Archives For Down Payment Fraud

Marek Harrison, 56, Plant City, Florida has pleaded guilty to bank fraud.

According to the plea agreement, between September 2007 and December 2008, Harrison created and executed a mortgage fraud scheme involving Saratoga Resort Villas, a condominium conversion of a former hotel located in Kissimmee, Florida.  Harrison’s scheme to defraud financial institutions involved kickbacks of mortgage proceeds to buyers and co-conspirators, as well as misrepresentations regarding the source of down payment funds for the transactions. None of the incentives and kickbacks were disclosed to the mortgage lenders. Harrison also recruited otherwise unqualified buyers, and provided down payment money for the buyers.  http://www.mortgagefraudblog.com/?s=Marek+Harrison

Harrison faces a maximum penalty of 30 years in federal prison. A sentencing date has not yet been set.

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

 

Mordechai Boaziz, 68, Fort Lauderdale, Florida and Jonathan Marmol,41, Odessa, Florida have pleaded guilty to conspiracy to make false statements to financial institutions.

According to their plea agreements, beginning around the summer of 2006 and continuing through August 2008, Boaziz and Marmol conspired with others to execute a scheme to influence the credit decisions of financial institutions in connection with the sale of condominium units at The Preserve at Temple Terrace, a 392-unit condominium complex. Boaziz was converting The Preserve from an apartment complex into a condominium complex and hired Marmol to market the units.

In order to recruit and entice otherwise unqualified buyers to purchase units at The Preserve, the conspirators offered to pay the prospective buyers’ down payments (“cash-to-close”). The conspirators then intentionally concealed from the financial institutions the cash-to-close payments made on behalf of the buyers.

In particular, the HUD-1 Settlement Statements submitted to the financial institutions falsely stated that the buyers brought their own cash-to-close funds to purchase the condominium units, which influenced the financial institutions’ mortgage loan approval decisions. In reality, Boaziz funded the buyers’ cash-to-close and routed the payments through Marmol and others. As a result of the conspiracy, the financial institutions that financed the condominium unit purchases at The Preserve sustained a total loss of approximately $5 million.

Each faces a maximum penalty of 5 years in federal prison. A sentencing date has not yet been set.

This case was investigated by the Federal Housing Finance Agency–Office of Inspector General and the Federal Bureau of Investigation. It is being prosecuted by Special Assistant United States Attorney Chris Poor and Assistant United States Attorney Jay L. Hoffer.

 

Min Jin Zhao, a/k/a Michael Zhao, a/k/a Michael West, 56, San Francisco, California, a real estate agent has been indicted on charges of wire fraud, mail fraud, and money laundering.

According to the indictment filed May 9, 2019, and unsealed today, Zhao, defrauded his clients out of down payments meant for the purchase of homes in and around the Bay Area.  From 2014 through 2015, Zhao misrepresented to prospective homebuyers and investors that Portfolio Consulting, Inc., offered a loan program that would enable his clients to procure financing to make all-cash offers on real property.  Zhao told his victims that, as part of the loan program, they had to wire, transfer, or deposit 10% to 20% of the sale price of the real property they sought to purchase into Portfolio’s bank account.  According to the indictment, Zhao told his clients that once they delivered their funds to Portfolio, the company then would provide the remaining portion of the purchase price.  In reality, however, after Zhao’s victims deposited their funds into Portfolio’s account, Zhao either spent the funds or transferred the funds to another bank account in Portfolio’s name.  Further, Zhao used the funds to make purchases unrelated to the purchase of real property for the victims, including for purchases for Zhao’s benefit and the benefit of businesses he controlled.  In sum, Zhao is charged with three counts of wire fraud, in violation of 18 U.S.C. § 1343; two counts of mail fraud, in violation of 18 U.S.C. § 1341; and one count of money laundering, in violation of 18 U.S.C. § 1957.

Zhao was arrested in San Francisco, California on July 2, 2019, and made his initial federal court appearance this morning in Oakland, California.  Zhao is currently out on bond.  His next scheduled appearance is on September 11, 2019, at 10:30 a.m., for an initial appearance before the Honorable James Donato, U.S. District Judge.

The announcement was made by United States Attorney David L. Anderson; Internal Revenue Service, Criminal Investigation (IRS-CI), Special Agent in Charge Kareem Carter; and Federal Bureau of Investigation (FBI) Special Agent In Charge John F. Bennett.

An indictment merely alleges that crimes have been committed, and all defendants are presumed innocent until proven guilty beyond a reasonable doubt.  If convicted, Zhao faces a maximum sentence of 20 years in prison and a fine of $250,000, plus restitution for each violation of wire and mail fraud, as well as 10 years in prison and a fine of $250,000, plus restitution for the money laundering count.  However, any sentence following conviction would be imposed by the court after consideration of the U.S. Sentencing Guidelines and the federal statute governing the imposition of a sentence, 18 U.S.C. § 3553.

Assistant U.S. Attorney Jose Apolinar Olivera is prosecuting the case with the assistance of Jessica Rodriguez Gonzalez and Katie Turner.  The prosecution is the result of an investigation by the IRS-CI and the FBI.

 

John F. Iacono (also known under the alias Vito Yodice), 46, and Shpresa Gjekovic (also known under the aliases Hope Gjekovic, Hope Iacono, Hope Yodice, and Shpresa Hadzovic), 32 , were sentenced today for defrauding banks throughout New York State and laundering those criminal proceeds to further their scheme.

The co defendants were convicted for mortgage fraud, money laundering and scheme to defraud after a joint investigation by the Office of the Attorney General and the New York State Police revealed that the couple utilized shell companies, forged cashier’s checks, and provided fake bank statements, W2s, paystubs, and tax returns in order to solicit over $1.3 million in loans from multiple upstate New York banks.

According to the indictment and statements made by the prosecutor in court, between April 2016 and March 2017, Iacono and Gjekovic applied for mortgages, a construction loan, personal lines of credit, personal loans, a commercial loan, a debt consolidation loan, and a Home Equity Line of Credit with fraudulent documentation that overstated their income, assets, and source of funds. The couple also created fake entities, including but not limited to JF Iacono, LLC and Iacono, LLC, and purported to have worked for them for years. In reality, these companies were created just days prior to their submissions of applications for hundreds of thousands of dollars in bank funds.

The investigation also revealed that Iacono and Gjekovic supplied over $125,000 in counterfeit cashier’s checks to financial institutions, law firms, title companies, and the sellers of a Schoharie County, New York property in order to secure financing and establish residency in the area. The couple allegedly intended to turn the Schoharie County property into a swingers club, but instead rented it out as a hunting cabin while pretending to raise money for children in need. Utilizing online postings, including on Facebook and Airbnb, they advertised the rental property.

The defendants also created a false personal financial statement showing net worth in excess of $1.1 million, with cash on hand of $400,000, while their actual account balances were in the negative. The balances on these statements were grossly inflated, as the couple never had more than a few thousand dollars in the accounts – the vast majority of which was from other loans. To support their claims, Iacono and Gjekovic also supplied fake bank statements showing counterfeit assets.

In addition, Iacono and Gjekovic concealed outstanding judgments against them totaling in excess of $1.4 million from the financial institutions from which they tried to secure loans. Moreover, the couple laundered the fraudulently-obtained loan proceeds to fund real estate transactions, utilizing at least five financial institutions during the course of the year-long scheme. In total, the couple stole over $460,000 from three financial institutions, and attempted to steal over $860,000 in additional proceeds from five financial institutions.

In December 2018, both defendants were arrested on a 19-count indictment charging Residential Mortgage Fraud in the Second Degree, Grand Larceny in the Second and Third Degrees, Money Laundering in the Third Degree, Criminal Possession of a Forged Instrument, Falsifying Business Records in the First Degree, and Scheme to Defraud in the First Degree, among other charges.

On March 29, 2019, Iacono and Gjekovic pleaded guilty before Schoharie County Court Judge George R. Bartlett, III to Residential Mortgage Fraud in the Second Degree (a class C felony), Money Laundering in the Third Degree (a class D felony), and Scheme to Defraud in the First Degree (a class E felony). Iacono and Gjekovic’s pleas resolve additional alleged crimes of money laundering, grand larceny, forgery, and identity theft for which the defendants could have been charged in Albany, Delaware, Greene, Kings, Otsego, Queens, and Rensselaer Counties.

Attorney General Letitia James and State Police Superintendent Keith M. Corlett made the announcement.

Iacono and Gjekovic falsified document after document in order to pad their own pockets,” said Attorney General Letitia James. “Let this serve as a warning to all of those who try to carry out such deliberate schemes: There is no place in this state for individuals who try to cash in at the expense of hardworking New Yorkers. I thank the State Police for their bringing accountability and justice to this elaborate and deceitful plot.”

This couple knowingly defrauded financial institutions and businesses, and preyed on the public’s philanthropy, all to fill their pockets and satisfy their greed,” said New York State Police Superintendent Keith M. Corlett. “This sentencing brings justice and should remind those thinking of carrying out these types of schemes, that you will be held accountable. Thank you to the Attorney General’s Office, our State Police Financial Crimes Unit and other law enforcement partners for their hard work in exposing this plot.”

The case is being prosecuted as part of Attorney General James’ Combatting Upstate Financial Frauds and Schemes (“CUFFS”) Initiative, led by Assistant Attorney General Philip V. Apruzzese of the Criminal Enforcement and Financial Crimes Bureau. The CUFFS Initiative was created to assist local law enforcement and District Attorney’s Offices in the investigation and prosecution of complex financial crimes and money laundering cases such as this one.

Attorney General James thanks the New York State Police Financial Crimes Unit and State Police Bureau of Criminal Investigations, as well as Schoharie County District Attorney Susan J. Mallery for their valuable assistance on this investigation.

This case is being prosecuted by Assistant Attorney General Philip V. Apruzzese, with the assistance of Legal Support Analysts Kira M. Russom, Caitlin Carmody and Samantha Wintner and Supervising Analyst Paul Strocko. The Criminal Enforcement and Financial Crimes Bureau is led by Bureau Chief Stephanie Swenton and Deputy Bureau Chief Joseph D’Arrigo. The Criminal Division is led by Chief Deputy Attorney General José Maldonado.

The OAG investigation was conducted by Investigator Mark J. Terra, under the supervision of Supervising Investigator Mark Spencer and Deputy Bureau Chief Antoine Karam. The Investigations Bureau is led by First Deputy Chief Investigator John Reidy.

 

Laurence Savedoff, Esq., 44, New City, New York, who was convicted of misprision of a felony, was sentenced today for his role in a mortgage fraud scheme.

Between 2008 and 2009, the defendant represented The Funding Source (“TFS”), a mortgage bank, as the settlement attorney. The defendant’s law office was used to execute the closings for the eight real estate transactions for properties located in Bronx, New York, which involved efforts by five other individuals fraudulently to obtain mortgages that were insured by FHA on behalf of unqualified borrowers. For all eight transactions, the defendant caused the signing of the HUD-1 settlement statement and FHA Addendum to the HUD-1 knowing that the information therein was false.

Although he did not know the full extent of the scheme, the defendant became aware that others were using him to help defraud financial institutions. The defendant failed to notify authorities, including federal authorities, of these other individuals’ use of fraud to obtain funds from TFS. Furthermore, the defendant took affirmative steps to conceal the fraud by signing the HUD-1 Settlement Statement and FHA Addendum, or by having his paralegal sign them. Those documents were later forwarded by TFS, which he knew would be sent to financial institutions, including M&T Bank located in the Western District of New York. One duty of the defendant in his role as settlement attorney was to certify that the disbursements written on the HUD-1 accurately reflected the disbursements in the transactions. The HUD-1 and other financial documents were sent to financial institutions to show that the borrowers met FHA’s requirement of providing a 3-3.5% down payment. The defendant was aware that the borrowers in all eight transactions did not provide that down payment. Nevertheless, the defendant, or his paralegal at this direction, certified on the HUD-1 and in the FHA Addendum that the disbursements listed therein were accurate.  As a result of the aforementioned facts, financial institutions, including M&T Bank, purchased the fraudulently originated loans from TFS. https://www.justice.gov/usao-wdny/pr/attorney-sentenced-his-role-mortgage-fraud-scheme

The total amount of the mortgage loans for these eight transactions was $4,800,007.

U.S. Attorney James P. Kennedy, Jr. made the announcement.

The sentencing is the culmination of an investigation by the United States Postal Inspection Service under the direction of Joseph W. Cronin, Inspector in Charge, Boston Division, the United States Department of Housing and Urban Development, Office of the Inspector General, under the direction of Special Agent in Charge Brad Geary; and the Federal Bureau of Investigation, under the direction of Special Agent in Charge Gary Loeffert.  Additionally, the New York State Department of Financial Services assisted with the investigation.

Geo Geovanni, 50, Moultrie, Georgia has been sentenced to 37 months in federal prison for conspiracy to commit bank fraud and bank fraud.

According to testimony and evidence presented at trial, Geovanni worked as a real estate broker who owned his own brokerage firm based in Orlando, Florida. Between May and August 2008, Geovanni sold condominium units at The Landing, Altamonte Springs, Florida. Geovanni engaged in a conspiracy to conceal from mortgage lenders sales incentives that he provided to the buyers. These undisclosed incentives included making the buyers’ down payments and paying kickbacks after closing. As a result of his actions, Geovanni helped cause the loss of approximately $736,000 to the Federal National Mortgage Association (“Fannie Mae”), Federal Home Loan Mortgage Corporation (“Freddie Mac), and JP Morgan Chase Bank when the mortgages involved in the fraudulent transactions went into foreclosure. http://www.mortgagefraudblog.com/?s=Geo+Geovanni

As part of his sentence, the court also entered a money judgment of $56,984.34, the proceeds of the fraud scheme. A federal jury found Geovanni guilty on November 29, 2018.

This case was investigated by the Federal Housing Finance Agency Office of Inspector General and the Federal Bureau of Investigation. It was prosecuted by Special Assistant United States Attorneys Chris Poor and Joseph Capone.

David Tipton, 52, Alexandria, Virginia, was sentenced today to a year and a day in prison for defrauding lenders who provided him with nearly $710,000 towards the purchase and renovation of a residential property in Northeast Washington.

According to the government’s evidence, Tipton owned a company that was created to purchase, renovate, and sell residential real estate in the District of Columbia and Virginia. He signed a contract in January 2013 to purchase a property in the 500 block of 14th Street NE, Washington, DC for $450,000 in cash, planning to renovate and sell the property for a profit. He falsely represented that he had the required funds available to close the cash transaction and created a false bank statement to back up the claim. In fact, almost all of the money for the purchase was coming from two unrelated private individuals whom he had met at a real estate investment seminar. Each of them provided Tipton with $224,497, for a total of $448,994, in return for Deeds of Trust securing their interest in the property.  Tipton did not tell the settlement company about the loans.  As a result, the Deeds of Trust were not recorded.

Additionally, Tipton later obtained $260,000 from a private money lender to renovate the property.  Tipton did not disclose to the lender that two other individuals held Deeds of Trust in the property.

Tipton pled guilty in May 2018, in the U.S. District Court for the District of Columbia, to a charge of mail fraud. He was sentenced by the Honorable Senior Judge Paul L. Friedman. Following his prison term, he will be placed on three years of supervised release. He also must pay $448,994 in restitution, as well as an identical amount in a forfeiture money judgment.

The announcement was made by U.S. Attorney Jessie K. Liu and Nancy McNamara, Assistant Director in Charge of the FBI’s Washington Field Office.

In announcing the sentence, U.S. Attorney Liu and Assistant Director in Charge McNamara commended the work of those who investigated the case from the FBI’s Washington Field Office. They also expressed appreciation for the work of those who handled the case for the U.S. Attorney’s Office, including former Assistant U.S. Attorney John P. Marston, former Criminal Investigator Juan Juarez, Paralegal Specialist Aisha Keys, and former Paralegal Specialist Kristy Penny. Finally, they commended the work of Assistant U.S. Attorney Anthony Saler, who investigated and prosecuted the case.

Aleksandr Kovalev, 54, Rocklin, California, was sentenced to three years and ten months in prison for wire fraud involving financial institutions,

According to court documents, Kovalev was in the business of developing, building and selling real property in Sacramento, Fairfield, and Stockton, California. As the real estate market began to weaken, Kovalev offered to make incentive payments to purchasers, through “down payment assistance” or by making other payments to the buyers to be used in whatever manner the buyers wanted. Most of the payments to the buyers were out of escrow and were often paid through intermediaries, originating in Kovalev’s bank account. These payments were not disclosed to the lenders, and had the effect of substantially reducing the sales price below what was represented to the lenders.

Dozens of properties were involved in Kovalev’s mortgage fraud scheme, with several million dollars of losses to the lenders. Kovalev is the last to be sentenced out of nine individuals who were prosecuted as part of this mortgage fraud scheme. http://www.mortgagefraudblog.com/down-payment-assistance-results-in-guilty-plea

Kovalev was sentenced by U.S. District Judge Morrison C. England Jr.

This case was the product of an investigation by the Federal Bureau of Investigation and the IRS Criminal Investigation. Assistant U.S. Attorney Todd A. Pickles prosecuted the case. The sentencing was announced by U.S. Attorney McGregor W. Scott.

Abolghasseni “Abe” Alizadeh, 59, Granite Bay, California, pleaded guilty  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 60–65 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.

Alizadeh is scheduled to be sentenced by U.S. District Judge Garland E. Burrell Jr. on March 30, 2018. Co-defendant Weaver pleaded guilty to one count of wire fraud and one count of bank fraud on December 15, 2017, and is scheduled for sentencing on March 23, 2018. Alizadeh and Weaver face a maximum statutory penalty of thirty years in prison on each count and a $1 million fine.

U.S. Attorney McGregor W. Scott announced the plea. The case is the product of an investigation by the Federal Bureau of Investigation, the Internal Revenue Service, Criminal Investigation, and the Federal Deposit Insurance Corporation, Office of Inspector General. Assistant U.S. Attorney Michael D. Anderson and Heiko P. Coppola are prosecuting the case.

James Nassida, IV, 50, West Mifflin, Pennsylvania, was sentenced in federal court to 78 months of incarceration on his conviction of conspiracy to commit bank fraud, wire fraud, and mail fraud.

According to information presented to the court, Nassida owned and operated a mortgage broker business called Century III Home Equity (Century III), which assisted borrowers in obtaining loans collateralized by real estate. At the time of the events at issue, which was between 2002 and 2008, Century III was one of the largest mortgage broker businesses in the Western District of Pennsylvania, and during the course of that timeframe brokered hundreds of millions of dollars worth of loans using more than a dozen different lenders. Many of those loans, however, involved one or more aspects of fraud.

Some of the aspect of the fraud included the following:

  • Appraisals that fraudulently inflated the true value of the properties;
  • Settlement statements that falsely reflected that the borrowers made substantial payments associated with the purchases of real estate;
  • Settlement statements that failed to disclose secondary financing;
  • Settlement statements that failed to include cash payments charged by Century III and paid by the borrowers;
  • Settlement statements and closing documents that were backdated to reflect that the settlements had occurred on a date prior to the actual settlement date; and
  • Various loan documents, including loan approval forms, good faith estimates, and underwriting transmittal forms, that failed to disclose secondary financing and falsely represented the combined loan to value ratio

The fraud also involved misrepresentations to some of the borrowers to induce them to enter into the transactions, including concealing the fees Century III received from lenders for the borrowers’ transactions and the impact of those fees on the borrowers’ interest rates; and concealing the nature of the mortgage products, including that some of the mortgage products could negatively amortize. Lastly, the fraud also involved Nassida’s receipt of kickbacks from the settlement company that he failed to disclose to the borrowers and lenders, as required.

Nassida also submitted multiple fraudulent documents associated with loans in which he served as a loan officer, but also that the loan officers working under his direction regularly submitted false information to lenders and borrowers. In addition, Nassida caused the submission of fake documents to the lender in connection with his purchase of a $300,000 vacation home near Seven Springs, including the following: (1) a settlement statement that overstated the sales price; (2) a loan application that falsely stated his income and assets; and (3) fake statements from an investment company that falsely verified that he had more than $600,000 in investments when he really had about $15,000. In the loan application, James Nassida reported that he earned approximately $980,000 in 2006, but he did not even file his tax returns in 2006, and his reported taxable income in 2004 and 2005 was not even close to that figure.

This case was a breeding ground for many of the other investigations led by the Western Pennsylvania Mortgage Fraud Task Force,” said FBI Special Agent in Charge Robert Johnson. “Mortgage fraud cases are a priority for the FBI because mortgage lending and the housing market have such a significant effect on the overall economy. At the time of this case, James Nassida was living a fancy lifestyle, in a million dollar home, taking money from victims who put their trust in him. That is why today’s sentencing is significant. Since the task force formation in February, 2008, more than 100 people were charged and more than a half billion dollars in fraudulent loans were uncovered,” added SAC Johnson.

United States Attorney Scott W. Brady announced the sentence.  Assistant United States Attorneys Brendan T. Conway and Cindy Chung prosecuted this case on behalf of the government. Senior United States District Judge Donetta Ambrose imposed the sentence.

United States Attorney Brady commended the Mortgage Fraud Task Force for the investigation leading to the successful prosecution of Nassida. The Mortgage Fraud Task Force is comprised of investigators from federal, state and local law enforcement agencies and others involved in the mortgage industry. Federal law enforcement agencies participating in the Mortgage Task Force include the Federal Bureau of Investigation; the Internal Revenue Service, Criminal Investigations; the United States Department of Housing and Urban Development, Office of Inspector General; the United States Postal Inspection Service; and the United States Secret Service. Other Mortgage Fraud Task Force members include the Allegheny County Sheriff’s Office; the Allegheny County District Attorney’s Office; the Pennsylvania Attorney General’s Office, Bureau of Consumer Protection; the Pennsylvania Department of Banking; the Pennsylvania Department of State, Bureau of Enforcement and Investigation; and the United States Trustee’s Office.