Archives For Bankruptcy Fraud

Michael Rubino, 59, Clearwater, Florida, was sentenced today to 13 months in federal prison for bankruptcy fraud and equity skimming.

According to court documents, Rubino devised a scheme to defraud mortgage lenders that were holding recorded mortgage notes, as well as the Federal National Mortgage Association (“Fannie Mae”) and the Federal Housing Agency (“FHA”), which guaranteed the mortgage notes. In furtherance of his scheme, Rubino searched Pinellas County Clerk of Court records to find properties in various stages of foreclosure. He then contacted distressed homeowners who had already defaulted on their mortgages and had vacated their properties. Rubino offered to take control of, manage, and rent the properties to new tenants. Rubino told the homeowners that he would use the rental income he obtained to pay the mortgages and, in some instances, pay the homeowner a portion of the rent he collected. At no time did Rubino hold any legal or equitable interest in these properties, or have authorization from the mortgage lenders, Fannie Mae, or FHA, to rent out the properties. Further, he failed to remit any of the collected rent monies to FHA, as required by law.

Additionally, in order to prevent Fannie Mae and the mortgage lenders from lawfully foreclosing on properties secured by mortgage notes, Rubino engaged in a bankruptcy fraud scheme whereby he filed fraudulent bankruptcy petitions in the names of the distressed homeowners, without their knowledge or consent, just prior to the scheduled foreclosure sale. These fraudulent bankruptcies triggered the automatic stay provision of the bankruptcy code, preventing the mortgage note holders from conducting the foreclosure sale. The fraudulent bankruptcy petitions filed by Rubino allowed him to continue to collect rent monies to which he was not entitled.

Rubino had pleaded guilty on January 31, 2018.

This case was investigated by the U.S. Department of Housing and Urban Development – Office of Inspector and the Federal Housing Finance Agency – Office of Inspector General. The Office of the U.S. Trustee for the Middle District of Florida also provided substantial assistance. It was prosecuted by Special Assistant United States Attorney Chris Poor.

Christopher Coburn, 33, Winter Garden, Florida was indicted today on six counts of bankruptcy fraud. If convicted, he faces a maximum penalty of 30 years in federal prison.

According to the indictment, Coburn solicited homeowners whose mortgages were in default and offered to rescue their homes from foreclosure. In order to prevent the Federal National Mortgage Association (“Fannie Mae”) and multiple financial institutions holding mortgages from lawfully foreclosing on homeowners’ properties, Coburn engaged in a bankruptcy fraud scheme whereby he filed or caused to be filed fraudulent bankruptcy petitions in the name of homeowners, without their knowledge or consent, just prior to the scheduled foreclosure sale dates. These fraudulent bankruptcies triggered the automatic stay provision of the bankruptcy code, preventing Fannie Mae and the financial institutions from conducting lawful foreclosure sales and obtaining title to the properties. The fraudulent petitions enabled Coburn to collect fees and allowed him to refer the properties to real estate agents in order to obtain ill-gotten referral fees.

United States Attorney Maria Chapa Lopez made the announcement.

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. The Office of the United States Trustee for the Middle District of Florida (Orlando Division) also provided substantial assistance. It will be prosecuted by Special Assistant United States Attorney Chris Poor.

 

David Lyle Morgan, 53, Tampa, Florida, has been charged with two counts of bankruptcy fraud and one count of falsification of records in a bankruptcy proceeding. If convicted, he faces a maximum penalty of 30 years in federal prison.

According to the indictment, Morgan, a licensed realtor, entered into a contract with a homeowner to sell a property in foreclosure. In order to prevent the Federal National Mortgage Association (“Fannie Mae”) from lawfully foreclosing on the homeowner’s property, Morgan engaged in a bankruptcy fraud scheme whereby he filed fraudulent bankruptcy petitions in the homeowner’s name, without the homeowner’s knowledge or consent, just prior to the scheduled foreclosure sale dates. These fraudulent bankruptcies invoked the automatic stay provision of the bankruptcy code and prevented Fannie Mae from conducting the sale and obtaining title to the property. They also allowed Morgan to continue his efforts to sell the property to obtain illegal real estate commissions.

The indictment further alleges that Morgan made false declarations on a fraudulent bankruptcy petition that he had filed in the name of the homeowner, impeding the proper administration of a bankruptcy proceeding.

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.

United States Attorney Maria Chapa Lopez made the announcement.

This case was investigated by the Federal Housing Finance Agency – Office of Inspector General. The Office of the United States Trustee for the Middle District of Florida (Tampa Division) also provided substantial assistance. It will be prosecuted by Special Assistant United States Attorney Chris Poor.

Andrew Valles, Jemal Lilly, Mark Bellinger and Arnold Millman were indicted by a grand jury in the San Diego Superior Court on 194 criminal felony counts for allegedly operating a mortgage fraud scheme throughout Southern California. The scheme resulted in a loss of approximately $2 million for 40 victims who were seeking loans to help pay off their mortgages. Many of the victims lost their homes and life savings.

According to the indictment, between 2012 and 2017, the defendants conspired using a fake insurance company, “SafeCare,” which promised to provide home loan services at a low monthly price to primarily Latino and African American families. During this time, the defendants would delay foreclosures and eviction actions by filing false bankruptcy and other court documents under fictitious names. They would instruct victims to deposit illegal advance fees and other large payments into a bank account controlled by the defendants and, when the promised loan did not come through, would proceed with the fabricated filings. One of the defendants allegedly committed identity theft by posing as an attorney purporting to assist the victims. The victims were charged additional fees for the false “attorney services.” The scheme took place in San Diego, Riverside, Orange, Los Angeles, and San Bernardino counties in California.

California Attorney General Xavier Becerra announced the indictment of the four individuals.

The perpetrators of this mortgage fraud stole the life savings of decent Californians,” said Attorney General Becerra. “It’s too common a story with all-too-common tactics. I hope today’s arrests and indictments break the stride of those who prey on hard working Americans and betray their trust. This case demonstrates the potency of multi-jurisdictional law enforcement agencies collaborating to fight fraud.”

These individuals are alleged to have played a role in this scheme by promising distressed homeowners new financing only to turn around and deliver bad credit. These actions not only cost the government sponsored enterprises and financial institutions hundreds of thousands of dollars, but they harmed consumers who were trying to do the right thing. FHFA-OIG thanks its law enforcement partners for their efforts,” said Rene Febles, Deputy Inspector General for Investigations for the Federal Housing Finance Agency Office of the Inspector General.

This case is evidence that insurance fraud is not a victimless crime,” said Insurance Commissioner Dave Jones. “These suspects allegedly deceived dozens of victims to the tune of over $2 million, leaving them uninsured and at great financial risk. Thanks to the hard work of our law enforcement partners, we were able to work together to unravel this case and stop this criminal enterprise.”

Two of defendants, Jemal Lilly and Mark Bellinger were arrested on January 30, 2018; they pled not guilty at their arraignments on February 2 and February 13, 2018. Defendants Andrew Valles and Arnold Millman have not been arrested and are currently at large and out of custody.

The arrests were the product of a joint investigation by the California Department of Justice, the California Department of Insurance, and the Federal Housing Finance Agency Office of the Inspector General (FHFA-OIG). The United States Trustee Program assisted in providing a grand jury witness.

Attorney General Becerra is committed to protecting Californians from criminal fraudsters. If you are a homeowner who believes you may have been targeted by SafeCare, please contact the California Department of Justice. For those located in California, please call: 1-800-952-5225. For those located outside of California, please call: 1-916-322-3360.

It is important to note that a criminal indictment contains charges that must be proven in a court of law. Every defendant is presumed innocent until proven guilty.

MichaelMickey” Henschel, 68, Van Nuys, California was indicted on an 11-counts for his alleged role as the mastermind of a foreclosure-avoidance scam that targeted distressed homeowner.  He was arrested on federal charges that he orchestrated a bankruptcy fraud scheme that brought in more than $7 million from victims. Henschel was ordered detained pending trial.

According to the indictment unsealed after his arrest, Henschel owned a Van Nuys-based company he operated under several names, including Valueline. Henschel and several co-conspirators marketed illegal foreclosure- and eviction-delay services to homeowners who had defaulted on their mortgages and renters who were facing eviction. As part of the scheme, Henschel and the others allegedly convinced homeowners to sign fake grant deeds that purported to show the homeowners had conveyed an interest in their properties to fictional third parties.

Henschel and his co-conspirators allegedly filed bankruptcies in the names of fictional persons and entities to trigger the automatic stay provision of the Bankruptcy Code, which meant that foreclosure sales were stalled.

Henschel allegedly delayed evictions in a similar way, filing fraudulent documents in state eviction actions and sending similar documents to sheriff’s offices.

Henschel allegedly charged some homeowners large fees before agreeing to clear title to their properties, in addition to the monthly fees paid for the illegal services. During the course of the scheme, from October 2010 through July 2013, Henschel and his co-conspirators collected more than $7 million, according to the indictment.

The indictment charges Henschel with one count of conspiracy, eight counts of bankruptcy fraud and two counts of wire fraud.

Following his arrest, Henschel was arraigned on the indictment. He entered a not guilty plea, and a trial was scheduled for August 8, 2017.

If he is convicted of the charges in the indictment, Henschel would face a statutory maximum sentence of five years in federal prison for each of the conspiracy bankruptcy fraud counts. The two wire fraud counts carry a statutory maximum sentence of 20 years.

The case against Henschel is the result of an investigation by the FBI and FHFA-OIG, which received assistance from the Alameda County District Attorney’s Office and the United States Trustee’s Office for the Central District of California.

This case is being prosecuted by Assistant United States Attorney Kerry L. Quinn of the Major Frauds Section.

Barbara Jean Dennis, 60, Las Vegas, NV, a  former Nevada real estate agent who owned at least 12 rental properties in Nevada and Texas and filed multiple bankruptcy petitions to avoid paying the mortgages, has been sentenced to 11 months in prison, two years of supervised release, and ordered to pay a fine of $10,000 and restitution of $83,000.  She was sentenced on Tuesday, September 20, 2016 by U.S. District Judge Kent J. Dawson. Judge Dawson also entered an order restricting Dennis from engaging in real estate business during the period she is on supervised release.

Dennis pleaded guilty in February to bankruptcy fraud, admitting that she used the automatic stay provision in bankruptcy proceedings to avoid paying the mortgages, while at the same time, collecting rent from her tenants.  Dennis filed three bankruptcy petitions in the District of Nevada and two in the Southern District of Texas between August 2009 and November 2010. The filing of the bankruptcy petitions caused the bankruptcy court to issue an automatic stay, which prevented the mortgage lenders from filing foreclosure proceedings on her properties during the pendency of the bankruptcy proceedings. Dennis also delayed the bankruptcy cases by failing to appear at hearings and meetings, failing to submit supporting financial documents and other paperwork to the Court, and failing to disclose prior bankruptcy cases. In one case, Dennis filed the bankruptcy petition under a false name and failed to disclose the other petitions and the names under which they had been filed. Over the course of the fraud scheme, from Aug. 31, 2009, through Dec. 17, 2010, Dennis received at least $150,000, but not more than $250,000 in rental income.

As this case demonstrates, the fallout from the housing crisis in Nevada is still impacting federal investigations and prosecutions,” said U.S. Attorney Daniel G. Bogden for the District of Nevada in announcing the sentence.  “The prosecution of these cases typically takes years and requires a significant amount of resources. This sophisticated fraud scheme involved mortgage fraud, bankruptcy fraud, 12 properties in two states, and five bankruptcy petitions.”

The sen case was prosecuted by Assistant U.S. Attorney Kathryn C. Newman and investigated by the FBI.

 

 

Murray O. Wilhoite, Jr., 68, Franklin, Tennessee, was convicted of three felony charges following a trial before U.S. District Court Judge Aleta A. Trauger.  The jury convicted Wilhoite of making a false statement to a bank, making a false statement in a federal bankruptcy filing, and making a false statement under oath during a bankruptcy hearing.

Evidence presented during the trial demonstrated that Wilhoite obtained a $1.2 million loan in December 2007 by pledging, as collateral, a Franklin, Tennessee property that he did not own. During trial, testimony and exhibits proved that Wilhoite knowingly misrepresented to an FDIC-insured bank that he owned certain real property that he pledged as collateral. However, as trial evidence proved, the property was owned at all relevant times by his father.

In documents signed during the closing for this loan, Wilhoite falsely represented that he was the owner and titleholder of the property, and the bank relied on his statements in permitting him to obtain a loan using the Franklin property as collateral in lieu of a down payment.  Wilhoite subsequently lied during a 2011 bankruptcy filing, by again misrepresenting that he owned the Franklin property, and did so for the purpose of preventing the bank from foreclosing on this property after he defaulted on his loan. Wilhoite lied again at a 2013 hearing before the U.S. Bankruptcy Court for the Middle District of Tennessee, during which he perjured himself by falsely stating that he had not known that the Franklin property was designated as collateral for the loan. The evidence at trial proved that Wilhoite made the bankruptcy-related false statements knowingly and with the intent to deceive.

Wilhoite faces up to 30 years in prison and a fine of up to $1,000,000 on the false statement to a bank charge, and up to 5 years in prison and fines of up to $250,000 on the other charges. Wilhoite will be sentenced by Judge Trauger on September 23, 2016. The sentence will be imposed by the Court after consideration of the U.S. Sentencing Guidelines and applicable federal statutes.

The conviction was announced by announced United States Attorney David Rivera.  The case was investigated by the Federal Bureau of Investigation and the Office of the United States Trustee. The case is being prosecuted by Assistant U.S. Attorneys Sandra G. Moses and William F. Abely.

Hugo O. Parra, 43, Cypress, Texas; Carmen P. Turner, 55, Missouri City, Texas; LaTasha Riles, 47, Huntsville, Texas; Leslie Nicole Breaux, 40, Sugar Land, Texas; and Jermaine S. Thomas, Houston, Texas 40; Angelina Gailey, 57, Houston, Texas; and Patrick Lee Gailey, 25, Houston, Texas were each charged by a federal grand jury in separate indictments alleging the individuals filed multiple bankruptcy cases to prevent creditors from initiating foreclosure proceedings against their properties. All defendants are expected to appear before a U.S. magistrate judge in the near future.

The individuals are each charged with filing multiple bankruptcy cases to obtain an “automatic stay” from the bankruptcy courts which would prevent their creditors from initiating foreclosure proceedings against property for which they had outstanding loans.

Each defendant filed multiple bankruptcy cases to prevent a foreclosure proceeding by their creditors, according to the indictments. Each time a creditor would issue a “Notice of Foreclosure,” the defendants would allegedly file a bankruptcy case in order to obtain an automatic stay of the foreclosure. The charges allege that they would take no further action to abide by the requirements of the court to file additional documents and submit a payment plan to the court to pay their debts under the protection of the bankruptcy laws. Following a 45-day-period of no action by the defendants, their cases would be dismissed, according to the indictments.

The number of bankruptcy cases the defendants allegedly filed ranged from four within less than two years to 12 over a five-year-period.

The defendants did not make any payments to their creditors under a court approved payment plan, according to the charges. Additionally, each time a defendant filed a bankruptcy case, he/she allegedly failed to list all of the cases they had previously filed. They also signed each filing as being true and correct under penalty of perjury, according to the indictments.

Each person is charged with bankruptcy fraud-scheme to defraud and making false declarations under penalty of perjury. If convicted of either charge, they face up to five years in federal prison and a possible $250,000 maximum fine.

The indictments were announced by U.S. Attorney Kenneth Magidson.The FBI conducted the investigations with the assistance of the U.S. Trustee’s Office. Assistant U.S. Attorney Quincy L. Ollison is prosecuting the cases.

Terry Meisinger, 75, Seal Beach, California, was sentenced to 8 years in federal prison in connection with his operation of a bogus mortgage rescue scheme in which is made false promises to dozens of distressed homeowners, filed fraudulent bankruptcies to delay foreclosure and rented the properties to third parties during the bankruptcy delays. United States District Judge Virginia A. Phillips rejected Meisinger’s arguments that his age merited a lower sentence and noted that, even if Meisinger was released from prison when he was 80 years old, he would still pose a danger to the public. Continue Reading…

David W. Griffin, 44, Lutz, to three years in federal prison for bankruptcy fraud and making a false statement during a bankruptcy proceeding.

According to court documents, Griffin operated a foreclosure rescue scheme through his companies, Bay2Bay Area Holding, LLC and Business Development Consultants, LLC.  The purpose of the scheme was to obtain quitclaim or warranty deeds from distressed homeowners facing foreclosure in return for false promises to rescue their homes from foreclosure by negotiating with creditors, renting the properties back to the homeowners to obtain rental income, and falsely promising that the homeowners could repurchase the properties from Griffin. To maximize his rental income, Griffin also prevented creditors and guarantors, including the Fannie Mae and the Federal Housing Administration, from pursuing lawful foreclosure and eviction actions against homeowners who had defaulted on their mortgages. This was accomplished by filing, and causing to be filed, fraudulent bankruptcies in the names of the homeowners without their knowledge or consent.  Continue Reading…