Archives For Escrow Fraud

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.

 

Shenandoah Adams Sr., aka “Shane Adams Sr.,” 56, New Providence, New Jersey, today admitted committing wire fraud and making false reports and statements to and for the U.S. Department of Housing and Urban Development (HUD), U.S.

According to documents filed in this case and statements made in court:

Adams was a principal of Adams Property Management and Investment Group LLC (Adams Property Management), which purchased property on Hilton Street, East Orange, New Jersey in 2014. The following year, Adams arranged for a close associate to obtain a $153,562 loan from a mortgage lender to purchase the Hilton Street property from Adams Property Management. After the associate’s mortgage payments on the Hilton Street property became substantially in arrears, Adams arranged for the associate to sell the property to another associate for $255,000. The closing on that sale commenced on May 31, 2016; as of that date, the total amount to pay off the first associate’s mortgage was $210,565, including interest and fees. On June 1, 2016, Adams and the first associate had a telephone conversation with the mortgage servicer for the associate’s lender, during which Adams made false and fraudulent statements to induce the lender to reduce the payoff amount. The lender agreed to reduce the associate’s payoff amount to $190,000. At Adams’s direction, the associate cashed the check for the amount of the reduction – $20,665 – and delivered the cash proceeds to Adams.

Adams also was a principal of VH Electrical and Plumbing LLC.  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 $49,000. The project was funded by a HUD Community Development Block Grant to the library and Orange. Adams sent a library representative documentation 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 library’s chiller.

The charge of wire fraud carries a maximum potential penalty of 20 years in prison and a maximum $250,000 fine. The charge of making false reports and statements to HUD carries a maximum potential penalty of one year in prison and a maximum potential fine of $100,000. Sentencing is scheduled for Sept. 29, 2022.

Adams Sr. pleaded guilty before U.S. District Judge Esther Salas to one count of an indictment charging him with wire fraud and an information charging him with one count of making false reports and statements to and for HUD.

Attorney Philip R. Sellinger made the announcement.

U.S. Attorney Sellinger credited special agents of the FBI, under the direction of Special Agent in Charge George M. Crouch Jr. in Newark, and 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, with the investigation leading to today’s guilty plea.

The government is represented by Assistant U.S. Attorney Cari Fais, Chief of the Opioid Abuse Prevention and Enforcement Unit, and Assistant U.S. Attorneys J Fortier Imbert and Sara F. Merin of the U.S. Attorney’s Office’s Special Prosecutions Division.

Jasmine Morgan, 32, Queens, New York has been charged today with grand larceny, identity theft and other crimes. The defendant allegedly posed as the granddaughter of an elderly veteran to fraudulently transfer a property deed into her name and then collected more than $134,000 when she sold the home in March 2020.

According to the charges, around February 6, 2020, the defendant claimed to be the granddaughter of a deceased Queens, New York homeowner and offered to facilitate the sale of his home on 198th Street in St. Albans, Queens, New York. Morgan and an unapprehended other – who posed as the homeowner – agreed to a sale price of $300,000 with a buyer and subsequently entered into a contract. Morgan allegedly accepted a $5,000 down payment and provided identification and a death certificate for the dead grandfather and an uncle.

On March 6, 2020, the defendant again purported herself to be the heir to the deceased homeowner’s estate when she appeared at a law firm in Queens for the closing with an unapprehended other, who again posed as the homeowner. The deed transfer for the property was confirmed by the lawyer, who gave the defendant a check for just over $134,000.

According to the complaint, the true owner of the home is a 74-year-old veteran who discovered the ruse when he was sued by the person who “bought” the home from Morgan. The victim did not transfer his deed and does not have a granddaughter.

The defendant allegedly cashed the check she received from the lawyer at a Brooklyn check cashing establishment and received cash.

Queens District Attorney Melinda Katz made the announcement.

District Attorney Katz said, “This defendant was ultimately caught in a tangled web of her own making – a paper trail of bogus transactions that revealed a complicated con to steal a man’s home. By posing as a grieving granddaughter, the defendant allegedly duped multiple people into believing she was entitled to a $134,000 payday from the sale of a house to which she had no rightful claim. The victim is a 74-year-old veteran who was left with a mess to unravel.

Morgan was arraigned on Tuesday before Queens Criminal Court Judge Karen Gopee on a 15-count criminal complaint. The defendant is charged with grand larceny in the second degree, criminal possession of a forged instrument in the second degree, identity theft in the first degree, falsifying business records in the first degree, scheme to defraud in the first degree and offering a false instrument for filing in the second degree. Judge Gopee ordered the defendant to return to Court on January31, 2022. If convicted, Morgan faces up to 15 years in prison.

The investigation was conducted by Detective Marcelo Razzo of the NYPD Special Frauds Squad and Assistant District Attorney Christina Hanophy, Deputy Bureau Chief of the Housing and Worker Protection Bureau of the Queens District Attorney’s Office who is also prosecuting the case under the supervision of Assistant District Attorney William Jorgenson, Bureau Chief, and under the overall supervision of Executive Assistant District Attorney for Investigations Gerard A. Brave.

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.

Tammy Hamrin, formerly known as Tammy A. Cheek, 58, Virginia Beach, Virginia, the former president of an escrow and title company was sentenced today to 18 months in prison for misappropriating $715,000 of closing funds in connection with 48 real estate transactions for which she served as the settlement agent.

According to court documents, Hamrin was a licensed title and settlement agent and was the president, secretary, and treasurer of Preferred Escrow and Title, Inc. During 48 real estate transactions between January 2018 and approximately February 2018, Hamrin misappropriated $715,000 of closing funds that had been deposited by various lenders and individual buyers into the company’s escrow account. She did so by making seven unauthorized wire transfers of funds from the escrow account to certain entities at the request of a person with whom Hamrin had an online personal relationship.

During this period, Hamrin partially replenished the funds that she had misappropriated by depositing approximately $199,000 of her own money into the escrow account, resulting in a remaining shortage of approximately $516,000. As a result, all 48 closings were affected. Among others, losses were sustained by sellers, buyers, business entities, financial institutions, various lienholders, municipal clerks of court and treasurer offices, and a title insurance company.

Raj Parekh, Acting U.S. Attorney for the Eastern District of Virginia, and Brian Dugan, Special Agent in Charge of the FBI’s Norfolk Field Office, made the announcement after sentencing by U.S. District Judge Raymond A. Jackson.

Assistant U.S. Attorney Alan M. Salsbury prosecuted the case.

A copy of this press release is located on the website of the U.S. Attorney’s Office for the Eastern District of Virginia. Related court documents and information are located on the website of the District Court for the Eastern District of Virginia or on PACER by searching for Case No. 2:21-cr-2.

Ronald J. Mccord, 70, Oklahoma City, Oklahoma pleaded guilty yesterday to defrauding two locally-based banks, Fannie Mae, and others through a broad range of fraudulent conduct over the course of three years.

McCord was the Chairman and founder of First Mortgage Company, LLC (“FMC”), an Oklahoma City, Oklahoma based mortgage lending and loan servicing company.

According to court documents and yesterday’s plea hearing, McCord admitted to defrauding Spirit Bank (“Spirit”) and Citizens State Bank (“Citizens”)—two state-chartered financial institutions—as well as their respective residential mortgage subsidiaries, American Southwest Mortgage Corporation (“Mortgage Corp.”) and American Southwest Mortgage Funding Corporation (“Funding Corp.”).  An independent audit discovered that McCord had sold more than $14,100,000.00 in Spirit/Mortgage Corp. and Citizens/Funding Corp. loans “out of trust” by failing to repay Spirit/Mortgage Corp. when certain Spirit/Mortgage Corp.-initiated loans were refinanced or otherwise paid off.  At the time of this discovery, FMC carried outstanding balances of about $200,000,000.00 and $140,000,000.00 on the Spirit/Mortgage Corp. and Citizens/Funding Corp. lines of credit, respectively.

Upon learning of McCord’s conduct, Spirit/Mortgage Corp. and Citizens/Funding Corp. terminated future warehouse lending to FMC, and instituted new notification requirements that required McCord to assign FMC-funded mortgages to Spirit/Mortgage Corp. and Citizens/Funding Corp., to ensure the title companies handling those mortgages sent payoffs directly to the banks.  McCord admitted at yesterday’s plea hearing that he filed the assignments as required, but then caused the mortgages to be released on two properties—in Leland and Denver, North Carolina—after collecting the mortgage payoffs.

Spirit/Mortgage Corp. and Citizens/Funding Corp.’s refusal to fund new FMC mortgages prompted McCord to seek out a new warehouse lender.  In early 2017, McCord began negotiating with CapLOC, LLC, a North Carolina-based mortgage lending business, and offered to sell FMC’s mortgage lending business in exchange for quick funding from CapLOC.  At yesterday’s plea hearing, McCord admitted that he made a materially false statement and representation to CapLOC in the course of those negotiations, in order to influence CapLOC’s actions.

Finally, in 2017, FMC serviced approximately 12,000 loans worth a total of approximately $1,800,000,000.00 for the Federal National Mortgage Association (“Fannie Mae”).  McCord admitted at the plea hearing that he defrauded Fannie Mae by diverting escrow monies intended to pay homeowners’ taxes and insurance premiums to cover FMC’s operating expenses.  McCord also admitted that he then laundered the proceeds by causing a wire transfer from FMC’s operating account to a custom home builder, as payment towards construction of McCord’s home in Colorado.

At sentencing, which is currently scheduled for August 9, 2021, McCord faces up to 30 years in prison and a fine of up to $1,000,000.00 on each count of bank fraud and false statement to a financial institution.  He also faces up to 10 years in prison and a $250,000.00 fine on the money laundering count.  Per the terms of his plea agreement, the government agreed not to advocate at sentencing for a sentence above 104 months.  Under the plea agreement, McCord will be ordered to pay restitution to the victims of his conduct in amounts to be determined by the court at the time of sentencing.  McCord must also forfeit proceeds of the fraudulent schemes and property involved in the offenses.  Further, as part of the plea agreement, the government will dismiss at sentencing the remaining counts of the Indictment.

On June 3, 2020, a grand jury returned a 24-count Indictment against McCord.  The charges included bank fraud, money laundering, and making a false statement to a financial institution.

The announcement was made by Acting U.S. Attorney Robert J. Troester.

This case is the result of investigations by the Federal Housing Finance Agency Office of the Inspector General, Federal Deposit Insurance Corporation Office of Inspector General, and the Federal Bureau of Investigation.  Assistant U.S. Attorney Julia E. Barry is prosecuting the case.

Reference is made to court filings for further information.

 

Stephen Sharkey, 51, Swedesboro, New Jersey, was sentenced to four years and one month in prison, three years of supervised release, for stealing down payments for homes from two different families.

In September 2020, the defendant pleaded guilty to two counts of conspiracy to commit wire fraud, eight counts of wire fraud, one count of aggravated identity theft and, one count of money laundering in connection with three brazen and predatory frauds which greatly harmed innocent victims and netted the defendant more than $385,000. Sharkey engaged in two mortgage-closing schemes to defraud potential home buyers – stealing money that the victims had intended to use to purchase residences for themselves and their families. In the third scheme, the defendant stole all of the proceeds of the sale of a house by secretly going to closing without telling the seller.

Sharkey and his associate, Antonio Ambrosio, convinced their victims to provide Sharkey with the down payment funds in advance of the dates set for the real estate closings, with the promise that Sharkey would provide full financing for the purchases. Rather than finance the deals, Sharkey and Ambrosio simply stole the down payment money supplied by the victims and made excuses when the deals did not close. As part of the scam, Sharkey and Ambrosio even defrauded Ambrosio’s own brother-in-law out of $208,000. After receiving this money, Sharkey immediately cut checks to ARMM Investments, LLC, a company owned by George Borgesi. Borgesi and Sharkey were both convicted in United States v. Merlino, et al., 99 CR 363, an early 2000s RICO case in which the Philadelphia La Cosa Nostra was named as the enterprise. Borgesi was named as a capo of the Philadelphia LCN in that Indictment, and Sharkey was identified as a bookmaker for the mob.

After Sharkey and Ambrosio stole the down payment from Ambrosio’s brother-in-law, they proceeded to lure a second victim to use Sharkey to finance his mortgage, and the victim wired Sharkey $100,000, which Sharkey promptly converted to his own use. The deal for this property fell through, but Sharkey and Ambrosio induced the victim to send the seller an extra $25,000 to hold the deal open, claiming Sharkey would get the deal done. The victim sent the seller the $25,000, but Sharkey had already disposed of the earlier $100,000 and the deal never closed.

Finally, in the real estate fraud perpetrated on the seller victim, Sharkey promised the victim that Sharkey would sell the house belonging to the estate of the victim’s deceased parents and, after going to a closing the victim knew nothing about, Sharkey deposited all of the proceeds of the sale into his own bank account, stealing over $52,000 from the victim in the process.

Sharkey was ordered to pay $296,000 restitution and to forfeit the same amount of money.

Acting United States Attorney Jennifer Arbittier Williams made the announcement.

Sharkey’s greed impacted the lives and security of multiple families, and his shameful actions had severe consequences for these innocent people,” said Acting U.S. Attorney Williams. “Not only did he and his associate steal mortgage down payments, but he also sold a different family’s house right out from underneath them and pocketed all of the cash. For his actions, he will now spend years in prison.

Real estate fraud was just the latest racket for Stephen Sharkey,” said Michael J. Driscoll, Special Agent in Charge of the FBI’s Philadelphia Division. “He blatantly preyed on innocent victims here, destroying two families’ plans of buying homes and stealing a third person’s inherited property. A chunk of these fraudulent proceeds was diverted to a longtime Philadelphia mob figure, underscoring Sharkey’s continued association with organized crime. The FBI and our partners are going to keep investigating and locking up those committed to making money through illicit means.”     

This investigation once again reveals how members and associates of the Philadelphia La Cosa Nostra Organized Crime Family are constantly looking to make illicit financial gains by infiltrating legitimate business or exploiting regulatory rules as well as federal and state laws,” said Brandon Corby, Eastern Organized Crime Task Force Commander, Pennsylvania State Police. “The Pennsylvania State Police with our FBI partners are committed to eradicating this type of criminal behavior and hold those engaged in such activities accountable.”

The case was investigated by the Federal Bureau of Investigation’s Organized Crime Task Force and the Pennsylvania State Police, and is being prosecuted by Assistant United States Attorney Michael T

 

Adolfo Schoneke, 43, Torrance, California and his sister, Bianca Gonzalez, a.k.a. Blanca Schoneke, 38, Walnut, California, a brother-and-sister team were arrested today on federal charges alleging they orchestrated a $6 million real estate fraud scam in which they listed homes without the owners’ consent and collected money from multiple would-be buyers for each of the not-for-sale homes.

According to the indictment, Schoneke and Gonzalez, with the help of 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. The indictment alleges Schoneke and Gonzalez found properties that they would list for sale – even though many, in fact, were not for sale, and they did not have authority to list them for sale – and they then marketed the properties as short sales providing opportunities for purchases at below-market prices.

Using other people’s broker’s licenses, Schoneke and Gonzalez allegedly listed the properties on real estate websites such as the Multiple Listing Service (MLS). In some cases, the indictment alleges, the homes were marketed through open houses that co-conspirators were able to host after tricking homeowners into allowing their homes to be used.

As part of the alleged scheme, the co-conspirators accepted multiple offers for each of the not-for-sale properties, hiding this fact from the victims and instead leading each of the victims to believe that his or her offer was the only one accepted. The co-conspirators allegedly were able to string along the victims – sometimes for years – by telling them closings were being delayed because lenders needed to approve the purported short sales.

The indictment also alleges that Schoneke and Gonzalez directed office workers to open bank accounts in the office workers’ names. 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” to these bank accounts after receiving forged short sale approval letters. Schoneke and Gonzalez also allegedly directed the office workers to withdraw large amounts of cash from these accounts and give it to them – a procedure that allowed Schoneke and Gonzalez to take possession of the fraud proceeds while hiding their involvement in the scheme.

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

Each pleaded not guilty this afternoon to nine charges contained in an indictment unsealed after their arrests. The indictment charges Schoneke and Gonzalez with one count of conspiracy, seven counts of wire fraud, and one count of aggravated identity theft.

During the arraignments this afternoon, a trial was scheduled for June 1, 2021. Both defendants will remain in custody at least until detention hearings scheduled for Friday for Schoneke and April 13, 2021 for Gonzalez.

An indictment contains allegations that a defendant has committed a crime. Every defendant is presumed innocent until and unless proven guilty beyond a reasonable doubt.

If convicted of all charges, Schoneke and Gonzalez each would face a statutory maximum sentence of 162 years in federal prison.

This matter was investigated by the FBI and the Federal Deposit Insurance Corporation, Office of Inspector General. 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.

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

Robert Pena, 69, the president and founder of a Falmouth mortgage company was sentenced yesterday in connection with defrauding the Government National Mortgage Association (Ginnie Mae) out of approximately $2.5 million.

The charges arise out of Pena’s scheme to defraud Ginnie Mae, a government-run corporation charged with making housing more affordable by injecting capital into the U.S. housing market. Ginnie Mae, which is part of the U.S. Department of Housing and Urban Development (HUD), guarantees the timely payment of principal and interest to investors in bonds backed by government-sponsored mortgage loans, such as those offered by the Federal Housing Administration and the U.S. Department of Veterans Affairs.

MSI contracted with Ginnie Mae to pool eligible residential mortgage loans and then sell Ginnie Mae-backed mortgage bonds to investors. MSI was responsible for servicing the loans in the pools it created, including collecting principal and interest payments from borrowers, as well as loan payoffs, and placing those funds into accounts held in trust by Ginnie Mae, which would ultimately pass them along to investors. Among other things, Ginnie Mae required issuers like MSI to provide regular reports to Ginnie Mae concerning the status of the loans in the pools.

Beginning in 2011, Pena began diverting money that borrowers were sending to MSI.  Specifically, Pena deposited high-dollar, loan-payoff checks into bank accounts unknown to Ginnie Mae and then used those funds for personal and business expenses. Pena also diverted borrowers’ escrow funds and mortgage-insurance premiums for his own use. In total, Pena took approximately $2.5 million, which Ginnie Mae then had to pay to investors whose investments it had guaranteed. Pena also attempted to cover up his scheme by providing false reports to Ginnie Mae about the status of the loans MSI was servicing. These false reports made it appear that the loans were still in repayment.

Pena’s co-conspirator, Gilda Andrade, who worked for Pena at MSI and helped Pena file false reports with Ginnie Mae, cooperated with the government’s investigation. Andrade pleaded guilty to a misdemeanor charge of making a false statement to HUD in December 2017, and was previously sentenced to one year probation and ordered to pay $108,240 in restitution to Ginnie Mae.

Pena was sentenced to 32 months in prison, two years of supervised release, and ordered to pay $2.5 million in restitution to Ginnie Mae. In October 2017, Pena pleaded guilty to an indictment charging him with one count of conspiracy and six counts of wire fraud.

United States Attorney Andrew E. Lelling; Christina Scaringi, Special Agent in Charge of the U.S. Department of Housing and Urban Development, Office of Inspector General, Northeast Regional Office; and Joseph Bonavolonta, Special Agent in Charge of the Federal Bureau of Investigation, Boston Field Division, made the announcement today. The U.S. Attorney’s Office wishes to acknowledge the invaluable assistance of the U.S. Department of Veterans Affairs, Office of Inspector General; the U.S. Department of Agriculture, Office of Inspector General; and the Falmouth Police Department. Assistant U.S. Attorney Brian M. LaMacchia prosecuted the case.

Constantine Giannakos, 51, Hicksville, New York, a disbarred attorney, pleaded guilty yesterday to stealing $40,000 from a Hicksville couple selling their home.

In early 2017, a Hicksville homeowner and her ex-husband hired the defendant to represent them in the sale of their home. The complainants and their home purchasers entered a sales contract on February 4, 2017.

At the time of the contract signing, the buyers’ attorney provided a $40,000 down payment check made out to ‘Constantine Giannakos, as attorney’ that was deposited into Giannakos’ escrow account and held there until the closing.

Between February 4, 2017 and the scheduled closing date of September 27, 2017, the defendant and one of the complainants met at public locations including a Dunkin’ Donuts on Newbridge Road in Hicksville. The defendant claimed he had an office in Syosset, New York but in fact, did not.

Following the closing on September 27, 2017 the defendant was supposed to remit the $40,000 down payment to his clients but never did so. The complainants made several subsequent requests for the money via phone and text messages but never received the money.

The Nassau County District Attorney’s Office received the case on October 24, 2017, after receiving a complaint from the homeowners. A review of the escrow account showed Giannakos spent the $40,000 at Home Depot, on credit card payments, department stores, mortgage payments, and unrelated business expenses.

Giannakos pled guilty to Grand Larceny in the Third Degree (a D felony) before Judge Robert Bogle. If the defendant provides $40,000 restitution at the time of sentence on May 10, 2019 he is expected to be sentenced to five years’ probation; however, if the defendant does not pay restitution, he is expected to be sentenced to one to three years in prison.

Nassau County District Attorney Madeline Singas made the announcement.

Instead of faithfully representing his clients, this defendant stole $40,000 from them and spent it at the Home Depot and on personal credit card payments,” DA Singas said. “When an attorney abuses their client’s trust and steals from them, my office will hold them accountable for their crimes.”

Giannakos was disbarred for another matter on August 21, 2012.

Since 2012, the NCDA has prosecuted more than 20 attorneys for misconduct.

If you believe you may have been a victim of an unscrupulous attorney, please call the NCDA’s Tip Line at 516-571-7755. Anyone interested in hiring an attorney is encouraged to check that person’s standing and registration with the Office of Court Administration.

Assistant District Attorney Jennifer Contreras of DA Singas’ Financial Crimes Bureau is handling this case. Eric Franz, Esq. represents the defendant.