“They did everything imaginable in the realm of fraud.” The legal drama in Miami-Dade circuit court offers a rare snapshot of one of the most egregious scams carried out on a single home in South Florida during the mortgage fraud crisis in a case that …A fugitive couple and South Florida’s Russia-linked mortgage fraud machine MiamiHerald.com (blog)all 4 news articles »
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Source: Orlando Sentinel
H. Gregory Cordell, 46, Cartersville, Georgia, was sentenced by United States District Judge Charles A. Pannell, Jr. to federal prison for bank fraud related to a mortgage he obtained on property located in Cartersville, Georgia.
Cordell was sentenced to 2 years, 3 months in prison to be followed by 5 years of supervised release, and was ordered to pay $1,005,804.20 in restitution. Cordell was convicted of these charges on November 30, 2011, after pleading guilty to bank fraud.
According to the charges and other information presented in court: In March 2003, Cordell, a real estate agent and real estate developer, bought a house and six acres of land at 179 Old Mill Road, Cartersville, Georgia, for $1.25 million. Although the seller had listed the property for approximately $950,000, Cordell and the seller agreed to inflate the sales price by $307,000, obtain an inflated mortgage from Washington Mutual, and then pay the extra $307,000 to Cordell after closing. This kickback arrangement was not disclosed to the bank. In his loan application, Cordell also overstated his annual income, claimed that he owned several properties that he no longer owned, and understated his financial liabilities.
Cordell refinanced the property in August 2004. He obtained a mortgage from Washington Mutual for $1 million and drew out $62,500 in equity. His mortgage application contained the same false claims about income and assets as his original application.
On the evening of September 1, 2004, the house was destroyed by arson as Cordell and his family were driving to Florida for a vacation. Because of the timing of the fire, he never made a payment on the new mortgage. Cordell‘s property insurer paid off the mortgage to avoid the accrual of interest while it investigated the arson. With the mortgage lien lifted, Cordell sold the property in October 2005 for $900,000 and spent the proceeds without paying any to the insurer. Including the kickback, refinance, and sale amounts, Cordell thus pocketed about $1.26 million from the Old Mill property. Cordell‘s purchases during this time period included a private airplane, a Porsche, two Suburbans, two Mercedes Benz SUVs, and other vehicles.
In an earlier civil case tried in federal court in Rome, Georgia, the property insurer obtained a judgment against Cordell for over $1 million for the amount it paid to Washington Mutual to satisfy the mortgage. In August 2008, Cordell was indicted on state arson, insurance fraud, and loan fraud charges. That case remains pending in Bartow County Superior Court.
This case was investigated by Special Agents of the Federal Bureau of Investigation.
Assistant United States Attorneys William G. Traynor and Stephen H. McClain prosecuted the case.
United States Attorney Sally Quillian Yates said of the case, “Mortgage fraud involving fraudulently inflated sales prices contributed to the housing bubble that, when it burst, caused so much damage to the economy in Georgia and across our nation. This defendant not only lied on mortgage applications to get over $1 million in loans, he fraudulently inflated the purchase price to get a bigger mortgage and then was paid a kickback under the table from the proceeds. He will now spend over two years in federal prison.”
Brian D. Lamkin, Special Agent in Charge, FBI Atlanta Field Office, stated: “The defendant, through his fraudulent actions and, later, his extravagant purchases of airplanes and luxury vehicles, exhibited a selfish greed that he will now have to answer for. The FBI will continue its efforts to ensure that individuals such as Mr. Cordell, who engage in bank fraud schemes of this type, are identified, investigated, and brought forward for prosecution.”
Roberto Caro, 41, Miami-Dade, Florida, has pled guilty to one count of money laundering in connection with a mortgage fraud scheme and one count of conspiracy to manufacture and possess with intent to distribute marijuana. Caro also pled guilty to a related charge of bond jumping, arising from his failure to appear in court in January 2011 on the original charges.
Sentencing has been scheduled for April 17, 2012, at 1:30 p.m. before U.S. District Judge Jose E. Martinez. Caro faces maximum possible prison sentences of up to 40 years for the drug conspiracy, 10 years for the money laundering, and a consecutive sentence of up to 10 years for the bond violation.
Defendant Caro was first charged on July 15, 2010. According to court documents and testimony, this investigation began in May 2006 when law enforcement discovered marijuana grow house operations in numerous homes in Port St. Lucie, Florida. During the investigation, many of those homes were linked to co-defendant Manuel Caro, father of Roberto Caro. Manuel Caro was charged in 2006 for his participation in the marijuana grow house operation, but fled after being released on bond and remains a fugitive.
Continued investigation led to the discovery of additional marijuana grow houses in St. Lucie, Palm Beach, and Miami-Dade Counties, Florida. According to a second superseding indictment, most of these homes were bought with funds obtained through mortgage fraud committed by co-defendant Hugo Oliva, a mortgage broker, through his company, MBA Mortgage Services, Inc., and his co-defendants, including Roberto Caro. To execute the scheme, the defendants submitted loan applications to mortgage lenders that contained false information, including false bank statements, W2 forms, pay stubs, verifications of deposit and verifications of employment.
The defendants in the mortgage fraud scheme were charged with various counts of conspiracy, mail fraud, drug charges, and laundering drug-related money through the purchase of the homes. On December 13, 2010, defendant Sergio Caro, 37, was sentenced to 37 months in prison and the Court ordered him to pay $671,166.36 in restitution to victim mortgage lenders. On March 29, 2011, mortgage broker and co-defendant Hugo Oliva was sentenced to 87 months in prison and ordered to pay $886,418.97 in restitution. Two additional co-defendants, Ilan Reyes, 37, and Orlando Dominguez, 44, both of Miami, Florida, pled guilty and were each sentenced to probation for a term of 5 years.
Defendant Roberto Caro had been arraigned and released on bond for the original mortgage fraud and money laundering charges in September 2010. In January 2011, Caro failed to appear for a scheduled court hearing and thereby violated conditions of his bond. He remained a fugitive from justice until he was found and detained in Miami in October 2011. In the interim, the federal grand jury had separately indicted Caro for the additional crime of violating his bond conditions.
Wifredo A. Ferrer, United States Attorney for the Southern District of Florida, Jose A. Gonzalez, Special Agent in Charge, Internal Revenue Service, Criminal Investigation Division (IRS-CID), and Mark R. Trouville, Special Agent in Charge, Drug Enforcement Administration (DEA), Miami Field Division, announce the guilty plea.
Mr. Ferrer commended the investigative efforts of the IRS Criminal Investigation Division and the DEA. Mr. Ferrer also thanked the Port St. Lucie Police Department, the St. Lucie County Sheriff s Office, and the U.S. Marshals Service for their work on this investigation. The case arose from the Organized Crime and Drug Enforcement Task Force (OCDETF) long-term investigation. The case is being prosecuted by Assistant U.S. Attorney Theodore Cooperstein.
Henry J. Papale, 60, Southington, Connecticut, was indicted by a federal grand jury sitting in New Haven, Connecticut, on eight counts of wire fraud and four counts of money laundering stemming from an alleged mortgage fraud scheme involving four properties in Florida.
The superseding indictment alleges that, in 2007, Papale persuaded two individuals to use their names and credit information to purchase four homes in Florida, purportedly as legitimate investments. Papale also obtained mortgage financing using the names and credit information of the two individuals. The following properties were involved in the scheme:
537 Gleneagles Circle, Davenport, Florida; 702 Calabria Avenue, Davenport, Florida; 7783 Basnett Circle, Kissimmee, Florida; and 478 Belfry Circle, Daveport, Florida.
The indictment further alleges that Papale submitted to the Florida settlement agent fraudulent invoices and work authorizations, which purported to be from a construction company for restoration on the properties, along with wire transfer instructions. In fact, the construction company was fictitious and no work was performed on the properties.
Following the closing on each property, the settlement agent, at Papale‘s direction, transferred loan proceeds corresponding to the fictitious construction company’s price for restoration work, in the total amount of $360,307.23, to the Connecticut bank account of an individual known to Papale. That individual then turned the majority of the fraudulently obtained loan proceeds over to Papale, who deposited them into his own bank account. Papale then transferred $255,500 in funds from his bank account to an investment trading account.
It is alleged that Papale did not make the mortgage payments due on the Florida properties, resulting in delinquencies on the properties’ mortgages.
If convicted, Papale faces a maximum term of imprisonment of 20 years on each count of wire fraud, and a maximum term of imprisonment of 10 years on each count of money laundering.
The superseding indictment was returned on January 30, 2012. As previously reported by Mortgage Fraud Blog, Papale was originally charged with two counts of wire fraud in an indictment that was returned on September 29, 2011.
The case is assigned to Senior United States District Judge Ellen Bree Burns in New Haven.
David B. Fein, United States Attorney for the District of Connecticut, announced the Indictment.
U.S. Attorney Fein stressed that an indictment is not evidence of guilt. Charges are only allegations, and each defendant is presumed innocent unless and until proven guilty beyond a reasonable doubt.
This case is being investigated by the Federal Bureau of Investigation and is being prosecuted by Special Assistant United States Attorney Jonathan N. Francis and Assistant United States Attorney Michael S. McGarry.
Citizens are encouraged to report any suspected mortgage fraud activity by calling 203-333-3512 and requesting the Connecticut Mortgage Fraud Task Force, or by sending an e-mail to ctmortgagefraud@ic.fbi.gov.
The Connecticut Mortgage Fraud Task Force includes representatives from the U.S. Attorney’s Office; Federal Bureau of Investigation; Internal Revenue Service-Criminal Investigation; U.S. Postal Inspection Service; U.S. Department of Housing and Urban Development, Office of Inspector General; Federal Deposit Insurance Corporation, Office of Inspector General, and State of Connecticut Department of Banking.
This case was brought in coordination with the President’s Financial Fraud Enforcement Task Force, which was established to wage an aggressive and coordinated effort to investigate and prosecute financial crimes. The task force includes representatives from a broad range of federal agencies, regulatory authorities, inspectors general, and state and local law enforcement who, working together, bring to bear a powerful array of criminal and civil enforcement resources. The task force is working to improve efforts across the federal executive branch, and with state and local partners, to investigate and prosecute significant financial crimes, ensure just and effective punishment for those who perpetrate financial crimes, combat discrimination in the lending and financial markets, and recover proceeds for victims of financial crimes.
PAPALE also obtained mortgage financing using the names and credit information of the two individuals. The indictment further alleges that PAPALE submitted to the Florida settlement agent fraudulent invoices and work authorizations, which purported to …Southington Man Indicted in Federal Mortgage Fraud Case Patch.comall 5 news articles »
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Source: LoanSafe
Jerry J. Williams, 51, formerly of Naples, Florida, and currently residing in Fort Worth, Texas, pleaded guilty to conspiracy to commit bank fraud and making false statements to federal regulators. Williams faces a maximum penalty of 15 years in federal prison. A sentencing date has not yet been set.
According to the plea agreement, Williams, the former President of Orion Bank, participated in a conspiracy with top Orion Bank executives, Thomas Hebble (former Executive Vice President), Angel Guerzon (former Senior Vice President), and former Orion Bank borrower, Francesco Mileto, to mislead state and federal regulators that Orion Bank was in a better capital position than it was in truth and fact.
The conspiracy had two objectives: 1) to finance the sale of promissory notes secured by mortgages held by Orion Bank on distressed properties, thereby creating the illusion that non-performing loans were performing loans, and 2) to conceal the financing for the sale of Orion Bancorp, Inc. stock to Mileto, thus creating the illusion of a legitimate capital infusion into the bank. The conspirators accomplished these objectives by falsifying the books and records of Orion Bank and deceiving state and federal regulators over a period of seven months, from May 2009 until November 13, 2009.
As part of the scheme to defraud, Williams directed Hebble and Guerzon to increase loans-in-process to nominee entities associated with Mileto, to $82 million, including a $26.5 million line of credit. Within the lines of credit, Williams concealed $15 million of financing for Mileto‘s purchase of Orion Bancorp, Inc. stock, despite knowing that banking laws and regulations prohibited the bank from financing the purchase of its, or its affiliates’, own stock. The loans closed on June 29, 2009, the end of the banking quarter.
In order to ensure capital infusion to the bank, Williams directed Hebble and Guerzon to close the loans after discovering that Mileto had submitted fraudulent financial documentation to Orion Bank, in support of the current loans, and in support of $41 million of previously acquired loans.
According to the plea agreement, Williams made false statements to the Federal Reserve about the true source of the capital infusion. Based upon these transactions and other actions by the bank, the Federal Reserve Board issued a Cease and Desist Order to Orion Bank on September 18, 2009. The Florida Office of Financial Regulation closed Orion Bank on November 13, 2009, and appointed the Federal Deposit Insurance Corporation (“FDIC”) as the receiver.
The Office of the Special Inspector General for the Troubled Asset Relief Program (SIGTARP) investigates fraud, waste, and abuse in connection with the Troubled Asset Relief Program (TARP). “Williams is another senior bank executive being held criminally responsible for his actions in a fraud that contributed to the financial crisis,” said Christy Romero, Deputy Special Inspector General for the Troubled Asset Relief Program. “As the President, CEO, and Chairman of Orion Bank, Williams fraudulently conspired to have the bank survive the economic downturn by creating the illusion that non-performing loans were performing. Thousands of banks faced losses during the financial crisis without turning to fraud. Anyone looking for a bailout from TARP who engaged in criminal fraud will be brought to justice by SIGTARP and its partners in law enforcement.”
On October 25, 2011, United States District Judge Charlene E. Honeywell sentenced Thomas Hebble to 2 1/2 years in prison, Angel Guerzon to 2 years in prison, and Francesco Mileto to 5 1/2 years in prison for their participation in the conspiracy. Hebble and Guerzon were ordered to pay $33,512,618.00 in restitution to the FDIC. The court ordered Mileto to pay restitution to the FDIC in the amount of $65,214,491.00.
U.S. Attorney Robert E. O’Neill announced the guilty plea.
This case was investigated by the Federal Bureau of Investigation, Federal Deposit Insurance Corporation – Office of Inspector General, Federal Reserve Board – Office of Inspector General, Internal Revenue Service Criminal Investigation, and Special Inspector General for the Troubled Asset Relief Program. It is being prosecuted by Assistant United States Attorney Nicole H. Waid.
Marlon Baugh, 32, Pembroke Pines, Florida, was sentenced on Friday, January 27, 2012, by U.S. District Judge James Cohn to one year and one day in prison for mail fraud in connection with his participation in a mortgage fraud scheme. The defendant previously had pled guilty to one count of mail fraud, in violation of Title 18, United States Code, Section 1341.
According to information presented in court, defendant Baugh was a mortgage broker licensed by the State of Florida’s Office of Financial Regulation. Baugh was a partner at National Foreclosure Center, which was in the business of completing loan modifications for homes that were in foreclosure or about to go into foreclosure. Baugh and others engaged in a scheme to enrich themselves by fraudulently causing real estate to be bought and sold through straw buyers.
Baugh and others falsified the Uniform Residential Loan Applications that were submitted on behalf of the straw buyers in order to fraudulently qualify the straw buyers for mortgages. Baugh also submitted false employment verification letters to support the false information on the loan application.
Wifredo A. Ferrer, United States Attorney for the Southern District of Florida, John V. Gillies, Special Agent in Charge, Federal Bureau of Investigation (FBI), Miami Field Office, and Tom Grady, Commissioner, State of Florida’s Office of Financial Regulation, announced the sentencing of defendant.
Mr. Ferrer commended the investigative efforts of the FBI and Florida’s Office of Financial Regulation. This case is being prosecuted by Assistant U.S. Attorney Laurence Bardfeld.
Louis Gendason, 42, Delray Beach, Florida, A loan officer, was sentenced by U.S. District Court Judge William P. Dimitrouleas in Ft. Lauderdale, Florida, for his participation in a nationwide $2.5 million reverse mortgage fraud scheme.
Gendason was sentenced to 70 months in prison, five years of supervised release and ordered to pay over $2 million in restitution. Gendason was the mastermind of this complicated reverse mortgage fraud scheme, which was designed to lure financially distressed elderly homeowners into applying for reverse mortgage loans, to create fictitious equity in their homes with fraudulent appraisals, and ultimately to steal that false equity from the seniors and their lenders.
Gendason cultivated relationships with each of his co-conspirators and they executed their respective roles in the scheme at his behest. As previously reported by Mortgage Fraud Blog, Kimberly Mackey, 47, and Marcos Echevarria, 29, Palm Beach, Florida, received prison sentences of 60 and 24 months, respectively, on Nov. 3, 2011. A third co-defendant, John Incandela, 25, Palm Beach, was sentenced to 41 months in prison on Dec. 16, 2011. Gendason was the final defendant in the scheme to be sentenced.
A reverse mortgage, also known as a Home Equity Conversion Mortgage, allows borrowers who are at least 62 years of age to convert the equity in their homes into a monthly stream of income or a line of credit. Unlike the traditional mortgage loan scenario, in which borrowers make monthly payments to a mortgage lender in satisfaction of their outstanding loan, in a reverse mortgage loan scenario, the mortgage lender purchases borrowers’ equity and makes installment payments to the borrower.
According to the information and statements made during the August 2011 hearing in the case, from May 2009 through November 2010, the defendants engaged in a reverse mortgage scheme that defrauded unwitting borrowers, Genworth Financial Home Equity Access Inc., and the Federal Housing Administration (FHA).
As the scheme’s ring-leader, Gendason, along with loan officers Incandela and Echevarria, solicited seniors to refinance their existing mortgages with a reverse mortgage loan financed by Genworth. To qualify the borrowers for these loans, Gendason altered real estate appraisals to fraudulently inflate the value of the borrowers’ properties. In fact, however, none of the borrowers had sufficient equity in their properties to qualify for a reverse mortgage. The defendants then submitted the fraudulently inflated appraisals to Genworth. Based on the false documentation, Genworth approved and the FHA insured more than $2.5 million in reverse mortgage loans.
As part of the scheme, Mackey, a licensed title agent, fraudulently closed the Genworth loans and did not pay off the borrowers’ existing mortgage loans. Mackey attempted to conceal the fraudulent loan closings by preparing false settlement documents that showed that the existing mortgages had, in fact, been paid off. The defendants divided up the loan proceeds and each used the money for his or her personal benefit, including for such things as gym memberships, vacations, and casino gambling.
The defendants further engaged in a loan modification scheme to conceal the existence of the Genworth reverse mortgage transactions from the original mortgage lenders, whose loans remained unpaid. To this end, Gendason, Incandela and Mackey conspired to create fictitious offers to buy some of the borrowers’ properties in the form of “short sales.” A short sale is a sale of real estate in which the sale proceeds are less than the balance owed on the loan to the mortgage lender, but avoids foreclosure and related costs.
In other instances, to hide the existence of the Genworth reverse mortgage loan from the original lenders, the defendants made monthly mortgage payments to the borrowers’ original lenders. Many of the elderly homeowners that trusted the defendants anguished for years over whether they might lose their homes after learning that the defendants had stolen their reverse mortgage loan proceeds.
The Department of Justice announced the sentence.
“This reverse mortgage loan modification scheme robbed elderly homeowners of more than just their homes,”said Wifredo A. Ferrer, U.S. Attorney for the Southern District of Florida. “It also robbed them of the American dream of home ownership, their peace of mind, and in some cases, their life’s savings. Through these prosecutions, these fraudsters have been brought to justice.”
“The stiff sentence the court imposed on the leader of this reverse mortgage fraud scheme sounds a cautionary note to those who prey upon elderly, distressed homeowners,” said Tony West, Assistant Attorney General for the Civil Division of the Department of Justice. “We will not waver in our commitment to investigate, prosecute, and hold accountable those who try to victimize our nation’s most vulnerable consumers.”
The case was investigated by agents from the U.S. Department of Housing and Urban Development Office of Inspector General, the Internal Revenue Service’s-Criminal Investigation, the U.S. Postal Inspection Service, the FBI and Florida’s Office of Financial Regulation, with assistance from the U.S. Secret Service and Genworth Financial Home Equity Access. The case was prosecuted by Kevin J. Larsen, a Trial Attorney in the Justice Department’s Consumer Protection Branch, and Assistant U.S. Attorneys Jeffrey H. Kay and Thomas Lanigan of the Southern District of Florida.
Anthony Cutaia, who pleaded guilty to mail and wire fraud by misleading investors and misappropriating funds, was sentenced in United States District Court, Southern District of Florida, to 51 months in prison for a real estate investment scheme. He is not licensed by the Florida Office of Financial Regulation (OFR).
An Italian immigrant and one of 10 children, Filomena Marullo moved to the United States at 20 years old. She has 4 children of her own, 10 grandchildren, and 1 great-grandchild. She wants to share her story so others won’t fall victim to financial fraud. Filomena is one of 35 Florida investors who collectively contributed nearly $6 million to Cutaia.
In March 2003, Cutaia began soliciting investor funds through his firm CMG Property Investment Group, LLC, claiming the money would be used as down payments on commercial real estate transactions. The investors were told they would participate in any profits and also be paid interest on their investment. The investigation alleged that Cutaia only used minimal investor funds to further the real estate transactions.
Most of the money was used to make Ponzi-type payments to investors, pay personal expenses, conduct seminars and air television and radio programs. Many investors learned about Cutaia and his real estate investments through these seminars and programs.
OFR jointly investigated the case with the Federal Bureau of Investigation, and the case was prosecuted by the United States Attorney’s Office in West Palm Beach, Florida.
“I cannot tell you the pain I have been going through,” said 81-year-old Boca Raton resident Filomena Marullo. “That was money for my golden years.”
Filomena said she was forced to take several different jobs in addition to caring for her husband and coping with the pain of betrayal. She advises Florida consumers to shop around before doing business with anyone. “I learned not to trust anybody, even if they come from the church.”
“My heart goes out to all the victims impacted by Cutaia and their families,” said OFR Commissioner Tom Grady. “Investment fraud is a serious threat to consumers, particularly when fraudsters prey on those who know and trust them. OFR is committed to building trust by protecting consumers, investigating and assisting in the prosecution of these criminals and by enforcing Florida law.”
Filomena and Anthony, her husband of 56 years, said they lost $200,000 from the sale of their home to Cutaia, whom they viewed as a good friend from church. None of their money was recovered. “I gave him everything I had, and he promised me a better return. I put him in trust of my savings,” said Marullo.
Andrew F. Vulpis, 30, Gibsonton, Florida, was sentenced by U.S. District Judge Steven D. Merryday to 30 months in federal prison for conspiracy to commit bank fraud. As part of his sentence, the court also entered a money judgment in the amount of $1,245,145.26, the proceeds of the charged criminal conduct. Vulpis forfeited a 2007 Volvo S40-5 sedan as a substitute asset in partial satisfaction of the money judgment.
Vulpis pleaded guilty on November 4, 2011.
According to court documents, from May 2007 through December 2007, Vulpis, who was then employed as a loan officer of Wachovia Bank, Tampa, Florida, played a role in 12 residential real estate transactions in Hillsborough and Pasco Counties, Florida. All of the transactions involved fraud.
With respect to 11 of the real estate transactions, Vulpis, in his capacity as an officer of Wachovia Bank, caused the submission of false and fraudulent loan applications to Wachovia Bank. Specifically, Vulpis knew that the income of the applicants stated on all 11 loan applications was materially inflated. As to 10 of these real estate transactions, he knew that the applicants failed to qualify for the particular Wachovia Bank loan program.
In four instances, Vulpis caused the disbursement of loan proceeds to his co-conspirator, who was the seller of the subject properties.
In one of the real estate transactions, which took place on December 28, 2007, Vulpis purchased a residential property owned by a co-conspirator – residence located at 7326 Sheffield Road, Tampa, Florida 33615. The sales price was $200,000, and Vulpis applied for a $180,000 mortgage loan from the Bank of America.
In the loan application, Vulpis falsely inflated his income and assets, as well as the amount of money that he would contribute toward the down payment. A co-conspirator provided Vulpis with the money for the down payment, but neither Vulpis nor the co-conspirator disclosed to the Bank of America, a FDIC-insured institution, the fact that the co-conspirator was the source of the down payment.
Co-conspirator Sang Min Kim pleaded guilty on June 15, 2010 and was sentenced to 41 months imprisonment. Another co-conspirator, Francisco Acevedo, Jr., pleaded guilty for his role on September 9, 2011, and is awaiting sentencing.
U.S. Attorney Robert E. O’Neill announced the sentence.
This case was investigated by the Federal Bureau of Investigation. It was prosecuted by Assistant United States Attorney Rachelle DesVaux Bedke.
