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Mother & Son Convicted in Mortgage Fraud Scam

admin —  April 29, 2010 — 12 Comments

John Pereless, 42, Colts Neck, New Jersey, has been convicted of one count of second degree Conspiracy to Commit Theft by Deception, eight counts of second degree Theft by Deception, eight counts of fourth degree Securing Execution of Documents by Deception and eight counts of fourth degree Falsifying Records. The jury also returned a guilty verdict against John Pereless’ mother, Susan Pereless, on one count of second degree Conspiracy to Commit Theft by Deception, seven counts of Theft by Deception, seven counts of fourth degree Securing Execution of Documents by Deception and seven counts of fourth degree Falsifying Records.

An investigation which was conducted by the Monmouth County Prosecutor’s Office revealed that the Perelesses participated in a conspiracy to file fraudulent mortgage applications in connection with eight different properties. Seven of the properties are in Monmouth County, New Jersey, and one is in Florida. All of the properties are now in foreclosure.

In addition to filing fraudulent applications which greatly exaggerated the financial position of the applicants, the values of the properties were inflated, fraudulent construction liens were financed and excessive fees were charged. Funds from the closings were funneled into various shell corporations.

All of the mortgages were processed through a Colts Neck, New Jersey based mortgage broker, Rate Cast. Rate Cast is no longer in business. Seven separate financial institutions were defrauded of over $4.8 million through this scheme. They include: ACT Lending, LoanCity Inc., Green Point Mortgage, Option One Mortgage, Countrywide Home Loan, INDY Mac and New Century Mortgage.

Monmouth County Prosecutor Luis A. Valentin stated, “The Perlesses fraudulently manipulated the lending practices of the sub-prime mortgage industry in the hopes of turning a quick illegal profit. However, their efforts were thwarted when their complex illicit scheme was discovered.”

The maximum potential custodial sentence for a second degree crime is a 10 year State Prison term. The maximum potential custodial sentence for a fourth degree crime is an 18 month term.

The Perelesses remain free on bail, secured by real property, pending sentencing which is scheduled for July 15, 2010. Bail was originally set at $750,000 for John Pereless and at $500,000 for Susan Pereless by Monmouth County Superior Court Judge Edward M. Neafsey. A condition of bail for each was that they surrender their passports to the Court. That condition was met previously.

The case is assigned to Assistant Monmouth County Prosecutor Thomas F. Fichter. John Pereless is represented by Michael Pappa, Esquire, of Hazlet, New Jersey Susan Pereless is represented by Cathy Waldor, Esquire, of Manasquan, New Jersey.

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Mortgage Asset Research Institute Releases 12th Periodic Mortgage Fraud Case Report

Allison Tussey —  April 28, 2010 — 2 Comments

MARI’s 12th Periodic Mortgage Fraud Case Report – Executive Summary – reports that “fraud continues to be a pervasive issue, growing and escalating in complexity. The market is attempting to recover from devastating financial losses and reputational harm due to the lack of controls, and denial and greed that enabled a fallacy of flourishing profits during the mortgage industry boom years. In 2009, we saw the beginning of a laser-focused effort to realign this industry back to the basics of sensible and accountable business practices. The findings throughout this report qualify the need for greater visibility into industry processes, professionals and consumers. Incidents reported by subscribers to LexisNexis® Mortgage Asset Research Institute reflect verified experiences of unscrupulous activities perpetrated by industry professionals who may or may not have involved complicit consumers. The bad news is that because of its adaptability, fraud can never be completely eradicated-but the good news is that, using industry-submitted information like that used to generate this report and proper due diligence standards, it can be proactively defeated.

As this report will indicate, reported mortgage fraud and misrepresentation increased 7 percent from 2008 to 2009. Though a smaller increase than in recent year-to-year comparisons, this increase over 2008’s record-setting submission volume remains a marker of strong reporting activity. The market experienced a meltdown, housing inventories are at an all-time high and it is next to impossible to obtain credit; so why is reported fraud and misrepresentation still increasing? There are various reasons for the increase, including new opportunities to take advantage of consumers, maintenance of lifestyles obtained during the boom period, consumers who are desperate for the American dream of homeownership, and the need for new, creative methods of moving illicit funds. How is fraud still being facilitated? Technology has provided fraudsters with the ability to access information, conduct criminal activities and remain anonymous via the internet, and manipulate processes that rely on the need for expediency. Although technology is an enabler of fraud perpetration, for the scammer there must be a system to beat and/or a victim to manipulate. Fraudsters are opportunistic and often prey upon the vulnerable within society. Systems and processes that can be beaten are the easiest targets and are often selected. For example, 2009 saw record foreclosures in several major metropolitan areas, a trend which led to the emergence of several different types of foreclosure rescue scams. In these scenarios, vulnerable homeowners in danger of losing their houses are being taken advantage of by fraudsters ahead of the fraud curve. They know that it will take time for the industry to catch up. This slow-moving reactive lag time is what must change.

In 2009 and beyond, the industry-at-large has been forced to succumb to constant change in what is considered acceptable business practices. Many lenders have adapted and adjusted their methods of verifying the information presented to them for varying consumer products provided by their organization; however, some have not and continue to remain seemingly unresponsive to change. Driven primarily by legislation and influential secondary market participants, technology vendors are also under tremendous pressure to maintain parity with these constant changes. The government, responding to and trying to force regulated responsiveness, is under the same-some would say greater-pressure to generate measurable results quickly. Congress introduced significant legislation and amendments to existing mandates in an effort to push the onus of responsibility down to the financial community or those closest to the consumer. This report will identify employment and income misrepresentation as high on the list of reported incidents for 2009. Recent relevant legislation includes amendments to the Truth in Lending Act (TILA)-one in particular focuses on the consumer’s ability to repay a debt when the debt is considered high priced or nonprime. Although the legislation is somewhat ambiguous, as it does not specify the type of verification and by whom the verification should be sourced, its purpose is valid. Lenders seeking a defense against falsified employment, income, and other loan file documentation should leverage third party sources with no vested interest in the financial transaction. Unfortunately (and rather unbelievably), there are some lenders who continue to rely upon stated information and borrower sourced documentation. The standard for lending due diligence must be elevated. The current distractions facing lenders with regard to loss mitigation and righting past wrongs is ripening the opportunities for and complexities of fraud in other areas. Lenders are more aware of the adverse activities that contributed to the current state of the industry. Unfortunately, fraudsters are also paying attention and evolving their practices to be more complex and difficult to detect. New frauds emerge daily-the industry must react in real time.
This is the twelfth annual report by LexisNexis® Mortgage Asset Research Institute. These annual reports examine the current composition of residential mortgage fraud and misrepresentation in the United States. (See Appendix I at the end of this report for information about the Mortgage Asset Research Institute and the methods it uses to collect data on mortgage fraud.) This year’s report will continue that trend, but will also explore the impact of mortgage fraud on the current mortgage market environment.

The highlights of this annual report include:
• With close to three times the expected amount of reported mortgage fraud and misrepresentation for its origination volume, Florida is ranked first in the country for reported mortgage fraud and misrepresentation.
• New states to enter the top ten include Arizona, New Jersey,
and Virginia.
• The most noticeable increase in reported fraud and misrepresentation type for loans originated during the 2009 year involves the appraisal.

The body of this report presents the data and reasoning behind the conclusions cited above.”

Access the MARI report here.

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Organizer in Mortgage Scheme Pleads Guilty

Allison Tussey —  April 23, 2010 — 3 Comments

Jason Vitulano, 44, Boca Raton, Florida, has pled guilty before U. S. District Judge Donald M. Middlebrooks to conspiracy to commit mail and wire fraud (Count 1) and one count of mail fraud (Count 12), in violation of Title 18, United States Code, Section 1349 and 1341, respectively. Vitulano is being held in pre-trial detention pending sentencing, which has been scheduled for July 19, 2010, at 10:30 am.

According to documents filed with the court, from January 2006 through October 2007, Vitulano conspired with others to commit mail and wire fraud by submitting false mortgage loan applications to Washington Mutual and other lenders. The superseding indictment also charged defendants Peter Hartofilis, Joseph B. Miller, Robert Hofler, and Steve Vento. Defendant Hofler has pled guilty and is currently awaiting sentencing. The case against defendants Hartofilis, Miller and Vento is pending and trial is scheduled for July 5, 2010.

According to the factual proffer filed with the court in support of the guilty plea, Vitulano was a branch manager at TopDot Mortgage, Boca Raton, Florida, where Vitulano and others, including co-branch manager Hartofilis, devised a scheme to submit fraudulent loan applications to numerous lenders. The false loan applications grossly inflated the loan applicants’ earnings and assets on deposit in a local bank. Furthermore, according to the proffer, Vitulano recruited attorney co-defendant Joseph Miller to act as closing and title agent on a number of these loan transactions. According to Vitulano‘s proffer, Miller agreed to divert loan proceeds to the personal accounts of Vitulano, Hartofilis and others without disclosing that fact to the mortgage lenders.

Defendant Robert Hofler pled guilty to the conspiracy charge on April 8, 2010. Hofler was a vice president at First Southern Bank in Boca Raton, Florida. According to documents filed in the case, Hofler used his position to falsify verification of deposit forms that were used to deceive lenders into believing that a prospective loan applicants had large balances on deposit at First Southern, which was not true. In reliance on these and other false statements in the loan applications, the lenders approved and funded more than $5 million in mortgage loans to purchase residences in Palm Beach and Broward Counties, Florida. 

At sentencing, defendants Vitulano and Hofler each face a maximum statutory term of imprisonment of up to 30 years in prison on each of the counts against them.

Jeffrey H. Sloman, United States Attorney for the Southern District of Florida, Henry Gutierrez, Inspector in Charge, U.S. Postal Inspection Service, Miami Division, Michael Fithen, Special Agent in Charge, U.S. Secret Service, J. Thomas Cardwell, Commissioner, State of Florida Office of Financial Regulation, and Chief Financial Officer Alex Sink, State of Florida Department of Financial Services, announced the guilty plea. 

U.S. Attorney Jeffrey H. Sloman commended the State of Florida Office of Financial Regulation, the U. S. Postal Inspection Service, the U. S. Secret Service, and the State of Florida Department of Financial Services for their work in the case. This case is being prosecuted by Assistant U.S. Attorneys Lauren Jorgensen and Ellen Cohen, in conjunction with the Palm Beach County Mortgage Fraud Task Force. 

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13 Mortgage Fraud Defendants Indicted for $16.9M Scheme

Allison Tussey —  April 14, 2010 — Leave a comment

Thirteen defendants have been charged in a superseding indictment in connection with a mortgage fraud scheme that resulted in approximately $16.9 million in fraudulent mortgage loans, and losses of $9.7 million to the lender, Wells Fargo Bank:

Greta Medina, 26, Coral Gables, Florida

Ricardo Estrada, 39, Miami, Florida

Dania Arguelles, 44, Miami, Florida

Fernanda Abrea, 50, Miami, Florida

Obed Hernandez, 38, Miami, Florida

Martin Mere, 42, Port St. Lucie, Florida

Nestor Collantes, 59, Miami, Florida

Alfonso Velasco, 55, Miami, Florida

Adan Vasquez, 40, Houston, Texas

Yohamel Caballero, 26, Miami, Florida

Ana Aviles, 45, Miami, Florida

Leismy Barcia, 33, Miami, Florida

Christian Gomez, 37, West New York, New Jersey

The 18 count superseding indictment was unsealed on April 8, 2010.

The properties charged in the superseding indictment include multiple units at a luxury condominium building on Brickell Bay Drive in Miami, Florida and single family homes in Coral Gables, Florida.

According to the superseding indictment, defendant Greta Medina and other co-conspirators identified eleven properties to be used to defraud Wells Fargo Bank into issuing $16.9 million in mortgage loans. The real estate broker, Margaret Roberts, who previously pled guilty, negotiated the purchases with the sellers. Medina and others paid a Wells Fargo loan officer, defendant Ricardo Estrada, to facilitate the approval of the fraudulent loan applications at Wells Fargo. Medina also paid the title agent to create fraudulent closing documents and to release the lender’s proceeds early to allow the straw purchasers to use the lender’s money to make deposits on the properties and pay their closing costs.

The conspirators recruited straw buyers to purchase the properties. The recruiters, including defendants Dania Arguelles, Fernanda Abrea, Obed Hernandez, and Martin Mere, recruited straw buyers Nestor Collantes, Alfonso Velasco, Adan Vasquez, Yohamel Caballero, Ana Aviles, and Leismy Barcia to submit fraudulent loan applications to the lender. The loan applications included false information about the straw buyers’ salaries and deposits, to create the impression that the straw buyers could qualify for loans in excess of one million dollars for each property.

At closing, the defendants diverted millions in loan proceeds by skimming the difference between the inflated purchase price and the price actually paid to the seller for the property. Greta Medina, Dania Arguelles, Christian Gomez, Alfonso Velasco and Fernanda Abrea received loan proceeds from the title company and paid off their co-conspirators, including the title agent, the loan officer, the recruiters, and the straw buyers. In some instances, the defendants stripped more money out of the properties by taking out home equity lines of credit. Ultimately, the straw buyers defaulted on the loans, causing each of the properties to go into foreclosure and resulting in estimated losses to the lender of more than $9.7 million.

The superseding indictment includes charges of conspiracy to commit bank fraud, substantive bank fraud and receipt of commissions and gifts for procuring loans. The bank fraud and receipt offenses carry a statutory maximum sentence of 30 years’ imprisonment.

Jeffrey H. Sloman, United States Attorney for the Southern District of Florida, commended the investigative efforts of the Federal State Mortgage Fraud Strike Force with special commendation to the U.S. Secret Service, the U.S. Postal Inspection Service and the Miami-Dade Police Department. The case is being prosecuted by Assistant U.S. Attorney Peter A. Forand.  The superseding indictment was announced by Jeffrey H. Sloman, Michael K. Fithen, Special Agent in Charge, U.S. Secret Service, Henry Gutierrez, Postal Inspector in Charge, U.S. Postal Inspection Service, and James K. Loftus, Director, Miami-Dade Police Department.

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Man Admits Mortgage Fraud Scam Involving 70 Properties

admin —  March 25, 2010 — Leave a comment

Michael Anthony Prieskorn, 35, Ellendale, Minnesota, pleaded guilty in federal court to charges stemming from a mortgage fraud scheme that resulted in losses of at least $20 million for mortgage lenders. Prieskorn was charged with orchestrating the scheme, which involved the purchase of approximately 70 residential properties in Florida and Minnesota between December 2006 and April 2007.

In his plea agreement and as previously reported on Mortgage Fraud Blog, Prieskorn admitted he and others conspired to obtain mortgage loan proceeds by luring others to buy properties. In return, Prieskorn promised the buyers $5,000 for every property purchased. He also promised to make all mortgage payments and pay all other bills associated with the properties for a specific term, after which, he would sell the properties at no cost to the original buyers or “investors.” Prieskorn maintained that the mortgage loans were risk free to their investors, knowing all the while the 20 investors were responsible for the loans. Following the closing of these real estate transactions, many investors defaulted on their mortgage loans and were forced into short sales or foreclosure. Yet, Prieskorn admitted receiving at least $1 million in gross receipts as a result of the scam.

In pleading guilty, Prieskorn also admitted concealing from mortgage lenders that he temporarily deposited funds into the bank accounts of some investors to misrepresent the true financial status of those buyers, thereby inducing lender approval of the mortgage loans. He also concealed from the 20 mortgage lenders that he paid the down payments and closing costs for their investors.

In furtherance of the scheme, Prieskorn transferred money, by wire, into investors’ bank accounts and caused the faxing of fraudulent mortgage loan applications to potential mortgage lenders. He also caused lenders to make wire transfers of mortgage loan proceeds on related real estate transactions. Specific to the monetary transaction count, Prieskorn structured financial transactions to conceal that he was the recipient of funds from the fraud. Those transactions included a $225,000 transfer on May 7, 2007.

Appearing before United States District Court Judge Paul A. Magnuson in St. Paul, Prieskorn specifically pled guilty to one count of conspiracy to commit wire fraud and one count of engaging in an illegal monetary transaction. Prieskorn was indicted on January 20, 2010

For his crimes, Prieskorn faces a potential maximum penalty of 20 years in prison on the conspiracy count and 10 years on the monetary transaction count. Judge Magnuson will determine his sentence at a future date, yet to be determined.

This case is the result of an investigation by the Internal Revenue Service-Criminal Investigation Division, the Eagan Police Department, the Minnesota Department of Commerce, the U.S. Secret Service, the Minnesota Financial Crimes Task Force, and the Minnesota Bureau of Criminal Apprehension. It is being prosecuted by Assistant U.S. Attorney Tracy L. Perzel.

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Mortgage Fraudster Sentenced to 4+ Years

admin —  March 22, 2010 — Leave a comment

Mark J. Moncher, 53, Orlando, Florida, has been sentenced to 57 months in federal prison for conspiracy to commit mail and wire fraud in connection with a mortgage fraud scheme. The court also ordered Moncher to pay more than $1.9 million in restitution. Moncher had pleaded guilty on December 29, 2009.

According to court documents (indictment, plea) and as previously reported on Mortgage Fraud Blog, during 2007 and 2008, Moncher organized a scheme fraudulently to obtain residential mortgages on multiple properties in central Florida. Moncher located properties and offered to find purchasers in exchange for “management fees” at closing. Moncher then recruited individuals, some of whom were his family members living in Wisconsin, to purchase the properties with fraudulently obtained mortgage loans. Moncher and his co-conspirators prepared mortgage loan applications falsely stating that they worked at a company called “Broadway Productions” for large salaries, lying about their intentions to make the purchased homes their primary residences, and falsely representing their assets. Moncher also recruited an individual at Broadway Productions falsely to verify the purchasers’ employment to lenders.

At closings for the properties, Moncher directed funds to his management company, Dream Home Management, and then wire-transferred monies to his co-conspirators’ accounts in Wisconsin and Virginia. He also used some of the mortgage funds for the down payments for the properties.

Moncher often moved into the fraudulently purchased homes and lived in them rent free. In this manner, Moncher caused the purchase of a total of 9 properties during 2007- 2008 and fraudulently obtained over $3.7 million in mortgage loans from financial institutions. All of the borrowers defaulted on the loans, causing a total loss of nearly $2 million.

This case was investigated by the Federal Bureau of Investigation and was prosecuted by Assistant United States Attorney Karen L. Gable. It was brought as part of the Middle District of Florida’s Mortgage Fraud Surge, a joint effort by the U.S. Attorney’s Office for the Middle District of Florida, the Federal Bureau of Investigation, Tampa and Jacksonville Divisions, and numerous other federal, state, and local law enforcement agencies. The Surge focused intensive investigative and prosecutorial resources on the mortgage fraud crisis that plagues middle Florida and has contributed to the current economic situation nationwide. The Surge accelerated mortgage fraud cases to bring perpetrators to justice quickly and provide maximum deterrence. It was the first step in and ongoing effort to prosecute mortgage fraud of all types throughout the Middle District.

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Forty Indicted in Major East Texas Mortgage Fraud Scheme

Allison Tussey —  March 17, 2010 — 11 Comments

40 individuals have been arrested and charged in connection with a major mortgage fraud scheme in the Eastern District of Texas. The 16-count indictment was returned by a federal grand jury on March 10, 2010, and includes one count of conspiracy to commit mail and wire fraud, 12 counts of mail fraud, and three counts of money laundering.

The 40 defendants, from Texas, Florida, Massachusetts, Tennessee, and Georgia, are charged as follows:

  • John Barry, conspiracy, mail fraud, money laundering
  • Allyson Barry, conspiracy
  • Joy Beckner, conspiracy, mail fraud
  • Sheri Brower, conspiracy, mail fraud
  • Julie Hanley, conspiracy, mail fraud
  • Elaine Powers, conspiracy, mail fraud
  • Michelle Strickland, conspiracy
  • Shannon Jensen, conspiracy
  • Frank Field, conspiracy, mail fraud
  • Rita Hunter, conspiracy
  • Andrea Tannahill, conspiracy, mail fraud
  • Azza Bassiouny, conspiracy
  • Tim Dreslinski, conspiracy
  • Jared Gowans, conspiracy
  • Chris Howard, conspiracy, mail fraud
  • Kamilla Kirch, conspiracy
  • Patty Peery, conspiracy
  • Allison Ridgeway, conspiracy
  • Liz Smittle, conspiracy, mail fraud
  • Daniel Ayers, conspiracy, mail fraud
  • Debbie Fernie, conspiracy
  • Anthony Flores, conspiracy, mail fraud
  • Elizabeth Altizer, conspiracy, mail fraud
  • Pamela Ford, conspiracy, mail fraud
  • Joshua Melton, conspiracy
  • William Doug Mitchell, conspiracy, mail fraud
  • William Barry, conspiracy
  • Christopher Feagan, conspiracy, mail fraud
  • Debbie Friedman, conspiracy
  • Patrick Johnson, conspiracy
  • Travis Jones, conspiracy
  • Delisa Kearney, conspiracy, mail fraud, money laundering
  • Francis Kearney, conspiracy, mail fraud
  • Barbara Muzeni, conspiracy, mail fraud
  • David Muzeni, conspiracy, mail fraud, money laundering
  • Kathleen Muzeni, conspiracy
  • Brett Relander, conspiracy
  • David Sacco, conspiracy
  • Ellen Summers, conspiracy, mail fraud, money laundering
  • Clarence White, conspiracy

According to the indictment, beginning in 2004, John Barry, 41, Windemere, Florida, owned and operated, TKI Group, Inc. and JAB Consulting, businesses out of Florida through which he solicited real estate agents, property finders, mortgage brokers, title company attorneys or escrow officers, property appraisers, and straw buyers to facilitate this scheme. The purpose of the scheme was to defraud lending institutions by convincing them to approve mortgage loans for residential properties for which the property values had been fraudulently inflated.

The indictment specifically lists 114 residential properties located in Texas:

  • 1221 San Saba Court, Allen, Texas
  • 4500 Springhill Estates Drive, Allen, Texas
  • 518 Gunnison Drive, Arlington, Texas
  • 2513 Rolling Oaks, Cedar Hill, Texas
  • 500 Green Ridge Drive, Coppell, Texas
  • 3109 Blue Jay Drive, Corinth, Texas
  • 16551 Cypress Bridge Drive, Cypress, Texas
  • 7329 Elmridge Drive, Dallas, Texas
  • 5812 Encore Drive, Dallas, Texas
  • 14420 Overview Circle, Dallas, Texas
  • 7415 Spring Valley Road, Dallas, Texas
  • 4352 Voss Hills Place, Dallas, Texas
  • 5804 Willow Wood Lane, Dallas, Texas
  • 5212 Balmoral Lane, Flower Moun, Texas
  • 4609 Hampshire Drive, Flower Mound, Texas
  • 4704 Mariner Court, Flower Mound, Texas
  • 3100 Oak Crest Drive, Flower Mound, Texas
  • 4708 Seafarer Court, Flower Mound, Texas
  • 4716 Seafarer Court, Flower Mound, Texas
  • 8624 Canyon Crest, Fort Worth, Texas
  • 8417 Crosswind Drive, Fort Worth, Texas
  • 12261 Fairway Meadows Drive, Fort Worth, Texas
  • 12264 Fairway Meadows Drive, Fort Worth, Texas
  • 12300 Fairway Meadows Drive, Fort Worth, Texas
  • 12333 Fairway Meadows Drive, Fort Worth, Texas
  • 12336 Fairway Meadows Drive, Fort Worth, Texas
  • 12340 Fairway Meadows Drive, Fort Worth, Texas
  • 8812 Greenhaven Drive, Fort Worth, Texas
  • 9400 Harbour View Lane, Fort Worth, Texas
  • 12509 Indian Creek Drive, Fort Worth, Texas
  • 3940 Lakewood Heights Court, Fort Worth, Texas
  • 8644 Overland Drive, Fort Worth, Texas
  • 6100 Troon Road, Fort Worth, Texas
  • 2513 Wabash Avenue, Fort Worth, Texas
  • 8316 Waterfront Court, Fort Worth, Texas
  • 8533 Waterfront Court, Fort Worth, Texas
  • 3933 Westway Terrace, Fort Worth, Texas
  • 12008 Alexandria Drive, Frisco, Texas
  • 4 Englewood Court, Frisco, Texas
  • 1 La Costa Court, Frisco, Texas
  • 2370 Sleepy Hollow Trail, Frisco, Texas
  • 3814 Fairway, Granbury, Texas
  • 1717 Bison Meadows Lane, Heath, Texas
  • 210 Cedar Tree Lane, Heath, Texas
  • 524 Mariah Bay, Heath, Texas
  • 549 Mariah Bay, Heath, Texas
  • 2 Shepards Way, Heath, Texas
  • 900 Shadow Ridge Drive, Highland Village, Texas
  • 3305 Shadow Wood Circle, Highland Village, Texas
  • 801 Tree Haven Court, Highland Village, Texas
  • 17402 Cedar Placid Lane, Houston, Texas
  • 414 North Wilcrest Drive, Houston, Texas
  • 2148 Ravenwood Drive, Keller, Texas
  • 8700 Weston Lane, Lantana, Texas
  • 1873 Tucson Drive, Lewisville, Texas
  • 6004 Pinnacle Circle, Little Elm, Texas
  • 9403 Wayne Avenue, Lubbock, Texas
  • 11114 Autumn Mist Cove, Magnolia, Texas
  • 38122 Wind Song Trace, Magnolia, Texas
  • 6804 Boulder Lake Road, Mckinney, Texas
  • 2121 Brenham Drive, Mckinney, Texas
  • 5904 Cypress Court, Mckinney, Texas
  • 6908 Echo Canyon Drive, Mckinney, Texas
  • 6917 Echo Canyon Drive, Mckinney, Texas
  • 1509 Edgewood Drive, Mckinney, Texas
  • 5806 Edgewood Drive, Mckinney, Texas
  • 1612 Hastings Bluff, Mckinney, Texas
  • 812 Hills Creek Drive, Mckinney, Texas
  • 817 Hills Creek Drive, Mckinney, Texas
  • 822 Hills Creek Drive, Mckinney, Texas
  • 823 Hills Creek Drive, Mckinney, Texas
  • 900 Hills Creek Drive, Mckinney, Texas
  • 909 Hills Creek Drive, Mckinney, Texas
  • 911 Hills Creek Drive, Mckinney, Texas
  • 918 Hills Creek Drive, Mckinney, Texas
  • 931 Hills Creek Drive, Mckinney, Texas
  • 1207 Hills Creek Drive, Mckinney, Texas
  • 12200 Hills Creek Drive, Mckinney, Texas
  • 4905 Jamestown Lane, Mckinney, Texas
  • 7204 Millard Pond, Mckinney, Texas
  • 509 Old Course Circle, Mckinney, Texas
  • 7012 Old York Road, Mckinney, Texas
  • 7019 Old York Road, Mckinney, Texas
  • 7002 Oxford Court, Mckinney, Texas
  • 823 Parkwood Court, Mckinney, Texas
  • 826 Parkwood Court, Mckinney, Texas
  • 2105 Pebblebeach Place, Mckinney, Texas
  • 7111 Round Hill Road, Mckinney, Texas
  • 1208 Saddlebrook Drive, Mckinney, Texas
  • 12528 Saratoga Springs, Mckinney, Texas
  • 1917 Savannah Drive, Mckinney, Texas
  • 2021 Savannah Drive, Mckinney, Texas
  • 1112 Shady Oaks Circle, Mckinney, Texas
  • 5701 Spring Hill Drive, Mckinney, Texas
  • 5917 Spring Hill Drive, Mckinney, Texas
  • 2603 Sunny Meadows, Mckinney, Texas
  • 1991 Sunset Trail, Mckinney, Texas
  • 1603 Timber Edge Drive, Mckinney, Texas
  • 7003 Wellington Point Road, Mckinney, Texas
  • 7103 Wellington Point Road, Mckinney, Texas
  • 7110 Wellington Point Road, Mckinney, Texas
  • 508 Willow Springs Drive, Mckinney, Texas
  • 2012 Winchester Street, Mckinney, Texas
  • 1000 Windsor Creek, Mckinney, Texas
  • 4301 Kingsbury Drive, Plano, Texas
  • 3708 Watercrest Drive, Plano, Texas
  • 403 Hilltop, Roanoke, Texas
  • 930 Parkview Lane, Southlake, Texas
  • 6330 Borg Breakpoint Drive, Spring, Texas
  • 21014 Florette Lane, Spring, Texas
  • 78 Northgate Drive, The Woodlands, Texas
  • 86 Sunlit Grove Street, The Woodlands, Texas
  • 10135 Valley Drive South, Willis, Texas

In announcing the indictment, U.S. Attorney John M. Bales specifically noted the breadth of the financial scheme, “This indictment brings to light a criminal scheme that is quite breathtaking in its scope and beyond disturbing as far as the boldness of the fraud. The agents have done a remarkable job putting together this investigation and we look forward to presenting all of the evidence in court. Hopefully, others involved in mortgage fraud will be taking notice-we will be relentless in discovering, exposing and holding accountable those who have committed similar crimes.”

If convicted, the defendants face up to 20 years in federal prison for the conspiracy charge, up to 20 years in federal prison for each count of mail fraud charge, and up to 10 years in federal prison for each count of money laundering.

“Mortgage fraud creates so much harm to individuals, businesses and our economy, but today’s indictment is a strong reminder how serious our system considers this criminal activity,” said Erick Martinez, Assistant Special Agent in Charge, IRS-Criminal Investigation, Dallas, Texas Field office. “Those who line their pockets with profits from these schemes should know they will not go undetected and will be held accountable.”

“Evidence collected by the FBI to support today’s indictments proves that financial crime conspiracies, particularly mortgage fraud, still threaten our economic stability,” said Robert E. Casey, Jr., Special Agent in Charge of the FBI Office in Dallas. “This investigation illustrates the North Texas law enforcement community’s commitment to root out those who perpetrate mortgage fraud. Although increased prosecutions alone will not solve the mortgage crisis, we hope these prosecutions will help deter future fraud.”

This case is being investigated by the FBI and the Internal Revenue Service and is being prosecuted by Assistant U.S. Attorney Shamoil Shipchandler.

This law enforcement action is part of President Barack Obama’s Financial Fraud Enforcement Task Force. President Obama established the interagency Financial Fraud Enforcement Task Force to wage an aggressive, coordinated and proactive 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.

An indictment is not evidence of guilt. All defendants are presumed innocent until proven guilty beyond a reasonable doubt in a court of law.

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Woman Arrested In Real Estate Fraud Cases

admin —  March 4, 2010 — 1 Comment

Angela M. Moore, 42, a Florida resident, has been charged with a scheme to defraud, grand theft, and operating as a real estate broker without a license in a case involving online real estate sales.

The initial investigation began in October 2008 when the Florida Office of the Attorney General received a complaint and referred it to the Lee County Sheriff’s Office Economic Crimes Unit. The victim had participated in an online auction with landbidz.com in June 2008. After wiring money to the seller’s account, the victim was not able to reach the seller to obtain his warranty or property deed. As per the contract, both of these items should have been provided to the victim within 48 hours of the sale.

Detectives with the Economic Crimes Unit began an extensive investigation where they discovered Moore, operating as ‘Home Design Consultants,’ had participated in fraudulent real estate activity and collected a combined total of $63,802.00 from five online victims. In addition to those victims, Cape Coral’s Island Coast High School became a victim in October 2008 after paying $5,300.00 to Moore’s business, Home Design Consultants, for a solar powered filtration system that was never installed.

In a second case, Moore advertised a job fair on craigslist whereby potential employees were required to purchase Magic Jacks. This investigation resulted in Moore being charged with a scheme to defraud, uttering counterfeit checks, grand theft, and petit theft.

In March 2009, while investigating the landbiz.com case, the Economic Crimes Unit received a fraud complaint involving a job fair that had been advertised on Craigslist. The individual being accused of this fraudulent job fair was the same Angela Moore of Home Design Consultants who was already under investigation for the online real estate fraud.

On February 1, 2009, Angela Moore gave a presentation about jobs that would soon be available with ‘Home Design Consultants.’ Potential employees were required to pay $10.00 for the purchase of a Magic Jack. Several individuals came forward and stated they had attended the job fair, but never received their Magic Jacks and were never hired. Many were concerned because their personal information was now in the hands of Moore. Three of the participants had been hired and each had received over $700.00 in paychecks. All of their paychecks had bounced as they were drawn on a non-existent account. This case involved twelve victims with the total theft valued at $2969.37.

Angela M. Moore was arrested and transported to the Lee County Jail in Florida.

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Former Appraiser Sentenced in Mortgage Fraud Scheme

admin —  February 26, 2010 — Leave a comment

Barry C. Westergom, 60, Jacksonville, Florida, has been sentenced to four years in federal prison for conspiracy to commit wire and bank fraud. The court also ordered restitution in the amount of $866,141.62 and entered a money judgment for $100,000, the amount that Westergom had obtained from the fraud. Westergom had pleaded guilty on October 8, 2009.

As previously reported on Mortgage Fraud Blog, and according to court documents, during 2004 and 2005, Westergom’s co-conspirator, Juan Carlos Gonzalez, contracted to purchase about 55 houses. Gonzalez retained Westergom, who was a licensed real estate appraiser, to appraise most of the properties. Westergom then fraudulently inflated the appraisals, valuing each property at a significantly higher price than the negotiated purchase price. Westergom knew that Gonzalez intended to submit the appraisals to lenders in support of mortgage loan applications in which the inflated appraisal value was listed as the purchase price. The lender was not informed that the price listed in the transaction documents was higher than the actual price negotiated with the seller. Gonzalez also submitted fraudulent financial documents and information, including altered bank statements and payroll records, to the lenders in support of the loan applications.

At each closing, Gonzalez received the difference between the loan amount, which was based on the inflated appraisal, and the actual purchase price, and Westergom received commissions and fees.

Westergom’s plea agreement details one transaction in which Westergom, acting as a buyer’s agent for Gonzalez, negotiated with a seller to purchase a house for $490,000. Westergom then fraudulently appraised the house for $625,000. Gonzalez submitted first and second mortgage loan applications for the house reflecting a sales price of $625,000. Gonzalez also submitted altered bank account statements showing significantly larger cash balances in the account than actually existed. The lender approved the loans and, at the closing, Gonzalez received $134,000, which was listed on closing documents as an “Assignment of Contract Fee.” Westergom received $12,250 as a broker’s fee and $550 as an appraisal fee.

The conspirators’ fraudulent acts resulted in lenders extending more than $29,272,000 in first and second mortgage loans. Westergom received a total of about $100,000 in commissions and fees. Gonzalez received $6,296,303.65 from the scheme. Gonzalez pleaded guilty to a conspiracy charge and was sentenced to seven years in federal prison on November 5, 2009.

The announcement was made by United States Attorney A. Brian Albritton.

The case was investigated by the Federal Bureau of Investigation and was prosecuted by Assistant United States Attorney Arnold B. Corsmeier. It was brought as part of the Middle District of Florida’s Mortgage Fraud Surge, a joint effort by the U.S.  Attorney’s Office for the Middle District of Florida, the Federal Bureau of Investigation, Tampa and Jacksonville Divisions, and numerous other federal, state, and local law enforcement agencies. The Surge focused intensive investigative and prosecutorial resources on the mortgage fraud crisis that plagues middle Florida and has contributed to the current economic situation nationwide. The Surge accelerated mortgage fraud cases to bring perpetrators to justice quickly and provide maximum deterrence, and it was the first step in an ongoing effort to prosecute mortgage fraud of all types throughout the Middle District. For more information on the Middle District of Florida’s Mortgage Fraud Surge, please contact Steve Cole, Public Affairs Officer for the United States Attorney’s Office.

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FinCEN Issues Mortgage Loan Fraud Update

admin —  February 19, 2010 — Leave a comment

The Financial Crimes Enforcement Network (FinCEN) released a new analysis of suspicious activity related to possible mortgage loan fraud reported in the third quarter of 2009. The report also discusses the types of suspected fraud occurring in the foreclosure rescue area as a result of FinCEN issuing a “red flags” guidance on foreclosure rescue scams in April 2009.

The analysis found that suspicious activity reports (SARs) indicating suspicious activity by loan modification or foreclosure specialists, filers most commonly reported two types of schemes. First, subjects conned homeowners into signing quit-claim deeds to their properties and then sold homes from under the former owners to straw borrowers; the homeowners subsequently received eviction notices. Second, others falsely claimed affiliations with lenders to convince distressed homeowners to pay large advance fees for modification services, but failed to take any action on the homeowners‟ behalf.

“FinCEN‟s tracking of suspected mortgage loan fraud and foreclosure rescue scam SARs has contributed greatly to law enforcement‟s ability to better understand the nature of this insidious crime,” said FinCEN Director James H. Freis, Jr. “FinCEN‟s efforts in fighting mortgage fraud and foreclosure rescue scams remain a priority. We are harnessing all of our authorities to support this fight.”

Overall, the report shows that in the third quarter of 2009, depository institution filers submitted 15,697 mortgage loan fraud (MLF) SARs, a 7.5 percent increase over the same period in 2008.

In April 2009, FinCEN issued Guidance to Financial Institutions on Filing Suspicious Activity Reports regarding Loan Modification/Foreclosure Rescue Scams, which asked SAR filers to use the words “foreclosure rescue scam” to help law enforcement identify suspected fraud. This report looks at not only MLF SARs, but SARs identified by filers with the phrase “foreclosure rescue scam” filed in the third quarter, 2009.

Among other highlights in the report:

– Filers of SARs in the study population commonly reported foreclosure and loan modification fraud that included occupancy misrepresentation, Social Security number discrepancies, and altered or forged documentation.
– By state, California and Florida represented a combined 42 percent of reported SAR subjects in the study population. The top 10 metropolitan areas by population included 40 percent of all SAR subjects in the study population.
– Filers most frequently reported borrowers as subjects, relating subject descriptions as „Borrower‟ or „Customer‟ in a combined 57 percent of MLF SARs.
– Thirty-five percent of the SARs examined in the report indicated an amount of $100,000 to $250,000 and an additional 32 percent of these SARs filed involved suspected amounts of $250,000 up to $500,000. Five percent of these SARs were for suspected amounts of $1 million or more.
– One third of MLF SARs examined in this report indicated secondary activities, with „False Statement‟ as the most frequently reported category.

The report also shows that although subjects of MLF SARs filed in the third quarter 2009 by depository institutions primarily have been borrowers, filers also reported industry insiders as subjects, including loan officers, underwriters, and purported loan modification agents.

SARs involving loan modifications described potential fraud in either the application for the loan modification, or in the older loan which came under review subsequent to the modification application.

An increasing number of filers submitted SARs noting suspicious activity in connection with actual or purported foreclosure rescue specialists. Credit card processors noted multiple transaction charge-backs in accounts held by clients later determined to be loan modification or foreclosure rescue specialists, after homeowners complained that the specialist failed to deliver services.

FinCEN is conducting additional analyses to examine mortgage loan fraud, foreclosure rescue scams and other financial fraud, and will further explore reported activities, locations, and subjects.

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