Thursday, April 13, 2006

Two Convicted in Pennsylvania Home Improvement Fraud Scheme

Edwin Rivera was convicted after trial and Brad Marks plead guilty to mail and wire fraud in connection with a scheme by which they targeted the Latino community in Southeastern Pennsylvania with false promises of low-cost loans and quality home improvements. They operated their scheme through several home improvement companies: Quality Builders, Millennium Home Improvements, Quality Home Remodeling, and Millennium Dream Homes 2000.  They are scheduled for sentencing April 20, 2006 at 4:00 p.m. in courtroom 6A before U.S. District Judge Legrome D. Davis.  The government is recommending a sentence at the low end of the 30-37 month guideline prison term for Marks and a sentence at the high end of the 33-41 month guideline prison term for Rivera.  The government also recommends a restitution order of $400,000

The evidence at trial established that the defendants induced prospects to enter into contracts for home improvements by describing, with the aid of tantalizing photographs, kitchens and bathrooms made affordable through attractive, low-cost bank loans arranged by the defendants.

With contracts in hand, the defendants steered the homeowners–many of whom spoke only Spanish–to mortgage brokers and lenders which specialized in sub-prime loans. The homeowners did not–and, because of the language barrier, could not–appreciate the discrepancy between what the defendants had

promised in Spanish and what the documents (work orders and loan documents) delivered in English. For this reason, the normal disclosures required by contract law and federal fair housing statutes did not work.

The defendants recognized this and pressed their advantage. They knew their customers relied upon them to translate the terms of their work contracts and loan documents, and intentionally omitted essential facts in their verbal communications. With financing secured, the defendants deceived–and sometimes intimidated–homeowners into giving the defendants all of their loan proceeds before any work had begun.

The defendants told homeowners who expressed reservations about proceeding that the homeowners were legally bound to go forward. In other cases, the defendants sent crews to homes to rip out kitchens and bathrooms so that the home owners had no choice but to proceed.

The defendants called their customers at work and at home at all hours of day and night demanding payment in advance of work. They appeared on their customers’ doorsteps, sometimes late at night, sometimes at homes occupied by single, working mothers. Rivera engaged in particularly aggressive tactics in this regard.

Some customers protested that their banks had instructed them to hold their loan proceeds until completion. The defendants gave these individuals checks to hold drawn on Quality Builders’ bank accounts. These Quality Builders “hold” checks, the defendants told their customers, assured homeowners the defendants would complete the work to the customer’s satisfaction. The homeowners lost all leverage when they agreed to this exchange. They did not

realize until it was too late that the defendants made the hold checks non-negotiable either by not signing them, by making them payable jointly to the homeowner and Quality Builders (which made a second endorsement by Quality Builders necessary), or by failing to fund the account on which the check was drawn.

Other customers followed the defendants’ instructions regarding payment because they trusted the defendants. The defendants gained this trust by deliberately and falsely expressing affinity for their customers’ core values. Rivera assured customers that he would protect their interests alternatively because he was Hispanic like them or because he was Christian like them.

The defendants took advantage of the disbursement practices of the many of the lenders - which were either joint disbursements to the defendants and homeowners with no mechanism for ensuring that the work had been performed or through “stagedfunding” practices–whereby they instructed their agents to disburse the funds in stages as work was completed–but did not enforce this protocol.

With payment in hand, the defendants provided either shoddy work or no work at all.

The government established at trial that the defendants deliberately failed to perform. The evidence showed that the defendants knew they lacked the necessary funds and work crews. They perpetuated the scheme for as long as they could by ducking customer complaints, sending lulling letters, recruiting more victims to fund work necessary to quiet their loudest critics, and, finally, disbanding one company only to start up a series of successor companies, all with the same results. They began with Quality Builders, Inc., then moved their operation to Millennium Home Remodeling, Inc., and then separated, doing business as Quality Home Remodeling, Inc. (Marks) and Millennium Dream Home 2000 (Rivera).

Out of approximately 60 victims, 57 reached agreements whereby the lenders stepped into the shoes of the victims to bear the loss by modifying or forgiving the loans, and in many cases refunding loan payments made by the homeowner.

mortgage fraud

1. quality builders is also a fraud they help a friend of my husband take out a loan under my husbands name in the house my husband let her lived the help her get a 26,595 dollars loans and we are pressing charges on all of them how can you steal someones name to get rich these people should get the electric chair dont they have kids

   Posted by  on  08/09  at  02:18 PM