Leader of $30M Mortgage Fraud Scheme and Wife Plead Guilty

Allison Tussey —  December 17, 2013 — Leave a comment

David Crisp, 34, and his wife Jennifer Anne Crisp, 31, both of San Diego, California, pleaded guilty in U.S. District Court to charges stemming from their involvement in an extensive mortgage fraud scheme that ran from January 2004 to September 2007.

David Crisp pleaded guilty to one count of conspiracy to commit mail fraud, wire fraud and bank fraud. Jennifer Crisp pleaded guilty to one count of mail fraud, and one count of wire fraud.

According to the plea agreements, David Crisp and Carl Cole owned and operated real estate brokerage firm Crisp, Cole & Associates, also known as Crisp & Cole Real Estate (CCRE), and Tower Lending, an affiliated mortgage brokerage. According to court documents, between January 2004 and September 2007, these defendants and others at CCRE and Tower Lending carried out a conspiracy to defraud mortgage loan companies and federally insured financial institutions, in part by using straw purchasers to acquire properties at inflated prices with funds borrowed from lenders, often using 100 percent financing, based on false and fraudulent loan applications. The properties were nominally owned in the names of the straw buyers, but were controlled by the conspirators and held for the benefit of the conspirators and CCRE. The straw buyers typically received a payment ranging from several thousand dollars to $20,000 or more per property purchase, while CCRE and the conspirators received the profits upon the sale of the property.

The conspirators frequently resold the properties from one straw buyer to another, each time at an inflated, higher price so that the conspirators and CCRE could extract the purported increased “equity” from the property for their benefit. Certain of the conspirators tracked the properties and for a time made mortgage payments on them using CCRE funds. Ultimately, and in many cases after the properties were flipped several times through various straw purchasers, most of the properties were foreclosed upon after the defendants failed to make the mortgage payments when due. David Crisp admitted in his plea agreement that he and the co-conspirators caused losses of at least $29,884,498 to the defrauded lenders due to the conspiracy.

Seven co-defendants have pleaded guilty. In November 2013, Carl Cole, Sneha Ramesh Mohammadi, Jayson Costa, and Jeriel Salinas pleaded guilty to conspiracy to commit mail fraud, wire fraud, and bank fraud. Caleb Cole pleaded guilty to one count of mail fraud. Michael Angelo Munoz pleaded guilty to two counts of mail fraud. On October 7, 2011, Robinson Nguyen, a former CCRE real estate agent, pleaded guilty to his role in the conspiracy and has finished serving his 27-month sentence.

Carl Cole, Caleb Cole, Costa, and Munoz are scheduled to be sentenced by U.S. District Judge Lawrence J. O’Neill on February 18, 2014. Salinas is scheduled to be sentenced by Judge O’Neill on February 24, 2014. Mohammadi is scheduled to be sentenced by Judge O’Neill on June 9, 2014.

The maximum statutory penalty for conspiracy to commit mail fraud, wire fraud, and bank fraud is 30 years in prison and a $1 million fine. The maximum statutory penalty for one count of mail or wire fraud is 20 years in prison and a $250,000 fine. The actual sentences, however, will be determined at the discretion of the court after consideration of any applicable statutory factors and the Federal Sentencing Guidelines, which take into account a number of variables.

The remaining co-defendant, Julie Dianne Farmer, 45, Bakersfield, is currently scheduled for trial on February 4, 2014.

This case is the product of an investigation by the Federal Bureau of Investigation. Assistant United States Attorneys Kirk E. Sherriff, Henry Z. Carbajal III, and Christopher D. Baker are prosecuting the case.

“The defendants falsely inflated real estate prices knowing that the foreclosures that followed would do harm to local builders, consumers, and lenders,” said U.S. Attorney Wagner. “The conduct of Crisp, Cole & Associates was emblematic of the recklessness and lawlessness in the mortgage industry in the mid-2000s that caused the financial crisis. Since that crisis hit, this office has charged more than 350 people with crimes related to mortgage fraud schemes, and our work is not yet done.”

“The guilty pleas submitted by the Coles offer little solace to victims who suffered devastating losses and the community that continues to suffer the repercussions of the artificially inflated home prices generated by this large scale conspiracy,” said Special Agent in Charge Monica M. Miller of the Sacramento Field office of the Federal Bureau of Investigation. “The FBI is committed to identifying and investigating egregious, greed-based crimes such as these”

Allison Tussey

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