George Cavallo, his wife, Paula Hornberger, and Joel Streinz, a former police officer, were found guilty by a federal jury of conspiracy to commit wire fraud and of making false statements on loan applications submitted to FDIC-insured financial institutions and mortgage lenders.
The jury also found Cavallo and Hornberger guilty of separate counts of making false statements on loan applications submitted to an FDIC-insured bank. Cavallo, Hornberger and Streinz each face a maximum penalty of 5 years in federal prison on the conspiracy count. Cavallo and Hornberger each also face an additional term of up to 30 years in federal prison on the false statement counts. All three individuals are scheduled to be sentenced on October 5, 2012, before the Honorable Elizabeth A. Kovachevich.
Evidence presented during the three-month trial revealed that Cavallo, Hornberger and Streinz conspired with each other and with numerous other individuals to purchase residential properties in the Sarasota area by making false statements on loan applications that were submitted to various FDIC-insured banks and mortgage lenders.
The false statements made and caused to be made by all three individuals and their co-conspirators pertained to, among other things, the actual purchase/sale price of the property; the purchaser/borrower’s intended use of the property; the purchaser/borrower’s employment, income, assets and liabilities; and the amount and source of the equity contributed to the purchase by the purchaser/borrower. The idea behind the scam perpetrated was to fraudulently obtain the maximum loan possible on each property, and then to sell that property within a few years after it had appreciated, without risking much, if any, of their own money.
The conspiracy began in the late 1990’s and then grew slowly until 2004. In 2004, with the drastic increase in real estate prices in Sarasota, it grew exponentially. The conspiracy ended when the real estate market collapsed in 2008.
U.S. Attorney Robert E. O’Neill announced the jury verdict.
This case was investigated by the Federal Bureau of Investigation, the FDIC’s Office of Inspector General, and the Sarasota County Sheriff’s Office. It was prosecuted by Assistant United States Attorneys Christopher Tuite and Cherie Krigsman.