Man Jailed for Scam Involving Straw Buyers and Appraisal Fraud

Allison Tussey —  April 24, 2014 — 2 Comments

Johnny Eugene Grivette Jr., 39, Magalia, California, was sentenced by United States District Court Judge John A. Mendez to four and a half years in prison for his participation in a mortgage fraud scheme involving straw buyers and the payment of commissions to appraisers who would artificially inflate values.

On July 10, 2012, Grivette pleaded guilty to conspiracy to commit mail fraud and money laundering. According to the plea agreement, Grivette was manager of Advantage Financial Partners of California (AFP), a company that bought residential properties at market prices and then sold them to straw buyers who were investors in a purported investment program. Once AFP bought the properties, it paid commissions to an appraiser who would appraise them for significantly higher than the true market value. This allowed the homes to be financed for the straw buyers at loan-to-value ratios significantly higher than the limits lenders authorized. If the straw buyers had to make down payments on the properties sold by AFP, the money was quickly reimbursed to them by AFP without the lenders’ knowledge.

Grivette’s sentencing marks another event in a series of prosecutions related to Loomis Wealth Solutions, a “wealth-building” program offered to the public in California, Illinois, Washington, and elsewhere, from 2006 through 2008. As previously reported by Mortgage Fraud Blog, persons connected to Loomis Wealth Solutions are alleged to have committed various acts of fraud and money laundering.

In related cases, Dawn Powers, 43, Lincoln, and John Hagener, 77, Granite Bay, pleaded guilty to conspiracy charges on March 4, 2014. Powers was a manager at Loomis Wealth Solutions, and Hagener was a manager of entity known as the Naras Funds, which was an investment fund related to Loomis Wealth Solutions. They are scheduled for sentencing on June 10, 2014.  On September 11, 2012, Christopher Warren, 31, formerly of Sacramento, was sentenced to 14 and a half years in prison for his role in the scheme. Warren was a manager of a lending company related to Loomis Wealth Solutions. On April 15, 2014, Scott Cavell, a partner of Warren’s, pleaded guilty to wire fraud, which was unrelated to his employment at Loomis Wealth Solutions. He is scheduled for sentencing on July 22, 2014.

There are five defendants remaining in the criminal case related to Loomis Wealth Solutions: Lee Loomis, 56, Granite Bay; Darren Fehst, 45, Halifax, Nova Scotia; Peter Woodard, 45, Ventura; Joseph Gekko, 45, Yorba Linda; and Michael Llamas, 29, Tracy. A trial is scheduled for October 6, 2014, before the Honorable John A. Mendez.

United States Attorney Benjamin B. Wagner announced the sentence.

This case was the product of an investigation by the Federal Bureau of Investigation and the Internal Revenue Service-Criminal Investigation. Assistant United States Attorney Paul A. Hemesath prosecuted the case.

“Victims of mortgage fraud may include the banks which loan the money, but also include all homeowners and would-be homeowners who end up paying for this type of fraud,” said José M. Martínez, Special Agent in Charge, IRS-Criminal Investigation. “IRS-CI is committed to pursuing those who line their pockets with profits from these schemes.”

Allison Tussey

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2 responses to Man Jailed for Scam Involving Straw Buyers and Appraisal Fraud

  1. Stephen

    Speak for yourself. Your comment is obviously one-sided and biased. I must object to your comment because I am an honest appraiser. If you are talking about yourself, then let’s have the facts.

  2. Appraisers and fraud are synonymous. From one who knows.

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