Sergio Garcia, Sr., 50, Chicago, Illinois and Sergio Garcia, Jr., 30, of Lowell, Indianapolis were sentenced on their guilty pleas to conspiracy to commit mail fraud.
According to documents in the case, between January 1, 2011 and May 31, 2014, the Garcias conspired with others to engage in a scheme to defraud HUD and to obtain money and property by means of false pretenses, representations and promises. The scheme involved contracting with HUD to buy more than 87 homes in Indiana and Illinois and attempting to sell them for a profit the same day. The purchase contracts the conspirators provided to HUD stated that they or one of their businesses were purchasing the properties as investors and would pay with cash or use other financing not involving FHA. To support their claimed ability to pay for the homes, the conspirators mailed fraudulent letters purporting to show that they or their company had access to the funds needed to complete each purchase. Many of the letters purported to be written by a private venture capital business and falsely stated that the Garcias or their business held a line of credit of up to $500,000.00, when in fact, as the conspirators well knew: the letters were forged and counterfeited; the lines of credit referenced therein did not exist; and the signatures thereon were forged and unauthorized.
Once under contract to purchase homes from HUD, the conspirators advertised the homes for subsequent resale and placed their own “for sale” signs at the homes. When the conspirators could not find a subsequent purchaser to buy the homes, they allowed their purchase contracts with HUD to expire and filed false liens on the homes for the full purchase price, impeding HUD’s ability to sell the homes to others. In some instances, the conspirators demanded money from would-be subsequent purchasers to release the false liens on the HUD-owned homes.
Garcia, Sr. was sentenced to serve 70 months in prison followed by 2 years of supervised release and was ordered to pay $471,571.06 in restitution to the Department of Housing and Urban Development (“HUD”) and $3,862 in restitution to other victims of his crime.
Garcia, Jr. was sentenced to serve 18 months in prison followed by 1 year of supervised release and was ordered to pay $24,819.53 in restitution to HUD and $202.25 to other victims of his crime
“This sentencing serves as an example that when housing professionals defraud the system of rules sponsored by HUD, the HUD Office of Inspector General will continue to partner with both the U. S. Attorney’s Office and the FBI to pursue those individuals to ensure the integrity of its federal housing programs.”
“If you attempt to defraud the system and violate public trust, we will find you, we will investigate you, and we will ensure you are held accountable for your illegal actions,” said Special Agent in Charge Grant Mendenhall, FBI Indianapolis. “Today’s sentence should serve as a warning to others that the FBI and our partners will continue to pursue those who would seek to blatantly commit fraud.”
The case was investigated by the Federal Bureau of Investigation and the HUD Office of Inspector General. The case was handled by Assistant United States Attorney Jill R. Koster.