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American Financial Network, Inc., a mortgage lender based in Brea, California, has agreed to pay $1,037,145 to resolve allegations that it improperly and fraudulently originated government-backed mortgage loans insured by the Federal Housing Administration (FHA), a component of the U.S. Department of Housing and Urban Development (HUD).

Since at least December 2011, AFN has been a participant in FHA’s Direct Endorsement Program. Through this program, a lender such as AFN is authorized to originate and approve mortgage loans to be insured by FHA without any prior review or approval by FHA. Lenders such as AFN are responsible for carefully underwriting the mortgage to make sure that it meets all FHA requirements. Once a mortgage loan is insured by FHA, if the borrower defaults or is unable to repay the mortgage, the lender that holds the mortgage note can submit a claim for insurance benefits to FHA to cover its losses.

The settlement resolves allegations that between December 2011 and March 2019, AFN knowingly underwrote certain FHA mortgages and approved for insurance certain mortgages that did not meet FHA requirements or qualify for insurance, resulting in losses to the United States when the borrowers defaulted on those mortgages. The settlement further resolves allegations that AFN knowingly failed to perform quality control reviews that it was required to perform.

This case began in March 2019 when a whistleblower, a former loan processor with AFN, filed a qui tam complaint under seal in federal court in Spokane. When a whistleblower, or “relator,” files a qui tam complaint, the False Claims Act requires the United States to investigate the allegations and elect whether to intervene and take over the action or to decline to intervene and allow the relator to go forward with the litigation on behalf of the United States. The relator is generally able to then share in any recovery. Pursuant to the settlement agreement, the relator in this case will receive $228,172 of the settlement, and will also recover her attorney’s fees, expenses, and costs.

Vanessa R. Waldref, the United States Attorney for the Eastern District of Washington, made the announcement.

FHA-backed mortgages are a critical resource for first-time homebuyers, moderate-income borrowers, and families who have suffered negative credit due to the pandemic or other events out of their control,” said U.S. Attorney Waldref. “By improperly originating ineligible mortgages, lenders take advantage of the limited resources of the FHA program and unfairly pass the risk of loss onto the public.

Quality and affordable housing is a critical issue in Eastern Washington and across the nation,” said U.S. Attorney Waldref. “Protecting the resources that support families who dream of purchasing their first home makes our community stronger. I commend the exceptional investigative work by Veterans Affairs Office of Inspector General and HUD’s Office of Inspector General that holds accountable those who abuse housing programs.”

HUD’s Office of Inspector General is committed to working with the Department of Justice and our law enforcement partners to ensure that federal programs designed to help our nation’s most vulnerable are not abused,” said Special Agent-in-Charge Scott Tanchak. “Today’s settlement demonstrates the Government’s commitment to protecting the integrity of HUD programs.

Investigations such as these help safeguard the integrity of the home loan approval process and protect vulnerable veterans from fraudulent lending practices,” said Special Agent in Charge Jason Root of the Department of Veterans Affairs Office of Inspector General’s Northwest Field Office. “The VA OIG thanks the U.S. Attorney’s Office for the Eastern District of Washington and HUD’s Office of Inspector General for their partnership in this joint investigation.

The settlement was the result of a joint investigation conducted by the U.S. Attorney’s Office for the Eastern District of Washington, HUD’s Office of Inspector General, and the U.S. Department of Veterans Affairs, Office of Inspector General, Spokane Resident Office.

Assistant United States Attorneys Tyler H.L. Tornabene and Dan Fruchter and Special Assistant United States Attorney Frieda K. Zimmerman handled this matter on behalf of the United States. The claims resolved by the settlement are allegations only and there has been no determination of liability.

Todd Ament, 57, Orange, California, the former president and CEO of the Anaheim Chamber of Commerce is expected to appear this afternoon in federal court after being charged with lying to a mortgage lender about his assets while seeking a loan for a $1.5 million home in the San Bernardino Mountains.

Ament was charged in a 99-page criminal complaint filed Monday afternoon in United States District Court with making false statements to a financial institution while seeking funding in late 2020 to purchase a second home, a five-bedroom residence in Big Bear City, California.

The affidavit in support of the criminal complaint outlines a plot in which Ament – with the assistance of a political consultant who was a partner at a national public relations firm – devised a scheme to launder proceeds intended for the Chamber through the PR firm into Ament’s bank account. This infusion of cash – which appears to have been a loan from the PR firm engineered by the political consultant – allegedly influenced the lender’s decision to fund the mortgage.

The scheme led to a series of wire transfers from the PR firm that ultimately gave Ament $205,000 and made it appear he had enough cash on hand to secure the home loan, according to the affidavit. Ament allegedly used some of that money for the down payment, and some was used to make an out-of-escrow payment to the seller. The affidavit states that Ament made a $200,000 payment directly to the seller in an apparent effort to reduce the sale price of the house, thus reducing property taxes and lowering the commission to the seller’s real estate agent, the affidavit states.

An investigation outlined in the affidavit revealed that Ament and the political consultant had a close relationship for several years, one that included leading a small group of Anaheim public officials, consultants and business leaders. That group –described by Ament and the political consultant as a “family” and a “cabal” – met regularly at “retreats” to allegedly exert influence over government operations in Anaheim, according to the affidavit.

Ament and the political consultant also allegedly devised a scheme to divert proceeds intended for the Chamber through the PR firm and into Ament’s personal bank account. The affidavit alleges that Ament and the political consultant schemed to defraud a cannabis company that had retained the political consultant to lobby for favorable cannabis-related legislation in Anaheim. The cannabis company paid $225,000 to the Chamber with the understanding that it would have access to a task force that crafted such legislation, but at least $31,000 of that money was paid directly to Ament without those payments being disclosed to the client, the affidavit alleges.

The charge of making false statements to a financial institution carries a statutory maximum sentence of 30 years in federal prison.

A criminal complaint contains allegations that a defendant has committed a crime. Every defendant is presumed to be innocent until and unless proven guilty in court.

The FBI and IRS Criminal Investigation are conducting the investigation in this matter.

Assistant United States Attorneys Daniel H. Ahn, Daniel S. Lim and Melissa S. Rabbani of the Santa Ana Branch Office are prosecuting this case.

James Christopher Castle, 57, formerly of Petaluma, California was sentenced today to 15 years in prison for a bank fraud scheme that sought to fraudulently eliminate home mortgages and then profit on the subsequent home sales.

According to evidence at trial, in May 2020, Castle was extradited to the United States from Australia. Castle had fled to New Zealand and then Australia in 2011 when it became clear that his scheme was unraveling. After a three-year extradition process, Castle was transported back to the United States by the U.S. Marshals Service to stand trial in the United States.

Between April 22, 2010, and November 18, 2011, Castle was the leader of a conspiracy that ran a “mortgage elimination program” that purported to help distressed homeowners avoid foreclosure. The conspirators fraudulently altered the chain of title on residential properties, sold the properties, and received the sales proceeds.

As a requirement for participation in the “mortgage elimination program,” the conspirators enrolled homeowners as members in a Nevada City-based church named Shon-te-East-a, Walks With Spirit, or its successor entity Pillow Foundation. The conspirators told the homeowners that these entities would offer protection against the banks.

Castle directed other co-conspirators in all aspects of the mortgage elimination program, including recruiting homeowners into the scheme, marshaling the necessary recorded documents, and guiding the homes through sale. Once the homeowner enrolled with Shon-te-East-a or Pillow Foundation, Castle would cause a sham deed of trust to be created and recorded, giving the impression that the homeowner had refinanced the mortgage loan with a new lender. In reality, the new lender was a fake entity controlled by the conspirators, and the homeowner owed no money to the purported new lender.

The next step in the process was also a recorded document. The conspirators caused a fake deed of reconveyance to be recorded, giving the appearance that the true mortgage loan had been discharged and that the true lienholder no longer had a security interest in the home.

With title appearing to be clear, the conspirators caused the sale of the home and split the proceeds between the co-conspirators and the homeowners.

In total, 37 properties were sold through the Shon-te-East-a conspiracy. The conspirators recorded fraudulent documents on an additional approximately 100 homes but were unable to sell these before the scheme unraveled.

On Aug. 2, 2021, a jury found Castle guilty of 35 counts of bank fraud.

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

Three other co-defendants have previously entered guilty pleas. On April 21, 2017, Remus A. Kirkpatrick, 65, formerly of Oceanside, California pleaded guilty to one count of falsely making writings of lending associations and was sentenced to six years in prison. On May 26, 2017, Michael Romano, 75, Benicia, California pleaded guilty to conspiracy and was sentenced to three years in prison. On July 14, 2017, Laura Pezzi, Roseville, California pleaded guilty to falsely making writings of lending associations and was sentenced to time served.

In related cases, on September 4, 2015, Tisha Trites and Todd Smith, both of San Diego, California pleaded guilty to related charges. Trites is scheduled to be sentenced on June 14, 2022, and Smith was sentenced to two years in prison.

Two other co-defendants, George B. Larsen, 60, San Rafael, California and Larry Todt, 70, Malibu, California were convicted of conspiracy and bank fraud following a jury trial in December 2017. Larsen was sentenced to 10 years in prison, and Todt was sentenced to 7 years and three months in prison.

Co-defendant John Michael DiChiara passed away on August 24, 2019, while awaiting trial.

This case is the product of an investigation by the Federal Bureau of Investigation. Assistant U.S. Attorney Audrey B. Hemesath is prosecuting the case.

 

Adolfo Schoneke, 44, Torrance, California  pleaded guilty today to a federal criminal charge for participating with his sister in a $6 million real estate scam that involved listing homes without the owners’ consent and collecting money from multiple would-be buyers for each of the not-for-sale homes.

On April 4, 2020, Schoneke’s sister, Bianca Gonzalez, 39, a.k.a. Blanca Schoneke, pleaded guilty to the same criminal charge.

According to court papers, from November 2013 to December 2016, Schoneke and Gonzalez, along with co-conspirators, operated real estate and escrow companies based in Cerritos, La Palma and Long Beach, California under a variety of names, including MCR and West Coast Realty Services. Schoneke, Gonzalez and other co-conspirators found properties that they would list for sale – even though they did not intend to sell them to anyone.

The properties were listed on real estate websites such as the Multiple Listing Service (MLS) and were marketed as below-market short sales opportunities. In some cases, the homes were marketed through open houses arranged by tricking homeowners into allowing their homes to be used.

Multiple offers were accepted for each of the not-for-sale properties, but the co-conspirators hid this fact from the victims and instead led each victim to believe that his or her offer was the only one accepted. The co-conspirators strung victims along – sometimes for years – by telling them closings were being delayed because lenders needed to approve the purported short sales.

At the co-conspirators’ direction, office workers opened bank accounts to hide the co-conspirators’ involvement in the fraud. Those accounts were used to receive down payments on the homes and other payments from victims who were convinced to transfer the full “purchase price” after receiving forged short sale approval letters. The co-conspirators directed the office workers to withdraw large amounts of cash from these accounts, which made the proceeds harder to trace.

Investigators estimate that several hundred victims collectively lost more than $6 million during the scheme.

A co-conspirator, Mario Gonzalez, 50, was charged in a related case and pleaded guilty in January 2019 to conspiracy to commit wire fraud. His sentencing is scheduled for October 3, 2022.

Adolfo Schoneke pleaded guilty to one count of conspiracy to commit wire fraud and Bianca Gonzalez’s sentencing hearing is scheduled for October 3, 2022.

United States District Judge R. Gary Klausner has scheduled an August 8,2022 sentencing hearing, at which time Schoneke will face a statutory maximum sentence of 20 years in federal prison.

The FBI and the Federal Deposit Insurance Corporation, Office of Inspector General investigated this matter. The investigation was initiated by numerous complaints to the Long Beach Police Department and the Los Angeles County Sheriff’s Department, both of which provided substantial assistance during the federal investigation.

Assistant United States Attorney Kerry L. Quinn of the Major Frauds Section is prosecuting this case.

 

Steven Tetsuya Morizono, 59, Mission Viejo, California, and Albert Lugene Lim, 53, Laguna Niguel, California, a ringleader and his brother-in-law have been indicted for their participation in a multi-state scheme involving mortgage fraud, credit repair and government loan fraud.

The indictment remains sealed to others charged but not as yet in custody.

The 33-count indictment, returned March 16,2022 alleges Morizono and Lim led the conspiracy. Using the alias Jeff, Morizono was the leader and namesake for the scheme purporting to do business as Jeff Funding, according to the charges. In reality, Jeff funding allegedly operated a multi-layered scheme to defraud mortgage lending businesses, banks, Small Business Administration (SBA) and Federal Trade Commission (FTC).

The indictment alleges co-conspirators recruited clients for credit repair using company names of KMD Credit, KMD Capital and Jeff Funding, among others. They allegedly “cleaned” their clients’ credit histories by filing false identity theft reports with the FTC. After fraudulently inflating client credit worthiness, the co-conspirators fraudulently obtain credit cards, disaster loans and mortgages for themselves and their clients, according to the charges. They were allegedly able to accomplish this through false statements and fake documents.

Morizono and his crew maintained control of the properties purchased in their clients’ names, according to the charges. The purpose, the indictment alleges, was for the purpose of building a real estate portfolio worth millions of dollars and enriching themselves with rental income.

If convicted, Morizono and Lim face up to 30 years in federal prison and a possible $1 million maximum fine.

They are set for an arraignment before U.S. Magistrate Judge Sam S. Sheldon today at 2 p.m.

Two others – Heather Ann Campos, 43, and David Lewis Best Jr., 58, both of Houston –  are fugitives with warrants remain outstanding for their arrest. Anyone with information about their whereabouts is asked to contact the U.S. Postal Inspection Service at 281-512-8525.

The announcement was made by U.S. Attorney Jennifer B. Lowery.

The Federal Housing Finance Agency – Office of Inspector General (OIG), U.S. Postal Inspection Service, Housing and Urban Development – OIG and SBA – OIG conducted the investigation with the assistance of the FTC – OIG and IRS – Criminal Investigation. Assistant U.S. Attorneys Kate Suh and Jay Hileman are prosecuting the case.

An indictment is a formal accusation of criminal conduct, not evidence. A defendant is presumed innocent unless convicted through due process of law.

 

Sergio Lorenzo Rodriguez, 47, Laguna Niguel, California, pled guilty to one count of wire fraud in connection with a fraudulent foreclosure rescue scheme that took in at least $5 million in prohibited advance fees from thousands of financially distressed homeowners.

According to the Complaint, the Indictment,[1] and statements made in court, and publicly available documents:

From approximately mid-2015 through August 2020, Rodriguez and a co-conspirator (the Defendants) owned and/or managed a series of mortgage modification companies through which they perpetrated a scheme to defraud and attempt to defraud financially distressed consumers who were facing or were at imminent risk of foreclosure through deceptive marketing practices. Those companies included American Home Servicing Center, National Advocacy Center, National Advocacy Group, and Capital Home Advocacy Center (collectively, the “Companies”).  The Defendants tricked desperate homeowners into paying thousands of dollars each in prohibited advance fees through various misrepresentations, including: falsely claiming that the homeowners had been pre-approved by their lender or servicer for a mortgage modification; misrepresenting prohibited advance fees as closing costs or other non-prohibited costs; fraudulently claiming that the Companies achieved success rates of 95 percent or higher for mortgage modifications; and making empty promises of a no-risk money back guarantee.  As a result of their intentional misrepresentations, and misrepresentations that they encouraged their subordinates to make, the Defendants induced thousands of homeowners to pay, in the aggregate, millions of dollars in prohibited advance fees to the Companies, including a large number of consumers who were ultimately denied mortgage modifications or who received modification offers that were less favorable than they had been led to expect at the time they paid advance fees.

Rodriguez pled guilty before U.S. Magistrate Judge Sarah Netburn.

Damian Williams, the United States Attorney for the Southern District of New York, and Daniel B. Brubaker, Inspector-in-Charge of the New York Office of the United States Postal Inspection Service (“USPIS”) made the announcement today.

U.S. Attorney Damian Williams said:  “As he admitted today, for years, Sergio Lorenzo Rodriguez took advantage of desperate homeowners who were facing foreclosure and eviction to collect from them, in the aggregate, millions of dollars in advance fees based on promises that Rodriguez knew he could not, or would not, keep.  He exploited the financial vulnerability of his victims and is now being held accountable for his crime.”

Rodriguez pled guilty to one count of wire fraud, which carries a maximum sentence of 20 years in prison and a maximum fine of $250,000 or twice the gross gain or loss from the offense.

The maximum potential sentence in this case is prescribed by Congress and is provided here for informational purposes only, as any sentencing of the defendant will be determined by the judge.

In February 2018, the Federal Trade Commission brought a civil lawsuit against the Defendants, among others, in federal court in Santa Ana, California.  That civil action resulted first in a temporary restraining order and then a permanent injunction barring the Defendants from marketing and selling all debt relief products and services.  As alleged in the Indictment, the Defendants flouted those judicial orders by having a relative create another mortgage modification company named 1st Premier Asset Solutions, which the Defendants operated using aliases and some of the same deceptive practices.

Mr. Williams praised the outstanding and persistent investigative work of the United States Postal Inspection Service and thanked the Federal Trade Commission for their assistance.

The prosecution of this case is being handled by the Office’s Complex Frauds and Cybercrime Unit.  Assistant U.S. Attorney Sarah Lai is in charge of the prosecution.

[1] As to Rodriguez’s co-defendant Eva Christine Rodriguez, the entirety of the text of the Indictment, and the descriptions of the Indictment set forth herein constitute only allegations and every fact described should be treated as an allegation.

Ernesto Diaz, 66, former El Monte, California resident, a former realtor and longtime fugitive was sentenced today to 48 months in federal prison for scheming to defraud distressed homeowners out of nearly $4 million by falsely promising them help with their mortgages, but instead pocketing their money, causing many victims to lose their homes.

According to evidence presented at his trial, from March 2010 to March 2011, Diaz and co-defendant Maria Marcella Gonzalez, 51, Whittier, California ran a fraudulent mortgage-elimination program that operated in Montebello, California under the names “Crown Point Education Inc.” and “Crown Point Inc.” Diaz and Gonzalez advertised to distressed homeowners that the Crown Point program could eliminate whatever balance existed on their mortgages.

Several homeowners testified at trial that they had fallen behind on their mortgage payments during the financial crisis of 2007-08 because of workplace injuries, medical bills and other personal circumstances. In exchange, the homeowners paid Crown Point thousands of dollars for its services, typically with a partial payment demanded at the program’s inception, followed by monthly fees.

Diaz and Gonzalez offered seminars describing the Crown Point program to prospective customers but refused to specify – citing the need to protect the company’s proprietary information – how they purportedly eliminated existing mortgages.

At the seminars, Diaz and Gonzalez guaranteed that the Crown Point program would be successful and had cleared the mortgage problems of past customers. Diaz and Gonzalez also met personally with customers and prospective customers to make similar promises of success, assuage concerns of customers who had seen no signs of success, and demand additional payments. Diaz and Gonzalez often counseled customers to cease mortgage payments to their lenders altogether and to pay Crown Point instead.

After clients signed up for the program and paid a fee – usually $15,000 per property – Diaz and Gonzalez directed others to mail packets of information to the clients’ lenders that falsely asserted that the client’s mortgages were invalid and that mortgages would be extinguished if the lenders did not respond. Many of the mailed documents were notarized to create the appearance of legitimacy, at times using the notary stamp of Diaz’s own sister without her knowledge or consent.

In fact, Crown Point had no success in eliminating customer mortgage debt and many customers – including Diaz’s brother – lost their homes.

One integral part of the scheme involved the filing of unauthorized bankruptcy petitions to delay the foreclosure process, leaving victims with the impression that the Crown Point program was working and inducing them to continue making payments, but damaging clients’ credit ratings in the process.

Many, though not all, of [Diaz’s] victims could have qualified for loan modifications or legitimate foreclosure forbearance programs to save their homes but, in reliance on [Diaz’s] lies, were never able to avail themselves of these options,” prosecutors wrote in a sentencing memorandum.

Diaz, who fled to Mexico after entering into a plea agreement in this case in 2012, pleaded guilty on September 9, 2012 to a separate count of failure to appear in court while released on bond. He was a fugitive for seven years until the FBI arrested him in October 2019. A federal grand jury in February 2020 returned a superseding indictment against him, which led to this year’s trial.

Gonzalez pleaded guilty in July 2015 to two-count superseding information charging her with making a false statement in a bankruptcy declaration. Judge Wilson sentenced her to 70 months in federal prison.

At the conclusion of a three-day trial, a federal jury on September 13, 2021 found Diaz guilty of one count of conspiracy, two counts of mail fraud affecting a financial institution, and one count of mail fraud. The jury acquitted him on one mail fraud count.

Diaz was also ordered to pay $3,061,159 in restitution to his victims.

The FBI investigated this matter.

Assistant United States Attorneys Alexander B. Schwab of the Major Frauds Section and Julia Hu of the General Crimes Section prosecuted this case.

 

 

Ernesto Diaz, 66, a former El Monte, California, who managed the sales staff for a program that falsely promised to eliminate the debt owed by struggling homeowners has been found guilty for his role in a scheme that caused customers to lose money and, in many cases, their homes.

Diaz is a former realtor who operated a purported mortgage elimination program in Montebello, California known as Crown Point Education Inc., was found guilty of three counts of mail fraud and one count of conspiracy to commit mail fraud. Prior to the start of the trial, he also pleaded guilty to one count of failure to appear.

According to evidence presented at trial, Diaz and others advertised to distressed homeowners who sought relief from foreclosure and elimination of their mortgage debt. Diaz and others conducted seminars to convince homeowners that the Crown Point program could eliminate all or part of the existing balances on their mortgages, as well as save homes that were near or in foreclosure. Diaz told clients and prospective clients that the Crown Point program involved sending a series of documents to lenders and others to eliminate the clients’ mortgages. Clients were falsely told that the Crown Point program would result in the elimination of their mortgage within six to eight months and that they would be able to obtain up to hundreds of thousands of dollars from their lenders.

After clients signed up for the program and paid a fee, usually $15,000 per property, Diaz and a codefendant directed others to mail packets of information to the clients’ lenders which falsely asserted that the client’s mortgages were invalid and that mortgages would be extinguished if the lenders did not respond. Many of the mailed documents were notarized to create the appearance of legitimacy, at times using a notary’s stamp without that notary’s knowledge or consent. Clients were instructed not to make their mortgage payments while the program was implemented.

Bankruptcy petitions and other legal papers were filed in order to delay foreclosure and eviction actions brought by mortgage lenders. This was done by forging the names of clients in the petitions filed. These delays had the effect of lulling homeowners into believing that the Crown Point program had been effective. In some cases, Diaz and others would cause some clients to unknowingly execute quitclaim deeds that would convey ownership of their homes.

Crown Point obtained nearly $5 million from approximately 400 clients who paid to participate in the Crown Point program. Numerous clients lost their properties in foreclosure sales and were evicted from their properties despite having participated in the Crown Point program.

Diaz entered into a plea agreement in 2012; however, he failed to appear on October 15, 2012, for a change of plea hearing following his arraignment. Diaz was not located after failing to appear and agents believed at the time that he fled to Mexico. Diaz remained a fugitive for approximately seven years until his arrest on October 30, 2019, when he was arrested by the FBI in Santa Ana. He is scheduled to be sentenced on November 15 and faces 130 years in federal prison.

This investigation was conducted by the FBI and is being prosecuted by the United States Attorney’s Office, Central District of California.

 

Christopher Castle, 57, formerly of Petaluma, California was found guilty on Monday of 35 counts in a bank fraud scheme that sought to fraudulently eliminate home mortgages and then profit on the subsequent home sales.

According to court documents, between April 22, 2010, and November 18, 2011, Castle was the leader of a conspiracy that ran a “mortgage elimination program” that purported to help distressed homeowners avoid foreclosure. The conspirators fraudulently altered the chain of title on residential properties, sold the properties, and received the sales proceeds.

As a requirement for participation in the “mortgage elimination program,” the conspirators enrolled homeowners as members in a Nevada City-based church named Shon-te-East-a, Walks With Spirit, or its successor entity Pillow Foundation. The conspirators told the homeowners that these entities would offer protection against the banks.

Castle directed other co-conspirators in all aspects of the mortgage elimination program, including recruiting homeowners into the scheme, marshaling the necessary recorded documents, and guiding the homes through sale. Once the homeowner enrolled with Shon-te-East-a or Pillow Foundation, Castle would cause a sham deed of trust to be created and recorded, giving the impression that the homeowner had refinanced the mortgage loan with a new lender. In reality, the new lender was a fake entity controlled by the conspirators, and the homeowner owed no money to the purported new lender.

The next step in the process was also a recorded document. The conspirators caused a fake deed of reconveyance to be recorded, giving the appearance that the true mortgage loan had been discharged and that the true lienholder no longer had a security interest in the home.

With title appearing to be clear, the conspirators caused the sale of the home and split the proceeds between the co-conspirators and the homeowners.

In total, 37 properties were sold through the Shon-te-East-a conspiracy. The conspirators recorded fraudulent documents on an additional approximately 100 homes but were unable to sell these before the scheme unraveled.

In May 2020, Castle was extradited to the United States from Australia. Castle had fled to New Zealand and then Australia in 2011 when it became clear that his scheme was unraveling. After a three-year extradition process, Castle was transported back to the United States by the U.S. Marshals Service to stand trial in the United States.

The U.S. Marshals Service successfully conducted this extradition during the height of the pandemic,” said Acting U.S. Marshal Lasha R. Boyden for the Eastern District of California. “To minimize exposure, the extradition was conducted expeditiously with minimal time on the ground. All safety precautions were implemented, and Mr. Castle was extradited back to the United States without incident.

This was the first jury trial in the Eastern District of California since the onset of the COVID-19 pandemic in March 2020.

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

Castle decided to game the system so that he could profit in the midst of the then looming financial crisis, to which his actions contributed,” said Acting U.S. Attorney Talbert. “We are gratified by the jury’s verdict for this significant fraud scheme.

Mortgage fraud is not a victimless crime. Identifying and investigating those who abuse the system for their own personal gain ensures the mortgage system is safer and fairer for everyone. The FBI affirms our commitment to pursuing those who leverage false statements made to financial institutions to enrich themselves while threatening the stability of the banking system and taking advantage of distressed homeowners desperate to retain their homes or start anew without significant losses,” said Special Agent in Charge Sean Ragan of the FBI Sacramento Field Office. “We thank our domestic and international law enforcement partners for their continued efforts to ensure fugitives will face justice regardless of the distance traveled or time that has elapsed.”

This case is the product of an investigation by the Federal Bureau of Investigation. Assistant U.S. Attorneys Audrey B. Hemesath and Tanya B. Syed are prosecuting the case.

Three other co-defendants have previously entered guilty pleas. On April 21, 2017, Remus A. Kirkpatrick, formerly of Oceanside, California pleaded guilty to one count of falsely making writings of lending associations. On May 26, 2017, Michael Romano, Benicia, California pleaded guilty to conspiracy. On July 14, 2017, Laura Pezzi, Roseville, California pleaded guilty to falsely making writings of lending associations.

In related cases, on September 4, 2015, Tisha Trites and Todd Smith, both of San Diego, California pleaded guilty to related charges.

Two other co-defendants, George B. Larsen and Larry Todt, were convicted of conspiracy and bank fraud following a jury trial in December 2017.

Co-defendant John Michael DiChiara passed away on Aug. 24, 2019, while awaiting trial.

Castle is scheduled to be sentenced by U.S. District Judge Morrison C. England Jr. on October 28, 2021, at which time he faces a maximum penalty of 30 years in prison and a $1 million fine for bank fraud, 10 years in prison and a $250,000 fine for falsely making documents of a lending association, and five years in prison and a $250,000 fine for conspiracy. 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.

Patrick Joseph Soria, 35, West Hollywood, California was sentenced today to 152 months in federal prison for orchestrating a real estate fraud scheme that victimized more than 2,000 homeowners, involved fraudulent filings that affected the title to properties across the country and caused more than $7 million in losses.

From January 2015 to June 2018, Soria stole money from homeowners and would-be home buyers through a two-pronged scheme.

Firstly, Soria hijacked title to properties through fraudulent title filings done at county recorders’ offices around the country. He faked the filings to make it appear that he owned the properties, and then “sold” the properties to victims who thought they were buying the homes from the true owner. In fact, Soria never owned the homes, and he instead used the victims’ “purchase” money for his own personal expenses, including escort services, stays at luxury hotels, and Bentley and Lamborghini car rentals.

In the second part of the scheme, Soria convinced homeowners that he could help them with their mortgages, either by assisting them with a loan modification or by taking over their mortgage from their lender, with the promised result, either way, of reducing their mortgage payments. He told them that he had achieved success in this area in the past, and he convinced them that he was trying to help them, often befriending them to gain their trust and give them hope.

After gaining the victims’ trust, Soria convinced homeowners to stop paying their real lender and to start paying him. Through yet more fraudulent filings, Soria deceived his victims into believing he had taken over their mortgages. He also falsely lulled victims into doing nothing to protect themselves when they started receiving foreclosure and eviction notices. Many of the homeowners targeted in the scheme lost their homes.

As part of the fraud, Soria used company names such as HBSC US and Deutsche Mellon National Asset LLC, designed to trick homeowners into thinking that these companies were real. He also took advantage of the complex mix of lenders, trustees, beneficiaries, and servicers in the mortgage market, and the assignments of mortgage loans between entities, to confuse homeowners and to make it seem as if he did in fact own the properties and mortgages.

More than 2,000 individuals were victimized through this scheme. Soria admitted in court documents that losses totaled more than $7.6 million. In addition to causing losses to individual homeowners, the fraud scheme also victimized numerous lenders who held mortgages on, or other interests in, properties targeted in the scheme.

The targeted properties were located nationwide, including in Texas, New York, Nevada, and in the California cities of Vernon, Beverly Hills, Santa Ana, Yorba Linda, Anaheim and elsewhere.

A restitution hearing is scheduled for October 25, 2021. Soria pleaded guilty on March 2, 2021 to one count of conspiracy to commit wire fraud and one count of contempt of court.

Soria was sentenced by United States District Judge Dale S. Fischer, who called Soria “a skillful conman who created a very sophisticated scheme.” Judge Fischer also stated, “This is not the largest case I have presided over in terms of dollars, but it is the most brazen and heartless.”

In a related matter, Soria committed numerous acts of contempt of court in a related civil case before Judge Fischer, Nationstar Mortgage LLC v. Patrick Soria, et al., 18-cv-03041-DSF-RAO (C.D. Cal.), including willfully spending funds subject to an asset freeze. The contempt resulted in his incarceration in 2018, and criminal charges filed by the Court in 2019 by way of an Order to Show Cause.

This matter was investigated by the FBI and the Federal Housing Finance Agency – Office of Inspector General, with assistance from the Los Angeles Police Department; the Beverly Hills Police Department; the Los Angeles County Sheriff’s Department; the San Joaquin County District Attorney’s Office, the Ventura County District Attorney’s Office; and the Orange County District Attorney’s Office.

Assistant United States Attorney Kerry L. Quinn of the Major Frauds Section prosecuted this case.