Archives For credit manipulation

Man Pleads Guilty To Nearly $32 Million Mortgage Fraud Scheme

Stephanie Abbott —  July 31, 2020 — Leave a comment

Michael Scott Leslie, 57, Boulder, Colorado, pleaded guilty today to federal bank fraud and aggravated identity theft charges.

According to the stipulated facts contained in Leslie’s plea agreement, Leslie owned, operated, or otherwise had an interest in several business entities, some of which were operated out of Colorado.  These entities were involved in or affiliated with financing or originating residential mortgage loans.  Through these business entities, Leslie sold residential mortgage loans to investors, including an FDIC-insured bank in Texas (“the victim bank”).

Between October 2015 and October 2017, Leslie devised and executed a scheme to defraud the victim bank by selling it 144 fraudulent residential mortgage loans valued at $31,908,806.88.  These loans were purportedly originated by one of Leslie’s companies, Montage Mortgage, and “closed” by Snowberry, which earned fees for the closing.  The loans were then presented and sold to the victim bank until Montage identified a final investor.  For these 144 fraudulent loans, that final investor was Mortgage Capital Management (MCM). 

Leslie never disclosed to the victim bank that he operated MCM and Snowberry, or the fact that sales to investor MCM, even if they had been real, were not arms-length transactions.

The 144 residential mortgage loans sold to the victim bank were not, in fact, real loans.  The borrowers listed on these 144 fraudulent loans were real individuals, but they had no idea that their identities had been used as part of the sale of the fraudulent loans. The defendant had access to their personal identifying information in one of two primary ways:  (1) the borrowers had used Montage for legitimate residential real estate transactions which were properly executed and closed, or (2) the borrowers had been solicited by Montage about refinancing their existing loans.  In the case of refinance transactions, Montage secured permission from the borrowers to request credit scores and history from the major credit agencies.  After receipt of those credit scores, Montage often told these would-be refinance borrowers that they did not qualify for a refinance.  Leslie then recycled the borrowers’ information, obtained through prior legitimate transactions or attempted refinances, to create and sell nearly $32 million of fraudulent loan packages.

To execute this scheme, Leslie forged signatures on closing documents and fabricated and altered credit reports as well as title documents, often by using the names of legitimate companies.  The fraudulent real estate transactions were never filed with the respective counties in which the properties were located, there were no closings, and no liens were ever recorded.  Through numerous bank accounts for the various business entities and his personal accounts, the defendant used money in a Ponzi-like fashion from prior fraudulent loans sold to the victim bank to fund future fraudulent loans.  This complex flow of money continued until the defendant’s fraud was detected.  When the fraud was discovered, the victim bank still had 12 fraudulent loans, valued at $3,887,505.93, on its books that it could not, given that the loans did not exist, sell to any other legitimate third-party investor.

Leslie appeared remotely on a $50,000 unsecured bond, which was continued at the hearing’s conclusion.  The Denver office of the FBI, and the Offices of the Inspector General for both the Department of Housing and Urban Development (HUD) and the Federal Deposit Insurance Corporation (FDIC) joined in today’s announcement.

United States Attorney Jason R. Dunn made the announcement.

Chief U.S. District Court Judge Philip A. Brimmer presided over the change of plea hearing today, July 31, 2020.  Leslie was first charged by information on June 5, 2020.  This case was investigated by the Denver office of the FBI, and the Offices of the Inspector General for both the Housing and Urban Development and the Federal Deposit Insurance Corporation.  The defendant was prosecuted by Assistant U.S. Attorneys Hetal J. Doshi and Jeremy Sibert.

A copy of this press release is located on the website of the U.S. Attorney’s Office for the District of Colorado.  Related court documents can be found on PACER by searching for Case Number 20-cr-171.

The year 2020 marks the 150th anniversary of the Department of Justice.  Learn more about the history of our agency at www.Justice.gov/Celebrating150Years.

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Credit Repair Co. Settles Charges Re: “Piggybacking” on Others’ Credit to Boost Scores

Stephanie Abbott —  March 9, 2020 — Leave a comment

BoostMyScore.net (BMS), a Colorado-based credit repair company and its owner have agreed to settle Federal Trade Commission charges they mislead consumers with promises to “drastically and immediately” improve credit scores and increase access to lower rates on mortgages.

In its complaint, the FTC alleges that the defendants guaranteed consumers that, in exchange for fees ranging from $325 to $4,000, they could “piggyback” on unrelated consumers’ good credit, artificially inflating their own credit score in the process.

In piggybacking, a consumer pays to be listed on another person’s well-maintained credit account, ostensibly receiving the benefit of the good account on their own credit even though they can’t access the account. In this case, the FTC alleges, defendants charged struggling consumers steep, illegal fees and made unsupported promises about how piggybacking would pave the way to new credit, including mortgages and other loan products.

According to the complaint, BMS made unwarranted promises in various advertisements that consumers’ credit scores would increase by anywhere from 100 to 120 points over two to six weeks. BMS also allegedly charged consumers upfront for the credit repair services they offered, which is illegal under the Credit Repair Organizations Act (CROA). The complaint alleges that the defendants violated the FTC Act, CROA, and the Telemarketing Sales Rule (TSR).

Under the terms of the proposed settlement with the FTC that will soon be filed with the court, BoostMyScore, LLC, BMS, Inc., and William O. Airy will be prohibited from selling fake access to another consumer’s credit as an authorized user and from collecting advance fees for credit repair services, as well as other violations of CROA. They will also be prohibited from misrepresenting a product or service as being legal, as well as from misrepresenting the terms of a refund or return policy. The defendants also will be banned from further violations of the TSR. The settlement also includes a monetary judgment of $6,630,678, which will be partially suspended upon payment of $64,863 due to the defendants’ inability to pay. Should the defendants be found to have misrepresented their financial condition, the full judgment would be immediately payable.

“Good credit isn’t for sale,” said Andrew Smith, Director of the FTC’s Bureau of Consumer Protection. “This company charged people thousands of dollars based on hollow promises that ‘piggybacking’ on a stranger’s good credit would raise their credit score or help them get a mortgage.”

The Commission vote authorizing the staff to file the complaint and stipulated final order was 5-0. The FTC filed the complaint and final order in the U.S. District Court for the District of Colorado.

NOTE: The Commission files a complaint when it has “reason to believe” that the named defendants are violating or are about to violate the law and it appears to the Commission that a proceeding is in the public interest. Stipulated final orders have the force of law when approved and signed by the District Court judge.

The Federal Trade Commission works to promote competition, and protect and educate consumers. You can learn more about consumer topics and file a consumer complaint online or by calling 1-877-FTC-HELP (382-4357). Like the FTC on Facebook, follow us on Twitter, read our blogs, and subscribe to press releases for the latest FTC news and resources.

 

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Man Sentenced To Prison for Mortgage Fraud

Stephanie Abbott —  June 22, 2018 — Leave a comment

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.

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4 years is Price for False Police Reports

Rachel Dollar —  October 22, 2015 — 1 Comment

George Price, 42, a former Miami-Dade Police Department officer, was sentenced to 48 months in prison, to be followed by three years of supervised release for his participation in a wire fraud scheme, arising out of the operation of a series of credit repair businesses.  Price previously pled guilty to conspiracy to commit wire fraud, in violation of Title 18, United States Code, Section 1349. He was sentenced by U.S. District Judge Jose E. Martinez

According to court documents, Price and his co-conspirators participated in a scheme to provide false police reports to individuals operating credit repair businesses. A co-conspirator would provide Price with identifying information of credit business customers. Price would then create false police reports, using the customers’ identifying information. The police reports would falsely represent that the customers had reported to the Miami-Dade Police Department facts consistent with having been victims of identity theft.  Price would cause the false police reports to become official records of the Miami-Dade Police Department. A member of the conspiracy would cause the false police reports created by Price to be transmitted to credit reporting agencies in order to induce the removal of negative items from the credit histories of the alleged victims identified in the false police reports. Price created the false police reports in order to promote the success of the credit businesses and in return would receive payment from his co-conspirators.

Wifredo A. Ferrer, U.S. Attorney for the Southern District of Florida, George L. Piro, Special Agent in Charge, Federal Bureau of Investigation (FBI), Miami Field Office, and J.D. Patterson, Director, Miami-Dade Police Department (MDPD), made the announcement. Mr. Ferrer commended the investigative efforts of the FBI Miami Area Corruption Task Force and MDPD Professional Compliance Bureau. This case was prosecuted by Assistant U.S. Attorney Michael Davis.

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Manipulate your Credit Report, Go to Jail

Rachel Dollar —  June 30, 2015 — 1 Comment

Ricky Lamont Flemings, 31, Antelope, California was sentenced to two years in prison for two counts of mail fraud in connection with a long-running scheme to deceive Experian and the other credit reporting agencies by exploiting provisions in the Fair Credit Reporting Act (FCRA), a statute intended to provide consumer protections to individuals. According to court documents, from 2005 until November 12, 2009, Flemings engaged Experian on multiple occasions and falsely reported that he was the victim of identity theft. During that period, Flemings demanded that Experian remove derogatory and other entries from his credit report. However, as he well knew, many of those entries were proper and were the result of his having sought credit or purchased items on credit. Continue Reading…

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