such as tax returns, employment verifications, rental agreements, rental verifications and payment histories in order to qualify borrowers for loans that they would not have otherwise been able to obtain. He would also provide home buyers with down payments and closing costs without disclosing this to the lenders.
The homeowners would be manipulated into moving into the home before closing. The sales price would then be increased and closing - creating a situation where the homeowners were forced to chose between closing on the home with the increased sales price or facing eviction and homelessness. The increased sales price would be secured by a second mortgage with an illegal interest rate serviced through his company, Associated Finance. Miller and Earnshaw created a form called the Principal Reduction Form to reduce the second mortgage balance by permitting the homeowner a discount on the mortgage if the reduced amount was paid off in a specified time.
The conspiracy was later reconfigured to sell homes to investors in volume. The actual sales price was discounted but this was not disclosed to the lenders who continued to be provided with false documentation on the financial condition of the investors as well as false lease/purchase agreements. Miller would also pay the investors undisclosed kickbacks that were concealed as referral fees or interior design fees.
According to the guilty please, $25,042,670.39 in loan proceeds were obtained from federally insured financial institutions in connection with the conspiracy.
Look back in history and go to the point where the “combined business arrangement” was started.
You could consider that the beginning of this nonsense.
Should be called the “one stop chop shop”.
Then came Uncle Alan Greenspan unprecedented rate cuts and the profits that followed in the mortgage industry.
Automated underwriting engines replaced human being underwriters to allow huge volumes to be funded and funded fast.
That period from 9/11 to about mid 2003 is a blur. Refinanced some of my clients five times without charging any costs. It was ridiculous.
Wall Street noticed though and they had to get their greedy mitts in the mortgage origination world.
They created no money down and no income verification programs for people that used to rent previously. Bad credit, no proof of income and no skin in the game equals a bad result.
Currently it seems that ex Goldman Sachs guys are running this country.
Paulsen should read his job description and start performing instead of trying to help “friends of Goldman”
I have no problem sleeping at night.
Why not?
I originated only 3 sub prime loans in 22 years.
Dan K Addison, IL
Posted by on 10/30 at 06:12 PM
What recourse do the victims/duped homeowners have in this case? I have been in contact with one victim looking for direction on how to pursue some resolution.
Posted by on 11/02 at 09:35 AM
Miller and Steven Vanetta, through Starland Development, did the same thing here in Missouri and nearly every house in my neighborhood (developed by them) has suffered a foreclosure. At this time there is little we can do, it seems. Our file is tied up in the KS case and the Attorney General’s Office has not indicated they do not know much. We’re stuck waiting as we try to get Starland to release our 2nd mortage. Fraudulent signatures, initials, and charges were involved. Anyone know how homeowners are able to get any quicker recourse/results?
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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