Loan Originator Forged Documents, Defrauded Banks and Sellers in Scheme

Allison Tussey —  April 7, 2011 — 1 Comment

William S. Poff, 37, Marshall, Michigan, a former resident of Washington State, was sentenced in U.S. District Court in Seattle, Washington, to 135 months in prison, five years of supervised release and $4,258,529 in restitution for 30 felony counts of conspiracy, bank fraud and money laundering offenses. Poff was tried and convicted of the charges in March 2010. Poff is one of five people arrested in June 2009, in connection with a mortgage fraud scheme that cheated banks and property sellers out of more than $18 million. Poff was a licensed notary and worked as a loan originator. Poff represented himself in a seven day bench trial in front of U.S. District Judge James L. Robart. Judge Robart convicted Poff of all counts brought by prosecutors. At sentencing today Judge Robart told Poff he had “criminally tried to take advantage of the housing market.” Judge Robart noted that Poff is an adherent of the ‘Sovereign Citizen’ movement that “says things like ‘I don’t need a drivers license, I don’t need insurance, I don’t have to follow the law.'” The judge said Poff‘s filings in the case were mostly “gobbledygook and fiction.”

Co-defendant, Humberto Reyes-Rodriguez aka Tony Reyes, 43, Federal Way, Washington, pleaded guilty and was sentenced in June 2010, to 51 months in prison.

According to records filed in the case, the conspirators obtained financing from banks and, in some cases, also from sellers who were convinced to extend private loans for a portion of the purchase price. These private loans, which were not disclosed to the banks, as well as a web of fictitious rental companies, allowed the conspirators to obtain loan proceeds far beyond the value of the assets securing those loans, and beyond their ability to pay. In Poff‘s trial, prosecutors focused on the sales of eight different properties using different means of deception: straw buyers, forged documents, lies on loan applications, inflated sales prices and undisclosed seller financing. Prosecutors showed how Poff and his wife pocketed $1.7 million from the fraud, and used it for his living expenses, trips and child support payments.

In all, between 2005 and 2008, the conspirators used straw buyers to purchase and resell properties, obtaining more than 80 loans totaling more than $18 million. The conspirators submitted a variety of false information to the banks such as employment, income, citizenship status, assets and liabilities. The conspirators also submitted false appraisals and created fictitious companies that were allegedly doing repair work on the properties. Money at closing would go to these entities that, in reality, had done no work on the property. The scheme involved fraudulent mortgage transactions in communities across the Puget Sound region: Des Moines, Tacoma, Seattle, Puyallup, Spanaway, SeaTac, Auburn, Bellevue, Renton, Lakewood, Fircrest, Kent, Pacific and Issaquah.

Additional defendants Alexis Ikilikyan, a/k/a Haikanush Ikilikyan, 30, of Auburn, Washington, was sentenced to 28 months in prison and Micki S. Thompson, 55, Tacoma, Washington, was sentenced to 18 months in prison. Mario A. Marroquin, 39, Kent, Washington received a sentence of probation.

The conspirators did not just damage banks and financial institutions. Innocent sellers were harmed when they agreed to loan the buyer a portion of the purchase price, to be paid back over time. The sellers did not know that the conspirators had already obtained 100 percent financing from commercial lenders. When payments were not made and properties fell into foreclosure, and then were sold for less than the total of all loans secured by the property, the sellers holding private notes were left with nothing.

“The defendants in this case were mortgage professionals who manipulated the real estate market, pocketed the illegal proceeds and knowingly defrauded innocent clients who unwittingly were caught up in their criminal scheme,” said Leigh Winchell, special agent in charge of ICE’s Homeland Security Investigations. “ICE will continue to use its unique investigative authority to expose other illegal financial transactions in an effort to deter this type of activity.”

Mortgage fraud is a major part of President Barack Obama’s Financial Fraud Enforcement Task Force. President Obama established the interagency Financial Fraud Enforcement Task Force to wage an aggressive, coordinated and proactive effort to investigate and prosecute financial crimes. The task force includes representatives from a broad range of federal agencies, regulatory authorities, inspectors general, and state and local law enforcement who, working together, bring to bear a powerful array of criminal and civil enforcement resources. The task force is working to improve efforts across the federal executive branch, and with state and local partners, to investigate and prosecute significant financial crimes, ensure just and effective punishment for those who perpetrate financial crimes, combat discrimination in the lending and financial markets, and recover proceeds for victims of financial crimes.

The case was investigated by U.S. Immigration and Customs Enforcement Homeland Security Investigations (HSI).

The case was prosecuted by Assistant United States Attorneys Sarah Vogel and Michael Scoville.

Allison Tussey

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One response to Loan Originator Forged Documents, Defrauded Banks and Sellers in Scheme

  1. Information like this makes us aware of the fraud and scams int he real estate industry. This blog is really living up to the status. Keep up the good work.

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