Archives For Down Payment Fraud

Mary Beyer Halsey, age 59, Rising Sun, Maryland, the former President and Chief Executive Officer of Cecil Bank, pleaded guilty today to the federal charges of conspiracy to commit bank fraud, receipt of a bribe by a bank official, and false statement in bank records, in connection with the straw purchase of a home in Elkton, Maryland, upon which Cecil Bank had foreclosed.

Cecil Bank, located in Elkton, Maryland, had received $11,560,000 in federal taxpayer funds in 2008, under the Capital Purchase Program, as part of the Troubled Asset Relief Program. On April 20, 2011, Cecil Bank initiated the foreclosure of a single-family house located at 127 Ebenezer Church Road in Elkton.

According to her plea agreement, from 2012 to 2013, Halsey conspired with Daniel Whitehurst, an employee of a real estate development company that did business in Maryland, to defraud Cecil Bank and another bank to purchase a home through false pretenses, representations and promises. Specifically, on March 28, 2012, Halsey and Whitehurst met at a restaurant in Cecil County. Whitehurst asked Halsey if she could help him and a business partner get a $500,000 line of credit from Cecil Bank. Halsey agreed to help Whitehurst to obtain a line of credit from Cecil Bank, in exchange for Whitehurst agreeing to serve as the straw purchaser of 127 Ebenezer, Elkton, Maryland on behalf of Halsey. Halsey suggested that she increase the line of credit for Whitehurst to $650,000 to include the funds needed to buy the house. Whitehurst agreed to Halsey’s request to secretly buy 127 Ebenezer on Halsey’s behalf. On May 9, 2012, Halsey participated in a loan committee meeting at Cecil Bank that considered and approved a $650,000 line for credit for Whitehurst and a $500,000 line of credit for his business partner.

Halsey admitted that at her request, on May 14, 2012, Whitehurst visited 127 Ebenezer and provided Halsey with an estimate of the costs to update the house. Whitehurst determined that beyond replacing the kitchen subflooring at a cost of about $1,000, there were no significant repairs needed. Whitehurst provided a letter of intent to purchase the home from the bank for $150,000 for Halsey to review. Halsey suggested lowering the price to $145,000 to allow room to increase the offer later. Halsey knew that an exterior-only appraisal of the property ordered by Cecil Bank on November 9, 2011, showed a market value of $263,000. A full appraisal on September 10, 2012, reflected a market value of $295,000. To support the below-market price that Halsey wanted to pay, Whitehurst included in the letter of intent a list of lower-priced home sales in the same area that were not comparable to 127 Ebenezer and therefore was not reflective of the property’s actual market value.

As detailed in the plea agreement, on May 23, 2012, Whitehurst e-mailed Cecil Bank his offer to purchase 127 Ebenezer for $145,000. On the same day, during a meeting of the Cecil Bank Board of Directors, Halsey advised the Board that Whitehurst had made a purchase offer of $140,000 for 127 Ebenezer, $5,000 less the actual offer. To support the below-market price of $140,000, Halsey falsely characterized the property as having “structural deficiencies [that] will require significant repairs.” Halsey did not disclose her personal interest in the property, nor Whitehurst’s role as her nominee to acquire the property on her behalf. The Board authorized Halsey to “negotiate the best price.” Thereafter, Whitehurst submitted a contract for him to purchase 127 Ebenezer from Cecil Bank for $150,000, which Halsey signed on August 17, 2012 on behalf of Cecil Bank.

According to the plea agreement, subsequent to authorizing the sale of 127 Ebenezer, Halsey told Whitehurst that he should not use his line of credit from Cecil Bank to purchase the house, but should instead get the funds from a different source. Whitehurst applied for and obtained a $100,000 loan from another bank to purchase 127 Ebenezer, fraudulently claiming that he was purchasing the property for himself and that the down payment was from an investment account. On October 31, 2012, prior to 127 Ebenezer going to settlement, Halsey wired $75,000 to Whitehurst’s bank account to cover the cost of the down payment as well as closing costs and upgrades to the property that Halsey directed Whitehurst to arrange. To conceal the true purpose of the wired funds, Whitehurst sent Halsey a fictitious real estate contract purporting to show that the $75,000 was the down payment for a different property that Whitehurst owned in Havre de Grace, Maryland.

On November 21, 2012, the settlement of 127 Ebenezer was held with Halsey representing Cecil Bank as the seller, and Whitehurst as the purported purchaser, selling the property to Whitehurst for $150,000. Both signed the HUD-1 form which falsely represented that Whitehurst had paid approximately $52,566 at settlement, when in fact, the down payment and all related closing costs were paid from the $75,000 Halsey had wired to Whitehurst’s bank account beforehand. From October 31, 2012 through March 29, 2013, Halsey transferred an additional $60,000 to Whitehurst to cover the cost the upgrades to the house that they had previously discussed, as well as to reimburse Whitehurst for mortgage payments he made on the property. Halsey and Whitehurst also made plans to transfer title of the property to Halsey by selling the house to her at a price that would minimize the tax consequences of the sale for Whitehurst.

In December 2012, in response to a question from a bank examiner for the Federal Reserve Bank of Richmond inquiring about the sale of the property to Whitehurst, Halsey falsely stated that she was “not totally familiar with [that] property” and that the bank had difficulty marketing the property and had not listed it with a realtor because of “issues with the county over the bonds outstanding.”

In April 2013, federal agents began interviewing employees and other borrowers about banking irregularities at Cecil Bank. Title to 127 Ebenezer was never transferred to Halsey. Halsey never told the bank that she was the true purchaser of 127 Ebenezer, nor did the bank know that Halsey and Whitehurst had orchestrated the sale of the foreclosed property at the fraudulent price of $150,000, instead of the appraised pre-renovation price of $295,000.

As a result of Halsey’s misrepresentations and omissions, the bank lost approximately $145,000.

Halsey faces a maximum sentence of 30 years in federal prison for each offense: conspiracy to commit bank fraud; false statement in bank records; and receipt of a bribe by a bank official. Actual sentences for federal crimes are typically less than the maximum penalties. A federal district court judge will determine any sentence after taking into account the U.S. Sentencing Guidelines and other statutory factors. U.S. District Judge Deborah K. Chasanow has scheduled sentencing for November 6, 2020 at 11:00 a.m.

The guilty plea was announced by United States Attorney for the District of Maryland Robert K. Hur; Special Agent in Charge Mark P. Higgins of Federal Housing Finance Agency, Office of Inspector General (FHFA-OIG), Mid-Atlantic Region; Special Agent in Charge Patricia Tarasca of Federal Deposit Insurance Corporation, Office of Inspector General (FDIC/OIG), New York Region; Special Inspector General Christy Goldsmith Romero for the Troubled Asset Relief Program (SIGTARP); and Inspector General Hannibal “Mike” Ware of the Small Business Administration, Office of Inspector General (SBA/OIG).

Mary Beyer Halsey used her position as President and CEO of Cecil Bank for her personal benefit, causing a loss to the bank, which had already received federal taxpayer funds as part of the Troubled Asset Relief Program,” said U.S. Attorney Robert K. Hur. “Corrupt bank officials undermine the public’s trust in our financial system.

The Federal Housing Finance Agency Office of Inspector General (FHFA-OIG) is committed to investigating allegations of fraud committed by officers of financial institutions which are members of the 11 Federal Home Loan Banks (FHLBanks) because their crimes strike at the heart of the FHLBank System,” said Mark Higgins, Special Agent in Charge of the FHFA-OIG’s Mid-Atlantic Region. “We are proud to have partnered with the U.S. Attorney’s Office for the District of Maryland on this case.”

This plea illustrates the tremendous harm bank insiders can cause when they use their positions for personal gain, breaking the trust placed in them by their employees, shareholders, and customers,” said Patricia Tarasca, Special Agent in Charge, New York Region, Office of Inspector General for the Federal Deposit Insurance Corporation. “We thank our law enforcement partners and appreciate the cooperation between investigating agencies.

Today, another bank CEO pleads guilty to committing fraud against the bank while the bank was in TARP,” said Special Inspector General Christy Goldsmith Romero. “Cecil Bank CEO Halsey pled guilty to conspiracy to commit bank fraud, making false statements in bank records, and receiving a bribe in a fraud that caused losses to Cecil Bank. Taxpayers lost nearly $11 million in TARP when Cecil Bank failed. SIGTARP commends U.S. Attorney Robert Hur and his team for fighting financial fraud related to TARP.”

OIG and its law enforcement partners are poised to root out fraud and bring wrongdoers to justice,” said SBA Inspector General Hannibal “Mike” Ware. “I want to thank the U.S. Attorney’s Office and our law enforcement partners for their dedication and pursuit of justice.”

Daniel Whitehurst, age 36, Bel Air, Maryland, pleaded guilty under seal to the federal charge of mail fraud on April 6, 2018. Whitehurst faces a maximum sentence of 30 years in federal prison for conspiracy to commit bank fraud. Judge Chasanow has not scheduled a date for Whitehurst’s sentencing.

United States Attorney Robert K. Hur commended the FHFA-OIG, Mid-Atlantic Region; FDIC/OIG; SIGTARP; and SBA/OIG for their work in the investigation. Mr. Hur thanked Assistant U.S. Attorneys Martin J. Clarke and Harry M. Gruber, who are prosecuting the case

David Daughtrey, 60, El Cajon, California, pleaded guilty in federal court today to bank fraud and tax evasion charges, admitting that over the course of several years he evaded taxes by failing to report $498,612 of income to the IRS, and also orchestrated an illegal scheme to fraudulently obtain a mortgage for his $1.8 million residence using a third party.

Daughtrey admitted that from July 2006 until April 2016, he conspired with others to commit bank fraud and tax evasion. As part of the bank fraud scheme, Daughtrey directed another individual to submit a mortgage application to Wells Fargo to purchase a $1.8 million five-bedroom residence, and to falsely claim that the funds used as down payment belonged to the third party and the residence would be used by the third party.  In reality, Daughtrey provided the funds, and the home was intended to be Daughtrey’s primary residence. Daughtrey made monthly mortgage payments of approximately $8,000 for his residence, but continued to represent to the bank that the third party owned the house.  Daughtrey later submitted a false hardship letter on behalf of the third party in an effort to get the bank to modify the terms of the loan on the home.  As part of the plea agreement, Daughtrey admitted he was the true owner of the residence at all relevant times, and promised to make a good faith effort to transfer the legal ownership of the home into his own name.

Daughtrey also admitted as part his plea that over several years, he and his spouse (who is not charged in the case) conspired to commit tax evasion by filing tax returns listing substantially less income than Daughtrey actually earned.  Daughtrey’s tax return for the year 2012 omitted at least $498,612 in income.  Daughtrey failed to report his total income in tax years 2013, 2014, and 2015, and did not file timely tax returns for subsequent years.  According to the plea agreement, the resulting tax loss to the IRS for the years 2012-2014 was $456,536.   Daughtrey agreed to pay $1,016,457.91 in restitution to the IRS, which includes the total tax loss plus penalties and interest.

As part of his plea agreement, David Daughtrey also agreed to pay over $1 million in restitution to the Internal Revenue Service. He is scheduled to be sentenced on November 16, 2020, before U.S. District Judge Larry A. Burns.

People who cheat on their taxes are cheating all other law-abiding tax payers,” said U.S. Attorney Robert Brewer. “Mr. Daughtrey blatantly disregarded his tax obligations for years.  The defendant not only abused the tax system for his own financial benefit, but conspired to commit bank fraud in order to maintain this lifestyle.” Brewer commended the excellent work of prosecutor Oleksandra Johnson and FBI and IRS agents.

The FBI is dedicated to ensuring that white collar crimes are uncovered and prosecuted,” stated FBI Acting Special Agent in Charge Omer Meisel. “Today, David Daughtrey has admitted to mortgage fraud and tax evasion.  This case illustrates that the FBI will continue to investigate those individuals that engage in fraudulent financial schemes that cause harm to our banking industry and defraud the government of tax revenue.

Our Nation’s tax system funds critical infrastructures and vital programs, including supporting our citizens and small businesses during the ongoing pandemic,” Ryan L. Korner, Special Agent in Charge, IRS Criminal Investigation. “Honest Americans’ compliance with the tax laws is imperative. Rather than pay his fair share, David Daughtrey chose to live lavishly, while intentionally failing to report his true income and evading the payment of over $400,000 in taxes.  Today’s guilty plea demonstrates that the IRS will diligently continue our important enforcement efforts despite the ongoing challenges posed by Covid-19.  We will work alongside our law enforcement partners in a collective effort to enforce the law and ensure the public trust.”

SUMMARY OF CHARGES

Conspiracy to Commit Bank Fraud and Tax Evasion, 18 U.S.C. § 371 (count 1); and

Making a False Tax Return, 26 U.S.C. § 7206(1) (count 2).

Maximum penalty:

Five years’ imprisonment and $250,000 fine (count 1)

Three years’ imprisonment and a maximum fine of $250,000 or twice the gross gain or gross loss resulting from the offense, whichever is greatest (count 2)

AGENCY

Federal Bureau of Investigation

Internal Revenue Service

 

Jonathan Marmol, 41, Odessa, Florida has been sentenced to 15 months in federal prison and Mordechai Boaziz, 67, Miami Beach, Flordia, to 90 days in federal prison for conspiracy to make false statements to financial institutions.

According to court documents, 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 located in Temple Terrace, Florida. Boaziz was a real estate developer converting The Preserve from an apartment complex into a condominium complex. Boaziz, the leader and organizer of the fraud scheme, hired Marmol to market the condominium units at the complex.

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 the cash-to-close payments from the financial institutions that originated and funded the related mortgage loans.

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 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. Boaziz caused approximately $5.36 million in losses, and Marmol caused approximately $330,000 in losses to the victim financial institutions who financed the units at The Preserve.

Marmol and Boaziz had pleaded guilty to the offenses in November 2019. http://www.mortgagefraudblog.com/?s=Jonathan+Marmol

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 Attorney Chris Poor and Assistant United States Attorney Jay L. Hoffer.

 

Ruben Diaz and Rodrigo Diaz, who were accused of deceiving dozens of Spanish-speaking consumers in a variety of real estate-related transactions have been put out of business by court order. As a result of the injunctive relief, Ruben and Rodrigo Diaz are banned permanently from advertising, offering, or providing services in connection with the sale, purchase, lease, or financing of real property in Arizona.

The lawsuit filed by the Attorney General’s Office alleged that Ruben and Rodrigo Diaz (father and son team), used several companies, including ProSolutions LLC, to prey upon Spanish-speaking families who wanted to purchase a home. The Defendants promised to find the families homes to purchase and arrange financing. The Defendants then took tens of thousands of dollars in down payments and had Spanish-speaking consumers sign documents in English under false pretenses.

Families who believed they were purchasing a home eventually discovered, sometimes years later, that they were only renters with no equity or ownership rights. In other instances, consumers gave the Defendants thousands of dollars as a down payment for a home, with the promise that it would be returned to them if they did not make a home purchase. In reality, the Defendants spent the down payments and never made the promised refunds.

Ruben and Rodrigo Diaz were not licensed lenders, real estate agents, or mortgage brokers.

In addition, Ruben Diaz owes $425,313 in restitution to consumers, as well as $100,000 in civil penalties to the State.

Attorney General Mark Brnovich made the announcement.

Buying a home is part of the American dream, but Ruben and Rodrigo Diaz turned that process into a nightmare and robbed dozens of home buyers of that experience,” said Attorney General Mark Brnovich.

Consumers can help protect themselves from real estate and mortgage fraud by working only with licensed professionals and by ensuring that they read and understand contracts before signing them. The public can access the Arizona Department of Real Estate‘s and the Arizona Department of Financial Institutions‘ public databases to determine if a lender or realtor is licensed in the State of Arizona.

Assistant Attorneys General Rebecca Salisbury and Kaitlin Hollywood handled this case.

If you believe you have been the victim of consumer fraud, you can file a consumer complaint by visiting the Attorney General’s website. If you need a complaint form sent to you, you can contact the Attorney General’s Office in Phoenix at (602) 542-5763, in Tucson at (520) 628-6648, or outside the Phoenix and Tucson metro areas at (800) 352-8431. Nuestros formularios de quejas están disponibles en inglés o español.

 

Shenandoah Adams Sr., a/k/a “Shane Adams Sr.,” 54, New Providence, New Jersey, was charged today by indictment with six counts of wire fraud and two counts of making false statements in connection with a mortgage loan.

According to the indictment:

Adams was a principal of Adams Property Management and Investment Group Limited Liability Company (Adams Property Management), which purchased property on Hilton Street, East Orange, New Jersey, in 2014. The following year, Adams arranged for a close associate (Individual 1) to obtain a $153,562 loan from a mortgage lender to purchase the Hilton Street property from Adams Property Management. Adams knew that Individual 1 did not have the money to pay the balance of the purchase price of $225,000. At the closing on March 25, 2015, Adams directed Individual 1 to issue a fraudulent check in the amount of $90,280.47 (the balance of the purchase price) to give the false impression that Individual 1 had paid the closing balance. Adams reassured Individual 1 that Adams would not negotiate the check. Adams signed a settlement statement, falsely certifying that Individual 1 paid the closing balance and that the settlement statement was a true and accurate statement of all receipts and disbursements made in connection with the sale of the Hilton Street property, when Adams knew that Individual 1’s check was fraudulent. Adams used Individual 1’s loan proceeds to pay off Adams Property Management’s $100,000 mortgage loan to purchase the Hilton Street Property and to obtain a $26,335.30 check for Adams Property Management.

Although Adams reassured Individual 1 that Adams would fund Individual 1’s mortgage payments, by May 2016 Individual 1’s mortgage payments on the Hilton Street property were substantially in arrears. Adams arranged for Individual 1 to sell the property to another associate for a price of $255,000. The closing on that sale commenced on May 31, 2016; the total amount to pay off Individual 1’s mortgage was $210,565.34. On June 1, 2016, Adams and Individual 1 had a telephone conversation with an out-of-state representative of the mortgage servicer for Individual 1’s lender, during which Adams made false and fraudulent statements to induce the lender to reduce the payoff amount. The lender agreed to reduce Individual 1’s payoff amount to $190,000. At Adams’s direction, Individual 1 cashed the check for the amount of the reduction, $20,665.34, and delivered the cash proceeds to Adams.

Adams also was a principal of VH Electrical and Plumbing Limited Liability Company (VH). On March 11, 2015, Adams, on behalf of VH, entered into a contract with the Orange Public Library to replace the library’s HVAC/Chiller unit for a price of $49,000. The project was funded by a U.S. Department of Housing and Urban Development (HUD) Community Development Block Grant to the library and Orange.

Before getting the contract with the library, Adams sent the library’s executive director, Timur Davis, two fake quotes purportedly from two vendors to give the false impression that VH would replace the library’s chiller for less than those other vendors. After VH had been hired, Adams sent Davis records to give the false impression that Adams was taking steps to order a replacement chiller. Adams received $40,000 from the library, but did not replace the chiller. Davis pleaded guilty on Feb.13, 2020 to making false statements to HUD in connection with the project.

He is scheduled to appear this afternoon before U.S. Magistrate Judge Leda Dunn Wettre in Newark federal court.

The charges of wire fraud carry a maximum potential penalty of 20 years in prison and a maximum $250,000 fine. The charges of making false statements in connection with a mortgage application carries a maximum potential penalty of 30 years in prison and a maximum potential fine of $1 million.

U.S. Attorney Craig Carpenito made the announcement.

U.S. Attorney Carpenito credited special agents of the FBI, under the direction of Special Agent in Charge Gregory W. Ehrie in Newark; special agents of the U.S. Department of Housing and Urban Development, Office of Inspector General, under the direction of Special Agent in Charge Christina Scaringi; and special agents of IRS-Criminal Investigation, under the direction of Special Agent in Charge John R. Tafur, with the investigation leading to today’s arrest.

The government is represented by Assistant U.S. Attorneys J Imbert and Cari Fais of the U.S. Attorney’s Office’s Special Prosecutions Division.

The charges and allegations contained in the indictment are merely accusations, and the defendant is presumed innocent unless and until proven guilty.

Defense counsel: TBD

Marek Harrison, 56, Plant City, Florida, has been sentenced to 20 months in federal prison for his role in a bank fraud scheme.

According to court documents, 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 he provided down payment money for the buyers. http://www.mortgagefraudblog.com/?s=Marek+Harrison

The court also ordered Harrison to pay $2,753,495.79 in restitution to the victim financial institutions.

Harrison had pleaded guilty on November 27, 2019.

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 Attorney Chris Poor.

Edmundo Roman-Perez, 70, Sunset Park, Brooklyn, an attorney has been arraigned today on an indictment in which he is charged with several counts of grand larceny for allegedly stealing approximately $280,000 in down payments he received to hold in escrow from two clients he represented in the sale of their homes.

According to the investigation, between October 2018 and March 2019, the defendant represented a couple in the sale of their $1,350,000 two-family home in Sunset Park, Brooklyn. It is alleged that the defendant received a $135,000 down payment from the buyers that he was to hold in escrow until closing.

In March 2019, shortly after the closing, the defendant issued two checks to cover the amount of the down payment, each in the amount of $65,600, both checks were allegedly returned because of insufficient funds.

Similarly, between November 2018 and April 2019, the defendant represented three brothers in the sale of their $1,500,000 two-family home in Dyker Heights, Brooklyn. It is alleged that the defendant received a $150,000 down payment from the buyers that he was to hold in escrow until closing.

In April 2019, three days after closing, the defendant allegedly issued three checks to the victims, each in the amount of $49,187.10, to cover the amount of the down payment. It is alleged that all three checks were returned because of insufficient funds.

Roman-Perez was arraigned today before Brooklyn Supreme Court Justice Danny Chun on an indictment in which he is charged with second-degree grand larceny, three counts of third-degree grand larceny and five counts of issuing a bad check. He was released without bail and ordered to return to court on April 1, 2020.

Brooklyn District Attorney Eric Gonzalez made the announcement.

District Attorney Gonzalez said, “This defendant allegedly betrayed the trust of his clients and abused his power as an attorney, taking advantage of the escrow accounts he controlled to steal hundreds of thousands of dollars. We will now seek to hold him accountable for this serious breach of trust.

The case was investigated by Supervising Financial Investigator Deborah Wey of the District Attorney’s Investigations Division.

The case is being prosecuted by Senior Assistant District Attorney Katherine Zdrojeski of the District Attorney’s Public Integrity Unit, under the supervision of Assistant District Attorney Laura Neubauer, Chief of the Public Integrity Unit, and Assistant District Attorney Michel Spanakos, Deputy Chief of the Investigations Division, and the overall supervision of Assistant District Attorney Patricia McNeill, Chief of the Investigations Division.

 

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.