James Fidel Sotolongo, 49, Port Orange, Florida, Stephanie Musselwhite, 52, Daytona Beach, Florida, and Christopher Mencis, 53, Longwood, Florida, were sentenced by United States District Court Judge John A. Jarvey for their respective roles in a mortgage fraud scheme wherein they ripped off $9.3M from JP Morgan Chase, $1.6M from Wells Fargo and $1.5M from Bank of America.
Sotolongo was sentenced to eight years and four months in federal prison, Musselwhite received a sentence of five years’ imprisonment, and Mencis was sentenced to two years and four months in prison. They were also ordered to pay restitution, joint and severally, totaling $12,543,246 to JP Morgan Chase ($9,350,932), Wells Fargo ($1,640,467), and Bank of America ($1,551,847).
Sotolongo, Musselwhite, and Mencis were indicted on April 24, 2013. On February 4, 2014, Mencis, a mortgage broker, pleaded guilty to making false statements to a federally insured financial institution. A federal jury found Sotolongo and Musselwhite guilty on April 29, 2014. Sotolongo was convicted of one count of conspiracy and eleven counts of bank fraud. Musselwhite, a title agent in Orlando, was found guilty of one count of conspiracy, nine counts of bank fraud, and one count of making false statements to a federally insured financial institution.
According to evidence presented at trial, Sotolongo and Musselwhite were part of a scheme that recruited straw buyers with high credit scores to apply for and obtain 11 mortgages (first and second mortgages were obtained) totaling more than $12 million. The purpose of the scheme was to obtain the properties with no money down and no money at closings, rent the properties, and then sell them for a profit.
To carry out the plan, Sotolongo enlisted the straw buyers and told them that they did not need to bring a deposit or cash to the closing, and that they only needed to be involved in the loan application process. The straw buyers testified that the loan applications submitted in their names contained false information, including the use of the property as a primary residence, their income, their assets, and their liabilities. Other false information included grossly inflated checking and savings account balances.
Mencis prepared the loan applications and submitted them through his brokerage company, Real Estate Mortgage Professionals (REMP). REMP has since gone out of business. He also used a former bank branch manager at SunTrust bank, at the direction of Sotolongo, to falsely verify the incomes and assets for the straw buyers. The loan applications were then sent off to several lenders, all of whom testified that they would not have funded the loans had they known that the information contained in the loan applications was false or grossly inflated.
After the loans were approved, Musselwhite prepared settlement statements listing closing costs and payments to a company called American Signature Homes, which was partly owned by Sotolongo. Musselwhite, who owned Orlando Title and Abstract of Florida, Inc., would wire lender money to American Signature Homes, and Sotolongo would use a portion of the lender money to finance the deposit and closing costs that Musselwhite would collect after the closings. The banks did not know that they were actually funding 100% of the loans on the multi-million dollar homes.
This case was investigated by the Federal Bureau of Investigation, the Florida Department of Financial Services, and the City of Daytona Beach Shores Department of Public Safety. It was prosecuted by Assistant United States Attorney Shawn P. Napier.