Archives For False Statement

Victor Santos, a/k/a “Vitor Santos,” 58, Wachtung, New Jersey; Arsenio Santos, a/k/a “Gaspar Santos,” 51, Warren, New Jersey; and Fausto Simoes, 65, Millington, New Jersey were arraigned today on multiple charges in connection with their alleged roles in a mortgage fraud scheme.

The three were charged on Sept. 24, 2018, in a 19-count indictment. They were each charged with one count of conspiring to commit bank fraud. Victor Santos was charged with nine counts of bank fraud and nine counts of making false statements in an application for credit. Arsenio Santos was charged with four counts of bank fraud and four counts of making false statements in an application for credit. Simoes was charged with seven counts of bank fraud and seven counts of making false statements in an application for credit.

According to documents filed in this case:

From September 2007 through November 2008, Victor Santos, a real estate investor; Arsenio Santos, a builder; and Simoes, a real estate settlement attorney, and others allegedly conspired to fraudulently obtain mortgage loans with a total value of more than $4 million.

Victor Santos, Arsenio Santos, and their conspirators allegedly recruited “straw buyers”, individuals who purchase a property for another in order to conceal the identity of the actual purchaser, usually in exchange for a fee, to purchase properties in Newark, New Jersey.

In exchange for the use of the straw buyers’ identity and credit history, Victor Santos, Arsenio Santos, and others allegedly agreed to pay each of the straw buyers a fee of at least $5,000, provide the straw buyer’s down payment and cash required for closing, secure tenants to lease the purchased property, and make the mortgage payments on each of the fraudulently obtained mortgages. These secret agreements were not disclosed to the bank. Shortly after the properties were acquired the mortgages went into default.

For the three representative schemes highlighted in the indictment, Victor Santos, Arsenio Santos, and their conspirators prepared and submitted mortgage applications containing false information to the bank and obtained loans totaling more than $1.3 million. The conspirators allegedly arranged transactions for the Newark properties whereby the straw buyers would nominally purchase the properties for far more than the sellers had agreed to sell them, and the conspirators diverted excess loan proceeds for their own benefit and to further the conspiracy.

Simoes was the closing attorney on approximately 10 of the fraudulent transactions and signed and certified the final settlement statements. These statements falsely stated that the cash required for closing for each transaction came from the straw buyer. In fact, Victor Santos and his conspirators provided those funds to Simoes and the funds were deposited into Simoes’ attorney trust account. For certain transactions, a shell company – whose bank account was controlled by Victor Santos and a conspirator – and to which funds from fraudulently obtained mortgage loans were disbursed – was the source of the cashier’s checks given to Simoes to fund the straw buyer’s cash required at closing. For other transactions, down payments came from an account owned and controlled by Arsenio Santos or from the proceeds of a previously obtained fraudulent loan.

The conspiracy to commit bank fraud count, the bank fraud counts, and the false statement counts, each carry a maximum potential penalty of 30 years in prison, a fine of $1 million or twice the gross gain to the defendants or twice the gross loss to others whichever is greater.

The announcement was made by U.S. Attorney Craig Carpenito.

U.S. Attorney Carpenito credited special agents of the Federal Housing Finance Agency, Office of Inspector General, under the direction of Acting Special Agent in Charge Robert Manchak, and special agents of the FBI, under the direction of Special Agent in Charge Gregory W. Ehrie of the Newark office, with the investigation leading to the charges.

The government is represented by Special Assistant U.S. Attorneys Charlie Divine and Kevin DiGregory of the U.S. Attorney’s Office’s Economic Crimes Unit in Newark and the Federal Housing Finance Agency, Office of Inspector General.

Timothy Thomas Kes, a former Lonsdale realtor who pleaded guilty in April to mortgage fraud, was sentenced July 3, 2018 to 30 days in jail and five years probation.

Source: Jail, probation for ex-Realtor convicted of mortgage fraud | News | southernminn.com

James Thornton, Arizona, a real estate agent, was found guilty of Fraudulent Schemes and Theft after defrauding two banks in a short sale home scam.

In 2012, Thornton was the listing real estate agent for the owner of a home who was in default on both mortgages in Mesa, Arizona. Thornton sold the property via short sale to his parents’ LLC for $580,000. There had been other offers to purchase the home for hundreds of thousands of dollars more, including offers for $870,000, $707,000, and $650,000. Both banks approved the short sale price to Thornton’s parents not knowing about any of the other offers to purchase the property for significantly more.

Four days after Thornton’s parents purchased the home, Thornton became their listing agent and tried to sell the home “off the market” for $1,100,000. Thornton eventually sold the home to a third party for $1,050,000 cash approximately two months later. Thornton’s parents earned $540,722 in profit on the sale for $1,050,000, only having owned the home for two months.

In the course of his fraud scheme, Thornton made false statements and misrepresentations to bank representatives, potential buyers, and other real estate agents. To discourage buyers on the short sale and devalue the home, Thornton misrepresented the true number of rooms and bathrooms in the home, pointed out a code violation that didn’t exist to an appraiser, and removed all of the high end, custom appliances from the home. Thornton also falsely told the $1,050,000 cash buyer that the reason there was a substantial gap between his parents’ purchase price of $580,000 and the new list price of $1,100,000 was because there had been a “lien paid outside of escrow.”

Sentencing is set for March 16, 2018. Thornton faces 3 to 12.5 years in prison.

Attorney General Mark Brnovich made the announcement.

The FBI Phoenix Field Office investigated this case.

Assistant Attorney General Maura Quigley and Scott Blake prosecuted this case.