Nadia Kuzmenko, 35, Loomis, California, Peter Kuzmenko, 36, Sacramento, California, Edward Shevtsov, 51, Sacramento, and Aaron New, 39, Sacramento, were found guilty by a federal jury of multiple counts of mail and wire fraud associated with their involvement in a straw buyer mortgage fraud scheme that cost financial institutions approximately $16 million.
Peter Kuzmenko, Edward Shevtsov, and Aaron New were also found guilty of money laundering associated with the scheme. Nadia Kuzmenko was also found guilty of witness tampering.
According to evidence presented at trial, from late 2006 through 2007, the defendants engaged in a mortgage fraud scheme involving over 30 properties in the Sacramento area. The defendants were responsible for securing more than $26 million in residential mortgage loans on over 30 homes purchased through straw buyers. Records introduced at trial showed each of these defendants personally received hundreds of thousands or millions of dollars.
Nadia Kuzmenko was a licensed real estate sales person who, along with her sister Vera Kuzmenko, created fraudulent loan applications on behalf of the straw buyers. The loan applications contained materially false information as to the straw buyers’ income, employment, assets, and intent to occupy the residences. The loan paperwork also hid from lenders millions in dollars of payments that went to the defendants. With respect to the witness tampering count, the evidence showed that after she learned the FBI was investigating her, Nadia Kuzmenko told various witnesses to lie to the FBI and blame a dead woman for the fraud.
Aaron New was a licensed real estate broker who submitted the fraudulent loan applications to lending institutions and convinced home sellers to sign off on fraudulent invoices to divert money out of escrow and to the defendants. New also served as a straw buyer himself.
Peter Kuzmenko and Edward Shevtsov recruited straw buyers and helped create fraudulent loan paperwork. They also controlled shell accounts in which millions of dollars were diverted out of escrow based on fraudulent invoices and false representations made to lenders. Peter Kuzmenko was also a straw buyer himself.
The case is the product of an investigation by the Federal Bureau of Investigation and the Internal Revenue Service-Criminal Investigation. Assistant U.S. Attorneys Lee S. Bickley and Michael D. Anderson and Special U.S. Attorney David J. Ward are prosecuting the case.
The defendants are scheduled to be sentenced by Judge John A. Mendez on May 26, 2015. Each defendant faces a maximum statutory penalty of 20 years on each of their counts of conviction for wire and mail fraud. Nadia Kuzmenko faces an additional 20 years for witness tampering. Peter Kuzmenko, Edward Shevtsov, and Aaron New face up to 20 years on each of the counts of conviction for money laundering. Co-defendants Vera Kuzmenko and Rachel Siders are still awaiting trial.
United States Attorney Benjamin B. Wagner announced the convictions.
“The defendants convicted today were important players in a network of fraudsters responsible for millions of dollars in losses associated with dozens of inflated property sales using multiple straw buyers,” said U.S. Attorney Benjamin B. Wagner. “As the guilty verdicts in this case demonstrate, mortgage fraudsters who believe they can escape accountability for their crime by blaming others and offering false alibis are mistaken. Our enforcement efforts in this area are far from done.”
“While today’s verdict is a victory for justice it does not change the fact that these individuals victimized their community and severely damaged the regional economy with their multi-million dollar fraud scheme,” said Assistant Special Agent in Charge John Gliatta for the FBI’s Sacramento field office. “As in this case, the FBI will vigorously investigate large, complex financial fraud to ensure those who are victimizing the community are brought to justice.”
“Mortgage fraud is an incredibly destructive crime that leaves many victims in its wake”, said José M. Martínez, Special Agent in Charge, IRS-Criminal Investigation. “The impact on homeowners and communities is devastating. While this verdict cannot reverse the damage caused by these defendants, it highlights the ongoing commitment of IRS-CI to hold accountable those involved in these types of crimes.”