Sammy Araya, 41, Santa Ana, California, Michael Henderson, 49,Costa Mesa, California, and Jen Seko, 36, Anaheim, California, were convicted by a federal jury in connection with their operation of a nationwide, multi-year “home mortgage modification” fraud that scammed hundreds of victims out of at least $10 million.

This is the same scheme that Kristen Ayala, whose sentence I wrote about in Comment on Sentencing of Kristen Ayala was involved with.

According to court records and evidence presented at trial, Araya, Henderson, and Seko operated a large-scale “home mortgage modification” scam that victimized vulnerable individuals and families across the country for several years. The conspirators sent targeted mass mailers to homeowners facing foreclosure through Seko’s company, Seko Direct Marketing. The mailers referenced real federal programs designed to help struggling homeowners, such as the Home Affordable Modification Program (HAMP), and were titled “Notice of HUD Relief,” “Notice of Mortgage Relief,” and “New HAMP Benefits,” among other misleading titles. The mailers listed various toll-free telephone numbers for the homeowners to call for assistance. When a victim homeowner who had been solicited via a mass mailing called the toll-free number listed on the mailer, a member of the conspiracy posing as a “customer service representative” would answer the phone and collect financial information from the victim, as well as inquire about the victim’s mortgage and how far behind the victim was on his or her mortgage payments. The victims were told the information would be reviewed to determine if they qualified for a mortgage modification. Instead, the information was used by the conspirators to determine how much money could be stolen from the victim. Henderson served as one of the purported “customer service representatives” and helped to distribute the money collected by the scam, while Araya was the mastermind and principal beneficiary of the entire fraudulent operation.

According to court records and evidence presented at trial, after being contacted by another member of the conspiracy and told that their mortgage modification had been approved, the victim homeowner would be told that their lender required a “reinstatement fee,” usually in the amount of thousands of dollars. Victims were also told that they were required to make several “trial” mortgage modification payments. After these so-called “trial payments” were completed, their modification would be complete and their new lower mortgage payment would become permanent for the life of the loan.

Throughout this process, the members of the conspiracy represented themselves to homeowners in mass mailings, phone calls, emails, and other communications using a laundry list of aliases and fictitious entity names. Some of those fictitious entities included “Equity Restoration Group,” “Neighborhood Counseling Services of America,” and “Home Retention Center,” among many others. The conspirators changed their aliases and entity names regularly, in an effort to evade detection by law enforcement. The conspirators also falsely represented themselves as a “non-profit” organization or as affiliated with the federal government or the victims’ lenders, and they directed the victims to make their checks and money orders payable to other fake entities, such as “Payment Processing Services,” “Default Servicing,” and “Trust Funding.” They then opened bank accounts using those false entity names, and used those bank accounts to briefly deposit victim payments before withdrawing the funds and distributing the proceeds among the members of the conspiracy.

The victims of this scheme dutifully sent their payments to the fraudulent entities as instructed by the conspirators, only to discover that they had not been granted a mortgage modification by their lenders. When victims confronted the members of the conspiracy about this fact, the conspirators would make lulling statements designed to reassure the victims, such as telling them that the mortgage modification process takes time, and that they were dealing with individuals at a higher level at the bank than the lender representatives with whom the victims had spoken. In reality, however, the members of the conspiracy were simply diverting the victims’ payments for their own personal benefit, without doing anything to assist in modifying the victims’ mortgages. Araya, the ringleader of the scheme, used the proceeds of the fraud to purchase expensive vehicles, a racehorse, and a variety of luxury goods, as well as to fund his personal travel and a reality television show he produced called “Make It Rain.TV.”

This scheme had devastating consequences for the victim homeowners, all of whom were already in a precarious financial position. Many victims suffered substantially greater financial hardship after falling victim to this conspiracy than they were already facing when they entered into the bogus agreements with the conspirators. In many cases, the lenders ultimately foreclosed on the victims’ homes, after the victims had been induced to make their “trial” mortgage payments to the members of the conspiracy rather than to their lenders.

These defendants scammed hundreds of individuals and families who were trying desperately to save their homes,” said Dana J. Boente, U.S. Attorney for the Eastern District of Virginia. “Their crimes were rooted in dishonesty and greed, and they shamelessly enriched themselves at their victims’ expense. I am very pleased with the convictions and want to commend the efforts of the Assistant United States Attorneys and our investigative partners for their terrific work on this important and complex case.”

Twelve defendants have been convicted in the Eastern District of Virginia in this case and a related case. They include the following individuals:

Name, Age

Hometown

Result

Sentencing

Sammy Araya, 41

Santa Ana, California

Convicted on Counts 1-11 of superseding indictment at trial todayFaces maximum penalty of 20 years in prison on each count of conviction
Michael Henderson, 49

Costa Mesa, California

Convicted on Counts 1-6 and 9-11 of superseding indictment at trial todayFaces maximum penalty of 20 years in prison on each count of conviction
Jen Seko, 36

Anaheim, California

Convicted on Counts 1-6 and 9-11 of superseding indictment at trial todayFaces maximum penalty of 20 years in prison on each count of conviction
Roscoe Umali, 38

Santa Ana, California

Pleaded guilty March 22, 2016220 months in prison on Aug. 18, 2016
Joshua Sanchez, 37

Las Vegas, Nevada

Pleaded guilty July 8, 2015 in case 1:15cr147151 months in prison on Oct. 29, 2015
Kristen Ayala, 32

Las Vegas, Nevada

Pleaded guilty August 4, 2015 in case 1:15cr147135 months in prison on Oct. 29, 2015
Isaac Perez, 33

Los Angeles

Pleaded guilty March 30, 2016130 months in prison on Sept. 1, 2016
Joshua Johnson, 36

Huntington Beach, California

Pleaded guilty March 30, 2016121 months in prison on July 7, 2016
Jefferson Maniscan, 34

Los Angeles

Pleaded guilty March 29, 2016120 months in prison on Aug. 18, 2016
Raymund Dacanay, 47

Newport Beach, California

Pleaded guilty March 29, 201660 months in prison on July 21, 2016
Nicholas Estilow, 34

Mission Viejo, California

Pleaded guilty January 18, 2017Faces maximum penalty of 20 years in prison on June 1.
Sabrina Rafo, 24

Garden Grove, California

Pleaded guilty January 19, 2017Faces maximum penalty of 20 years in prison on June 1.

 

Araya faces a maximum penalty of 220 years in prison, and Henderson and Seko each faces a maximum penalty of 180 years in prison when sentenced on July 19.

Today justice was served to three scam artists who preyed upon hundreds of desperate homeowners taking money in exchange for empty promises of admission into the HAMP program,” said Christy Goldsmith Romero, Special Inspector for the Troubled Asset Relief Program (TARP). “This was a scheme of deception and thievery: the defendants pocketed the homeowner dollars but did nothing to help their victims. I thank U.S. Attorney Boente and his team for their hard work and commitment protecting homeowners getting help through HAMP.”

“These defendants preyed upon innocent homeowners when they were at their most vulnerable, and simply trying to save their homes,” said Leslie DeMarco, Special Agent in Charge, Western Region, Federal Housing Finance Agency – Office of Inspector General. “These egregious schemes victimize homeowners and entire communities, and today a jury held them accountable for their actions. We are proud to work with our law enforcement partners on this case, and will continue to work with them to bring to justice all individuals who attempt to defraud unwitting victims.”

Dana J. Boente, U.S. Attorney for the Eastern District of Virginia; Christy Goldsmith Romero, Special Inspector General for the Troubled Asset Relief Program (SIGTARP); William Hedrick, Acting Inspector in Charge of the Los Angeles Division of the U.S. Postal Inspection Service; Leslie DeMarco, Special Agent in Charge for the Federal Housing Finance Agency (FHFA-OIG); and James Todak, Special Agent in Charge, U.S. Housing and Urban Development, Office of Inspector General, Los Angeles Field Office, made the announcement after Senior U.S. District Judge James C. Cacheris accepted the verdict. Assistant U.S. Attorneys Samantha P. Bateman and Ryan S. Faulconer are prosecuting the case. Assistant U.S. Attorneys Zach Terwilliger and James Gillis formerly prosecuted the case.

Michael Pampalone, 34, of Elizabeth, New Jersey, pled guilty  to defrauding a Rensselaer, New York, resident of $132,450.

As part of his guilty plea, Pampalone admitted that he stole money that he had promised to hold in escrow for a client seeking a mortgage. After the client sent him two wires totaling $132,450, Pampalone withdrew the money and used it for his own purposes.

Sentencing is scheduled for August 9, 2017 at 10:30 a.m. before United States District Judge Mae A. D’Agostino. Pampalone faces up to 20 years in prison, a maximum fine of $250,000, and up to 3 years of post-imprisonment supervised release. A

The announcement was made by United States Attorney Richard S. Hartunian and Shelly A. Binkowski, Inspector in Charge, United States Postal Inspection Service (USPIS), Boston Division.

This case was investigated by the United States Postal Inspection Service and New York State Police, and is being prosecuted by Assistant United States Attorney Wayne A. Myers.

Louis Marandola, 42, Providence, Rhode Island, a Former Real Estate Attorney, and Brian R. McCaffrey, 38, Warwick, Rhode Island, a former licensed loan originator, have been sentenced to federal prison for their participation in a scheme to obtain money they were not entitled to from financial institutions and individuals through mortgage loans, residential property sales and fees.

Marandola was sentenced to 48 months in federal prison to be followed by 3 years supervised release. On January 13, 2017, Marandola pleaded guilty to conspiracy to commit bank fraud and aggravated identity theft.

McCaffrey was sentenced to 18 months in federal prison, to be followed by 3 years supervised release. McCaffrey pleaded guilty on January 27, 2017, to conspiracy to commit bank fraud and bank fraud.

Two co-defendants in this matter, Raffaele M. Marziale, 41, Bristol, Rhode Island, a former loan officer who pleaded guilty on February 29, 2016, to conspiracy to commit bank fraud, bank fraud, and aggravated identity theft; and Edwin Rodriguez, 35, Pawtucket, a real estate investor who pleaded guilty on June 1, 2016, to conspiracy to commit bank fraud, bank fraud, aggravated identity theft and tampering with a witness, are awaiting sentencing.

Gina Ronci Mohamed, 46, Lincoln, Rhode Island, was sentenced on April 25, 2017, to two years probation. Ms. Ronci pleaded guilty on April 22, 2016, to making a false statement to HUD. Lauren Sienko, 35, of Rehoboth, Massachusetts., was sentenced on April 3, 2017, to two years probation. Ms. Sienko pleaded guilty on January 6, 2017, to making a false statement to HUD.

According to court documents and information presented to the court, an investigation by the United States Attorney’s Office, HUD-OIG, U.S. Secret Service and Rhode Island State Police determined that between 2007 and 2014, the defendants conspired to execute a scheme which caused prospective homebuyers to obtain mortgages from financial institutions based upon materially false loan applications and fraudulent supporting documentation. As part of the conspiracy, false representations were made in order to obtain fees to which the defendants were not entitled or to make a profit selling property in which they had an ownership interest. In some instances, thousands of dollars were fraudulently obtained by misrepresenting on a HUD form the amount of funds due or to be paid to one of the parties involved in a transaction.

In numerous instances, the defendants concealed their involvement in the scheme by conducting business under the names of several different entities and individuals. At times, the defendants used stolen identities to further the fraud and to conceal their connection to the real estate transactions.

The sentences, imposed by U.S. District Court Judge John J. McConnell, Jr., are announced by Acting United States Attorney Stephen G. Dambruch; Christina D. Scaringi, Special Agent in Charge of the Northeast Region of the U.S. Department of Housing and Urban Development Office of Inspector General (HUD-OIG); Brian Deck, Resident Agent in Charge of the Providence Office of the U.S. Secret Service; and Colonel Ann C. Assumpico, Superintendent of the Rhode Island State Police.

The cases are being prosecuted by Assistant U.S. Attorneys Sandra R. Hebert and William J. Ferland.

 

 

Michael Lane Prevette, Greensboro, North Carolina, was sentenced to 42 months imprisonment in federal court in connection with loan application and appraisal fraud.

Brian Keith Perdue, appraiser, was sentenced to 5 years probation and ordered to pay $886,749.02 in restitution.

In October of 2016, Prevette pled guilty to count one of an indictment, which charged Conspiracy to Commit Application Fraud.  After Prevette completes the term of imprisonment, he will be on federal supervised release for 3 years and has been ordered to pay $886,749.02 in restitution. United States District Judge R. Bryan Harwell of Florence imposed the sentence.

Prevette was involved in a scheme in which mortgage lenders were misled when members of the conspiracy caused fraudulent loan packages to be submitted to the lenders. These packages included inflated real estate appraisals which were prepared at Prevette’s direction. These properties were located in the Myrtle Beach area.

United States Attorney Beth Drake made the announcement. The case was investigated by the FBI.  Assistant United States Attorney John C. Potterfield of the Columbia United States Attorney’s Office prosecuted the case.

Jessie C. Litvak, 42, Boca Raton, Florida, was sentenced to 24 months of imprisonment, followed by three years of supervised release, for engaging in fraudulent residential mortgage-backed securities (RMBS) trades. Litvak was also ordered to pay a $2 million fine.

On January 27, 2017, a jury found Litvak guilty of one count of securities fraud. According to the evidence introduced during the trial, in response to the 2008 financial collapse, the U.S. Department of Treasury introduced the Legacy Securities Public-Private Investment Program (PPIP), and used billions of dollars of bailout money from the Troubled Asset Relief Program (TARP) to restart the trading markets for many troubled securities, including certain kinds of RMBS. The program created nine PPIP funds, and more than 100 firms applied to manage the funds.

Litvak was a senior trader and managing director at Jefferies & Co, Inc. (“Jefferies”), a global securities and investment banking firm headquartered in New York. Jefferies also had a trading floor in Stamford, Connecticut, where Litvak and other members of its Mortgage and Asset-Backed Securities trading group worked.

The jury found that Litvak engaged in a scheme to defraud. As a broker-dealer, only Litvak – not the bond seller or buyer – knew the selling and asking prices of the parties. Litvak exploited this information by misrepresenting to his PPIP fund victim the price Jefferies paid for a RMBS bond in order to increase Jefferies’ profit on the trade.

Litvak has been released on bond since his arrest on January 28, 2013.

On March 7, 2014, Litvak was convicted after trial of 10 counts of securities fraud, one count of TARP fraud and three counts of making false statements to the government. Chief Judge Hall subsequently sentenced him to 24 months of imprisonment and a fine of $1.7 million. Litvak appealed his conviction and, on December 8, 2015, the U.S. Court of Appeals for the Second Circuit reversed the judgment of conviction as to the TARP fraud and making false statement charges, and remanded the matter for a new trial on the securities fraud charges.

The investigation of this matter revealed that members of Jefferies’ management in the fixed income division became aware that Jefferies employees were making misrepresentations to customers and did nothing to stop it. Jefferies has cooperated with the federal criminal investigation and paid a total penalty of $25 million as part of a non-prosecution agreement with the government. The penalty included up to $11 million in restitution to victims and up to a $4,200,402 penalty to the U.S. Securities and Exchange Commission (SEC). Jefferies also addressed deficiencies in the compliance and ethics practices and policies of its Mortgage and Asset-Backed Securities Trading group. These measures included Jefferies’ agreement to retain an Independent Compliance Consultant to conduct a review of Jefferies’ policies and procedures for detecting and preventing fraud in connection with the purchase or sale of RMBS.

Deirdre M. Daly, United States Attorney for the District of Connecticut, Christy Goldsmith Romero, Special Inspector General for the Troubled Asset Relief Program (SIGTARP), and Patricia M. Ferrick, Special Agent in Charge of the New Haven Division of the Federal Bureau of Investigation, made the announcement. The sentence was imposed by Chief U.S. District Judge Janet C. Hall in New Haven, Connecticut.

This sentence sends an unequivocal message that fraud in the residential mortgage backed securities trading market will be met with serious punishment,” said U.S. Attorney Daly. “Jesse Litvak took advantage of his victims through his repeated and brazen lies, and as the Court correctly found, Litvak’s lies led to more than $6 million in unearned profits for his employer. Simply put, Litvak lied to investors to cheat them and make more money for himself. This has been a demanding and lengthy prosecution. I thank our prosecutors and the SIGTARP and FBI agents for their tireless professionalism throughout this case. Our criminal investigations of individuals and institutions involved in fraudulent RMBS trading activities remain active and ongoing.”

Today former Jefferies trader Jesse Litvak was sentenced to federal prison for lying to customers about the prices of residential mortgage backed securities to criminally enrich his firm’s profit and his bonus based on the profit,” said Christy Goldsmith Romero, Special Inspector General for TARP. “This fraudulent pursuit of profit victimized customers including a fund trading with taxpayer dollars – part of a TARP program that unlocked frozen credit markets during the crisis. Despite making more than $15 million in four years, Litvak was motivated by greed to lie in 76 trades with 35 victims. Now Litvak has faced justice for his crimes. Since his arrest by SIGTARP special agents, broker dealers have changed their sale practices to prevent this type of fraud. SIGTARP commends U.S. Attorney Daly and prosecutors Jonathan Francis, Heather Cherry and William Nardini and for fighting crime in the residential mortgage backed securities market.”

The prison term imposed today serves as another example that justice prevails over greed, deceit and criminal behavior,” said FBI Special Agent in Charge Ferrick.

This matter was investigated by SIGTARP and the Federal Bureau of Investigation. The case was prosecuted by Assistant U.S. Attorneys Jonathan Francis, Heather Cherry and William Nardini.

Ignacio Beato, 46, Hazleton, Pennsylvania, was charged in a one count criminal information on April 26, 2017, with conspiracy to engage in monetary transactions through a financial institution, with funds that were the proceeds of wire fraud.

The information alleges that Beato, who was a licensed real estate agent, and his coconspirators, engaged in interstate wire communications and Beato falsely represented to potential real estate purchasers that he was authorized to sell vacant conventional and Federal Housing Administration insured mortgaged properties in Hazleton, Pennsylvania, when in fact, he did not have such authority.

The information further alleges that Beato solicited and accepted money in the total amount of $751,082 from individuals who believed they were purchasing properties. Beato and his coconspirators fraudulently converted that money to their own personal use.

The United States also filed a plea agreement, which is subject to the approval of the Court, wherein it is indicated that Beato intends to plead guilty to the charges when he appears in federal court for his arraignment.

United States Attorney Bruce D. Brandler made the announcement.  The case was investigated by the Internal Revenue Service, the Housing and Urban Development Office of the Inspector General, the Department of Homeland Security, the Pennsylvania State Police, and the Luzerne County District Attorney’s Office. Assistant U.S. Attorney Jenny P. Roberts is prosecuting the case.

The maximum penalty under federal law for this offense is 10 years of imprisonment, a term of supervised release following imprisonment, and a fine.

Jaime Jesus Sola Avila, a convicted felon, is wanted for his alleged involvement in a multi-million dollar mortgage fraud scheme that operated between Miami, Tampa, and Largo, Florida, in 2007 and 2008.  Avila’s last known residence was in Doral, Florida. He has ties to the Westchester area of Miami, Florida.

Avila allegedly recruited unqualified buyers to purchase condominiums under false and fraudulent pretenses. Additionally, Avila allegedly recruited co-conspirators to falsify documentation in order for unqualified buyers to get approved for mortgages on the condominiums.

On January 17, 2017, a federal arrest warrant was issued by the United States District Court for the Southern District of Florida, Miami, Florida, after Avila was charged with conspiracy to commit bank fraud and wire fraud, and bank fraud. Avila was advised of the charges on February 7, 2017, but has since evaded law enforcement.

Aliases:  Jaime Sola; Jaime Jesus Sola; Javier Ignacio Sola

Dates of Birth used:  April 20, 1957; February 1, 1960

Hair:  Gray

Eyes:  Brown

Height:  5’11”

Weight:  180 pounds

Sex:  Male

Race:  White (Hispanic)

Judge Jessica O’Brien, a small-claims judge in Cook County, Illinois, was indicted on allegations that she lied and concealed relevant facts from lenders to obtain more than $1.4 million in mortgages on two South Side investment properties that she purchased and sold between 2004 and 2007.

Source: Cook County judge indicted on mortgage fraud charges – Chicago Tribune

Kimberlee E. Himmell, 62, Massillon, Ohio, is alleged to have defrauded financial institutions out of more than $2 million by having escrow funds on home purchases deposited into her personal account.  Himmell was charged with 18 counts of bank fraud and one count of theft of government funds.

Himmell owned and operated Netwide Title Agency, Inc., located at 3711 Lincoln Way East, Massillon, Ohio. General Title Insurance Company, located in Cleveland, Ohio, was Netwide’s underwriter and responsible for auditing Netwide, according to the information.

Netwide, at the direction of Himmell, began in 2007 instructing all lenders doing business with Netwide as a title agency and utilizing its escrow services to wire all incoming lending proceeds to Himmell’s personal account, instead of Netwide’s corporate account, according to the criminal information filed in the case.

Himmell then used the deposited funds for her own personal use and for Netwide’s operational expenses without disclosing to lenders that she was not holding the funds in escrow, as she represented she would, according to the information.

Himmell closed at least 19 real estate transactions in 2013 and 2014 wherein Netwide received escrow funds and failed to pay or release the funds to the prior owner’s pre-existing mortgage. This causes financial losses to lenders and/or sellers of homes in Richmond Heights, North Canton, Willowick, Concord, Strongsville, Newbury, Brunswick, Wadsworth, Medina, Painesville, Parma, Akron, Twinsburg, Brecksville and Millersburg, Ohio according to the information.

Netwide’s underwriter, General Title, was contractually obligated to make lenders whole. The loss to General Title as a result of Himmell’s conduct was at least $2,111,014, according to the information.

The case was announced by Acting U.S. Attorney David A. Sierleja. The case is being prosecuted by Assistant U.S. Attorney Mark S. Bennett following an investigation by the U.S. Department of Housing and Urban Development – Office of Inspector General, the Federal Housing Finance Agency – Office of Inspector General and the Federal Bureau of Investigation.

Sanjiv Kakkar, 55, Saratoga, California, was sentenced to 48 months in prison and ordered to pay $4,208,565.36 in restitution to the victim for wire fraud and making misstatements to a bank.  Kakkar was concited after a twelve-day jury trial ending with a guilty verdict on all counts.

The evidence at trial demonstrated Kakkar presented false information to a bank in connection with refinancing a hotel property he owned in Boulder Creek, California.  In November of 2008, Kakkar sought to secure a $6 million loan to refinance the Brookdale Inn and Spa.  In connection with the loan, he submitted bogus documents to a bank, including falsified income information and tax returns, which overstated his business income.  Kakkar also did not comply with his continuing obligation under the terms of the loan to provide the bank with updated financial records and further tax documents.  Further, between January and June 2009, Kakkar submitted false and fraudulent documents to an escrow company.  Kakkar induced the escrow company to advance hundreds of thousands of dollars in wire progress payments that were earmarked for reimbursement of construction costs.

A federal grand jury issued a superseding indictment against Kakkar on June 2, 2016, charging him with one count of making misstatements to a bank, in violation of 18 U.S.C. § 1014, and six counts of wire fraud, in violation of 18 U.S.C. § 1343.  On November 8, 2016, a jury found Kakkar guilty of all the charges presented in the superseding indictment.

In addition to the prison term, and restitution, Kakkar was ordered to pay a $20,000 fine and to serve three years of supervised release.  Kakkar currently is released on bond and has been ordered to surrender on or before June 22, 2017, to begin serving his sentence.

The sentence was handed down by the Honorable Edward J. Davila, U.S. District Judge.  U.S. Attorney Brian J. Stretch and Bureau of Alcohol, Tobacco, Firearms, and Explosives (ATF) Special Agent in Charge Jill Snyder announced the sentence.Assistant U.S. Attorneys Amie Rooney and Maia Perez are prosecuting the case with assistance from Nina Burney and Elise Etter.  The case is the result of an investigation by the ATF.