Archives For Bank Fraud

Pilar Rose, 58, Fresno, California was charged today with bank fraud, tax evasion, obstructing an IRS tax audit, and aggravated identity theft.

According to court documents, Rose, who managed her husband’s orthodontics practice, committed bank fraud by submitting false financial information to obtain a $1.4 million home refinance and a loan for a BMW. She committed aggravated identity theft by using an acquaintance’s Social Security number for the latter loan.

Rose evaded over $400,000 in taxes in 2014 and 2015. She then altered and produced financial records to the IRS during an audit to make personal expenses appear to be deductible business expenses.

Acting U.S. Attorney Phillip A. Talbert made the announcement.

This case is the product of an investigation by the IRS Criminal Investigation. Assistant U.S. Attorney Joseph Barton is prosecuting the case.

If convicted of evading taxes, Rose faces a maximum penalty of five years in prison and a fine of up to $250,000. If convicted of obstructing an IRS audit, she faces a maximum penalty of three years in prison and a fine of up to $250,000. If convicted of bank fraud, she faces a maximum penalty of 30 years in prison and a fine of up to $1 million. If convicted of aggravated identity theft, she faces a penalty of two years in prison consecutive to any other sentence she may receive and a fine of up to $250,000. Any sentence, however, would be determined at the discretion of the court after consideration of any applicable statutory factors and the Federal Sentencing Guidelines, which take into account a number of variables. The charges are only allegations; the defendant is presumed innocent until and unless proven guilty beyond a reasonable doubt.

Ronald J. McCord, 69, Oklahoma City, Oklahoma, was charged yesterday with defrauding two locally-based banks, Fannie Mae, and others. The charges include bank fraud, money laundering, and making a false statement to a financial institution.

McCord was the former President of First Mortgage Company, LLC (“FMC”), an Oklahoma City, Oklahoma based mortgage lending and loan servicing company.  The Indictment alleges a broad range of fraudulent conduct spanning approximately three years.

McCord is charged in Counts 1 through 7 with defrauding Spirit Bank (“Spirit”) and Citizens State Bank (“Citizens”), two state-chartered financial institutions, as well as their respective residential mortgage subsidiaries, American Southwest Mortgage Corporation (“Mortgage Corp.”) and American Southwest Mortgage Funding Corporation (“Funding Corp.”).  According to the Indictment, in approximately June 2016, an independent audit discovered that McCord had sold more than $14,100,000.00 in Spirit/Mortgage Corp., and Citizens/Funding Corp., loans “out of trust” by failing to repay Spirit/Mortgage Corp., when certain Spirit/Mortgage Corp., initiated loans were refinanced or otherwise paid off.  At the time of this discovery, FMC carried outstanding balances of about $200,000,000.00 and $140,000,000.00 on the Spirit/Mortgage Corp. and Citizens/Funding Corp. lines of credit, respectively.

According to the Indictment, this discovery prompted further internal review.  An internal audit revealed that McCord had misappropriated additional Spirit/Mortgage Corp. and Citizens/Funding Corp. loans by: (1) using FMC’s warehouse line of credit with (i.e., obtaining mortgage loans from) Spirit/Mortgage Corp. or Citizens/Funding Corp., selling those Spirit/Mortgage Corp. or Citizens/Funding Corp. loans to Fannie Mae, then resubmitting the loan documents to Spirit/Mortgage Corp. or Citizens/Funding Corp. to receive additional money from the Spirit/Mortgage Corp. or Citizens/Funding Corp. line of credit; (2) using FMC’s warehouse line of credit with Spirit/Mortgage Corp. or Citizens/Funding Corp. to refinance the resulting loans without repaying Spirit/Mortgage Corp. or Citizens/Funding Corp. the originally loaned funds; (3) using FMC’s Spirit/Mortgage Corp. or Citizens/Funding Corp. line of credit to fund mortgages to borrowers, receiving payments from those borrowers, but never repaying Spirit/Mortgage Corp. or Citizens/Funding Corp.; (4) obtaining funds from Spirit/Mortgage Corp. or Citizens/Funding Corp. for loans that never closed, then failing to return the funds to Spirit/Mortgage Corp. or Citizens/Funding Corp.; and (5) using FMC’s warehouse lines of credit with Spirit/Mortgage Corp. and Citizens/Funding Corp. to “double fund” loans by obtaining funds from both financial institutions to fund the same loans.

The Indictment alleges that McCord’s actions involved Spirit/Mortgage Corp. and Citizens/Funding Corp. loans that totaled approximately $40,000,000.00, in addition to the more than $14,100,000.00 in Spirit/Mortgage and Citizens/Funding Corp. loans that McCord had sold out of trust.

The Indictment further alleges that, upon learning of McCord’s conduct, Spirit/Mortgage Corp., and Citizens/Funding Corp., terminated future warehouse lending to FMC, and instituted new notification requirements that required McCord to assign FMC-funded mortgages to Spirit/Mortgage Corp. and Citizens/Funding Corp., to ensure that the title companies handling those mortgages sent payoffs directly to the banks.  Though McCord filed the assignments as required, his employees contacted the title companies handling the mortgages and directed payments to FMC, not Spirit/Mortgage Corp. and Citizens/Funding Corp.  McCord continued to collect loan payoffs without repaying Spirit/Mortgage Corp. and Citizens/Funding Corp.  He then signed releases on the assigned mortgages after receiving the payoffs, subjecting the properties to potential foreclosure should Spirit/Mortgage Corp. or Citizens/Funding Corp. try to collect payments on the mortgages, to which they held title.

According to Count 8 of the Indictment, Spirit/Mortgage Corp., and Citizens/Funding Corp.’s refusal to fund new FMC mortgages prompted McCord to seek out a new warehouse lender.  In early 2017, McCord began negotiating with CapLOC, LLC, a North Carolina based mortgage lending business, and offered to sell FMC’s mortgage lending business in exchange for quick funding from CapLOC.  In the course of those negotiations, McCord made false statements and representations to obtain CapLOC funds.  McCord then used the money to repay Spirit/Mortgage Corp. part of his outstanding $40,000,000.00 debt.

Finally, the Indictment alleges that, in 2017, FMC serviced approximately 12,000 loans worth a total of approximately $1,800,000,000.00 for the Federal National Mortgage Association (“Fannie Mae”).  Counts 9 through 24 of the Indictment allege that McCord defrauded Fannie Mae by diverting escrow monies intended to pay homeowners’ taxes, insurance, principal, and interest, to cover FMC’s operating expenses.  As a result, McCord bounced checks to more than sixty taxing authorities and borrowers throughout the Oklahoma City area and elsewhere missed making their tax payments.  The Indictment further alleges that McCord laundered the stolen escrow monies by using the funds to write himself checks, pay more than half the purchase price of his son’s $900,000.00 Oklahoma City home, and build a custom vacation home in Colorado.

With regard to the bank fraud and false statement to a financial institution charges in the Indictment, McCord faces up to 30 years in prison and a fine of up to $1,000,000.00 on each count.  He also faces up to 10 years in prison and a $250,000 .00 fine on to each of the money laundering counts. Furthermore, the Indictment seeks forfeiture from McCord in the amount of the proceeds of the fraudulent schemes and in the amount of the property involved in the offenses.

The announcement was made by Timothy J. Downing, United States Attorney for the Western District of Oklahoma.

This case is the result of an investigation by the Federal Housing Finance Agency Office of the Inspector General, Federal Deposit Insurance Corporation Office of Inspector General, and the Federal Bureau of Investigation Oklahoma City Field Office.  It is being prosecuted by Assistant U.S. Attorney Julia E. Barry.

Reference is made to the Indictment and other public filings for further information.  An indictment is only a charge and is not evidence of guilt.  A defendant is presumed innocent and is entitled to a fair trial at which the government must prove guilt beyond a reasonable doubt.  To download a photo of U.S. Attorney Downing, click here.

SAN FRANCISCO ­— Two former senior executives at Sonoma Valley Bank and an attorney for one of its biggest borrowers were sentenced to prison Friday for their roles in defrauding the bank, costing taxpayers and investors millions of dollars when it collapsed in 2010. Sean Cutting, the bank’s former president and CEO, and Brian Melland, its former vice president and chief loan officer, each received eight-year sentences from U.S. District Court Judge Susan Illston.

Source: Sonoma Valley Bank executives sent to prison for bank fraud

Geo Geovanni, 49, and Elizabeth Longerbone, 39, both of Moultrie, Georgia, have been charged today with conspiracy to commit bank fraud and four counts of bank fraud.

According to the indictment, Geovanni and Longerbone devised and executed a mortgage fraud scheme involving “The Landing,” a condominium conversion of a former apartment complex located in Altamonte Springs, Florida. The scheme involved providing the cash-to-close funds on behalf of the buyers, guarantying tenants and rental payments to the buyers, as well as paying post-closing kickbacks of mortgage proceeds to buyers and co-conspirators through entities that Geovanni and Longerbone controlled. None of the incentives or kickbacks were disclosed to the financial institutions that had approved and funded the mortgage loans.

If convicted, each faces a maximum penalty of 30 years in federal prison for each count.

An indictment is merely a formal charge that a defendant has committed one or more violations of federal criminal law, and every defendant is presumed innocent unless, and until, proven guilty.

This case was investigated by the Federal Housing Finance Agency – Office of Inspector General and the FBI. It will be prosecuted by Special Assistant United States Attorney Chris Poor.

Walter Woldt, 55, Crown Point, Indiana, was sentenced on his plea of guilty to conspiracy to commit mail fraud.

According to documents in this case, in 2006 and 2007 Woldt worked with Al Rodenburg, a mortgage broker based in Texas, to purchase 14 residential properties in Northwest Indiana in the span of 30 days with no money down. Defendants Rodenburg and Woldt worked out an arrangement where Woldt obtained mortgages that Rodenburg found for him on multiple properties beginning on January 3, 2007. They continued the process of closing on multiple properties roughly twice a week up through February 1, 2007. They knew that by closing on the properties so quickly mortgages Woldt obtained in early January 2007 would not hit his credit report for at least 30 days thereby depriving subsequent lenders, including lenders who purchased these mortgages in the secondary market, of material information they would want and need to know about Woldt’s debts for purposes of evaluating credit worthiness. Defendant Rodenburg did this for the commission he received on the mortgages Woldt obtained.  Defendant Rodenberg was sentenced on February 22, 2018 to a 14 month prison term, two years of supervised release and ordered to pay $1, 004,991 in restitution.

Woldt was sentenced to 14 months in prison followed by 24 months of home detention and ordered to pay $1,004,991 in restitution. He was ordered to report to the Bureau of Prisons (“BOP”) on August 3, 2018.

The announcement was made by U.S. Attorney Thomas L. Kirsch II.

This case was investigated by the FDIC-Office of Inspector General and was prosecuted by Assistant United States Attorney Diane Berkowitz.

Lyndon Chin, 54, Northport, New York was indicted today for using a 91-year-old man’s real estate properties to fraudulently obtain $8.5 million in unauthorized mortgage loans.

According to the indictment, documents filed in court, and statements made on the record, Chin had acted as a real estate broker for the 91-year-old victim in prior real estate transactions. In that capacity, the defendant helped the victim with the purchase and sale of residential and commercial real estate and had knowledge of the victim’s properties and the corporation through which he owned them.

In October 2015, Chin used his knowledge of the victim’s real estate holdings to falsify documents in the name of the victim’s company and obtain $5 million in mortgage loans on four of the victim’s Lower Manhattan, New York properties without his knowledge. Chin then opened a bank account in the name of the victim’s corporation and deposited approximately $4.4 million of the fraudulently obtained funds into that account. A large portion of the funds was paid to at least 20 personal and corporate bank accounts, including accounts belonging to members of the defendant’s family, and the remainder was used to cover personal expenses such as car payments, insurance payments, and jewelry.

From March through May 2016, Chin secured another $3.5 million in mortgage loans using similar means and deposited approximately $1.9 million into a bank account that he had opened specifically to receive the funds, before transferring the funds into a different account that he controlled.

The defendant is charged in a New York State Supreme Court indictment with two counts of Grand Larceny in the First Degree. [1]

The conduct was uncovered and the matter was referred to the Manhattan District Attorney’s Office after the victim was rejected for a mortgage loan on an unrelated business opportunity due to the existing mortgages that the defendant had fraudulently obtained on his properties. This indictment is the result of a 16-month-long, ongoing investigation by the Office’s Financial Frauds Bureau.

Manhattan District Attorney Cyrus R. Vance, Jr. made the announcement.

Frauds against seniors and other vulnerable residents of Manhattan will be met with the full force of our laws,” said District Attorney Vance. “As alleged in the indictment, the defendant is charged with exploiting his access to a 91-year-old victim’s business in order to falsify corporate documents and secure more than $8 million in fraudulent mortgage loans in just two years. I encourage all victims of financial crime to call our Financial Frauds Bureau at (212) 335-8900.”

Assistant D.A. Caitlin Naun is handling the prosecution of the case under the supervision of Assistant D.A.s Gloria Garcia, Deputy Chief of the Financial Frauds Bureau, and Archana Rao, Chief of the Financial Frauds Bureau, as well as Executive Assistant D.A. Michael Sachs, Chief of the Investigation Division. Trial Preparation Assistant Kelly Lai, Investigator Michael O’Brien, Financial Investigator Elaine Li, and Chief of the Forensic Accounting and Financial Investigations Bureau Robert Demarest also provided valuable assistance on the case.

[1] The charges contained in the indictment are merely allegations, and the defendant is presumed innocent unless and until proven guilty. All factual recitations are derived from documents filed in court and statements made on the record in court.

Dan Heine and Diana Yates, former executives at the Bank of Oswego in Lake Oswego, Oregon, were sentenced today to one count each of conspiracy to commit bank fraud and twelve counts each of falsifying bank entries, reports, and transactions

Dan Heine, a co-founder of the bank, was president, Chief Executive Officer (CEO) and member of the board of directors from September 2004 through September 2014. Diana Yates was executive vice president, Chief Financial Officer (CFO), and secretary of the board of directors from 2004 through March 2012. During the conspiracy Heine and Yates concealed the true financial condition of the bank to regulators and the board of directors by falsely reporting that the bank had title to a property in a straw buyer transaction, falsely reporting that delinquent loans were paid, and falsely reporting the sale of bank owned property.

Heine and Yates were sentenced to 24 and 18 months in prison, respectively.

Dan Heine and Diane Yates orchestrated one of the largest and most complex bank fraud schemes in Oregon’s history. Their selfish acts of greed are deplorable,” said Billy J. Williams, U.S. Attorney for the District of Oregon. “While we urged the court to impose longer sentences, these sentences still serve as a warning to bank executives and others entrusted with fiduciary responsibilities. We will continue to work with federal investigators to protect investors and ensure the trustworthiness of our financial institutions.”

For centuries, the American banking system has served as the bedrock of the U.S. economy. Honest bankers are critical to our financial system. By addressing lies and conspiracies at the Bank of Oswego, the FBI and Department of Justice have helped re-establish the integrity of the financial system we all rely on,” said Renn Cannon, Special Agent in Charge of the FBI in Oregon

A forfeiture and restitution hearing has been scheduled for August 7, 2018. The case was investigated by the FBI and the Federal Deposit Insurance Corporation Office of Inspector General (FDIC-OIG) and prosecuted by Claire Fay, Quinn Harrington, and Michelle Kerin, Assistant U.S. Attorneys for the District of Oregon.


Robert Levie Norris, Jr., 50, New Bern, North Carolina was sentenced today to 48 months in prison for conspiracy to commit bank fraud and obstruction of a federal bank examination.

According to court records, statements made in court, and other public information, Norris was the first President and Chief Executive Officer of Coastal Bank and Trust (CB&T), which opened its doors to customers in 2009.  Norris served in this capacity from April 2009 to June 2013.  As CB&T’s highest ranking executive, Norris was entrusted to oversee all aspects of CB&T’s business and to ensure that CB&T operated in accordance with applicable federal and state laws, rules, and regulations.  In June 2013, it was discovered that Norris had engaged in a scheme to defraud CB&T by engineering fraudulent loan transactions with straw borrowers where the true beneficiaries of the loans were co-conspirators of Norris, business entities controlled by Norris, or Norris himself.  The offending loans included unsecured lines of credit, small business loans, and mortgages for commercial and residential properties.  Norris used his position of trust and authority at CB&T to circumvent the bank’s internal controls and normal loan underwriting procedures.  To conceal his scheme, Norris withheld relevant information about the fraudulent loans from CB&T’s board of directors and examiners from the Board of Governors of the Federal Reserve System.  CB&T suffered losses of approximately $2.4 million as a result of Norris’ conduct.

The Court ordered the term of imprisonment to be followed by 3 years of supervised release.  Norris was also ordered to pay $2,397,475 in restitution. Norris was named in a Criminal Information on April 18, 2017 alleging the above offenses.  Norris pled guilty to the charges on May 17, 2017.

The United States Attorney for the Eastern District of North Carolina, Robert J. Higdon, Jr., made the announcement.

When a bank official uses their position for their own personal profit they do more than commit a federal crime, they abuse their power and violate the public’s trust. Mr. Norris’ sentence today is proof of the commitment of the FBI to work with other law enforcement agencies to find these offenders and hold them accountable,” said John Strong, Special Agent in Charge of the FBI in North Carolina.

United States Attorney Robert J. Higdon, Jr. said, “Mr. Norris used his position of trust to unlawfully line his pockets with money to which he was not entitled. The USAO-EDNC will always work with federal, state, and local law enforcement to vigorously investigate and prosecute this type of criminal conduct. Mr. Norris’ sentence sends a strong message that this type of conduct will not be tolerated and will be punished accordingly.”

Mr. Norris’ fraud scheme and deception of bank examiners is the type of criminal conduct that impedes federal regulators from effectively supervising banking institutions,” said Mark Bialek, Inspector General of the Board of Governors of the Federal Reserve System and Bureau of Consumer Financial Protection. “Today’s sentencing is one more step in a joint effort with our federal partners to hold accountable those who undermine the integrity of those institutions.”

This sentencing holds the defendant accountable for misusing his position as the bank President and CEO to fabricate fraudulent loans with straw borrowers, evade internal controls, and withhold information from the bank’s Board.  The underlying conspiracy cost the bank millions of dollars.  This case demonstrates the importance of cooperation among law enforcement partners to combat such criminal conduct and maintain the integrity of financial institutions,” said FDIC Inspector General Jay N. Lerner.

Investigation of this case was conducted by the Federal Bureau of Investigation, the Board of Governors of the Federal Reserve System – Office of Inspector General, and the Federal Deposit Insurance Corporation – Office of Inspector General. Assistant United States Attorney Adam Hulbig prosecuted the case for the government.

Abolghasseni “Abe” Alizadeh, 59, Granite Bay, California was sentenced today to four years and eight months in prison.  Alizadeh pleaded guilty on January 12, 2018 to wire fraud, bank fraud and making false statements to a federally insured financial institution.

According to court documents, Alizadeh, a Sacramento-area commercial real estate developer, restaurateur and owner of Kobra Properties, came up with a scheme to fraudulently purchase land that he planned to develop. Banks usually loan up to 60 to 65 percent of the loan to-value ratio (LTV) on undeveloped commercial property. (LTV ratio is the comparison between the amount of the loan and the value of the property.) To circumvent the banks and fraudulently get a higher level of financing, Alizadeh submitted altered purchase contracts to the banks that greatly inflated the purported purchase price. The banks, which competed for Alizadeh’s business, were unaware that the purchase prices were inflated and sometimes loaned well in excess of the loan-to-value ratio. By concealing the true purchase price from the banks, Alizadeh received substantial amounts of cash, sometimes millions of dollars, at the close of escrow and avoided making the full down payment or, in some instances, any down payment.

Alizadeh was assisted in this scheme by co-defendant Mary Sue Weaver, 64, currently of Scottsdale, Arizona and formerly of Lincoln, California, who was employed at a local title company. According to the plea agreement, Alizadeh would write checks for the down payment, but because he lacked funds to cover the checks, he would call Weaver and ask her to delay depositing the checks until after escrow closed. Once escrow closed, Weaver disbursed funds from the title company’s escrow trust account to Kobra Properties. Kobra Properties then used those funds to cover its down payment and other costs. In this way, it appeared as though Alizadeh was making a substantial down payment when in fact he was not.

On April 29, 2005, Alizadeh submitted a fraudulent purchase contract to Central Pacific Bank, which induced the bank to lend him nearly $4 million for the purchase of 10.3 acres of property. This loan represented over 96 percent loan-to-value ratio. Similarly, on October 21, 2005, Alizadeh received over $22 million in funding and loans to purchase the Turtle Island property, when in actuality, the original purchase price was $10 million. In March 2006, Alizadeh also falsely claimed to Bank of Sacramento that he was paying $36 per square foot for a piece of property where he intended to build a TGI Friday’s restaurant. In reality, Alizadeh was paying only $21 per square foot. This resulted in a $650,000 inflation of the true purchase price. Alizadeh’s entire scheme, involving no fewer than six properties in the Sacramento area, resulted in a loss to various financial institutions of over $22 million.

U.S. District Judge Garland E. Burrell Jr. also ordered Alizadeh to pay $15,879,945 in restitution to the victims of his crimes.

On December 15, 2017, Weaver pleaded guilty to one count of wire fraud and one count of bank fraud and is scheduled for sentencing on June 22, 2018. She faces a maximum statutory penalty of 30 years in prison on each count and a $1 million fine. The actual sentence, however, will be determined at the discretion of the court after consideration of any applicable statutory factors and the Federal Sentencing Guidelines, which take into account a number of variables.

The announcement was made by U.S. Attorney McGregor W. Scott.

The defendant used his reputation as a local business leader to perpetrate a complex fraud scheme to enrich himself at the expense of others,” stated U.S. Attorney Scott. “The U.S. Attorney’s Office will continue to work diligently with its law enforcement partners to expose schemes like this and bring criminals like the defendant to justice.

The scope of the fraud is staggering,” said Michael T. Batdorf, Special Agent in Charge, IRS Criminal Investigation. “As a well-known real-estate developer, title companies and banks competed for Mr. Alizadeh’s business. He submitted altered purchase contracts that greatly inflated the purchase price. This scheme cost financial institutions over $22 million. While this sentence cannot reverse the damage caused by Alizadeh and his co-defendant, it highlights the ongoing commitment of IRS-CI to hold accountable those involved in these types of crimes.

Today’s sentencing holds defendant Alizadeh accountable for causing more than $22 million in losses to the financial institutions, by corruptly inflating the value of property to obtain millions of dollars in fraudulent bank loans,” stated FDIC Inspector General Jay N. Lerner. “This case is a powerful example of law enforcement cooperation to combat fraud and bring such swindlers to justice.”

This case is the product of an investigation by the Federal Bureau of Investigation, the IRS Criminal Investigation, and the Federal Deposit Insurance Corporation, Office of Inspector General. Assistant U.S. Attorneys Michael D. Anderson and Heiko P. Coppola are prosecuting the case.

Dean Rossi, 49, Warrington, Pennsylvania, was found guilty by a federal jury yesterday of bank, mail and loan fraud in connection with a mortgage scheme.

Rossi, who owned numerous low-income properties throughout the Philadelphia area, misappropriated more than $643,000 from real estate closings. Specifically, after obtaining bank loans to purchase or refinance residential properties, Rossi teamed up with corrupt title/closing agents to divert a substantial portion of the loan proceeds, and then he pocketed cash from the settlements which should have been used to pay off prior mortgages and tax liens. In addition, to prevent the scheme from being detected, Rossi continued to cause payments to be made on the prior existing mortgages years after those loans were supposed to have been paid in full.

Rossi faces a maximum possible sentence of 120 years’ imprisonment, five years of supervised release, and a $4 million fine.

The announcement was made by U.S. Attorney William M. McSwain.

Our investigators and trial team did a phenomenal job of following a trail of evidence that goes back more than a decade,” said U.S. Attorney McSwain. “The defendant went to great lengths to cover his tracks, but due to the hard work of our agents and prosecutors, his long-running scheme was exposed.”

The case was investigated by the U.S. Postal Inspection Service and the Federal Bureau of Investigation, and is being prosecuted by Assistant United States Attorney Joel Goldstein.