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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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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.
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
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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