Robert Pena, 69, the president and founder of a Falmouth mortgage company was sentenced yesterday in connection with defrauding the Government National Mortgage Association (Ginnie Mae) out of approximately $2.5 million.

The charges arise out of Pena’s scheme to defraud Ginnie Mae, a government-run corporation charged with making housing more affordable by injecting capital into the U.S. housing market. Ginnie Mae, which is part of the U.S. Department of Housing and Urban Development (HUD), guarantees the timely payment of principal and interest to investors in bonds backed by government-sponsored mortgage loans, such as those offered by the Federal Housing Administration and the U.S. Department of Veterans Affairs.

MSI contracted with Ginnie Mae to pool eligible residential mortgage loans and then sell Ginnie Mae-backed mortgage bonds to investors. MSI was responsible for servicing the loans in the pools it created, including collecting principal and interest payments from borrowers, as well as loan payoffs, and placing those funds into accounts held in trust by Ginnie Mae, which would ultimately pass them along to investors. Among other things, Ginnie Mae required issuers like MSI to provide regular reports to Ginnie Mae concerning the status of the loans in the pools.

Beginning in 2011, Pena began diverting money that borrowers were sending to MSI.  Specifically, Pena deposited high-dollar, loan-payoff checks into bank accounts unknown to Ginnie Mae and then used those funds for personal and business expenses. Pena also diverted borrowers’ escrow funds and mortgage-insurance premiums for his own use. In total, Pena took approximately $2.5 million, which Ginnie Mae then had to pay to investors whose investments it had guaranteed. Pena also attempted to cover up his scheme by providing false reports to Ginnie Mae about the status of the loans MSI was servicing. These false reports made it appear that the loans were still in repayment.

Pena’s co-conspirator, Gilda Andrade, who worked for Pena at MSI and helped Pena file false reports with Ginnie Mae, cooperated with the government’s investigation. Andrade pleaded guilty to a misdemeanor charge of making a false statement to HUD in December 2017, and was previously sentenced to one year probation and ordered to pay $108,240 in restitution to Ginnie Mae.

Pena was sentenced to 32 months in prison, two years of supervised release, and ordered to pay $2.5 million in restitution to Ginnie Mae. In October 2017, Pena pleaded guilty to an indictment charging him with one count of conspiracy and six counts of wire fraud.

United States Attorney Andrew E. Lelling; Christina Scaringi, Special Agent in Charge of the U.S. Department of Housing and Urban Development, Office of Inspector General, Northeast Regional Office; and Joseph Bonavolonta, Special Agent in Charge of the Federal Bureau of Investigation, Boston Field Division, made the announcement today. The U.S. Attorney’s Office wishes to acknowledge the invaluable assistance of the U.S. Department of Veterans Affairs, Office of Inspector General; the U.S. Department of Agriculture, Office of Inspector General; and the Falmouth Police Department. Assistant U.S. Attorney Brian M. LaMacchia prosecuted the case.

Laurence Savedoff, Esq., 44, New City, New York, who was convicted of misprision of a felony, was sentenced today for his role in a mortgage fraud scheme.

Between 2008 and 2009, the defendant represented The Funding Source (“TFS”), a mortgage bank, as the settlement attorney. The defendant’s law office was used to execute the closings for the eight real estate transactions for properties located in Bronx, New York, which involved efforts by five other individuals fraudulently to obtain mortgages that were insured by FHA on behalf of unqualified borrowers. For all eight transactions, the defendant caused the signing of the HUD-1 settlement statement and FHA Addendum to the HUD-1 knowing that the information therein was false.

Although he did not know the full extent of the scheme, the defendant became aware that others were using him to help defraud financial institutions. The defendant failed to notify authorities, including federal authorities, of these other individuals’ use of fraud to obtain funds from TFS. Furthermore, the defendant took affirmative steps to conceal the fraud by signing the HUD-1 Settlement Statement and FHA Addendum, or by having his paralegal sign them. Those documents were later forwarded by TFS, which he knew would be sent to financial institutions, including M&T Bank located in the Western District of New York. One duty of the defendant in his role as settlement attorney was to certify that the disbursements written on the HUD-1 accurately reflected the disbursements in the transactions. The HUD-1 and other financial documents were sent to financial institutions to show that the borrowers met FHA’s requirement of providing a 3-3.5% down payment. The defendant was aware that the borrowers in all eight transactions did not provide that down payment. Nevertheless, the defendant, or his paralegal at this direction, certified on the HUD-1 and in the FHA Addendum that the disbursements listed therein were accurate.  As a result of the aforementioned facts, financial institutions, including M&T Bank, purchased the fraudulently originated loans from TFS. https://www.justice.gov/usao-wdny/pr/attorney-sentenced-his-role-mortgage-fraud-scheme

The total amount of the mortgage loans for these eight transactions was $4,800,007.

U.S. Attorney James P. Kennedy, Jr. made the announcement.

The sentencing is the culmination of an investigation by the United States Postal Inspection Service under the direction of Joseph W. Cronin, Inspector in Charge, Boston Division, the United States Department of Housing and Urban Development, Office of the Inspector General, under the direction of Special Agent in Charge Brad Geary; and the Federal Bureau of Investigation, under the direction of Special Agent in Charge Gary Loeffert.  Additionally, the New York State Department of Financial Services assisted with the investigation.

George French Jones, Jr., 50, Santa Monica, California, was sentenced to 116 months in prison today after previously pleading guilty to mail fraud and identity theft charges in connection with a mortgage fraud scheme involving two waterfront residential properties in Broward County, Florida.

According to information disclosed in open court, in early 2018 Jones identified two residential properties in Fort Lauderdale, Florida, which Jones fraudulently pledged as collateral in order to obtain mortgage loans from a private lender. http://www.mortgagefraudblog.com/?s=George+French+Jones%2C+Jr

The two Broward County properties were owned by corporate entities that Jones had no affiliation with and which were in fact owned by independent third parties. To execute his fraudulent loan scheme, Jones created fake identification documents and email addresses in order to impersonate officers of the corporate owners of the two properties. Jones then submitted bogus loan applications and other documents to a private lender in which he pretended to be the owners of the Fort Lauderdale properties. As a result of this scheme, Jones defrauded the private lender out of approximately $1.7 million dollars.

Jones was also ordered to pay $1,824,581 in restitution.

Ariana Fajardo Orshan, U.S. Attorney for the Southern District of Florida, and George L. Piro, Special Agent in Charge, Federal Bureau of Investigation (FBI) made the announcement.

U.S. Attorney Fajardo Orshan commended the investigative efforts of the FBI.  This case was prosecuted by Assistant U.S. Attorney Christopher Browne.  Assistant U.S. Attorney Nalina Sombuntham is handling the asset forfeiture aspects of the prosecution.

Related court documents and information may be found on the website of the District Court for the Southern District of Florida at www.flsd.uscourts.gov or at http://pacer.flsd.uscourts.gov.

 

Caliber Homes Loans Inc. (Caliber) will pay $2 million and undertake affordable loan modifications for affected Massachusetts homeowners,. The settlement resolves allegations that Caliber failed to help borrowers avoid foreclosure and instead gave homeowners unaffordable loan modifications with ballooning monthly payments they could not afford.

In an assurance of discontinuance filed in Suffolk Superior Court, Caliber has agreed to provide restitution and loan modifications to homeowners in Massachusetts and change its business practices to comply with state law.

The AG’s Office alleges Caliber violated the Massachusetts Act Preventing Unlawful and Unnecessary Foreclosures, known as “35B,” a landmark law passed in 2012 that protects certain borrowers from foreclosure. The law requires creditors to make a good faith effort to avoid foreclosure for borrowers whose mortgage loans have unfair subprime terms.

The AG’s Office began its investigation after observing through the AG’s consumer assistance work that Caliber predominantly offered struggling homeowners loan modifications with payments that were temporarily lower and only covered the interest due on the loan each month. After a few years, however, borrowers would see their mortgage payments balloon to an amount even higher than what they originally were paying and could not afford, setting borrowers up to again face foreclosure.

The AG’s investigation found that Caliber favored these short-term, interest-only loan modifications over permanent, affordable modifications even in cases where a permanent modification was commercially reasonable. The company also routinely gave borrowers the runaround about missing documents required for the loan modification review process.

Under the terms of the settlement, Caliber will provide loan modification relief to Massachusetts borrowers who applied for modifications and were foreclosed upon due in part to Caliber’s conduct. Caliber will also institute a new loan modification program and review Massachusetts borrowers currently on interest-only or short-term modifications to provide them a more sustainable, affordable modification.

Attorney General Maura Healey made the announcement today.

Mortgage servicing companies have a duty to help Massachusetts residents avoid foreclosure and stay in their homes,” said AG Healey. “Our settlement with Caliber will provide relief to borrowers across the state and sends a clear message that we will protect homeowners when companies break the law.”

The AG’s Office has been a national leader in securing restitution and other relief for borrowers from banks and servicers. The office has obtained recoveries and other relief from Morgan StanleyGoldman SachsRoyal Bank of ScotlandCitigroupJPMorgan ChaseCountrywideFremont Investment & LoanOption OneHSBCDitech, Nationstar Mortgage, Shellpoint Mortgage Servicing, PHH and others on behalf of Massachusetts homeowners.

Consumers with questions or concerns about deceptive or abusive foreclosure and loan servicing practices can call the Attorney General’s consumer hotline at 617-727-8400 or file a complaint with the office.

This matter was handled by Assistant Attorneys General Michael Lecaroz and Lisa Dyen and Division Chief Max Weinstein, all of the AG’s Consumer Protection Division.

 

Constantine Giannakos, 51, Hicksville, New York, a disbarred attorney, pleaded guilty yesterday to stealing $40,000 from a Hicksville couple selling their home.

In early 2017, a Hicksville homeowner and her ex-husband hired the defendant to represent them in the sale of their home. The complainants and their home purchasers entered a sales contract on February 4, 2017.

At the time of the contract signing, the buyers’ attorney provided a $40,000 down payment check made out to ‘Constantine Giannakos, as attorney’ that was deposited into Giannakos’ escrow account and held there until the closing.

Between February 4, 2017 and the scheduled closing date of September 27, 2017, the defendant and one of the complainants met at public locations including a Dunkin’ Donuts on Newbridge Road in Hicksville. The defendant claimed he had an office in Syosset, New York but in fact, did not.

Following the closing on September 27, 2017 the defendant was supposed to remit the $40,000 down payment to his clients but never did so. The complainants made several subsequent requests for the money via phone and text messages but never received the money.

The Nassau County District Attorney’s Office received the case on October 24, 2017, after receiving a complaint from the homeowners. A review of the escrow account showed Giannakos spent the $40,000 at Home Depot, on credit card payments, department stores, mortgage payments, and unrelated business expenses.

Giannakos pled guilty to Grand Larceny in the Third Degree (a D felony) before Judge Robert Bogle. If the defendant provides $40,000 restitution at the time of sentence on May 10, 2019 he is expected to be sentenced to five years’ probation; however, if the defendant does not pay restitution, he is expected to be sentenced to one to three years in prison.

Nassau County District Attorney Madeline Singas made the announcement.

Instead of faithfully representing his clients, this defendant stole $40,000 from them and spent it at the Home Depot and on personal credit card payments,” DA Singas said. “When an attorney abuses their client’s trust and steals from them, my office will hold them accountable for their crimes.”

Giannakos was disbarred for another matter on August 21, 2012.

Since 2012, the NCDA has prosecuted more than 20 attorneys for misconduct.

If you believe you may have been a victim of an unscrupulous attorney, please call the NCDA’s Tip Line at 516-571-7755. Anyone interested in hiring an attorney is encouraged to check that person’s standing and registration with the Office of Court Administration.

Assistant District Attorney Jennifer Contreras of DA Singas’ Financial Crimes Bureau is handling this case. Eric Franz, Esq. represents the defendant.

 

Kirk Lawrence Brannan, 65, Lake Jackson, Texas pleaded guilty today for his role in a mortgage fraud scheme, admitting he conspired with others from 2005 to 2009 to execute a scheme to defraud Wells Fargo Bank and other lenders.

At the hearing, the court held that, in committing the crime, Brannan had used sophisticated means and had employed his special skills as an attorney and real estate agent. The court noted that Brannan had created false HUD-1 settlement forms and title documents that purported to show the sale of three of his properties to his children at grossly inflated prices. These HUD-1 forms then became the three comparable sales that appraisers relied upon in over-valuing the rest of Brannan’s beach home properties which Brannan then sold through the fraud scheme at inflated prices.

Brannan sold 10 beach homes in the Freeport/Surfside, Texas area to “straw buyers” at exorbitant prices. Other co-conspirators recruited straw buyers who created loan applications with misrepresentations that lenders relied upon in deciding to make the mortgage loans. The applications contained misrepresentations of the buyer’s address, employer, income and expenses. The applications also suggested the buyers were much better credit risks than they actually were. Brannan admitted he paid kickbacks to co-conspirators each time one of the beach homes was sold to a straw buyer.

The beach properties were sold at two to three times the appraised values. The mortgage lenders, including Wells Fargo Bank, were induced to lend the inflated amounts for the purchases through flawed or fraudulent appraisals which were based on comparisons Brannan manufactured to further the scheme.

Brannan created settlement statements that suggested he sold three of his properties to his children at exorbitant prices. Appraisers relied upon these “sales” as comparable sales in appraising Brannan’s remaining properties sold to straw buyers. As a result of the fraudulent appraisals, he and his co-conspirators were able to inflate the values for his properties and deceive the lenders into approving home loans at those exorbitant amounts.

All of the straw buyers defaulted on the mortgages, and all 10 of the beach properties ended up in foreclosure.

The fraudulent mortgage loan scheme resulted in a loss of $5,317,350 to Wells Fargo Bank and the other lenders. Brannan paid $2,401,368 to his co-conspirators as part of the scheme.

Previously released on bond, Brannan was permitted to remain on bond and voluntarily surrender to a U.S. Bureau of Prisons facility to be determined in the near future.

Co-conspirators Chucoboie Lanier, 42, David Lee Morris, 56, and Derwin Jerome Blackshear, 52, all of Houston, Texas previously pleaded guilty for their roles in the scheme. Lanier received a sentenced of 36 months while Morris was ordered to serve a 42-month prison term. Blackshear is set for sentencing April 9, 2019.

Chief U.S. District Judge Lee Rosenthal handed Brannan a 36-month sentence to be immediately followed by three years of supervised release.

In imposing the sentence, Judge Rosenthal balanced Brannan’s honorable military service and other aspects of what, up to the time of the fraud, had been an exemplary life, with the tremendous damage mortgage fraud had done to the U.S. financial system and economy and the fact that Brannan had been a knowing and willing participant in such a scheme. She also pointed out that some individuals much less sophisticated than Brannan had suffered severe economic harm as a result of Brannan’s scheme.

Brannan was further ordered to pay $5,317,350 in restitution. A money judgement was previously entered in the amount of $2,401,368.

The announcement was made by U.S. Attorney Ryan K. Patrick.

The Texas Department of Public Safety and the FBI conducted the investigation. Assistant U.S. Attorneys Robert Johnson and Michael Day are prosecuting the case.

 

Brian Thomas Sapp, 38, formerly of Alexandria, Virginia was sentenced today to nine years in prison for operating a Ponzi scheme that took in approximately $9 million and defrauded over 20 victims of $1.8 million.

According to court documents, Sapp from 2014 through 2018, committed wire fraud and aggravated identity theft in executing the scheme. Sapp preyed on his closest friends and their families, many of whom described Sapp as a “best friend” and “like a brother.” He caused financial hardship to many victims, including those with special needs children.

To execute the scheme, Sapp set up Novus Properties, claiming he had identified distressed single family homes in the District of Columbia, Maryland and Virginia, which he would purchase and then resell to guaranteed buyers. All he needed was investor funds to finance the property flips. On hundreds of occasions, Sapp fabricated a sophisticated set of interlocking purchase, sale, guarantee, and HUD-1 settlement documents to induce victims to part with money. He stole real identities of sellers and buyers and digitally forged their signatures hundreds of times. Sapp bragged that he was “killing it” and “dominating the market.” In reality, he never closed a single deal.

Instead, Sapp used investor money to fund a lavish lifestyle, including golf trips, meals out, and attending wealth-building seminars. Sapp spent $80,000 to purchase and customize a Mercedes van that he outfitted with special rooftop satellite TV antennas and flat screen TVs. Sapp loaded the van with professional grilling equipment, tents, food and beverage service stations, and other amenities so that he could host elaborate tailgating parties at Penn State football games, where he ate and drank with his victims at their expense, unbeknownst to them at the time.

G. Zachary Terwilliger, U.S. Attorney for the Eastern District of Virginia, and Matthew J. DeSarno, Special Agent in Charge, Criminal Division, FBI Washington Field Office, made the announcement after sentencing by U.S. District Judge Anthony J. Trenga. Assistant U.S. Attorney Russell L. Carlberg 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 is located on the website of the District Court for the Eastern District of Virginia or on PACER by searching for Case No. 1:18-cr-446.

Ocwen Loan Servicing LLC, one of the nation’s largest mortgage servicers will pay $2 million in restitution to resolve allegations that it violated state law and committed unfair and deceptive practices by charging Massachusetts homeowners for unnecessary fees and overpriced force-placed insurance policies.

The AG’s complaint alleged that Ocwen committed widespread mortgage servicing violations that increased Massachusetts borrowers’ mortgage and insurance expenses, exposed borrowers to serious risk through insurance lapses, and contributed to loan delinquencies and foreclosures. When borrowers requested information about or disputed errors on their loan accounts, Ocwen failed to respond to the requests as required by law. According to the complaint, Ocwen’s violations include:

  • Unnecessary flood insurance: Ocwen force-placed borrowers in expensive flood insurance policies for time periods when properties were not in special hazard flood area and did not require flood insurance. The force-placed policies carried high deductibles and did not provide critical liability and personal property coverage to borrowers.
  • Improperly administering insurance premiums: Ocwen forced borrowers to pay their insurance premiums into an escrow account and then failed to disburse these escrowed insurance premiums to insurers, causing borrowers’ insurance policies to lapse and leaving them exposed to serious gaps in insurance coverage.
  • Charging inflated and duplicative fees: Ocwen took advantage of struggling borrowers by charging duplicative and unnecessary pre-foreclosure property inspection and preservation fees for grass cuts, landscaping, and title review. In some cases, Ocwen conducted three property inspections in the same month and ordered several grass cuts within the same week, then passed the costs on to the borrower.
  • Failing to respond to borrower disputes and requests for information: Ocwen failed to provide timely and adequate responses to borrowers’ requests for information, complaints, and notices of error, causing problems to go unaddressed.

Under the terms of the consent judgment, Ocwen will pay $2 million in restitution including direct cash refunds and account credits. Ocwen will send notifications to 4,000 borrowers who may be eligible to receive a loan modification and has also agreed to halt foreclosure proceedings for certain homeowners to allow them time to apply for the loan modification. Ocwen will also pay three times the damages for borrowers for whom the company wrongfully failed to disburse escrowed insurance premiums and reimburse borrowers who were unnecessarily charged for flood insurance policies. Finally, Ocwen will implement new policies relating to the handling of customer complaints.

Attorney General Maura Healey made the announcement today.

The consent judgment, entered in Suffolk Superior Court, settles a lawsuit filed by the AG’s Office in April 2017 against Ocwen Loan Servicing LLC, which services tens of thousands of mortgages for Massachusetts homeowners.

Keeping families in their homes remains a top priority for my office,” said AG Healey. “This settlement will provide relief to thousands of Massachusetts homeowners harmed by abusive and unfair mortgage servicing practices.”

The AG’s Office has been a national leader in securing restitution and other relief for borrowers from banks and servicers. The office has obtained recoveries and other relief from Morgan StanleyGoldman SachsRoyal Bank of ScotlandCitigroupJPMorgan ChaseCountrywideFremont Investment & LoanOption OneDitechHSBC, PHH, Nationstar, Shellpoint and others on behalf of Massachusetts homeowners.

The AG’s Office has also brought a string of force-placed insurance cases and obtained over $12 million in related recoveries under settlements with HSBC, American Security Insurance Company (Assurant), and QBE Insurance.

This matter was handled by Assistant Attorneys General Michael Lecaroz and Sarah Petrie, and Deputy Division Chief Shennan Kavanagh, all of the AG’s Consumer Protection Division; and Assistant Attorney General Tim Hoitink and Deputy Director Arwen Thoman of the AG’s Insurance and Financial Services Division.

 

Erik Hermann Green, 37, Roseville, California was found guilty on Tuesday of three counts of wire fraud in a mortgage fraud scheme.

According to evidence presented at trial, Green was part of a large-scale mortgage fraud scheme to defraud the New Century Mortgage Company by submitting false documentation about employment, income and assets, including fraudulent loan applications and other altered bank documents. Around October 2006, when Green submitted his fraudulent loan applications to obtain a loan for $820,000, he was a licensed real estate sales person and managed approximately 15 loan officers. As part of the scheme, Green received a check for $100,000 that was funneled through a shell company at the close of escrow. Green used the funds for personal expenses.

Co-defendants Stephen Pirt and Janis Pirt previously pleaded guilty to wire fraud. Stephen Pirt was sentenced in 2015 to 25 months in prison and in 2014, Janis Pirt was sentenced to five years of probation with a year of home detention.

Green is scheduled to be sentenced by U.S. District Judge Troy L. Nunley on June 13, 2019. Green faces a maximum statutory penalty of 20 years in prison and a $250,000 fine for each count of conviction. 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 is the product of an investigation by the IRS Criminal Investigation and the Alameda County District Attorney’s Office. Assistant U.S. Attorneys Michael D. Anderson and Miriam R. Hinman are prosecuting the case.

 

Eleven people from across the country have been charged with conspiracy to commit mail and wire fraud in a scheme to defraud distressed homeowners by falsely representing that they could help the victims save their homes. The indictment was returned on March 6, 2019 and unsealed today.

Eight defendants have been arrested to date:

Name Also Known As Age Residence
Lorin K. Buckner 62 Hamilton, Ohio
Garrett Stevenson 41 Cincinnati, Ohio
Damien Byrd 40 Norfolk, Virginia
Stacy Kay Slaughter 58 Gahanna, Ohio
Marcus A. Mullings, Jr. 57 Hackensack, New Jersey
Talia Marie Stephen-Mullings Marie Hightower 36 Hackensack, New Jersey
Amal Mahepaul Balmacoon Martin 37 South Ozone Park,  New York
John Nelson 66 Brooklyn, New York

Companies named in the indictment include:

  • MVP Home Solutions, LLC, also known as Stay In or Walk Away
  • Bolden Pinnacle Group Corp., also known as Home Advisory Services Network andHome Advisory Services Group Inc.
  • Silverstein & Wolf Corp.

Joel Harvey, 36, Cincinnati, Ohio, Dessalines Sealy, 55, Brooklyn, New York, and Rafiq Bashir, 35, Jacksonville, Florida have also been charged in the indictment.

According to the 26-count indictment, from 2013 through 2018, the defendants took advantage of homeowners’ desperation to save their homes and used money from homeowner victims to personally enrich themselves.

It is alleged that defendants were involved in a multilevel marketing scheme, which promised affiliates commissions by recruiting distressed homeowners to the above named companies.

They used multiple ways to recruit affiliates, including conference calls and direct mailings. For example, some co-conspirators hosted weekly conference calls where participants from across the country dialed in to hear details of the scheme and share sales strategies. During the calls, defendants encouraged affiliates to recruit homeowners to their companies on the promise of easy money.

Some co-conspirators also allegedly promoted, organized and attended conferences in which affiliates came to hear details of the scheme in person. For example, some co-conspirators organized and participated in a national conference in Columbus, Ohio in April 2015 in which they provided “deep impact training” and techniques for affiliates to convince homeowners to enroll in Bolden Pinnacle Group and Silverstein & Wolf Corporation programs.

Affiliates were encouraged to be aggressive in recruiting homeowners. Affiliates used online databases and court records to identify vulnerable, financially distressed homeowners who had recently received notice of foreclosure on their home.

According to the indictment, some co-conspirators mailed more than 22,000 postcards in the Southern District of Ohio and elsewhere promising that they could “stop foreclosure” or “stop the sheriff sale” for a fixed fee. Co-conspirators also reached out to homeowners using Craigslist ads, websites, emails and social media platforms.

On the promise of reducing or eliminating mortgage obligations in exchange for a fee, initial recruiters would collect payments from homeowners and refer the victims to the co-conspirator companies.

Among other things, the referral programs promised:

  • to negotiate with mortgage lenders on the homeowners’ behalf for the purchase of the mortgage notes at a discount;
  • to negotiate the sale of their home and release of their mortgage loans through a short sale and/or deed in lieu of foreclosure sale;
  • to stop an imminent foreclosure sale;
  • to remove the mortgage lien via a tender offer; and
  • achieve short sale prices at a fraction of the value of the outstanding lien/note.

Further, defendants represented that they had “proprietary” methods or “legal tactics” to help homeowners stall or completely avoid foreclosure. In actuality, the indictment says defendants persuaded homeowners to file chapter 13 bankruptcies in order to delay foreclosure actions.

Defendants allegedly filed skeletal bankruptcy petitions that they called “pump fakes.” These petitions intentionally failed to disclose the co-conspirators as preparers and named the homeowners as filing pro se. Any relief from foreclosure delay was temporary until the bankruptcy court dismissed the proceeding.

In 2014 alone, one defendant allegedly prepared and filed petitions for 30 homeowners without their knowledge, including four homeowners in the Southern District of Ohio.

The indictment includes one count of conspiracy to commit mail fraud and wire fraud, four counts of mail fraud, seven counts of wire fraud, 12 counts of bankruptcy fraud, one count of bank fraud and one count of aggravated identity theft.

These programs were fraudulent,” U.S. Attorney Glassman said. “The defendants performed virtually no negotiations on behalf of the homeowners and never successfully purchased a mortgage note or provided a new, lower-cost mortgage. They never removed a mortgage lien or performed short sales as advertised.”

To prey on individuals desperate to find a way to save their homes is unconscionable. What makes this crime even more egregious is the alleged methods these individuals used to lure their victims, and the extensive planning and details by these scammers to not take ‘no’ for an answer if a victim was not willing to enter their program. If you believe in karma, this is what law enforcement brought today when these scammers were arrested and brought to justice for their despicable crimes,” said Inspector in Charge Philip R. Bartlett.

Benjamin C. Glassman, United States Attorney for the Southern District of Ohio, Robert  Manchak, Acting Special Agent in Charge, Federal Housing Finance Agency –  Office of Inspector General (FHFA-OIG), Northeast Region, Todd Wickerham, Special Agent in Charge, Federal Bureau of Investigation (FBI), Cincinnati Division, Tommy D. Coke, Inspector in Charge, U.S. Postal Inspection Service (USPIS), Pittsburgh Division, and Philip R. Bartlett, Inspector in Charge, USPIS, New York region, announced the charges.

U.S. Attorney Glassman commended the investigation of this case by the FHFA-OIG, USPIS, and FBI, as well as Assistant United States Attorney Ebunoluwa A. Taiwo, who is prosecuting the case.

An indictment merely contains allegations, and the defendants are presumed innocent unless proven guilty in a court of law.

If you believe you are a potential victim of this fraud, please contact the FBI at CIForeclosure@fbi.gov or 513-421-4310.