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Lender Processing Services, Inc., and its subsidiaries, LPS Default Solutions and DocX, reached a civil settlement concerning allegations of robo-signing, of which Idaho will receive $890,995.
Idaho has joined in a legal settlement that requires one of the nation’s largest providers of mortgage loan processing services to change its business practices and pay a total of $120 million to 45 states and the District of Columbia. The settlement with LPS resolves allegations that the company, acting on behalf of mortgage servicers, improperly signed and notarized loan default paperwork. This practice is commonly known as robo-signing.
Lender Processing Services, Inc., headquartered in Jacksonville, Florida, is a Fortune 1000 company that primarily provides technological support to the mortgage and real estate industries.
Between 2008 and 2010, residential mortgage loan servicers authorized certain DocX employees to sign mortgage-related documents, but some of the documents reportedly contained unauthorized signatures or improper notarizations. Employees allegedly signed documents using other employees’ names, a practice known as “surrogate signing,” and DocX hired temporary surrogates to execute and file thousands of mortgage-related documents each day.
The settlement requires LPS to properly execute mortgage documents and prohibits signatures on documents by unauthorized persons or those without first-hand knowledge of the facts stated in the documents. Additionally, LPS must implement enhanced oversight of the default services it provides and review all third-party fees to ensure that the fees have been earned and are reasonable and accurate. The settlement also:
• Ensures that LPS has authority to sign documents on behalf of a servicer and does so, when required, in compliance with applicable notary requirements;
• Requires LPS to accurately identify the authority that the signer has to execute the document and where that signer works;
• Requires LPS to ensure that foreclosure and bankruptcy attorneys or trustees can communicate directly with the servicer; and
• Requires LPS to establish and maintain a toll-free phone number for consumers to call concerning document execution and property preservation services (including winterization, inspection, preservation and maintenance).
LPS will review all documents it executed between January 1, 2008, and December 31, 2010, to determine whether any of the documents it executed require correction. If LPS is authorized to make the corrections, it will do so. LPS will report quarterly to the Attorney General regarding the status of this review.
Idaho will receive $890,995 from the settlement to reimburse the Attorney General for his legal costs.
Attorney General Lawrence Wasden made the announcement.
“It is unfortunate that ‘robo-signing’ became so prevalent during the housing crisis that the word is now a permanent part of our lexicon,” Wasden said. “Today’s settlement is a significant step by state attorneys general to eliminate this debt collection tactic from the mortgage servicing industry and should discourage the entire lending community from adopting a similar practice.”
David F. Baker III, 62, Sewickley Heights, Pennsylvania, pleaded guilty in federal court to a charge of bankruptcy fraud conspiracy admitting that he defrauded two lenders.
The defendant pleaded guilty to one count before United States District Judge Joy Flowers Conti. Baker was indicted December 20, 2012.
In connection with the guilty plea, Baker conspired to defraud J.P. Morgan and Washington Mutual Bank in mortgage applications in 2005 and 2007 on a $2.5 million condominium located at 1300 Ben Franklin Drive, Unit 502, Sarasota, Florida.
Judge Conti scheduled sentencing for May 17, 2013. The law provides for a maximum total sentence of 20 years in prison, a fine of $250,000, or both. Under the Federal Sentencing Guidelines, the actual sentence imposed would be based upon the seriousness of the offenses and the prior criminal history, if any, of the defendant.
United States Attorney David J. Hickton announced the guilty plea.
Assistant United States Attorney Gregory C. Melucci is prosecuting this case on behalf of the government.
The Internal Revenue Service, Criminal Investigation, conducted the investigation that led to the prosecution of David F. Baker, III.
10 individuals have been indicted on 44-counts for their alleged roles in a mail and wire fraud conspiracy involving timeshare mortgages.
The six indicted defendants from New Jersey include: Adam Lacerda, 28, and his wife, Ashley R. Lacerda, 32, Egg Harbor Township; Ian Resnick, 37, Absecon; Steven Cox, 48, Ventnor City; Francis Santore, 52, Northfield; and Joseph Diventi, 32, Somers Point.
Also indicted are Alfred Giordano, 32, Hurry County, South Carolina; Brian Corley, 27, Little River, South Carolina; Joseph Saxon, 38, St. Thomas, Virgin Islands; and Genevieve Manzoni, 46, Lake Worth, Florida. The indictment was returned by a federal grand jury on January 23, 2013.
Ian Resnick, Joseph Saxon, and Genevieve Manzoni previously were charged by criminal complaint. Adam Lacerda, Ashley R. Lacerda, Steven Cox, Alfred Giordano, Francis Santore, Brian Corley, and Joseph Diventi previously were indicted on the same charges by a federal grand jury sitting in Trenton on May 3, 2012.
The defendants are expected to be arraigned before U.S. District Judge Noel L. Hillman in Camden, New Jersey, federal court in the coming weeks.
According to the superseding indictment and the Complaints previously filed:
In July 2010, law enforcement officers commenced an investigation into The Vacation Ownership Group, a/k/a VO Group LLC. The investigation revealed that beginning at least from March 2009 and continuing to September 1, 2011, the defendants, through the VO Group, participated in a fraudulent scheme in which representatives of the VO Group called owners of timeshare vacation properties purchased from Flagship Resort Development, Wyndham Vacation Resorts Inc., and other timeshare developers and convinced the owners to submit money to the VO Group, purportedly to pay off their “mortgages” on their timeshares. The VO Group claimed that the timeshare owner could pay off the mortgage balance at a substantially reduced amount—often by as much as 50 percent of the amount of the owner’s original mortgage—by mailing payment to the VO Group at a P.O. Box in Pleasantville, New Jersey. The VO Group representatives also persuaded timeshare owners to send the VO Group money purportedly to have timeshares cancelled or sold. Rather than paying off the timeshare owner’s mortgage, cancelling the owner’s timeshare, or selling the timeshare, the conspirators kept the timeshare owner’s money for their personal use.
The investigation also revealed that in an attempt to cover up the scheme, the conspirators in most cases engaged in a “bait and switch” tactic by purchasing an additional timeshare in the victim’s name without the victim’s knowledge. The victim purportedly had assented to the purchase based on documents the VO Group previously e-mailed to the victim for signature even though the victim had been led to believe that the victim was simply paying off the victim’s original timeshare mortgage.
According to the complaint, during the course of the investigation, law enforcement officers interviewed approximately 225 victims of the conspirators’ scheme identified to date. Many of the victims are elderly, causing them to be more vulnerable to the scheme. The indictment states that law enforcement has determined that the conspirators defrauded the victims of more than $3 million.
The mail and wire fraud conspiracy charge—with which all defendants named in the superseding indictment are charged—is punishable by a maximum potential penalty of 20 years in prison and a $250,000 fine. Each additional, substantive charge of mail fraud or wire fraud carries an additional, maximum potential penalty of 20 years in prison and a $250,000 fine. The conspiracy to commit money laundering charge subjects defendants Adam and Ashley Lacerda to an additional, maximum potential penalty of 20 years in prison and a $500,000 fine. Defendants Adam and Ashley Lacerda also face an additional, maximum potential penalty of 10 years in prison for each substantive money laundering count in which they are charged.
U.S. Attorney Paul J. Fishman announced the indictment.
U.S. Attorney Fishman credited special agents from the FBI’s Atlantic City Resident Agency, under the direction of Acting Special Agent in Charge David Velazquez in Newark; and special agents from the Department of Labor, Office of Inspector General, Office of Labor Racketeering and Fraud Investigations, under the direction of Special Agent in Charge Robert Panella, New York Region, for the investigation leading to today’s indictment. He also thanked the New Jersey Department of Labor, Benefit Payment Control Unit, for its assistance.
The government is represented by Assistant U.S. Attorneys Alyson M. Oswald and R. David Walk, Jr. of the U.S. Attorney’s Office Criminal Division in Camden.
The charges and allegations contained in the superseding indictment are merely accusations, and the defendants are considered innocent unless and until proven guilty.
Anyone who believes they are a victim of the fraud should contact the FBI’s Atlantic City Resident Agency at 609-677-6400.
Arthur R. Seaborne, 70, Sarasota, Florida, was sentenced by U.S. District Judge Steven D. Merryday to 5 years in federal prison for conspiring to commit bank fraud. In addition, Seaborne was ordered to forfeit $4,269,886.55 in proceeds from the offense. The matter of restitution will be addressed at a later date, As previously reported by Mortgage Fraud Blog, Seaborne pleaded guilty on November 6, 2012.
According to court documents and information presented in court, from as early as March 2003 through July 2008, Seaborne and others conspired to commit bank fraud. Throughout that time, Seaborne used several corporate entities to perpetuate the fraud scheme, including Southeast Capital Advisors, LLC. Through this entity, Seaborne marketed a “no money down” residential purchase program that operated by making loans to Seaborne‘s clients, so that those clients could make down payments in connection with their purchases of residential properties.
Thereafter, Seaborne and his co-conspirators prepared and submitted mortgage loan applications to lenders for these same clients. The applications were fraudulent in that they omitted the fact that the clients’ down payments had been loaned to them. Further, the applications usually overstated the clients’ assets and understated their liabilities. Some loan applications also included the fraudulent misrepresentation that the clients intended to make the properties their primary residences, when in fact they were investment properties. Over the course of the fraud scheme, some of the loans on the residential properties went into default. Although the total loss amount has not yet been definitively determined, the losses incurred by the lenders amount to approximately $4 million.
This case was investigated by the Federal Bureau of Investigation. It is being prosecuted by Assistant United States Attorneys Rachelle DesVaux Bedke and Joseph W. Swanson.
Raquel DeJesus Martinez, Miami-Dade County, Arizona, who previously worked as a title agent, was sentenced by U.S. District Judge Donald M. Middlebrooks to 24 months in prison, to be followed by 3 years of supervised release, in connection with a scheme to commit mortgage fraud at The Jade apartment complex, Brickell Bay Drive, Miami, Florida. In addition, she was ordered to pay restitution in the amount of $4,936,714.32. DeJesus Martinez is the eighth defendant to be sentenced in connection with the scheme.
According to statements in open court and court documents, the defendants engaged in a multi-million dollar mortgage fraud scheme using straw buyers to purchase residential properties at The Jade. As part of the scheme, the defendants submitted mortgage loan applications and supporting documents containing false information to lending institutions. The lending institutions relied on these documents to make mortgage loans to the straw buyers to purchase the residential properties.
The defendants then prepared and submitted to the lenders, false HUD-1 statements. The defendants created a second version of the HUD-1 statements, listing the actual sales prices, which were provided to the seller. To conceal and perpetuate the fraud, the defendants made some payments to the condominium association and made some mortgage payments to the lenders to prevent foreclosure and continue to receive rental income for the units. The defendants thereafter diverted the mortgage fraud proceeds into shell companies for their personal use.
Previously, defendants Lilia Casal-Diaz, a real estate attorney, Andres Mendez, Sr. and his son, Andy Mendez, both real estate brokers, Josephine Santana, a mortgage broker, Jose Arnaldo Rosario, Jose Rafael Martinez, and Basilio Gomez, all of Miami-Dade County, Florida, were convicted for their roles in the mortgage fraud scheme.
Wifredo A. Ferrer, United States Attorney for the Southern District of Florida, José A. Gonzalez, Special Agent in Charge, Internal Revenue Service, Criminal Investigation Division (IRS-CID), and Paula Reid, Special Agent in Charge, United States Secret Service, Miami Field Office, announced the sentence.
Mr. Ferrer commended the investigative efforts of IRS-CID and the U.S. Secret Service. This case is being prosecuted by Assistant U.S. Attorney Jerrob Duffy.
Deborah L. Kistner, 50, and her husband, Mark A. Kistner, 52, both of Hilliard, Ohio, pleaded guilty three days after their trial started on a $7 million mortgage fraud scheme they carried out between June 2006 and July 2010.
Deborah Kistner pleaded guilty to three counts of conspiracy to commit bank fraud, three counts of conspiracy to commit money laundering, and one count of bank fraud. Mark Kistner pleaded guilty to one count of conspiracy to commit money laundering.
Deborah Kistner operated Premiere Title Company, Hilliard, Ohio. She deceived lenders in connection with the purchases of real estate in Ohio and Florida. Evidence presented during the first three days of the trial showed that she conspired with others to secure inflated loans for real estate and kept the excess proceeds or used them to pay others involved in the conspiracy. Deborah Kistner intentionally failed to provide lenders with critical purchase contract language and accurate settlement statements.
Deborah and Mark Kistner also schemed to defraud lenders and launder the money they received through simultaneous short sale closings where the lenders would agree to absorb losses on existing mortgage loans while Deborah Kistner actually sold those properties on the same day for a profit and laundered the profits through bank accounts controlled by Mark Kistner. The government was prepared to show that they secured as much as $7 million in fraudulent loans through their schemes.
Deborah Kistner faces a maximum penalty of up to 30 years in prison and a fine of $1 million on each of the three counts of conspiracy to commit bank fraud, and the one count of bank fraud; and up to ten years in prison and a fine of $250,000 on the three counts of conspiracy to commit money laundering. Mark Kistner faces a maximum penalty of up to ten years in prison and a fine of $250,000 on the one count of conspiracy to commit money laundering. Lenders suffered losses of at least $3.3 million. The plea agreements they signed include forfeiture of investment accounts and restitution to victims.
They were released on bond pending sentencing. Judge Frost will schedule a date for sentencing.
Carter M. Stewart, United States Attorney for the Southern District of Ohio; Darryl Williams, Special Agent in Charge, Internal Revenue Service Criminal Investigation (IRS), Edward J. Hanko, Special Agent in Charge, Federal Bureau of Investigation (FBI) and other agencies participating in the mortgage fraud task force announced the guilty pleas entered before U.S. District Judge Gregory L. Frost.
Stewart commended the cooperative investigation of this case by IRS and FBI agents, and Assistant U.S. Attorney’s Laura Fulton and Dan Brown, who are prosecuting the case.
Anthony Haynes, 53, Seffner, Florida pleaded guilty to two counts of wire fraud affecting a financial institution. He faces a maximum penalty of 30 years in federal prison on each count.
As part of the plea agreement, Haynes has agreed to a money judgment of at least $990,498.00, representing the proceeds of his conduct, As previously reported by Mortgage Fraud Blog, Haynes was indicted on September 21, 2012. A sentencing date has not yet been set.
According to the plea agreement, Haynes, who was employed as the real estate services director for Hillsborough County, Florida, Board of County Commissioners, made material misrepresentations in connection with loan applications and closing documents for two personal mortgages. The mortgages were for his purchase of nine land lots located in Tennessee. The mortgages were funded by interstate wires from a federally insured bank, and the closing was conducted by mail.
United States Attorney Robert E. O’Neill announced the guilty plea.
This case was investigated by Federal Bureau of Investigation. It is being prosecuted by Assistant United States Attorney Kelley C. Howard-Allen.
Five people have been arrested by Federal authorities for their alleged involvement in a builder bailout real estate scheme that fraudulently purchased more than 100 condominium units around the country with mortgages that mostly went into default, resulting in foreclosures and millions of dollars in losses.
The five arrested include:
Aref Abaji, 31, Aliso Viejo, California, a real estate agent;
Maher Obagi, 26, Huntington Beach, California, the brother of Aref Abaji;
Jacqueline Burchell, 52, Orange, California, an escrow agent;
Mohamed Salah, 37, Mission Viejo, California; and
Mohamed El Tahir, 35, Glen Burnie, Maryland.
A sixth defendant named in the indictment—mortgage loan officer Wajieh Tbakhi, 48, Corona, California—is being sought by federal authorities.
The scheme, which was operated out of Excel Investments and related companies that were based in Irvine and then Santa Ana, California, allegedly identified new condominium developments in which the builder-owners were struggling to sell units and arranged with the builders to sell the units in return for large commissions. The builders benefitted by making it appear that their condos were selling and maintaining their value, while those involved with the fraudulent sale of the units financially benefitted from the hefty commissions that were concealed from the mortgage lenders. The defendants recruited a number of straw buyers to purchase the properties as investors and ensured that they qualified for financing by fabricating important aspects of their loan applications.
According to an indictment returned last Friday by a federal grand jury in Los Angeles, the defendants involved in the scheme negotiated with the builders of new housing developments in California, Florida, and Arizona to sell condominium units on behalf of builders in exchange for a hefty commission, which they often misleadingly referred to as marketing fees and did not disclose to the lenders. In each of the transactions—the indictment alleges there were more than 100 of them—the defendants earned commissions of $50,000 to $100,000 and sometimes more. The defendants bought units for themselves, their relatives, and on behalf of investors with good credit scores who served as straw buyers. They allegedly recruited the straw buyers by presenting the scheme as an investment opportunity that required no down payment and would generate income through rental payments.
To obtain mortgages for the properties, the defendants allegedly prepared loan applications with false information about the buyers’ employment, income, and assets. They allegedly submitted fabricated and altered W-2 forms, paystubs, and bank statements in support of those applications. According to the indictment, they concealed the huge commissions from mortgage lenders by submitting false Settlement Statements—or Form HUD-1s—that omitted these large payments.
When many of the loans defaulted and led to foreclosure, the lending institutions suffered losses of at least $6.2 million. The Federal Home Loan Mortgage Corporation and the Federal National Mortgage Association purchased dozens of these loans on the secondary mortgage market and suffered losses of at least $2.37 million as a result of delinquencies, defaults, and foreclosures on the properties.
The six defendants named in the indictment are all charged with conspiring to commit bank fraud and wire fraud. Abaji, Obagi, Tbakhi, and Burchell are additionally charged with six counts of wire fraud.
The four defendants who were arrested in California were arraigned by United States Magistrate Judge Robert N. Block. All four pleaded not guilty, and a trial was scheduled for March 5, 2013. Obagi, Burchell, and Salah were released last night on bond, and Abaji is expected to be released.
El Tahir, who has been in custody since yesterday, is scheduled to make his initial appearance this afternoon in United States District Court in Baltimore, Maryland.
An indictment contains allegations that a defendant has committed a crime. Every defendant is presumed to be innocent until and unless proven guilty in court.
The conspiracy charge in the indictment carries a statutory maximum sentence of 30 years in federal prison and a potential $1 million fine. The wire fraud charges carry a statutory maximum sentence of 20 years in federal prison and a potential $250,000 fine.
This case is the result of an investigation by the Federal Bureau of Investigation, the Federal Housing Finance Agency’s Office of Inspector General, and IRS-Criminal Investigation.
The five defendants were arrested by special agents with the FBI, the Federal Housing Finance Agency’s Office of Inspector General, and IRS-Criminal Investigation.
Juan Carlos Sanchez, New York, N.Y., was sentenced to 15 years in prison, to be followed by 3 years of supervised release for his participation in a $39 million mortgage fraud scheme. Sanchez previously pled guilty to count one of the indictment, which charged him with conspiracy to commit mail and wire fraud.
Sanchez was originally indicted with seven other defendants, Case No. 12-60088-CR-Williams, for fraudulently obtaining mortgages for the purchase of condominium units at Marina Oaks Condominiums in Fort Lauderdale, FL. The other defendants were: Quelyory Rigal, a/k/a Kelly, Homestead, FL, Sandra P. Campo, Colombia, Osbelia Lazardi, Southwest Ranches, FL, Dayanara Montero, Miramar, FL, Edward R. Mena, Miami, FL, Celeste Mota, Fort Myers, FL, and David Arboleda, Doral, FL.
Defendant Campo pled guilty on January 3, 2013, to count one of the indictment, which charged her with conspiracy to commit mail and wire fraud. Sentencing is scheduled for March 13, 2013, at 10:00 am before U.S. District Judge William J. Zloch.
Defendant Mena pled guilty in October 2012, and sentencing is scheduled for January 11, 2013, at 10:00 am before U.S. District Judge William J. Zloch.
Defendants Mota and Arboleda pled guilty in September 2012. Defendant Mota was sentenced on November 28, 2012 to 5 years of probation. Defendant Arboleda was sentenced on December 12, 2012 to 30 months in prison, to be followed by 3 years of supervised release.
According to the indictment and statements made in court, from January 2007 through November 2008, the defendants conspired to recruit individuals who would be willing to purchase condominium units at Marina Oaks Condominiums. These buyers were promised a “buyers’ incentive,” which payment was not disclosed to the lenders or reflected on any of the closing documents. The conspirators would then prepare materially false mortgage applications for the buyers on HUD Uniform Loan Application Form 1003. These forms contained false information regarding the borrowers’ credit worthiness in order to qualify the borrowers for mortgages to purchase the Marina Oaks Condominiums. The conspirators would also create false documents to support the mortgage applications. Once the loans closed, the conspirators would divert portions of the mortgage proceeds for their personal use and benefit. In this way, the conspirators obtained approximately $39 million in fraudulent mortgage loans.
Wifredo A. Ferrer, United States Attorney for the Southern District of Florida, Steve Linick, Inspector General, Federal Housing Finance Agency, Office of Inspector General, Jose A. Gonzalez, Special Agent in Charge, Internal Revenue Service, Criminal Investigation (IRS-CI), and Al Lamberti, Sheriff, Broward Sheriff’s Office, announced the sentencing.
Mr. Ferrer commended the investigative efforts of the Federal Housing Finance Agency Office of the Inspector General, IRS-CI and the Broward Sheriff’s Office. The case is being prosecuted by Assistant U.S. Attorney Thomas P. Lanigan.
