Steven Rogers, Robert Sedlar, and Audrey Gan, the operators of Grand View Financial, were indicted today on a 121-count felony indictment for allegedly operating a mortgage fraud scheme throughout California.

The victims, many of whom were elderly and in financial distress, sought mortgage relief services from Grand View Financial in the Counties of San Diego, San Mateo, Alameda, Contra Costa, San Joaquin, Placer, Solano, Mendocino, San Francisco, El Dorado, and Sacramento.

Between 2015 and 2019, the defendants allegedly conspired to steal money and homes from distressed homeowners using a company called Grand View Financial. The company launched a mortgage and foreclosure assistance program that advertised assistance to desperate homeowners facing foreclosure. The defendants promised consumers that if they transferred their house and paid money to Grand View Financial, the company would eliminate the mortgage lien and deed the home back to the homeowner, clear of any liens. During this time, the defendants allegedly filed false court proceedings, false documents with the county recorders offices, and false bankruptcies.

The trio was indicted by a grand jury in the Sacramento Superior Court for conspiracy, grand theft, elder abuse, filing false or forged documents in a public office, and engaging in a prohibited act as a foreclosure consultant.  The scheme resulted in a combined loss of over $7 million.

California Attorney General Xavier Becerra made the announcement.

Individuals who prey on vulnerable communities to enrich themselves will be held accountable by the California Department of Justice,” said Attorney General Becerra. “My office will continue to work with our law enforcement partners to identify and prosecute those who disregard the rule of law.”

The indictment and arrests are the result of a joint investigation by the California Department of Justice, Fraud and Special Prosecutions Section and White Collar Crime Team; the United States Office of Inspector General, Federal Deposit Insurance Corporation; the United States Office of Inspector General, Federal Housing Finance Agency; the United States Trustee Program; the United States Marshals Service; the Stanislaus County District Attorney’s Office; and the El Dorado County District Attorney’s Office.

Attorney General Becerra is committed to protecting Californians from mortgage fraud and other financial crimes. If you believe you may have been targeted by Grand View Financial, please contact the California Department of Justice. For those located in California, please call: 1-800-952-5225. For those located outside of California, please call: 1-916-322-3360.

It is important to note that a criminal indictment contains charges that must be proven in a court of law. Every defendant is presumed innocent until proven guilty.

A copy of the indictment can be found here.

Two comment letters urging the Consumer Financial Protection Bureau (CFPB) not to adopt two new rules, which would undermine the ability to enforce fair lending laws and prevent discrimination against communities of color in the mortgage lending market, were submitted by New York Attorney General Letitia James.

Fair lending laws are essential to protecting consumers from discriminatory lending practices,” said Attorney General James. “Both of CFPB’s proposed rules would undermine our ability to hold bad-acting lenders responsible for their actions. My office is committed to keeping provisions in place to ensure that almost a century of racism in mortgage lending is eradicated and that all Americans have access to sustainable homeownership.”

The first letter, signed by 13 attorneys general, challenges a May 2019 CFPB proposal limiting the data financial institutions are required to report to the CFPB under the Home Mortgage Disclosure Act (HMDA), a 1975 law that requires mortgage lenders to make certain mortgage data publicly available as a check to ensure compliance with fair lending laws. Some of this data includes information which lenders already collect to comply with other regulations as well as their own underwriting standards.

Now, the CFPB is soliciting comments on which data fields should be eliminated from reporting. By hiding important data points, the CFPB gives a windfall to financial institutions who will be able to resume predatory lending practices, and it will impede the government’s efforts to prevent another financial crisis brought about by predatory lending.

The second letter focuses on the state specific impact regarding another May 2019 CFPB proposal to the reporting threshold for mortgage lenders under HMDA. A preliminary review of the 2018 data shows that even with a slight increase to the threshold limit, New York loses essential data pertaining to local lending, or lenders that lend in one city or town.

By increasing the HMDA reporting threshold, the CFPB makes it difficult for the public and public officials to bring disparate impact discrimination claims, a decades-old theory of liability that has been instrumental in ending discrimination. If adopted, the changes in reporting thresholds would exempt large swaths of the mortgage lending industry from the obligation to report HMDA data.

With these two proposed rule changes, the CFPB fails to take into consideration the negative impact the relaxed reporting requirements will have on the ability to analyze local lending practices and hold lenders accountable for violations of fair lending laws.

New York Attorney General James argues that these changes undermine the core functions of the HMDA. The Attorney General also criticized the CFPB for reversing its prior position that such higher thresholds and the absence of certain data points would impede the public and public officials’ ability to ensure that mortgage lending was being conducted in a non-discriminatory manner in their communities. In addition to these substantive challenges to the CFPB’s proposed rule regarding the increased thresholds, the New York Attorney General James also maintains that it violates the Administrative Procedure Act since it fails to take into the consideration the cost of the proposed rule on the states.

Joining the New York Attorney General James in signing the first letter challenging the proposed rule to limit the data lenders are required to report to the CFPB are the attorneys generals of California, Connecticut, Delaware, District of Columbia, Hawaii, Illinois, Massachusetts, Michigan, Minnesota, Oregon, Pennsylvania, and Rhode Island.

 

Sara Cordry, 69, Overland Park, Kansas, was found guilty on Monday of taking part in a scheme to swindle homeowners facing foreclosure with false promises to help them save their homes.

During trial, prosecutors presented evidence that Cordry conspired with co-defendants to take money from victims by fraudulently promising to:

  • Lower their interest rates.
  • Lower their monthly payments.
  • Help them obtain loan modifications.

Investigators identified more than 500 victims in 24 states who suffered a total loss of more than $1 million due to the scheme.

Co-defendants include:

  • Tyler Korn, 30, St. Ann, Missouri, who was sentenced to 51 months in federal prison.
  • Ruby Price, 74, Bonner Springs, Kansas, who is awaiting sentencing.
  • Amjad Daud, 35, Lutz, Florida, who failed to appear at court hearings. A warrant for his arrest has been issued.

Cordry’s sentencing is set for January 9, 2020. She could face up to 30 years in federal prison and a fine up to $1 million on each count.

U.S. Attorney Stephen McAllister made the announcement.

McAllister commended the U.S. Department of Housing and Urban Development – Office of Inspector General, the Federal Housing Finance Agency – Office of Inspector General, the Johnson County District Attorney’s Office, Special Assistant U.S. Attorney Emilie Burdette and Assistant U.S. Attorney Jabari Wamble for their work on the case.

 

James Ignatius Diamond, 69, Riverside, California was sentenced today for defrauding hundreds of victims, mainly distressed homeowners who paid thousands of dollars after attending seminars that promoted a “Free and Clear” program pitched by the defendant and his salespeople.

Between 2010 and 2013, Diamond sold fraudulent debt-elimination services to desperate victims whose finances had been ravaged by the Great Recession. Diamond owned and operated a number of businesses, including the Riverside, California based Transmitting Assets Inc., Operation Safe Haven, Buyer Beware, and Unlimited Logistics Corp., through which he fraudulently offered services that he claimed could wipe out the debts of homeowners behind on their mortgage payments and other debts.

Diamond personally pitched the “Diamond Home Reclamation Method” to solicit victims with false promises that his methods would entirely eliminate their mortgages and allow people to own their homes “free and clear.”

Relying on the false representations, victims paid substantial fees, including an upfront fee, typically $3,500, payable only in cash, money orders or cashier’s checks, periodic program fees, and inflated notary fees. After paying the upfront fee, victims were required to sign and notarize documents, which they were instructed to send to financial institutions and government agencies, documents prosecutors described in court documents as “fraudulent and nonsensical.”

When victims of the scheme in 2011 began receiving mortgage default notices and lost their homes, Diamond launched another debt-elimination scam called the “EFT Program,” under which Diamond claimed to be able to eliminate victims’ debt with “EFT” checks. This scam required victims to pay Diamond 13 percent of the debt that was to be eliminated.

Diamond knew that his methods did nothing to discharge debts. In fact, when FBI agents searched his business in 2013, they recovered hundreds of “rejection letters” from financial institutions indicating that documents submitted as part of the debt-elimination programs did nothing to help the victims. Diamond’s email accounts contained numerous complaints and refund requests from victims, all of which he ignored.

Investigators have identified more than 500 victims who suffered losses of at least $1.6 million. Diamond spent victims’ money on luxury hotels, jewelry, alcoholic beverages, and living expenses.

At the conclusion of a six-day trial in June 2019, Diamond was found guilty by a jury of 15 counts of mail fraud affecting a financial institution and 15 counts of wire fraud affecting a financial institution.

Previously in this case, a Diamond associate,  Tricia Mae Gruber, 43, Riverside, California, pleaded guilty to conspiracy to commit mail fraud and admitted helping operate the scheme. Her sentencing hearing is scheduled for October 21, 2019.

This case was investigated by the FBI.

This matter was prosecuted by Assistant United States Attorneys Marina A. Torres of the International Narcotics, Money Laundering, and Racketeering Section and Kevin B. Reidy of the General Crimes Section.

 

Moctezuma “Mo” Tovar, 50, Sacramento, California, Jun Michael Dirain, 47, Antelope, California and Sandra Hermosillo, 57, Woodland, California were sentenced today for conspiring to commit wire fraud in a mortgage fraud scheme.

According to court documents, Tovar was the founder and president of Delta Homes and Lending Inc., a now-defunct Sacramento, California-based real estate and mortgage lending company. Delta Homes opened one office in 2003 and eventually had several offices in Sacramento and Woodland, California. As the president of Delta Homes, Tovar managed the day-to-day operations of the company and prepared and submitted residential home loan applications on behalf of Delta Homes’ clients. Dirain was a loan processor at Delta Homes, and Hermosillo was a loan officer at the Woodland office and was also responsible for submitting residential home loan applications on behalf of clients.

Between October 2004 and May 2007, Tovar, Dirain, and Hermosillo conspired along with others to obtain home loans from mortgage lenders based upon false and fraudulent loan applications and supporting documents that falsely represented the borrowers’ assets and income, liabilities and debts, and employment status. They provided money to the borrowers in order to inflate their bank account balances. Once the loans were secured, the borrowers returned the money to the defendants. The aggregate sale price of the homes involved in the overall conspiracy was in excess of $10 million. As a result of the conspiracy, mortgage lenders and others suffered losses of at least $4 million. http://www.mortgagefraudblog.com/?s=Jun+Michael+Dirain

Tovar was sentenced to four years and six months in prison, Dirain was sentenced to six months in prison, followed by six months of home detention; and Hermosillo was sentenced to nine months of home detention.

Co-defendant Christian Parada Renteria, 43, formerly of Sacramento, California pleaded guilty to two counts of concealing felonies related to the wire fraud conspiracy, and was previously sentenced to serve one year in prison.

Co-defendant Manuel Herrera, 39, Davis, California pleaded guilty to conspiracy to commit wire fraud, and co-defendants Jaime Mayorga, 40, and Ruben Rodriguez, 42, both of Sacramento, California, were convicted of conspiracy to commit wire fraud at a jury trial.

Herrera will be sentenced by Judge Shubb on a date to be determined. Mayorga and Rodriguez will be sentenced by U.S. District Judge John A. Mendez on November 5, 2019. Each defendant faces a maximum statutory penalty of 20 years in prison and a $250,000 fine. The actual sentence, 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.

U.S. Attorney McGregor W. Scott made the announcement.

This case was the product of an investigation by the Federal Bureau of Investigation. Assistant U.S. Attorneys Brian A. Fogerty and Justin L. Lee prosecuted the case.

 

Aston Wood, 55, New Richmond, Wisconsin, has been charged today with four counts related to an alleged mortgage fraud scheme.

The indictment charges that Wood engaged in a scheme to defraud from September 2015 to July 2019.  He is charged with one count of wire fraud, one count of mail fraud, one count of bankruptcy fraud, and one count of criminal contempt of court.

The indictment alleges that Wood represented to owners of homes in foreclosure that he could help them stay in their home by obtaining refinancing or modification of their mortgage, and that he instructed customers to make monthly mortgage payments towards a new or modified loan in an amount he selected, payable to him or to a limited liability company of which he was the sole member.  The indictment alleges that rather than remit the payments to lenders as promised, Wood instead deposited the payments in bank accounts he controlled and used the funds for his own personal expenses.

The indictment further alleges that Wood offered to help some customers buy back their foreclosed property, and he continued to solicit and receive funds from customers or their families based on false representations that the funds would be used to repurchase the property.   In addition, the indictment alleges that Wood told some customers to file for bankruptcy to stall foreclosure proceedings, which allowed Wood to delay detection and continue collecting monthly mortgage payments from customers.

The fourth count of the indictment alleges that Wood disobeyed a lawful order of a Court of the United States, an injunction issued on October 24, 2017, by U.S. Bankruptcy Judge Catherine J. Furay in the Western District of Wisconsin, which permanently enjoined Wood from soliciting customers, offering to perform, and performing services related to mortgage foreclosure and debt relief.

If convicted, Wood faces a maximum penalty of 20 years in federal prison on both the wire fraud charge and the mail fraud charge, and five years on the bankruptcy fraud charge.  The criminal contempt of court charge has no maximum penalty; the penalty is at the Court’s discretion.

You are advised that a charge is merely an accusation and that a defendant is presumed innocent until and unless proven guilty.

The charges against Wood are the result of an investigation by the Federal Bureau of Investigation, IRS Criminal Investigation, and the Federal Housing Finance Agency – Office of Inspector General.  The U.S. Attorney’s Office acknowledges the assistance of the Office of the U.S. Trustee.  Assistant U.S. Attorney Meredith Duchemin is handling the prosecution.

 

John Michael Gatchell, 55, Virginia Beach, Virginia was sentenced today to six years in prison for exploiting an elderly man’s for his money and property.

According to court documents,  Gatchell, facilitated a marriage between the elderly man and a woman with whom Gatchell had a long-term relationship in order to gain access to the elderly man’s money and property. Gatchell induced the elderly man to make a down payment on a Jaguar that Gatchell and a family member drove for about 10 months before it was repossessed by the lender when the loan went into default.

Gatchell also induced the elderly man to obtain two mortgage loans and then diverted most of the proceeds to the benefit of himself and others. He subsequently induced the elderly man to sell the property that secured the loans and again diverted most of the proceeds to himself and others. Gatchell used these monies that he fraudulently diverted to himself to purchase concert series tickets, pay delinquent bills, and make a security deposit for a house he leased, among other things.

Zachary Terwilliger, U.S. Attorney for the Eastern District of Virginia, Martin Culbreth, Special Agent in Charge of the FBI’s Norfolk Field Office, and Peter R. Rendina, Inspector in Charge of the Washington Division of the U.S. Postal Inspection Service, made the announcement after sentencing by U.S. District Judge Arenda Wright Allen. Assistant U.S. Attorney Alan M. Salsbury prosecuted the case.

A copy of this press release is located on the website of the U.S. Attorney’s Office for the Eastern District of Virginia. Related court documents and information are located on the website of the District Court for the Eastern District of Virginia or on PACER by searching for Case No. 2:19-cr-49.

 

Theodore Kurz, 70, New Orleans, Louisiana, pled guilty on September 12, 2019 to mortgage fraud.

According to court documents, Kurz obtained mortgages for three properties through the State of Louisiana, Division of Administration, Office of Community Development.  He then forged mortgage cancellations that he filed with the Orleans Parish Clerk of Court to falsely make it appear that the loans had been satisfied.  Kurz then obtained mortgages through a different lender, falsely claiming that there were no outstanding mortgages or liens on the properties.

Kurz faces 30 years of imprisonment, 5 years of supervised release and a $1,000,000 fine. Sentencing has been set for December 12, 2019.

The announcement was made by U.S. Attorney Peter G. Strasser.

U.S. Attorney Strasser praised the work of the Office of Inspector General for the U.S. Department of Housing and Urban Development in investigating this matter.  The prosecution of this case is being handled by Assistant U. S. Attorney G. Dall Kammer, Supervisor of General Crimes.

 

Neill Reed and Jeric Goodrum, North Little Rock, Arkansas have been indicted for violations of the Arkansas Deceptive Trade Practices Act. Reed and Goodrum tried to manipulate Arkansas’s tax-delinquent property sale procedures by illegally filing forged deeds in order to steal property from rightful owners and then sell the property to unsuspecting consumers.

Defendants Reed and Goodrum begin the scam by locating publicly-listed tax-delinquent properties that were soon to be auctioned by the Commissioner of State Lands. Once they identify a particular tax-delinquent piece of property they want to acquire, and without the true owner’s knowledge or consent, they forge a quitclaim deed that indicates that the record owner of the property transferred their interests to Defendants. Defendants record the forged document in a county’s property records and then sell the stolen property for a price that may be thousands of dollars below the property’s actual value to unsuspecting third parties. The scam often goes unnoticed until the true owner tries to pay the taxes and reclaim the property.

Arkansas Attorney General Leslie Rutledge filed the charges.

These fraudulent actions are costly for their victims, and in some circumstances rob children, grandchildren and families of property that should be their rightful inheritance,” said Attorney General Rutledge. “These scams hurt hard-working Arkansans, and these fraudsters must be stopped.

The investigation was assisted by staff for the Commissioner of State Lands, Tommy Land. The suit seeks an injunction; an order imposing civil penalties; restitution for affected consumers; the suspension or forfeiture of franchises, corporate charters, licenses, permits and authorizations to do business in Arkansas and other relief against Reed and Goodrum.

Attorney General Rutledge is requesting restitution, civil penalties, and injunctive relief and demands a jury trial. Victims of these business practices should file a consumer complaint on ArkansasAG.gov or call (800) 482-8982.

An amicus brief has been filed today in support of a lawsuit brought by the City of Oakland against Wells Fargo. The City alleges that the bank engaged in predatory mortgage lending targeting minority communities.

The brief urged the court to affirm the district court’s denial of Wells Fargo’s motion to dismiss the lawsuit and highlighted the harmful effects of discriminatory lending practices in California.

In 2015, the City of Oakland filed a lawsuit alleging that, in violation of the federal Fair Housing Act and the California Fair Employment and Housing Act, Wells Fargo harmed the city through a pattern of illegal and discriminatory mortgage lending, heavily impacting minority community members. In particular, Oakland alleged that Wells Fargo steered minority borrowers there to loans with higher costs and risks, and refused to allow those borrowers to refinance, or would only refinance on less favorable terms compared to other similar loans, when they were no longer able to meet the terms of their original agreements. According to the first amended complaint, African-American and Latino borrowers were more than twice as likely to receive a high-cost or high-risk loan from Wells Fargo than similarly situated white customers. As a result, the city alleged, among other things, that these discriminatory practices suppressed property values in minority communities in Oakland, reduced property tax revenues, and increased the costs of providing municipal services. Wells Fargo’s motion to dismiss the case was largely denied and the bank is currently seeking review before the U.S. Court of Appeals for the Ninth Circuit.

California Attorney General Xavier Becerra made the announcement.

Equal access to housing starts with equal and fair access to our financial institutions,” said Attorney General Becerra. “For many African-Americans and Latinos, the hardships of the mortgage crisis haven’t stopped. Our fight for economic justice continues and I’m proud to stand with the City of Oakland in this effort to combat predatory lending in our state.”

Wells Fargo’s racially discriminatory mortgage lending practices against African-Americans and Hispanics have devastated individuals, families, and communities in Oakland, throughout California, and across the country where Wells Fargo operates, dramatically increasing foreclosures and decreasing the Black and Latino middle class,” said Oakland City Attorney Barbara J. Parker. “Evidence shows that Wells Fargo systematically provided more expensive and higher risk loans to African-American and Hispanic borrowers in Oakland and other cities who qualified for the more favorable loans that the bank offered to white borrowers. We applaud Attorney General Becerra for standing with Oakland to hold Wells Fargo accountable and stop these racially discriminatory practices.”

Attorney General Becerra is committed to tackling housing inequity in the state and throughout the country. In March and October of 2018, the California Department of Justice submitted Attorney General Becerra is committed to tackling housing inequity in the state and throughout the country. In March and October of 2018, the California Department of Justice submitted comments opposing changes proposed by the Trump Administration that would revoke key tools used to overcome entrenched patterns of residential segregation and foster inclusive communities. In July of 2019, Attorney General Becerra urged the U.S. Department of Housing and Urban Development to withdraw a proposed rule on housing assistance eligibility, which would risk eviction for tens of thousands of Californians. Attorney General Becerra also joined a coalition of attorneys general seeking to protect federal rules allowing equal and consistent access to shelters for transgender and gender nonconforming individuals.

A copy of the brief is available here.