Archives For foreclosure fraud

Michael S. Davenport, 50, Santa Barbara, California, the former bass guitar player for the rock band, The Ataris, was sentenced on Wednesday for defrauding thousands of would-be renters and home-buyers throughout the United States from 2009 to 2016.

Davenport’s Santa Barbara-based business changed names several times but was known variously as MDSQ Productions LLC, Housing Standard LLC, Anchor House Financial, American Standard, American Standard Online, and Your American Standard. Court documents simply refer to the business as “American Standard.”

As part of his guilty plea, Davenport admitted that American Standard posted ads on Craigslist listing certain houses for sale or rent at very favorable prices, when, in fact, the houses described in the ads didn’t exist. Consumers who responded to the ads were told they would have to purchase American Standard’s list of houses before they could see any additional information. Consumers were also told that the houses on American Standard’s list were in “pre-foreclosure,” that they could purchase the properties by simply taking over the homeowners’ mortgage payments, and that the deeds to the homes would then be transferred into the customers’ names. The $199 fee that American Standard charged to access the list was purportedly to cover the cost of title searches and deed transfers. No matter what area of the country the consumer lived in, American Standard salespersons told them that the list contained numerous pre-foreclosure properties available in their area.

After consumers paid the $199 fee, they learned that the houses on American Standard’s list were not actually available for purchase. A substantial number of the addresses contained on the list were fictional, or there were simply no houses at those locations. In numerous other instances, the houses were not in pre-foreclosure or any financial distress and were not available to be purchased at below-market prices. If an American Standard customer asked for more information about a specific house advertised on Craigslist, the company’s customer service department always told them that the house was no longer available.

Davenport’s conspiracy and scheme to defraud operated from approximately January 2009 through at least October 5, 2016, over which time American Standard defrauded more than 130,000 people to the tune of more than $25 million. The victims were located in all 50 states and the District of Columbia. Over 100 victims of the scam were located within the Southern District of Illinois, spread across 22 counties, with multiple victims in both St. Clair and Madison counties. American Standard’s list included 534 houses located in Southern Illinois.

Four of Davenport’s former employees have also been charged with participating in the American Standard fraud conspiracy. On Wednesday afternoon, just hours after Davenport’s sentencing, Cynthia L. Rawlinson, 52, Santa Barbara, California was sentenced by Judge Yandle to five years of supervised release. Rawlinson was a salesperson who also served as a manager for American Standard for a brief period of time. Earlier this year, two other American Standard sales representatives from Santa Barbara, California, Mark A. Phillips, 50, Semjase E. Santana, 37 were also sentenced to serve five years of supervised release. And last June, Carlynne L. Davis, 34, Lompoc, California, pled guilty to conspiracy to commit wire fraud in connection with her participation in American Standard. Davis’s sentencing hearing is scheduled for April 5, 2019.

In handing down the seven-year sentence at the federal district courthouse in Benton, Illinois, United States District Judge Staci M. Yandle chastised Davenport for what she characterized as a crime of simple greed. “You were intoxicated with making all this money,” she told the ex-rocker. “You did horrible things.”

As part of his sentence, Davenport was ordered to forfeit $853,210.11 in fraud proceeds that were recovered from his credit card processing accounts, as well as $79,000 in cash that was seized from him at the Bill and Hillary Clinton Airport in Little Rock, Arkansas.

Davenport pled guilty last September to a one-count federal indictment charging him with conspiracy to commit mail and wire fraud.

This case is part of an ongoing investigation by the St. Louis Field Office of the Chicago Division of the United States Postal Inspection Service. The Office of the Honorable Joyce E. Dudley, District Attorney for Santa Barbara County, and the Santa Maria Office of the FBI have provided substantial assistance in the investigation. The case is being prosecuted by Assistant United States Attorney Scott A. Verseman.

 

Christopher Vaughan and Jon Gregg Goodhart Jr. were each sentenced today for their role in a conspiracy to rig bids, in violation of the U.S. antitrust laws, at public real estate foreclosure auctions in Southern Mississippi.

Vaughan and Goodhart Jr., were sentenced to serve four months in prison, with Vaughan receiving a fine of $20,000. Both defendants were ordered to pay restitution. Separately, but as a result of the same investigation, Jason Boykin, Shannon Boykin, Kimberly Foster, Kevin Moore, Chad Nichols, Ivan Spinner, and Terry Tolar were each sentenced to a term of four months in prison on January 17, 2019, and were ordered to pay fines ranging from $20,000 to $48,000 and restitution to victims of their crimes.

At various times between 2009 and 2017, according to court documents, these defendants and others conspired not to bid against each other for properties sold at public real estate foreclosure auctions.  Instead, they designated a winning bidder for the property and made and received payoffs in exchange for their agreement not to bid.  When properties are sold at these auctions, the proceeds are used to pay off the mortgage and other debt attached to the property, with any remaining proceeds paid to the homeowner.  These conspirators paid and received money in connection with their agreement to suppress competition, which artificially lowered the price paid at auction for such homes.

The Department of Justice made the announcement.

Those who subvert the competitive process will be held accountable and violations of the nation’s antitrust laws will be taken seriously,” said Assistant Attorney General Makan Delrahim of the Department of Justice’s Antitrust Division.  “The Division has prosecuted more than 100 individuals across the country for bid rigging at real estate foreclosure auctions, and we will continue our efforts to prosecute and deter this conduct.”

These types of crimes affect all Americans, because when individuals rig bids at auction, it ultimately damages our economy and hurts individuals,” said Christopher Freeze, Special Agent in Charge of the FBI in Mississippi. “We want to send a clear message to those participating in this type of corruption: the FBI and Department of Justice will investigate and prosecute anyone betraying the trust of our country’s economic foundation.”

There is a simple lesson from these cases – if you rig bids, you will be caught and you will be punished.  These are not victimless crimes, as we all suffer when people violate our antitrust laws.  I want to thank the FBI and the Antitrust Division for rooting out this corruption in our foreclosure auctions here in Mississippi. We will remain vigilant against these and other types of crimes as we move forward in protecting the public,” said United States Attorney Mike Hurst for the Southern District of Mississippi.

The sentences announced today resulted from an ongoing investigation being conducted by the Antitrust Division’s Washington Criminal II Section and the FBI’s Gulfport Resident Agency, with the assistance of the U.S. Attorney’s Office for the Southern District of Mississippi.  Anyone with information concerning bid rigging or fraud related to real estate foreclosure auctions should contact the Antitrust Division prosecutors in the Washington Criminal II Section at 202-598-4000, or visit https://www.justice.gov/atr/report-violations.

 

Prakashumar (“Kash”) Bhakta was sentenced today for operating a mortgage fraud scheme throughout Southern California and the Inland Empire that preyed on homeowners facing foreclosure.

The fraud scheme stretched through San Diego, Riverside, San Bernardino, and Los Angeles, counties, in California. Defendants convinced distressed homeowners that they could provide legal assistance to help save their home. They persuaded victims to pay them $3,500 to start; then $1,000 monthly; and separate fees for filing legal documents. Defendants filed and recorded numerous fraudulent documents, including false bankruptcies and false court filings. The scam defrauded lenders and other owners of their rightful possession of the residential properties. Meanwhile, the defendants took thousands of dollars from homeowner victims to perform fraudulent services. Bhakta, who was an integral part of the scheme, falsely notarized numerous fractional interest grant deeds without the presence of the person whose signature was being notarized. Bhakta, the last defendant to admit fault, pled guilty on November 28, 2018, to 113 felony charges, including conspiracy, grand theft, and filing false or forged documents.   http://www.mortgagefraudblog.com/?s=Prakashumar

Mr. Bhakta was sentenced to seven years and eight months in state prison. Restitution will be ordered in the amount of $256,000. Co-defendants Jacob Orona, Aide Orona, John Contreras, Marcus Robinson, and David Boyd previously pled guilty. They were sentenced to state prison terms ranging from four years to seven years and four months.

California Attorney General Xavier Becerra made the announcement.

We have zero tolerance for scam artists who cheat vulnerable families by stealing their life savings and shattering their dreams of owning a home,” said Attorney General Becerra. “Today’s sentence should serve as a reminder: if you prey on hardworking Americans and betray their trust, my office will hold you accountable to the fullest extent of the law.”

The guilty pleas and sentences result from a joint investigation by the California Department of Justice, Fraud and Special Prosecutions Section; the Federal Housing Finance Agency, Office of the Inspector General; and the Stanislaus County District Attorney’s Office.

Hollie Darlene Dustin, 60, Punta Gorda, Florida, was sentenced today to six months in federal prison for committing wire fraud against the Federal National Mortgage Association (Fannie Mae).

According to court documents, Dustin, a licensed real estate broker, owned Home Choice Real Estate (HCRE), a company that contracted with Fannie Mae to manage and perform preservation services on various Fannie Mae foreclosed properties. As part of a Master Listing Agreement with Fannie Mae, Dustin’s company was prohibited from using any vendors that she controlled to perform preservation services on Fannie Mae properties. Dustin fraudulently used ProPreserve, a company that she controlled, to perform preservation services on the properties without Fannie Mae’s knowledge or consent. She then submitted approximately 550 fraudulent ProPreserve invoices for HCRE, which Fannie Mae paid.

Dustin also created inflated ProPreserve invoices for work already performed by other vendors, then submitted those false invoices to Fannie Mae for payment.

Dustin used interstate wires to fraudulently submit the invoices to Fannie Mae.

The court also ordered Dustin to serve a term of three years of supervised release, 100 hours of community service, and to pay restitution in the amount of $34,001.25. As part of her sentence, the court also entered a forfeiture money judgment in the amount of $34,001.25, the proceeds of the wire fraud. Dustin had pleaded guilty on June 19, 2018. http://www.mortgagefraudblog.com/?s=Hollie+Darlene+Dustin

This case was investigated by the Federal Housing Finance Agency – Office of Inspector General. It was prosecuted by Assistant United States Attorney Jeffrey F. Michelland.

Michelle Sylethia Jordan, a/k/a Michelle Harris and Michelle Welsh, 49; and her husband, Michael Paul Anthony Welsh, a/k/a Michael A. Welsh and Michael Paul S. Welsh, 45, both of Laurel, Maryland, were sentenced yesterday to 57 months and 46 months in federal prison, respectively, each followed by three years of supervise release, on conspiracy and wire fraud charges in connection with a foreclosure prevention fraud scheme.

According to the evidence presented at their eight-day trial, Jordan was chief executive officer and director of MJ Loan Auditor Group, LLC (MJLAG), a limited liability company registered and doing business in Maryland.  Welsh was president and chief executive officer of MJLAG.  Jackson was the owner and manager of CJ Maxx Group LLC, a limited liability company doing business in Maryland, Virginia, and Georgia.

Trial evidence proved that from August 2012 until February 2017, Jordan and Welsh falsely told victim homeowners that, for a fee, MJLAG could help these homeowners modify their mortgage loans and prevent foreclosure of their homes.  Jordan and Welsh falsely represented that MJLAG could help the homeowners get “free and clear” title to their homes, with no debt or liens against the property, and that MJLAG could obtain money from the homeowners’ lenders, typically by suing the lenders.  Jordan and Welsh told homeowners that they needed to purchase one or more “audits” of the homeowners’ mortgage loans in order to uncover fraud and alleged illegal acts committed by the lenders, and that these “audits” could be used as evidence in lawsuits against the lenders and in negotiating for a loan modification.

Witnesses testified that as part of the scheme, Jordan and Welsh had homeowners sign a “contract fee agreement” setting out what fees would be charged for the “audit.”  The contract fee agreement contained the seal of the National Association of Mortgage Underwriters (NAMU), even though the defendants and their companies had no current affiliation with NAMU.  Jordan advised clients to submit baseless complaints about their lender to state and federal agencies, file frivolous lawsuits in local courts, and to stop paying their mortgages.  Jordan further advised MJLAG clients whose homes already were in foreclosure proceedings to file for bankruptcy in order to delay the foreclosure proceedings and as part of the process to prevent foreclosure of the clients’ homes.  Jordan assisted MJLAG clients in filing for bankruptcy, by preparing bankruptcy petitions and related documents and court filings.

The evidence proved that Jordan and Welsh paid Jackson to prepare fraudulent documents purporting to be “Forensic Audit Reports” and “Real Estate Securitization Audits” relating to loans for properties owned by MJLAG clients.  The victim homeowners paid money to MJLAG with the expectation of receiving assistance with modifying their mortgage loans and preventing foreclosure of their homes.

U.S. District Judge Roger W. Titus sentenced co-conspirator, Carrol Antonio Jackson, a/k/a Jack Jackson, 48, of Hinesville, Georgia, to time served, followed by nine months of home detention as part of three years of supervised release.  Finally, Judge Titus ordered that each defendant pay restitution of $491,036.87.  A federal jury convicted the three co-conspirators on June 20, 2018.  http://www.mortgagefraudblog.com/?s=jordan After the verdict was announced, Judge Titus ordered that Jordan and Welsh be detained pending sentencing and they were immediately taken into custody.

The sentence was announced by United States Attorney for the District of Maryland Robert K. Hur; Deputy Inspector General for Investigations Rene Febles of the Federal Housing Finance Agency Office of Inspector General (FHFA-OIG); Special Agent in Charge Bertrand Nelson of the U.S. Department of Housing and Urban Development Office of Inspector General (HUD-OIG); Postal Inspector in Charge Peter Rendina of the U.S. Postal Inspection Service – Washington Division; Chief Henry P. Stawinski of the Prince George’s County Police Department; Chief J. Thomas Manger of the Montgomery County Police Department; Sheriff Steve Sikes of the Liberty County, Georgia, Sheriff’s Office; and Vernon M. Keenan, Director of the Georgia Bureau of Investigation.

United States Attorney Robert K. Hur commended the FHFA-OIG, HUD-OIG, U.S. Postal Inspection Service, Prince George’s County and Montgomery County Police Departments, Liberty County Sheriff’s Office SWAT Team, and the Georgia Bureau of Investigation for their work in the investigation, and recognized the Maryland Department of Labor, Licensing, and Regulations for its assistance.  Mr. Hur thanked Assistant U.S. Attorneys Kristi N. O’Malley and Nicolas A. Mitchell, and Special Assistant United States Attorney Elizabeth Boison, who prosecuted the case.

Sergio Roman Barrientos, 64, Poway, California was sentenced today in multimillion dollar mortgage and foreclosure rescue fraud scheme. Barrientos was sentenced to 14 years in prison for conspiring to commit wire fraud affecting a financial institution and bank fraud.

According to court documents, from about September 2004 through February 2008, Barrientos and co-conspirators Zalathiel Aguila and Omar Anabo operated an entity named Capital Access LLC, Vallejo, California. They preyed on homeowners nearing foreclosure, convinced them to sign away title in their homes, spent any equity those homeowners had saved, and used straw buyers to defraud federally insured financial institutions out of millions of dollars in home loans obtained under false pretenses. The equity stripped from the distressed homeowners’ properties was then used for operational expenses of the scheme and personal expenses of Barrientos and his coconspirators. Vulnerable homeowners across California lost their homes and savings as a result of the scheme, and lenders lost an estimated $10.47 million from the fraud. http://www.mortgagefraudblog.com/?s=Sergio+Roman+Barrientos

Co-defendant Zalathiel Aguila pleaded guilty and is scheduled for sentencing on November 16, 2018. Aguila faces a maximum statutory penalty of 30 years in prison and a $1 million fine. 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.

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

This case is the product of an investigation by the Federal Bureau of Investigation and the U.S. Postal Inspection Service. Assistant U.S. Attorneys Matthew M. Yelovich and Todd A. Pickles are prosecuting the case.

David Lyle Morgan, 53, Tamp, Florida has pleaded guilty to one count of bankruptcy fraud.

According to the plea agreement, Morgan was a licensed realtor who entered into a contract with a homeowner to sell a property in foreclosure. In order to prevent the Federal National Mortgage Association (commonly known as Fannie Mae) from lawfully foreclosing on the homeowner’s property, Morgan devised and executed a bankruptcy fraud scheme wherein he filed a fraudulent bankruptcy petition in the name of the homeowner, without the homeowner’s knowledge or consent, just prior to the scheduled foreclosure sale date. The fraudulent bankruptcy invoked the automatic stay provision of the bankruptcy code, which prevented Fannie Mae from conducting the foreclosure sale and obtaining title to the property. http://www.mortgagefraudblog.com/?s=David+Lyle+Morgan

The fraudulent bankruptcy petition filed by Morgan allowed him to continue efforts to sell the property in order to obtain ill-gotten real estate commissions.

He faces a maximum penalty of five 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.

Brian Roy Lozito, Jacksonville, Florida, has been charged today for deceptively marketing and selling mortgage and foreclosure relief services to consumers throughout the United States, defrauding consumers out of more than $160,000.

Lozito, while doing business as American Investigative Services, LLC allegedly deceived more than 150 consumers by claiming to provide services in return for payments upfront.

According to the complaint, American Investigative Services solicited upfront payments from consumers promising to conduct a forensic audit of consumers’ mortgage documentation in order to uncover evidence of improper robosigning, or improper notarization, assignment, or recording of the mortgage documents, or other technical deficiencies. The defendants told consumers that if these purported legal deficiencies were uncovered in mortgage documents, the lender would be unable to foreclose on the consumer’s mortgage, and the consumer would thereby own the home free and clear, even if the consumer stopped making mortgage payments to the lender. The defendants even claimed that consumers could recover mortgage payments the consumers had previously made to mortgage companies.

The complaint also alleges that the defendants performed none of the promised services, and instead used the money obtained from consumers to pay Lozito’s personal expenses. The complaint alleges violations of Florida’s Deceptive and Unfair Trade Practices Act, and seeks permanent injunctive relief, restitution, civil penalties and fees.

Attorney General Pam Bondi made the announcement.

Consumers who paid fees to the above-named entity or individual can file a complaint by calling 1(866) 9NO-SCAM or file online at MyFloridaLegal.com

To view the complaint, click here.

Lynn Benson, 54, formerly of Las Vegas, Nevada was indicted today on charges including five counts of Mortgage Lending Fraud, a category “C” felony, one count of Pattern of Mortgage Lending Fraud, and five counts of Theft in the Amount of $3,500 or More, both category “B” felonies.

According to the indictment, Lynn Benson misled victims into believing their homes could be saved from mortgage foreclosure. The victims were led to believe that they could follow a devised scheme devised to not make additional payments on their homes.

Nevada Attorney General Adam Paul Laxalt made the announcement.

Taking advantage of homeowners in need of assistance will not be tolerated by my office,” said Laxalt. “We will continue to work with our law enforcement partners to protect the financial safety of all Nevadans.”

In July, 2016, the Nevada Legislature’s Interim Finance Committee unanimously approved AG Laxalt’s request to create a Financial Fraud Unit to combat increasing financial fraud within the State. Among the 10 positions created using non-taxpayer settlement funds, the office dedicated a criminal investigator to the FBI’s Joint Terrorism Task Force, where local, state and federal agencies collaborate to combat regional terrorism.

This case was investigated after the Office of the Nevada Attorney General began its full-time participation in the FBI’s Joint Terrorism Task Force. This case was investigated by Las Vegas Metropolitan Police Department Task Force officers, and the arrest was made by the Cloverdale, CA Police Department. The Office of the Nevada Attorney General is prosecuting this case.

A grand jury indictment is merely a charging document; every defendant is presumed innocent until and unless proven guilty in a court of law.

The grand jury indictment against Lynn Benson is attached.  To file a complaint about someone suspected of committing a fraud, click here.

Jeffery J. Detloff, Lori K. Detloff and Detloff Marketing and Asset Management Inc., have been indicted today on charges of conspiring to commit mail fraud and wire fraud for participating in a long-running conspiracy to defraud companies, including financial institutions, in connection with foreclosed properties in the Minneapolis area and elsewhere from in or about September 2007 and continuing through in or about June 2015.

Jeffery Detloff, a realtor who sold and managed foreclosed Minneapolis, Minnesota properties on behalf of victim companies worked alongside his wife, Lori Detloff, an accountant for Jeffery Detloff and associated companies, in committing the fraud.  The Detloffs conducted their real estate business through Detloff Marketing.  In addition to the conspiracy charge, the indictment includes four counts of wire fraud and four counts of mail fraud.

According to the indictment, the Detloffs devised a scheme requiring repair contractors to pay the Detloffs kickbacks.  In return, Jeffery Detloff used his position as a realtor for the victim companies to steer housing repair contracts to contractors who paid the kickbacks.  The contractors paid kickbacks to the Detloffs through Detloff Marketing.  The indictment further alleges that Jeffery Detloff procured and submitted sham bids as part of the scheme to defraud the victim companies.  One housing repair contractor has already pleaded guilty in connection with this investigation.

This is the second case involving fraud and kickbacks relating to repair contracts for properties in the Minneapolis area owned by financial institutions.  The maximum penalty for wire fraud affecting a financial institution, mail fraud affecting a financial institution, and conspiracy to commit mail and wire fraud affecting a financial institution is 30 years of imprisonment and a fine of $1,000,000.  The maximum fine may be increased to twice the gain derived from the crime or twice the loss suffered by the victims of the crime, if either of those amounts is greater than the statutory maximum fine.

The Department of Justice made the announcement.

This indictment affirms the Antitrust Division’s commitment to protecting the American housing market from fraud,” said Assistant Attorney Makan Delrahim of the Department of Justice’s Antitrust Division.  “We will continue to work with our law enforcement partners to protect the integrity of the competitive process.”

As alleged, the defendants created a scheme to siphon as much money as they could from these properties, no matter the method, no matter the victim,” said FBI Special Agent in Charge Jill Sanborn of the Minneapolis Division. “These scams victimize all of us, and the FBI and our law enforcement partners will continue to unravel these schemes and hold accountable anyone found responsible for defrauding the system.”

An indictment merely alleges that crimes have been committed, and all defendants are presumed innocent until proven guilty beyond a reasonable doubt.

The charges are the result of a federal investigation of housing repair contracts in the  Minneapolis area.