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Kenneth Schwartz, 64, Huntington, New York, and Helene Stetch, 50, Lindenhurst, New York, have been charged by a Queens County grand jury with defrauding homeowners, financial institution and real estate buyers out of more than $1 million through a short sale mortgage fraud scheme that occurred over a nineteen-month period between October 2008 and May 2010.

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Nine defendants have been indicted in two separate mortgage fraud cases. Seven defendants were charged together in one case, and two in the second case, together alleging schemes to fraudulently obtain at least four residential mortgage loans totaling more than $1 million from lenders.

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Theresa Sanders, a/k/a Theresa Hayes, 55, most recently of Westerville, Ohio, an attorney, Tracie Clark, 41, Wimauma, Florida, Michelle Powers, 51, DeRuyter, New York, an attorney, Steven Essig, 60, an appraiser, and Paul Sakowski, 44, both of Syracuse, New York, have been indicted for their roles in a mortgage fraud ring that operated for years and netted more than $1 million by preying upon first-time home buyers and institutional lenders.

The five defendants bilked consumers by advertising a rent-to-own opportunity in which first-time home buyers with low credit were offered the chance to own their own homes with no down payments and no closing costs. The accused then took out fraudulent loans against those properties, conned lenders into believing they were paying off underlying mortgages, and then pocketed the money. Continue Reading…

Two attorneys with a Forest Hills practice were convicted of mortgage fraud this week, according to the U.S. Attorney in Brooklyn. Matthew Burstein and Aaron Rabinowitz, both 40, were found guilty on ten felony counts of fraud for illegally obtaining …Two Queens Attorneys Convicted of Mortgage Fraud Equities.com2 NY Lawyers Convicted in $25M Mortgage-Fraud Case ABA JournalConvicted of Mortgage Fraud, Two Lawyers to Seek New Trial New York Law Journal (registration)all 5 news articles »

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Source: Patch.com

Business InsiderFederal prosecutors have brought a huge civil fraud case against one of the nation’s largest privately held mortgage brokerages, on the heels of a whistleblower suit with a Milwaukee connection. …Feds File Massive Fraud Case Against Allied Home Mortgage Business InsiderFeds Sue Mortgage Broker, Alleging Lending Fraud ClaimsJournal.comMortgage loans firm sued for $2.5bn over lending fraud Legalbrief (subscription)all 12 news articles »

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Source: Milwaukee Journal Sentinel (blog)

A New York title attorney who is awaiting sentencing for his role in a Long Island real estate developer’s $92 million mortgage origination fraud in Nassau County was disbarred last week. Federal Deposit Insurance Corp. is suing Ted …

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Source: ABA Journal

The State Bar of California has taken action against 5 more lawyers under investigation for loan modification misconduct, bringing to 14 the number of attorneys who have resigned or been placed on involuntary inactive enrollment since creation of the bar’s Loan Modification Task Force in April 2009.

Timothy Thurman [Bar #216048], 37, Altadena, California, resigned on November 2, 2009, with charges pending following his arrest by FBI agents in October 2009. Thurman‘s practice, Trinity Law Group in Los Angeles, which he started earlier this year, was doing lender litigation and loan modification. He was charged with creating and using a court order containing what he knew to be a forged signature of a federal judge. Thurman allegedly gave the document to his clients, who had sought Thurman‘s help to avoid eviction, telling them to give it to the sheriff, who became suspicious and contacted the judge.  State Bar investigators worked with the FBI in the investigation.

Gary Davidson [Bar #32110], 75, Costa Mesa, California, and Eric Douglas Johnson [Bar #224065], 55, Culver City, California, resigned on November 4, 2009, after the Loan Modification Task Force filed charges.

Paul Lucas [Bar #163076], 48, Aliso Viego, California, of the Lucas Law Center, was ordered on November 4, 2009, involuntarily inactive for posing “a substantial threat of harm to (his) clients or the public” under Business and Professions Code 6007. State Bar Court Judge Lucy Armendariz said Lucas had inaccurately described his firm’s refund policy and its business relationship with Future Financial Services. She also said that Lucas had formed a partnership with a nonlawyer in violation of State Bar rules and aided in the unauthorized practice of law.

Armendariz noted that the Lucas Law Center, Future Financial and others had generated 45 State Bar complaints and 89 Better Business Bureau complaints. The Federal Trade Commission also issued a preliminary injunction against Lucas Law Center and Future Financial Services. Armendariz said Lucas, through his staff, agents and advertisements, misrepresented the scope of his service to clients, collected advance fees under false pretenses, recklessly advised clients to stop making mortgage payments, failed to perform services, failed to promptly refund earned fees and repeatedly failed to respond to client inquiries.

Sean Rutledge [Bar #255938], 34, Irvine, California, who started United Law Group in August 2008, was enrolled as of November 6, 2009, as an inactive member of the State Bar pending further order under Business & Professions Code 6007. Rutledge “promised to help troubled homeowners – many of whom were in arrears or on the brink of foreclosure – modify their home loans and maintain financial stability,” State Bar Court Judge Richard Honn wrote in his order of inactive enrollment. “Instead, he took their money and time and offered little or nothing in return. In fact, due to their loss of money and time, many of respondent’s clients ended up in a worse position than they were in when they originally turned to respondent for help… respondent has engaged in a pattern of client neglect involving failing to perform, failing to communicate, and/or failing to refund unearned fees in 14 separate client matters.”

The Loan Modification Task Force has received more than 1,250 complaints and is investigating almost 250 lawyers. Each task force investigator oversees about 135 cases, and almost 20,000 attorney files have been removed from the offices of attorneys whose loan modification practices have been shut down or abandoned. State Bar investigations are up 69 percent over 2008.

The State Bar has been working with local law enforcement as well as the state Attorney General’s Office and the FBI to address the problem of businesses and law firms preying on people about to lose their homes through foreclosure. Orange County Deputy District Attorney George McFetridge Jr. said coordination between the State Bar and his office in combating “these criminal enterprises that prey on desperate homeowners” has been invaluable. “I’m also thrilled that the State Bar has taken such an aggressive stance against attorneys who employ cappers, split fees with non-attorneys, engage in false advertising and commit fraud on the public,” he wrote in a letter to State Bar President Howard Miller.

Last month, a new law, SB94 by Sen. Ron Calderon, D-Montebello, took effect that prohibits attorneys and any others involved in mortgage relief from taking upfront fees for loan modification work. Weiner said the new law should reduce the number of lawyers committing loan modification misconduct.

“I am very pleased with the results being obtained by members of our Loan Modification Task Force,” said Interim Chief Trial Counsel Russell Weiner. “They have exceeded my expectations. Our office has been aggressively investigating and prosecuting attorneys alleged to have committed loan modification misconduct. Any attorney thinking that he or she can commit loan modification misconduct and get away with it for a significant period of time should think again.”

A seven-count Indictment has been unsealed charging 12 individuals-including mortgage brokers, loan officers, and attorneys-with engaging in a scheme to defraud various lending institutions by using fictitious identities and documents to obtain more than $9 million in residential mortgages. All 12 defendants have been arrested and are expected to be presented in federal court.

The defendants are alleged in the Indictment to have played the following roles in the mortgage fraud scheme:

Jeffrey Larochelle, 29, Bay Shore, New York, processed loans through Reliable Capital, a mortgage brokerage firm. Larochelle identified target properties, supervised and coordinated the creation of false information for straw identities and the submission of fraudulent loan applications and other documents to lenders, and coordinated the activities of other co-conspirators.

Eric Finger, 44, an attorney from Mineola, New York, acted as the settlement agent on behalf of the lender in connection with closings on many of the target properties. Among other things, Finger made payments from mortgage loan proceeds to other members of the conspiracy and hid the true disbursements of the loan proceeds from lenders by preparing false mortgage documents.

Denise Parks, 43, Olive Branch, Mississippi, processed loans through Atlas Home Equities. Parks prepared fraudulent mortgage loan applications and falsely verified the employment and residential information for various straw identities.

Foriduzzaman Sarder, 40, Jackson Heights, New York, coordinated the use of various straw identities to buy homes with residential mortgage loans. Sarder gave his contact information to mortgage brokers and mortgage lenders to provide verification of the loan application information of certain straw identities.

Sakat Hossain, 43, Jackson Heights, New York, posed as several different straw identities purportedly buying various target properties. In exchange for posing as the straw identities, Hossain received payments from the loan proceeds.

Mikaek Huq, 34, Astoria, New York, among other things, created false identification documents in the names of straw identities for use at closings for target properties.

Reginald Johnson, 36, St. Albans, New York, controlled the Hempstead office of Reliable Capital. Among other things, JOHNSON prepared fraudulent mortgage loan applications and falsely verified the employment and/or residential information submitted in connection with the applications.

Frederick Warren, 35, Miller Place, New York, processed loans through Reliance Capital and other brokers. Warren prepared and processed fraudulent mortgage loan applications and participated in identifying target properties.

Dorian Brown, 36, Mount Sinai, New York, was a loan officer at Lend America, a mortgage lender and broker located in Long Island, New York. Brown identified target properties, processed fraudulent mortgage loan applications, and coordinated the use of the false identities.

Fritz Bonaventure, 28, Lithonia, Georgia, was an independent contract employee at Lend America. Bonaventure identified target properties, coordinated the use of false identities and fraudulent identification documents, and provided information about the straw identities to mortgage brokers, loan officers and loan processors.

Joell Barnett, 36, an attorney from Brooklyn, New York, acted as either the buyer’s or seller’s attorney in connection with the sale of some of the target properties. BARNETT, among other things, received payments from the loan proceeds which were not disclosed to lenders and disbursed those funds to other members of the conspiracy.

Brandon Lisi, 36, an attorney from Glen Cove, New York, prepared sale contracts for the purchase of target properties and procured straw buyers to act as purchasers for target properties.

As alleged in the Indictment filed in Manhattan federal court:

The defendants and their co-conspirators purchased dozens of residential properties throughout New York City and Long Island, New York with fraudulent mortgages. These mortgages, which amounted to 100 percent of the purchase price of the residences, were obtained using names of fictitious individuals or individuals whose identification information was misappropriated or misused.

To facilitate the fraud, the defendants provided the lending institutions with false identification documents, such as false driver’s licenses and social security cards; false employment, income, and rental information; and fraudulent bank statements. Most of the loans are now in default.

The charges contained in the Indictment include one count of conspiracy to commit bank fraud and wire fraud, one count of bank fraud, and five counts of wire fraud. A chart of the charges contained in the Indictment and the corresponding maximum potential penalties for each defendant is attached to this press release.

Of the 12 defendants arrested, Larochelle, Finger, Sarder, Hossain, Huq, Johnson, Warren, Brown, Barnett, and Lisi are expected to be presented in Manhattan Federal Court. Bonaventure and Parks are expected to be presented in federal court in the Northern District of Georgia and the District of Mississippi, respectively.

The filing of the charges is the culmination of a longterm investigation conducted by the United States Attorney’s Office for the Southern District of New York, the New York State Attorney General’s Office, the New York State Banking Department’s Criminal Investigations Bureau, the FBI, the USSS, and the USPIS. Valuable assistance also was provided by Department of Homeland Security’s United States Immigration and Customs Enforcement, the New York State Department of Motor Vehicles, the New York City Department of Probation, and the Social Security Administration.

Preet Bharara, the United States Attorney for the Southern District of New York, Andrew Cuomo, the Attorney General of the State of New York, Joseph M. Demarest, Jr., the Assistant Director-in-Charge of the New York Field Division of the Federal Bureau of Investigation (“FBI”), Richard H. Neiman, the Superintendent of Banks for New York State, Brian G. Parr, the Special Agent-in-Charge of the New York Field Office of the United States Secret Service (“USSS”), and Ronald J. Verrochio, the Inspector-in-Charge of the New York Division of the United States Postal Inspection Service (“USPIS”), announced the indictments.

Mr. Bharara thanked all of the federal, state, and local law enforcement agencies involved in the investigation for their outstanding work. He added that the investigation is continuing.

“The U.S. economy is still reeling from the damage done by mortgage fraud schemes like the one unraveled today. These charges expose the corrupt conduct of industry insiders who allegedly manipulated the mortgage markets to fraudulently obtain millions in loans. What is especially disturbing is that two of the alleged fraudsters were attorneys who used their law degrees to cheat the system and line their pockets. We will continue to prosecute corrupt custodians of the mortgage markets to the full extent of the law because our financial system depends on it,” said Preet Bharara.

“This is exactly the type of criminal activity that was caused by-and contributed to-the terrible mortgage crisis facing our nation. These defendants were allegedly able to obtain millions of dollars in home loans for phantom buyers precisely because obtaining these loans was far too easy at the time. As we work to reform our nation’s mortgage regulation, law enforcement must continue to collaborate to ensure that those who exploited the system for their personal financial gain are brought to justice,” said Andrew Cuomo, the Attorney General of the State of New York

“The scheme alleged in the indictment is a model of vertical integration. There were corrupt participants at each step of the mortgage process, from buyers to lenders to lawyers. The one obvious flaw in their scheme was that they got caught,” said Joseph M. Demarest, Jr., the Assistant Director-in-Charge of the New York Field Division of the Federal Bureau of Investigation.

“This multifaceted mortgage fraud scheme represents one of the most egregious types of criminal behavior since it involves attorneys and brokers who, instead of being the gatekeepers that protect our financial system, abused their positions and joined a conspiracy to steal millions of dollars. I am proud of the outstanding work the Banking Department’s Criminal Investigation Bureau has performed since the inception of this investigation and thank the SDNY, FBI and NYSAG’s office and our other law enforcement partners that worked with us on this investigation,” said Richard H. Neiman, the Superintendent of Banks for New York State.

“Mortgage fraud is a continuing threat to our nation’s financial system, compromising the identities of ordinary citizens. The Secret Service is committed to investigating these types of crimes, utilizing strong interagency partnerships, in order to bring these perpetrators to justice,” said Brian G. Parr, the Special Agent-in-Charge of the New York Field Office of the United States Secret Service.

“The Postal Inspectors will aggressively pursue these cases to ensure public confidence in the mortgage financial markets,” said Ronald J. Verrochio, the Inspector-in-Charge of the New York Division of the United States Postal Inspection Service.

Assistant United States Attorneys Michael D. Lockard and Ryan P. Poscablo, and Assistant Attorney General Meryl Lutsky-who is designated as a Special Assistant U.S. Attorney in this case-are in charge of the prosecution.

 

Ocwen Financial Corporation is a national provider of loan servicing for lenders. It is headquartered in Florida and has offices in several states. In its Consent Agreement with Maine’s Bureau of Consumer Credit Protection and Attorney General, Ocwen admitted that after July 2014 it pursued foreclosures against Maine homeowners based on paperwork which the State found to be legally defective.

Specifically, Ocwen used “powers of attorney” granted by corporate originators of the mortgages, but those corporate originators of the mortgages had been legally dissolved – had ceased to exist – no later than March 2012. The State alleges that the powers of attorney terminated when the granting corporations dissolved.

Under the Consent Agreement, the State found that Ocwen’s use of the powers of attorneys from legally nonexistent entities violated a statute prohibiting “false, deceptive or misleading representation or means in the collection of any debt.”

Ocwen’s illegal filings continued into January of 2019, even after Ocwen’s lawyers had assured State regulators in November 2018 that the practice would stop. The company termed the additional filings as “inadvertent.”

Ocwen Financial Corporation will refund or credit 24 Maine residents more than $50,000 in attorney’s fees they were assessed when their homes were foreclosed upon, and the company will pay $24,000 in civil penalties and $10,000 in investigative costs to the State of Maine, as part of a Consent Agreement signed last week.

Maine’s Supreme Court has made clear that lenders must establish that they have the legal right to pursue foreclosures,” said Will Lund, Superintendent of the Maine Bureau of Consumer Credit Protection. “Those requirements were not followed in these cases.”

Attorney General Aaron M. Frey, whose office assisted state mortgage regulators in negotiating and resolving the matter, stated, “The Consent Agreement puts Ocwen – and other national mortgage lenders and servicers – on notice that they must follow the legal standards here in Maine if they pursue actions on defaulted mortgages.”

The Consent Agreement may have ramifications beyond Ocwen, noted Superintendent Lund, since other lenders may be filing foreclosures based on similar powers of attorney issued by the same nonexistent corporate loan originators used by Ocwen.

 

Assad Suleiman, 48, Irvine, California, was convicted and sentenced on Friday to eight years in state prison for operating an unlawful loan modification and money laundering scam that defrauded nearly $2.3 million from 387 homeowners.

Co-defendants Kevin Suleiman, 39, Irvine, California and Rosa A. Barraza, 45, Santa Ana, California were charged on October 3, 2017, with 36 felony counts of money laundering, 12 felony counts of grand theft, 10 felony counts of commercial burglary, and one felony count each of conspiracy to commit grand theft, money laundering, and unlawful loan modification, with sentencing enhancements for aggravated white collar crime over $500,000 and property damage over $1.3 million.

Assad Suleiman was convicted of, and Kevin Suleiman and Rosa Barraza are accused of the following:

Between May 2012 and July 2017, engaging in a sophisticated loan modification scheme and operating as Jefferson Legal Group, Los Angeles, California; Simplify Law Group, Irvine, California; Synergy Law Center, Anaheim, California; Wilshire Debt Advisors, Irvine California:

  • Operating without any lawyers involved, despite the misleading entity names
  • Charging advance fees for loan modifications and, if no loan modification was approved, ceasing communication with the victims after receiving an initial payment
  • If the defendant did get a loan modification approved for the victims, lying to the victims and telling them a trial payment and/or lump sum payment to their lender was required to cover taxes and various fraudulent fees
  • Directing the homeowner to make their trial payment directly to one of the four fraudulent entities for a three to four month period and falsely telling the homeowner that the trial payments would be forwarded to their lender
  • If the victims had any money still available, demanding additional payments to bring their impound accounts current
  • Failing to forward any payments to the mortgage lenders and laundering the money by depositing funds to the defendants’ Chase Bank and Bank of America accounts under their fraudulent businesses names
  • Defrauding a total of 387 victims with a loss of at least $2.28 million.

Suleiman pleaded guilty on July 13, 2018, to the following felony counts, (43) Money laundering, (10) Grand theft, (10) Second degree burglary and conspiracy to commit grand theft, money laundering, and unlawful loan modification.  Suleiman was ordered to pay $1,568,717 in restitution.

Kevin Suleiman is scheduled for a pre-trial hearing on July 27, 2018, at 8:30 a.m. in Department C-55, Central Justice Center, Santa Ana, California. Barraza is scheduled for a pre-trial hearing on July 30, 2018, at 8:30 a.m. in Department C-55, Central Justice Center, Santa Ana, California.

Barraza and Assad Suleiman were arrested on October 5, 2017, during a warranted search of their office. The Orange County District Attorney’s Office (OCDA) recovered $500,000 in cash. Kevin Suleiman was arrested by U.S. Marshals in San Diego on January 10, 2018.

It is against California law to charge an advance fee for a loan modification. Homeowners needing foreclosure relief are typically in financial distress and vulnerable to losing their family’s principal asset. In many instances, the conspirators directed the homeowners to stop making their mortgage payments, ostensibly to prove to the lenders that a loan modification was necessary and freeing up funds to pay the conspirators. Directing homeowners to breach their contracts in many instances would precipitate the commencement of foreclosure proceedings that would otherwise be unnecessary.

This fraud scheme was particularly effective and insidious because the lenders were never aware that trial payments and impound fees had been collected by the conspirators, and the homeowners believed the lies the conspirators made to them that their monies would be forwarded to their lenders. Many homeowners never discovered the fraud until their lenders commenced foreclosure against their homes. The conspirators deliberately chose entity names that implied attorneys were involved, and when complaints began to pile up or suspicious raised, the same conspirators would contact victims with new entity names, while the old entity simply disappeared in a financial “hit and run.”

The OCDA, along with the U.S. Federal Housing Finance Agency Office of Inspector General and U.S. Department of Housing and Urban Development Office of Inspector General, investigated this case.

Prosecutor: Deputy District Attorney George McFetridge, Major Fraud Unit