Archives For foreclosure fraud

Andrew Valles was sentenced today for operating a $2 million mortgage fraud scheme throughout Southern California.

The scheme occurred between 2012 and 2017. The defendants conspired using a fake insurance company, “SafeCare,” which promised to provide home loan services at a low monthly price to primarily Latino and African American families. During this time, the defendants would delay foreclosures and eviction actions by filing false bankruptcy and other court documents under fictitious names. They would instruct victims to deposit illegal advance fees and other large payments into a bank account controlled by the defendants. When the promised loan did not come through, they would proceed with the fabricated filings. The scheme took place in San Diego, Riverside, Orange, Los Angeles, and San Bernardino Counties in California. http://www.mortgagefraudblog.com/?s=Andrew+Valles

Today, Mr. Valles was sentenced to 13 years in state prison. Restitution was ordered in the amount of $2,342,957. Co-defendant Arnold Millman was previously sentenced to a state prison term of three years and four months.

California Attorney General Xavier Becerra made the announcement.

These con artists stole the life savings of decent Californians who thought they were making a smart decision for their homes and their families,” said Attorney General Becerra. “These actions will not be tolerated. My office will continue to identify, investigate, and prosecute those who prey on hardworking Californians to line their own pockets.

The sentencing and guilty pleas are the product of a joint investigation by the California Department of Justice, the California Department of Insurance, and the Federal Housing Finance Agency Office of the Inspector General (FHFA-OIG). A third codefendant, Jemal Lilly, pled guilty and is scheduled to be sentenced on September 4, 2019.

Michael “Mickey” Henschel, 70, Van Nuys, California, a career con man pleaded guilty today in a federal fraud case stemming from a real estate scam that targeted distressed homeowners, many of whom were elderly individuals who were scammed out of their homes, losing significant equity in the properties accumulated over the course of their lifetimes and sometimes over the course of generations of home ownership.

Henschel, pleaded guilty to mail fraud in relation to the scheme that generated more than $17 million in profits and caused homeowners to suffer approximately $10 million in losses when they lost title to their homes and when they were defrauded into giving Henschel and his co-conspirators money as part of the scam. Henschel’s fraudulent conduct also caused losses to mortgage lenders and purchasers of foreclosed properties.

With another defendant pleading guilty today, a total of seven conspirators linked to Henschel’s Van Nuys-based businesses have now pleaded guilty in the scheme that used fraudulent deeds to steal properties from homeowners, and also charged homeowners illegal fees to delay foreclosure and eviction actions.

According to court documents, Henschel, who used various aliases, including “Frank Winston,” “Steve Lopez” and “Ron Berman”, and his co-conspirators tricked distressed homeowners into signing fraudulent deeds on their properties with false promises that the deeds would help homeowners protect their properties from creditors. The fraudulent deeds allowed Henschel and the others to fraudulently file documents on the titles to the targeted homeowners’ properties. For example, they filed fraudulent grant deeds that purported to convey an interest in the properties to entities that Henschel controlled. They also filed fraudulent trust deeds based on fictional loans supposedly guaranteed by the targeted homeowners and fraudulent liens that recorded an interest in the properties based on fictional debts.

Henschel and his co-conspirators benefited from the fraudulent filings in a variety of ways, including through outright theft of the properties, mortgages that co-conspirators obtained on the properties, and rental payments that they obtained from tenants living in the properties. The schemers also made money by demanding payments from the targeted homeowners to clear up the title, and from fraudulent state court civil actions that Henschel and his co-conspirators used to leverage settlement payments.

Four other defendants who worked for Henschel’s various companies recently pleaded guilty to conspiracy to commit mail fraud and bankruptcy fraud. They are:

  • Camerino “Mino” Islas, 42, North Hollywood, California;
  • Claudia “Jessica” Islas, 43, Reseda, California;
  • Juan Carlos Velasquez, 44, Sylmar, California; and
  • Eugene “Gene” Fulmer, 84, Encino, California who pleaded guilty today.

Two other individuals, Shara Surabi, 35, Burbank, California, and Lidia Alvarez, 55, Bell Gardens, California, pleaded guilty in late 2017 to federal charges related to this scheme.

The real estate fraud scheme had two parts, one involving property theft and litigation extortion, and the other involving illegal foreclosure and eviction delay.

In relation to the first aspect of the scheme, Henschel and his co-conspirators identified distressed homeowners who were in default on mortgages or were experiencing financial troubles, even though some had large amounts of equity in their properties. These homeowners were falsely told that Henschel was a sophisticated real estate investor and attorney who would purchase their properties on fair market terms, or he could help protect the homes from creditors. Henschel and the others promised distressed homeowners that they could refinance mortgages or restructure real estate holdings to insulate the properties from creditors, and that Henschel and other co-conspirators could manage the properties on an ongoing basis.

Henschel and the others convinced homeowners to sign fraudulent documents that were recorded on the titles to their homes. In some cases, these fraudulent filings were used to steal properties outright. In other cases, the conspirators exploited the fraudulent filings by initiating foreclosure proceedings and demanding money from homeowners before the properties could be sold. Henschel and his co-conspirators also leveraged the high cost of bringing and defending civil actions to extort settlement payments from homeowners, relying on the fact that it would often be less expensive for homeowners to pay money than to fight them in court.

In the foreclosure rescue part of the scheme, Henschel and his co-conspirators used fraudulent filings to charge homeowners fees to delay foreclosure and eviction actions. Henschel and the others had homeowners sign fraudulent deeds that transferred interests to debtors in bankruptcy cases – but the bankruptcies were fraudulent and used solely as part of the fraudulent scheme, not as part of any genuine effort to restructure or eliminate debts. Many of the fraudulent bankruptcies were filed in the names of fictional people and entities, and some involved stolen identities. Henschel and his co-conspirators sent fake deeds and fraudulent bankruptcy petitions to trustees to stop foreclosure sales, and they delayed evictions in a similar way, mainly by sending bogus documents to various county sheriff’s offices.

As a result of his guilty plea today, Henschel is facing a statutory maximum sentence of 20 years in federal prison. The other six defendants each face up to five years’ imprisonment. Henschel is scheduled to be sentenced by United States District Judge Virginia A. Phillips on August 12, 2019 and the four other conspirators who recently pleaded guilty are scheduled to be sentenced on August 26, 2019. Surabi and Alvarez are expected to be sentenced later this year.

As part of his plea agreement, Henschel agreed to forfeit money and property that represent proceeds of the fraudulent scheme, including more than $100,000 in cash seized from a bank account and various residential properties in the San Fernando Valley, Glendale and Pasadena.

The case against Henschel and the others are the result of an investigation by the Federal Bureau of Investigation, and the Federal Housing Finance Agency – Office of Inspector General. The United States Trustee’s Office for the Central District of California initially referred the matter for investigation and has provided substantial assistance. Also providing assistance during the investigation were the Alameda County District Attorney’s Office, the Los Angeles County Recorder’s Office, the Alameda County Recorder’s Office, and the San Diego County Recorder’s Office.

This case is being prosecuted by Assistant United States Attorneys Kerry L. Quinn and Eddie A. Jauregui of the Major Frauds Section. The forfeiture part of the case is being handled by Assistant United States Attorney Jonathan S. Galatzan of the Asset Forfeiture Section.

Monique N. Brady, 44, East Greenwich, Rhode Island, whose business specialized in preserving the current condition of foreclosed homes for resale has been charged for allegedly operated a scheme whereby she raised and pocketed millions of dollars from investors, often times family members, friends, and business associates, by misrepresenting to them that she needed to raise tens of thousands of dollars for various repair projects. In return for their investment, investors were promised a return of 50 percent of the profit.

According to Court documents, it is alleged that Brady misrepresented projects and solicited multiple bids for significantly more money than an individual project required. Brady performed relatively menial tasks such as grass mowing, snow removal, boiler service, etc., for as little as $20, but represented the bids to investors as full-fledged rehabilitation projects costing tens or hundreds of thousands of dollars.

It is alleged that Brady, owner and operator of MNB LLC, often convinced investors to invest substantial amounts of money claiming she had been awarded Freddie Mac rehabilitation projects, when in fact the projects were associated with real estate entities other than Freddie Mac. Brady allegedly used the Freddie Mac name to provide more credibility to her fraudulent solicitations.

A review of bank and other financial records revealed that Brady allegedly received approximately $10,076,291 in investments from 32 individuals based on numerous false and fraudulent representations. Many of these investors had close and personal relationships with Brady, including close friends, her step-brother and the former nanny for her children. The complaint charges that numerous investors suffered substantial harm as a result Brady’s fraudulent conduct, including an elderly woman who lost nearly all of her life savings and another elderly man with Alzheimer’s disease who lost his life savings to Brady.

As part of the alleged scheme, Brady often paid back some of the money she received from one investor with monies received from another. By the time the scheme ended after its discovery in the summer of 2018, 23 individuals had allegedly lost approximately $4,495,237 to Brady.

Brady appeared today before U.S. District Court Magistrate Judge Lincoln D. Almond on a Criminal Complaint charging her with wire fraud.

The announcement was made by Principal Deputy Assistant Attorney General Richard E. Zuckerman of the Justice Department’s Tax Division, U.S. Attorney for the District of Rhode Island Aaron L. Weisman, Special Agent in Charge of Internal Revenue Service Criminal Investigation Kristina O’Connell, and Special Agent in Charge of the FBI Boston Division Joseph R. Bonavolonta.

The case is being prosecuted by Assistant U.S. Attorneys Lee H. Vilker and Tax Division Trial Attorney Christopher P. O’Donnell.

A Criminal Complaint is merely an accusation. A defendant is presumed innocent unless and until proven guilty.

Eleven people from across the country have been charged with conspiracy to commit mail and wire fraud in a scheme to defraud distressed homeowners by falsely representing that they could help the victims save their homes. The indictment was returned on March 6, 2019 and unsealed today.

Eight defendants have been arrested to date:

NameAlso Known AsAgeResidence
Lorin K. Buckner62Hamilton, Ohio
Garrett Stevenson41Cincinnati, Ohio
Damien Byrd40Norfolk, Virginia
Stacy Kay Slaughter58Gahanna, Ohio
Marcus A. Mullings, Jr.57Hackensack, New Jersey
Talia Marie Stephen-MullingsMarie Hightower36Hackensack, New Jersey
Amal Mahepaul BalmacoonMartin37South Ozone Park,  New York
John Nelson66Brooklyn, New York

Companies named in the indictment include:

  • MVP Home Solutions, LLC, also known as Stay In or Walk Away
  • Bolden Pinnacle Group Corp., also known as Home Advisory Services Network andHome Advisory Services Group Inc.
  • Silverstein & Wolf Corp.

Joel Harvey, 36, Cincinnati, Ohio, Dessalines Sealy, 55, Brooklyn, New York, and Rafiq Bashir, 35, Jacksonville, Florida have also been charged in the indictment.

According to the 26-count indictment, from 2013 through 2018, the defendants took advantage of homeowners’ desperation to save their homes and used money from homeowner victims to personally enrich themselves.

It is alleged that defendants were involved in a multilevel marketing scheme, which promised affiliates commissions by recruiting distressed homeowners to the above named companies.

They used multiple ways to recruit affiliates, including conference calls and direct mailings. For example, some co-conspirators hosted weekly conference calls where participants from across the country dialed in to hear details of the scheme and share sales strategies. During the calls, defendants encouraged affiliates to recruit homeowners to their companies on the promise of easy money.

Some co-conspirators also allegedly promoted, organized and attended conferences in which affiliates came to hear details of the scheme in person. For example, some co-conspirators organized and participated in a national conference in Columbus, Ohio in April 2015 in which they provided “deep impact training” and techniques for affiliates to convince homeowners to enroll in Bolden Pinnacle Group and Silverstein & Wolf Corporation programs.

Affiliates were encouraged to be aggressive in recruiting homeowners. Affiliates used online databases and court records to identify vulnerable, financially distressed homeowners who had recently received notice of foreclosure on their home.

According to the indictment, some co-conspirators mailed more than 22,000 postcards in the Southern District of Ohio and elsewhere promising that they could “stop foreclosure” or “stop the sheriff sale” for a fixed fee. Co-conspirators also reached out to homeowners using Craigslist ads, websites, emails and social media platforms.

On the promise of reducing or eliminating mortgage obligations in exchange for a fee, initial recruiters would collect payments from homeowners and refer the victims to the co-conspirator companies.

Among other things, the referral programs promised:

  • to negotiate with mortgage lenders on the homeowners’ behalf for the purchase of the mortgage notes at a discount;
  • to negotiate the sale of their home and release of their mortgage loans through a short sale and/or deed in lieu of foreclosure sale;
  • to stop an imminent foreclosure sale;
  • to remove the mortgage lien via a tender offer; and
  • achieve short sale prices at a fraction of the value of the outstanding lien/note.

Further, defendants represented that they had “proprietary” methods or “legal tactics” to help homeowners stall or completely avoid foreclosure. In actuality, the indictment says defendants persuaded homeowners to file chapter 13 bankruptcies in order to delay foreclosure actions.

Defendants allegedly filed skeletal bankruptcy petitions that they called “pump fakes.” These petitions intentionally failed to disclose the co-conspirators as preparers and named the homeowners as filing pro se. Any relief from foreclosure delay was temporary until the bankruptcy court dismissed the proceeding.

In 2014 alone, one defendant allegedly prepared and filed petitions for 30 homeowners without their knowledge, including four homeowners in the Southern District of Ohio.

The indictment includes one count of conspiracy to commit mail fraud and wire fraud, four counts of mail fraud, seven counts of wire fraud, 12 counts of bankruptcy fraud, one count of bank fraud and one count of aggravated identity theft.

These programs were fraudulent,” U.S. Attorney Glassman said. “The defendants performed virtually no negotiations on behalf of the homeowners and never successfully purchased a mortgage note or provided a new, lower-cost mortgage. They never removed a mortgage lien or performed short sales as advertised.”

To prey on individuals desperate to find a way to save their homes is unconscionable. What makes this crime even more egregious is the alleged methods these individuals used to lure their victims, and the extensive planning and details by these scammers to not take ‘no’ for an answer if a victim was not willing to enter their program. If you believe in karma, this is what law enforcement brought today when these scammers were arrested and brought to justice for their despicable crimes,” said Inspector in Charge Philip R. Bartlett.

Benjamin C. Glassman, United States Attorney for the Southern District of Ohio, Robert  Manchak, Acting Special Agent in Charge, Federal Housing Finance Agency –  Office of Inspector General (FHFA-OIG), Northeast Region, Todd Wickerham, Special Agent in Charge, Federal Bureau of Investigation (FBI), Cincinnati Division, Tommy D. Coke, Inspector in Charge, U.S. Postal Inspection Service (USPIS), Pittsburgh Division, and Philip R. Bartlett, Inspector in Charge, USPIS, New York region, announced the charges.

U.S. Attorney Glassman commended the investigation of this case by the FHFA-OIG, USPIS, and FBI, as well as Assistant United States Attorney Ebunoluwa A. Taiwo, who is prosecuting the case.

An indictment merely contains allegations, and the defendants are presumed innocent unless proven guilty in a court of law.

If you believe you are a potential victim of this fraud, please contact the FBI at CIForeclosure@fbi.gov or 513-421-4310.

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.