Christopher Nelson, 46, Henderson, Nevada, and Niket Kulkarni, 38, Los Angeles, California were indicted by the Clark County, Nevada, Grand Jury, along with Thomas J. Adams, Robyn D. Reese, and James Sheridan Reese, in connection with a short sale rescue fraud scheme. The charges include racketeering, pattern of mortgage lending fraud, theft, theft from a person over the age of 60, and failure to place a mortgage fee of over $1,000 in escrow. The defendants operated their business, the American Equity Foundation, between July 2012 and May 2013.
According to the indictment, the defendants are accused of soliciting customers to participate in a short sale program purportedly associated with the federal government called the Neighborhood Stabilization Plan. Defendants falsely represented to their clients that their business could facilitate the short sales of customers’ homes to investors. Clients were also told that they could then lease their homes from the investors for two to four years, before having the opportunity to repurchase those homes at a cost of 90-100% of the home’s market value. Through these representations, the defendants are alleged to have unlawfully obtained more than $133,000 from their clients.
The indictment alleges that customers were informed that AEF was a non-profit agency and, because of this, mortgage lenders would waive the requirement that short sales be arms-length transactions. At least some customers were informed that upfront fees would be applied to first and last month’s rent and to the down payment for repurchasing the home and that fees would be refunded should the program be unsuccessful.
According to the indictment, Nelson acted as president of AEF and promised customers that AEF would return fees paid by AEF’s customers; Kulkarni acted as treasurer and secretary of AEF, trained staff, collected money from customers, created a PayPal account to collect customer fees and was the sole signatory for AEF’s bank account; Adams marketed the business to the public, entered into contracts on AEF’s behalf and obtained office space for AEF; Robyn Reese collected fees from customers and made decisions as to whether customers qualified for the short sale rescue program; and, James Reese acted as AEF’s real estate agent responsible for conducting short sales on behalf of AEF’s clients.
“Indictments such as these set a precedent that fraudulent behavior will not be tolerated and will be aggressively pursued,” said Nevada Attorney General Adam Paul Laxalt . “Mortgage fraud can have devastating effects on homeowners and the economy, and my office will hold accountable those who unlawfully collect fees from homeowners using false promises of solutions.”
Special Agent James Today of the Housing and Urban Development’s Office of the Inspector General (HUD-OIG) added, “Our office continues to be vigilant in protecting FHA insured borrowers from those in the mortgage industry willing to defraud them through foreclosure rescue schemes. This prosecution with the Nevada Attorney General’s Office demonstrates our commitment to protecting HUD’s important work in providing affordable home ownership.”
Nelson and Kulkarni are scheduled for initial appearances before the Eighth Judicial District Court on October 5, 2015.
The case was investigated by the HUD-OIG and the Office of the Special Inspector General for the Troubled Asset Relief Program (SIGTARP). Senior Deputy Attorney General Raya Swift and Deputy Attorney General Michael Kovac are prosecuting the case. An indictment is merely a charging document; every defendant is presumed innocent until and unless proven guilty in a court of law.