Archives For False Documents

Surjit Singh, 72, Dublin, California, Rajeshwar Singh, 44, Pleasanton, California and Anita Sharma, 56, Gilroy, California were sentenced today for crimes relating to their involvement in a mortgage fraud scheme.

According to court documents, in 2006 and 2007, Surjit Singh recruited individuals with good credit to act as straw buyers for residential properties owned by his family members and associates. Rajeshwar Singh, a licensed real estate agent, assisted in the scheme by submitting loan applications for the straw buyers. Anita Sharma, a dental assistant at the time, was one of the straw buyers. Because Sharma and the other straw buyers could not afford the homes based on their true incomes, the Singhs submitted fraudulent loan applications and supporting material to lending institutions that included false statements about the straw buyers’ income, employment, liabilities, and intent to occupy the homes as their primary residences.

At least 14 properties were involved in the scheme. Anita Sharma alone purchased five homes in San Jose, San Ramon, Elk Grove, Sacramento, and Modesto, California. Other straw buyers purchased or refinanced properties in Stockton, Modesto, Patterson, Lathrop and Tracy, California. All of these homes were ultimately either foreclosed upon or sold in a short sale where the bank lets homeowners sell their homes for less than is owed on the mortgage.

Sharma was paid for her involvement in the scheme. Rajeshwar Singh received financial benefits through broker commissions for the transactions and as the seller of seven of the properties. He also continued to occupy the San Ramon property at a time when Anita Sharma should have been living there. Surjit Singh benefitted through payments out of escrow directed to shell companies, such as SJR Investments and BK Investments, which were associated with his daughter and significant other, whose initials are SJR and BK respectively. These payments were purportedly for contracting services, which did not occur. He also benefitted through rental payments made to him and his significant other by the renters of the homes, as the straw buyers were not living in the homes. In addition, many of his family members received money by selling properties and had money directed to them out of escrow. According to court documents and evidence produced at trial, the defendants were responsible for the origination of more than $9.3 million in fraudulently procured residential mortgage loans.

Surjit Singh was sentenced to 11 years and three months in prison, his son, Rajeshwar Singh was sentenced to 11 years and three months in prison on four counts of mail fraud, four counts of bank fraud, and four counts of false statements on loan and credit applications. Anita Sharma, was sentenced to three years and 10 months in prison on two counts of mail fraud, two counts of bank fraud, and two counts of false statements on loan and credit applications. Surjit Singh was ordered to pay a $2 million fine, $698,787 in restitution, and $847,000 in forfeiture. Raj Singh was ordered to pay a $1 million fine, $928,287 in restitution, and $838,399 in forfeiture. Anita Sharma was ordered to pay $603,180 in restitution and $30,000 in forfeiture.

Surjit Singh is in custody.  Rajeshwar Singh and Anita Sharma are scheduled to self‑surrender on January 9, 2019.

U.S. Attorney McGregor W. Scott made the announcement.

This case was the product of an investigation by the Federal Bureau of Investigation. Assistant U.S. Attorneys Lee S. Bickley, Kelli L. Taylor, and Kevin Khasigian prosecuted the case.

Joseph Bates III, 38, Wakefield, Massachusetts pleaded guilty today in connection with a decade-long mortgage fraud scheme involving at least two dozen fraudulent loan transactions and $4.3 million in losses to lenders.

According to the charging documents, from 2006 through 2015, Bates and others engaged in a scheme to defraud banks and other financial institutions by causing false information to be submitted to those institutions on behalf of borrowers, people recruited to purchase properties, located primarily in Salem,Massachusetts . The properties were usually multi-family buildings with two-to-four units, which the co-conspirators then converted into condominiums. The co-conspirators recruited other borrowers to purchase the individual condominium units, which were also financed by fraudulent mortgage loans. http://www.mortgagefraudblog.com/?s=Joseph+Bates+III

Bates was charged with one count of conspiracy, three counts of wire fraud affecting a financial institution, and two counts of bank fraud. A sentencing date has not yet been scheduled. One of Bates’ alleged co-conspirators, George Kritopoulos, 46, Salem, Massachusetts was indicted on related charges in September 2018, and another participant, David Plunkett, 52, Lynn, Massachusetts was charged by Information.

The false information submitted to lenders included, among other things, representations concerning the borrowers’ employment, income, assets, and intent to occupy the property. Specifically, the false employment information included representations that borrowers were employed by entities that were, in fact, shell companies used to advance the fraudulent scheme. The employment information included false representations about the income that the borrowers received from the entities, when, in fact, the borrowers received little or no income from them.  Furthermore, the income asserted on the borrowers’ loan applications substantially overstated their true income. The false information also included representations that the recruited borrowers intended to live in the properties that they were purchasing, when the borrowers, in fact, did not intend to do so. Plunkett allegedly assisted the scheme by preparing tax returns for some of the borrowers that contained false and inflated income. Some of those tax returns were submitted to lenders in support of the fraudulent loan applications.

Because the borrowers did not have the financial ability to repay the loans, in many instances, they defaulted on their loan payments, resulting in foreclosures and losses to the financial institutions of more than $4.3 million.

The charges of bank fraud and wire fraud affecting a financial institution each provide for sentences of no greater than 30 years in prison, five years of supervised release, and a fine of $1 million. The charge of conspiracy provides for a sentence of no greater than five years in prison, three years of supervised release, and a fine of $250,000, or twice the gross gain or loss, whichever is greater. Sentences are imposed by a federal district court judge based upon the U.S. Sentencing Guidelines and other statutory factors.

United States Attorney Andrew E. Lelling; Harold H. Shaw, Special Agent in Charge of the Federal Bureau of Investigation, Boston Field Division; Christina Scaringi, Special Agent in Charge of the U.S. Department of Housing and Urban Development, Office of Inspector General, Northeast Regional Office; and Kristina O’Connell, Special Agent in Charge of the Internal Revenue Service’s Criminal Investigation in Boston, made the announcement today.  Assistant U.S. Attorneys Mark J. Balthazard and Sara Miron Bloom of Lelling’s Securities and Financial Fraud Unit are prosecuting the case.

The details contained in the charging documents are allegations. The remaining defendants are presumed to be innocent unless and until proven guilty beyond a reasonable doubt in a court of law.

 

George Kritopoulos, 46, Salem, Massachusetts, a real estate developer, Joseph Bates III, 38, Lynnfield, Massachusetts and David Plunkett, 52, Lynn, Massachusetts were charged today in connection with a 10-year mortgage fraud scheme involving at least two dozen fraudulent loan transactions and $4.3 million in losses to lenders.

According to the charging documents, from 2006 through 2015, Kritopoulos, Bates, and others engaged in a scheme to defraud banks and other financial institutions by causing false information to be submitted to those institutions on behalf of borrowers, people recruited to purchase properties, located primarily in Salem, Massachusetts. The properties were usually multi-family buildings with two-to-four units, which the co-conspirators then converted into condominiums. The co-conspirators recruited other borrowers to purchase the individual condominium units, which were also financed by mortgage loans obtained by fraud.

The false information submitted to lenders included, among other things, representations concerning the borrowers’ employment, income, assets, and intent to occupy the property. Specifically, the false employment information included representations that borrowers were employed by entities that were, in fact, shell companies used to advance the fraudulent scheme. The employment information included false representations about the income that the borrowers received from the entities, when, in fact, the borrowers received little or no income from them.  Furthermore, the income asserted on the borrowers’ loan applications substantially overstated their true income. The false information also included representations that the recruited borrowers intended to live in the properties that they were purchasing, when the borrowers, in fact, did not intend to do so. Plunkett assisted the scheme by preparing tax returns for some of the borrowers that contained false and inflated income. Some of those tax returns were submitted to lenders in support of the fraudulent loan applications.

Because the borrowers did not have the financial ability to repay the loans, in many instances, they defaulted on their loan payments, resulting in foreclosures and losses to the financial institutions of more than $4.3 million.

In addition, Kritopoulos sought to obstruct the federal criminal investigation into the mortgage fraud scheme by encouraging others to make false statements and provide false documents. Kritopoulos also made false statements to federal investigators.

Kritopoulos was charged with one count of conspiracy, two counts of wire fraud, six counts of bank fraud, one count of aiding the preparation of a false income tax return, and one count of obstruction of justice. Bates was charged with one count of conspiracy, three counts of wire fraud, and two counts of bank fraud. Plunkett was also charged with one count of bank fraud and one count of aiding in the preparation of a false tax return.

The charges of bank fraud and wire fraud each provide for sentences of no greater than 30 years in prison and five years of supervised release. The charge of obstruction of justice provides for a sentence of no greater than 20 years in prison and five years of supervised release. The charge of conspiracy provides for a sentence of no greater than five years in prison and three years of supervised release. The charge of aiding the preparation of false tax returns provides for a sentence of no greater than three years in prison and one year of supervised release. Each charge also carries a fine of $250,000, or twice the gross gain or loss, whichever is greater. Sentences are imposed by a federal district court judge based upon the U.S. Sentencing Guidelines and other statutory factors.

United States Attorney Andrew E. Lelling; Harold H. Shaw, Special Agent in Charge of the Federal Bureau of Investigation, Boston Field Division; Christina Scaringi, Special Agent in Charge of the U.S. Department of Housing and Urban Development, Office of Inspector General, Northeast Regional Office; and Kristina O’Connell, Special Agent in Charge of the Internal Revenue Service’s Criminal Investigation in Boston, made the announcement today.  Assistant U.S. Attorneys Mark J. Balthazard and Sara Miron Bloom of Lelling’s Economic Crimes Unit are prosecuting the case.

The details contained in the charging documents are allegations. The defendants are presumed to be innocent unless and until proven guilty beyond a reasonable doubt in a court of law.

Jason Anthony Martinez, 38, Tampa, Florida, has plead guilty to making false statements to the U.S. Attorney’s Office’s Financial Litigation Unit.

According to the plea agreement, Martinez was previously convicted in a mortgage-related fraud case and ordered to pay $3,008,551.01 in restitution. On October 24, 2017, Martinez signed and submitted a Financial Disclosure Form, upon which he falsely claimed a net income that was approximately half his actual net income and failed to disclose a number of credit accounts. This false information materially and adversely affected the resulting restitution-related payment calculations in his prior case.

He faces a maximum penalty of five years in federal prison.

United States Attorney Maria Chapa Lopez made the announcement.

U.S. Attorney Chapa Lopez stated, “Pursuant to the Crime Victims’ Rights Act of 2004, federal crime victims have the right to full and timely restitution. Our Financial Litigation Unit is dedicated to investigating defendants’ ability to meet their restitution obligation and collecting such restitution in compliance with federal law. Criminal defendants must understand that the United States Attorney’s Office actively pursues the collection of restitution.”

The U.S. Attorney’s Office, recognizing the critical importance of recovering restitution for victims, has a Financial Litigation Unit that collects criminal monetary penalties, including restitution, imposed on criminal defendants by the U.S. District Court as part of his or her sentence. One of the tools used by the Unit to collect restitution is the Financial Disclosure Statement, which requires defendants to truthfully disclose, among other things, their income, expenses, assets, and liabilities.

This case was investigated by the U.S. Attorney’s Office’s Economic Crimes Section. It is being prosecuted by Assistant U.S. Attorney Thomas N. Palermo.

Daniel Cardenas, 37, Tampa, Florida, was sentenced today to 18 months in federal prison for conspiracy to commit wire fraud.

According to court documents, from as early as October 2007 through May 2008, Cardenas and others conspired to execute a wire fraud scheme affecting financial institutions. The goal of the scheme was to sell condominium units at The Preserve at Temple Terrace, a 392-unit condominium complex in Tampa, Florida. To entice buyers to purchase the units, the conspirators offered cash payments to buyers, either before or after closing. Payment of the funds to the individual buyers was neither known to nor approved by the mortgage lenders.

The conspirators made material false statements on loan documents, such as purchase and sale agreements, loan applications, and HUD-1 settlement statements, to induce mortgage lenders to approve loans for otherwise unqualified borrowers. The conspirators used several entities to conceal the payments to buyers from the mortgage lenders.

Cardenas’s role in the conspiracy, as a loan officer at Transcontinental Lending Group’s branch in Tampa, Florida included but was not limited to preparing, signing, and certifying false and fraudulent loan applications submitted to lenders in order to induce the institutions to provide funding for buyers. The false representations submitted to and relied upon by the mortgage lenders included representations concerning occupancy, income, source of funds, and assets.  Cardenas’s participation in the mortgage fraud conspiracy caused approximately $710,000 in losses to the victim mortgage lenders.

Cardenas pleaded guilty on April 24, 2018.

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

 

Greisy Jimenez, 50, Methuen, Massachusetts, a real estate broker, was sentenced today in connection with a sweeping conspiracy to defraud banks and mortgage companies by engaging in sham “short” sales of residential properties in Merrimack Valley, Massachusetts.

Three co-conspirators involved in the scheme have been sentenced after pleading guilty to conspiracy to commit bank fraud. In June 2018, Jasmin Polanco, 37, Methuen, Massachusetts, a real estate closing attorney, was sentenced to 15 months in prison, three years of supervised release and ordered to pay $1,224,489 in restitution. In May 2018, Vanessa Ricci, 41, Methuen, Massachusetts, a mortgage loan officer, was sentenced to six months in prison, three years of supervised release and ordered to pay restitution of $963,730. In March 2017, Hyacinth Bellerose, 51, Dunstable, Massachusetts, a real estate closing attorney, was sentenced to time served and one year of supervised release to be served in home detention. http://www.mortgagefraudblog.com/?s=Greisy+Jimenez

The charges arose out of a scheme to defraud various banks via bogus short sales of homes in Haverhill, Lawrence and Methuen, Massachusetts in which the purported sellers remained in their homes with their debt substantially reduced. A short sale is a sale of real estate for less than the value of any existing mortgage debt on the property. Short sales are an alternative to foreclosure that typically occur only with the consent of the mortgage lender. Generally, the lender absorbs a loss on the loan and releases the borrower from the unpaid balance. By their very nature, short sales are intended to be arms-length transactions in which the buyers and sellers are unrelated, and in which the sellers cede their control of the subject properties in exchange for the short-selling bank’s agreement to release them from their unpaid debt.

The conspiracy began in approximately August 2007 and continued through June 2010, a period that included the height of the financial crisis and its aftermath. Home values in Massachusetts and across the nation declined precipitously, and many homeowners found themselves suddenly “underwater” with homes worth less than the mortgage debt they owed. As part of the scheme, Jimenez, Polanco, Ricci, Bellerose and others submitted materially false and misleading documents to numerous banks in an effort to induce them to permit the short-sales, thereby releasing the purported sellers from their unpaid mortgage debts, while simultaneously inducing the purported buyers’ banks to provide financing for the deals. In fact, the purported sellers simply stayed in their homes, with their debt substantially reduced.

The conspirators falsely led banks to believe that the sales were arms-length transactions between unrelated parties; in fact, the buyers and sellers were frequently related, and the sellers retained control of (and frequently continued to live in) the properties after the sale. The conspirators also submitted phony earnings statements in support of loan applications that were submitted to banks in order to obtain new financing for the purported sales. In addition, the defendants submitted phony “HUD-1 Settlement Statements” to banks that did not accurately reflect the disbursement of funds in the transactions. HUD-1 Settlement Statements are standard forms that are used to document the flow of funds in real estate transactions. They are required for all transactions involving federally related mortgage loans, including all mortgages insured by the Federal Housing Administration.

Jimenez was sentenced by U.S. Senior District Court Judge Mark L. Wolf, to three years in prison, four years of supervised release, and ordered to pay a fine of $12,500. The court will determine issues of restitution and forfeiture on Aug. 29, 2018. In January 2018, Jimenez pleaded guilty to two counts of bank fraud and one count of conspiracy to commit bank fraud.

United States Attorney Andrew E. Lelling; Christina Scaringi, Special Agent in Charge of the Department of Housing and Urban Development, Office of Inspector General, New York Field Office; and Christy Goldsmith Romero, Special Inspector General of the Troubled Asset Relief Program, made the announcement. Assistant U.S. Attorney Stephen E. Frank, Chief of Lelling’s Economic Crimes Unit, and Assistant U.S. Attorneys Sara Miron Bloom and Victor A. Wild, also of the Economic Crimes Unit, prosecuted the cases.

Momoud Aref Abaji, 37, Huntington Beach, California was sentenced to federal prison for his leadership role in a “builder bailout” mortgage fraud scheme.

The scheme Abaji operated resulted in the fraudulent purchase of more than 100 condominium units around the country, causing more than $10 million in losses when the properties went into foreclosure.

Abaji, along with several co-conspirators, operated the scheme through Excel Investments and related companies based in Santa Ana and Irvine, California. The scheme involved kickbacks from condominium builders during the 2008 financial crisis, that Abaji and his co-conspirators hid from lenders to convince them to fund loans in excess of the actual purchase price. http://www.mortgagefraudblog.com/?s=Maher+Obagi

During the course of the scheme, co-conspirators identified condominium developments around the country where the builders were struggling to sell units and arranged to purchase multiple units at a discount. The builders benefited by making it appear that their condos were selling and maintaining their value, while members of the conspiracy obtained the kickbacks.

The co-conspirators negotiated with condominium builders in California, Florida and Arizona for discount units. The defendants bought units for themselves, their relatives, and on behalf of “straw buyers” whom they brought into the scheme. They identified straw buyers by looking for individuals with good credit scores and then recruited them into the scheme by giving them an upfront payment for their participation and by presenting the scheme as an investment opportunity that required no down payment and would generate income through rental payments.

To obtain mortgages for the properties, Abaji and other co-conspirators prepared loan applications with false information about the straw buyers – including fake employment, income and assets, as well as fabricated W2s, pay stubs and bank statements. The mortgage applications also included false information about the terms of the transactions, such as concealing the large kickbacks from builders through false and misleading HUD-1 forms. As a result of the false statements in the fraudulent loan applications, mortgage lenders provided over $21 million in financing to purchase more than 100 properties.

Many of these loans went into default, and mortgage lenders lost more than $10 million after foreclosing on the properties. The Federal Home Loan Mortgage Corporation (Freddie Mac) and the Federal National Mortgage Association (Fannie Mae) purchased dozens of these loans on the secondary mortgage market and suffered losses of at least $1.3 million as a result of defaults and foreclosures on the properties.

Abaji was sentenced to 108 months in prison by United States District Judge Andrew Guilford and ordered to pay more than $10 million in restitution to the financial institutions that were victims of the fraud.

Several other defendants were charged in connection with the same scheme.

  • Abaji’s brother, Maher Obagi, 32, Huntington Beach, California who was sentenced in June 2018 to 78 months in prison and ordered to pay just over $10 million in restitution.
  • Mohamed Salah, 43, Mission Viejo, California who was sentenced in June 2018 to 57 months in prison and ordered to pay just over $7 million in restitution.
  • Ali Khatib, 53, Newport Coast, California pleaded guilty in a related case and is scheduled to be sentenced on September 10th;
  • Jacqueline Burchell, 57, Orange, California pleaded guilty in June 2013 and is scheduled to be sentenced on October 1st;
  • Wajieh Tbakhi, 53, who is currently a fugitive; and
  • Mohamed El Tahir, now deceased.

This matter was investigated by the Federal Bureau of Investigation; the Federal Housing Finance Agency, Office of the Inspector General; and IRS Criminal Investigation.

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

Garth Anthony Gardner, 49, a citizen of the Republic of Trinidad & Tobago, pled guilty yesterday to charges involving a scheme in which he made misrepresentations to apply for and obtain more than $3 million in multiple home equity line of credit loans.

According to the government’s evidence, in October 2003, Gardner purchased a property in the 5100 block of 13th Street NW, Washington, DC, using the Social Security number of another person and falsely representing himself as a U.S. citizen.  In May 2005, he used a corporation that he owned to purchase a second property in the 1300 block of Dexter Terrace SE, Washington, DC.  Gardner transferred ownership of the second property from the company to himself for $10.  Next, Gardner applied for a series of home equity line of credit loans using the two properties as collateral.

By settling these loans in close proximity to each other, Gardner minimized the banks’ ability to learn about the other loans.  From August to October 2004, Gardner obtained 12 home equity line of credit loans from 12 different banks secured by the 13th Street property, totaling approximately $1.4 million.  Between March and April 2006, Gardner applied for 13, and obtained 12, such loans from 12 banks, secured by the Dexter Terrace property, totaling approximately $1.9 million.

In approximately February 2008, Gardner stopped making payments and defaulted on all of the loans.  The banks discovered Gardner’s fraudulent conduct after initiating foreclosure proceedings on the properties.

Gardner admitted that he used a portion of the proceeds from the fraudulent scheme to purchase 15 silver bars, which the government recovered and liquidated for about $1.1 million.

Gardner was arrested in Frankfurt, Germany in May 2017, and was extradited to the District of Columbia in February 2018, to face the charges that had been pending since 2014.  He remains in custody pending his sentencing.

Gardner pled guilty on July 2, 2018, in the U.S. District Court for the District of Columbia, to two counts of bank fraud. Each charge carries a statutory maximum of 30 years in prison and potential financial penalties. Under federal sentencing guidelines, he faces an estimated range of 51 to 63 months in prison and a fine of up to $100,000. The plea agreement calls for him to pay $3,165,294 in restitution to 24 financial institutions. It also calls for him to pay a forfeiture money judgment in the amount of $2,048,446. The Honorable Christopher R. Cooper scheduled sentencing for Sept. 24, 2018.

The announcement was made by U.S. Attorney Jessie K. Liu and Acting Special Agent in Charge Kelly R. Jackson of the Internal Revenue Service Criminal Investigation (IRS-CI) Washington D.C. Field Office.

In announcing the plea, U.S. Attorney Liu and Acting Special Agent in Charge Jackson commended the work performed by those who investigated the case from the Internal Revenue Service-Criminal Investigation. They also expressed appreciation for the assistance provided by the Washington Field Office of the U.S. Secret Service and the Office of the Inspector General of the Social Security Administration. They acknowledged the efforts of those who worked on the case from the U.S. Attorney’s Office, including Assistant U.S. Attorneys Michelle Bradford, David A. Last, Diane Lucas and Denise A. Simmonds, and Paralegal Specialist Aisha Keys.

Robert McCloud, 39, Warrenville, South Carolina, pled guilty today to a federal wire fraud charge stemming from a real estate scheme in which he and others used forged deeds and fake driver’s licenses to fraudulently transfer ownership of District of Columbia homes from the rightful owners.

According to the government’s evidence, McCloud and others identified vacant or seemingly abandoned residential properties in the District of Columbia, and then prepared and filed forged deeds with the District of Columbia’s Recorder of Deeds transferring the properties into fictitious names. Next, they agreed to sell these properties to legitimate purchasers and arranged with unsuspecting title and escrow companies to finalize the sale and transfer ownership. Finally, they shared the fraudulently-obtained sales proceeds amongst themselves.

In his guilty plea, McCloud admitted taking part in two such fraudulent transactions within a two-month period of 2015, which generated a total of $580,482 in proceeds.

In the first, in April 2015, McCloud filed a forged Intra-Family deed with the District of Columbia’s Recorder of Deeds purporting to show that a home in the unit block of K Street NW, Washington, DC was transferred from the true owners to a fictitious person.  The true owners, who owned the home outright without any mortgage liens, did not sign the deed and did not give anyone permission to transfer their home. McCloud then appeared at the title company pretending to be the owner in order to close the transaction, presenting a California driver’s license with his photograph but in the name of the fictitious person, signing the settlement documents and selling the property. The title company sent by wire transfer $195,527 to a bank account opened in the name of the fictitious person. McCloud withdrew approximately $43,000 of the funds before the crime was discovered; the rest of the funds were returned to the title company.

In the second transaction, in May 2015, a conspirator arranged for a forged deed with respect to another home, in the 6400 block of 16th Street NW, Washington, DC, to be filed with the Recorder of Deeds. As with the other property, the true owners, who owned the home outright without any mortgage liens, did not sign the deed and did not give anyone permission to sell the residence. In June 2015, McCloud appeared at the title company pretending to be the owner and using another fake California driver’s license with his photograph.  He again signed the settlement documents in the fictitious name. The title company sent by wire transfer $384,955 to a bank account opened in the name of the fictitious person. McCloud was arrested the following day.

Although McCloud received $580,482 in proceeds from his wire fraud scheme regarding both real properties, law enforcement seized a total of $369,990, which was later administratively forfeited.  These forfeited funds, and the partial return of funds to the title company from the K Street transaction, reduced the amount owed in forfeiture to $57,965, which is the amount of the forfeiture money judgment.

The harm caused to the owners, buyers, and title companies was covered by title insurance; the restitution amount of $200,488 is the amount due and owing to the title insurance companies after giving credit to the forfeited funds, which were returned to the victims.

McCloud pled guilty in the U.S. District Court for the District of Columbia. The charge carries a statutory maximum of 20 years in prison and potential financial penalties. Under federal sentencing guidelines, McCloud faces a likely range of 27 to 33 months in prison and a fine of up to $60,000. He also has agreed to pay $200,488 in restitution to two title insurance companies, as well as a forfeiture money judgment of $57,965. The Honorable Amit P. Mehta scheduled sentencing for Oct. 19, 2018.

The announcement was made by U.S. Attorney Jessie K. Liu, Nancy McNamara, Assistant Director in Charge of the FBI’s Washington Field Office, and Peter Newsham, Chief of the Metropolitan Police Department (MPD).

In announcing the plea, U.S. Attorney Liu, Assistant Director in Charge McNamara, and Chief Newsham commended the work performed by those who investigated the case from the FBI’s Washington Field Office and the Metropolitan Police Department. They acknowledged the efforts of those who worked on the case from the U.S. Attorney’s Office, including Assistant U.S. Attorneys Diane Lucas and Stephanie Miller, former Paralegal Specialist Christopher Toms, Paralegal Specialist Aisha Keys, and Litigation Technology Specialist Leif Hickling. Finally, they commended the work of Assistant U.S. Attorney Virginia Cheatham, who is prosecuting the case.

Jasmin Polanco, 37, Methuen, Massachusetts, a real estate attorney was sentenced today in connection with a sweeping conspiracy to defraud banks and mortgage companies by engaging in sham “short” sales of residential properties in Merrimack Valley, Massachusetts.

Co-defendants Vanessa Ricci, 41, Methuen, Massachusetts , a  mortgage loan officer, pleaded guilty in March 2018 to one count of conspiracy to commit bank fraud and was sentenced to six months in prison, three years of supervised release and ordered to pay restitution of $963,730 http://www.mortgagefraudblog.com/?s=Jasmin+Polanco; Greisy Jimenez, 50, Methuen, Massachusetts , a real estate broker, pleaded guilty to two counts of bank fraud and one count of conspiracy to commit bank fraud and is awaiting sentencing; Hyacinth Bellerose, 51, Dunstable, Massachusetts,  a real estate closing attorney, was sentenced in March 2017 to time served and one year of supervised release to be served in home detention after pleading guilty to conspiracy to commit bank fraud.  Polanco was sentenced by U.S. Senior District Court Judge Douglas P. Woodlock to 15 months in prison, three year of supervised release and ordered to pay $1,224,489 in restitution. In March 2018, Polanco pleaded guilty to one count of conspiracy to commit bank fraud.

The charges arose out of a scheme to defraud various banks via bogus short sales of homes in Haverhill, Lawrence and Methuen, Massachusetts, in which the purported sellers remained in their homes with their debt substantially reduced. A short sale is a sale of real estate for less than the value of any existing mortgage debt on the property. Short sales are an alternative to foreclosure that typically occur only with the consent of the mortgage lender. Generally, the lender absorbs a loss on the loan and releases the borrower from the unpaid balance. By their very nature, short sales are intended to be arms-length transactions in which the buyers and sellers are unrelated, and in which the sellers cede their control of the subject properties in exchange for the short-selling bank’s agreement to release them from their unpaid debt.

The conspiracy began in approximately August 2007 and continued through June 2010, a period that included the height of the financial crisis and its aftermath. Home values in Massachusetts and across the nation declined precipitously, and many homeowners found themselves suddenly “underwater” with homes worth less than the mortgage debt they owed. As part of the scheme, Polanco, Jimenez, Ricci, Bellerose and others submitted materially false and misleading documents to numerous banks in an effort to induce them to permit the short-sales, thereby releasing the purported sellers from their unpaid mortgage debts, while simultaneously inducing the purported buyers’ banks to provide financing for the deals. In fact, the purported sellers simply stayed in their homes, with their debt substantially reduced.

The conspirators falsely led banks to believe that the sales were arms-length transactions between unrelated parties; in fact, the buyers and sellers were frequently related, and the sellers retained control of (and frequently continued to live in) the properties after the sale. The conspirators also submitted phony earnings statements in support of loan applications that were submitted to banks in order to obtain new financing for the purported sales. In addition, the defendants submitted phony “HUD-1 Settlement Statements” to banks that did not accurately reflect the disbursement of funds in the transactions. (HUD-1 Settlement Statements are standard forms that are used to document the flow of funds in real estate transactions. They are required for all transactions involving federally related mortgage loans, including all mortgages insured by the Federal Housing Administration.)

United States Attorney Andrew E. Lelling; Christina Scaringi, Special Agent in Charge of the Department of Housing and Urban Development, Office of Inspector General, New York Field Office; and Christy Goldsmith Romero, Special Inspector General of the Troubled Asset Relief Program, made the announcement. Assistant U.S. Attorney Stephen E. Frank, Chief of Lelling’s Economic Crimes Unit, and Assistant U.S. Attorneys Sara Miron Bloom and Victor A. Wild, also of the Economic Crimes Unit, prosecuted the cases.