Archives For Kickbacks

Geo Geovanni, 49, and Elizabeth Longerbone, 39, both of Moultrie, Georgia, have been charged today with conspiracy to commit bank fraud and four counts of bank fraud.

According to the indictment, Geovanni and Longerbone devised and executed a mortgage fraud scheme involving “The Landing,” a condominium conversion of a former apartment complex located in Altamonte Springs, Florida. The scheme involved providing the cash-to-close funds on behalf of the buyers, guarantying tenants and rental payments to the buyers, as well as paying post-closing kickbacks of mortgage proceeds to buyers and co-conspirators through entities that Geovanni and Longerbone controlled. None of the incentives or kickbacks were disclosed to the financial institutions that had approved and funded the mortgage loans.

If convicted, each faces a maximum penalty of 30 years in federal prison for each count.

An indictment is merely a formal charge that a defendant has committed one or more violations of federal criminal law, and every defendant is presumed innocent unless, and until, proven guilty.

This case was investigated by the Federal Housing Finance Agency – Office of Inspector General and the FBI. It will be prosecuted by Special Assistant United States Attorney Chris Poor.

Maher Obagi, 32, Huntington Beach, California was sentenced on Tuesday to 78 months in prison and ordered to pay just over $10 million in restitution.  A second defendant, Mohamed Salah, 43, Mission Viejo, California was sentenced to 57 months in prison and was ordered to pay just over $7 million in restitution.    Obagi and Salah were sentenced to federal prison for participating in a “builder bailout” mortgage fraud scheme that 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.

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

During the course of the scheme, co-conspirators identified condominium developments around the country in which the builders were struggling to sell units and then arranged with the builders 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, Obagi 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 lenders 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.

Both defendants were sentenced by United States District Judge Andrew Guilford.

Following a trial in 2015, Obagi was found guilty of one count of conspiracy and three counts of wire fraud. Salah was found guilty by the same federal jury of one count of conspiracy.

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

  • Ali Khatib, 53, Newport Coast, California who pleaded guilty in a related case and is scheduled to be sentenced on July 16;
  • Momoud Aref Abaji, 37, Huntington Beach, California who was convicted at trial and is scheduled to be sentenced on June 14;
  • Jacqueline Burchell, 57, Orange, California who pleaded guilty and is scheduled to be sentenced on July 16;
  • Wajieh Tbakhi, 53, who is a fugitive; and
  • Mohamed El Tahir, who is 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.

Kirk Lawrence Brannan, 64, Texas has entered a guilty plea to bank fraud for his role in a mortgage fraud scheme.  Brannan admitted to conspiring with others from 2005 to 2009 to execute a scheme to defraud Wells Fargo Bank and other lenders.

Brannan sold 10 beach homes in the Freeport/Surfside, Texas area to “straw buyers” at exorbitant prices. Other co-conspirators recruited straw buyers who created loan applications with misrepresentations that lenders relied upon in deciding to make the mortgage loans. The applications contained misrepresentations of the buyer’s address, employer, income and expenses. The applications also suggested the buyers were much better credit risks than they actually were. Brannan admitted he paid kickbacks to co-conspirators each time one of the beach homes was sold to a straw buyer.

The beach properties were sold at two to three times the appraised values. The mortgage lenders, including Wells Fargo Bank, were induced to lend the inflated amounts for the purchases through flawed or fraudulent appraisals which were based on comparisons Brannan manufactured to further the scheme.

Brannan created settlement statements that suggested he sold three of his properties to his children at exorbitant prices. Appraisers relied upon these “sales” as comparable sales in appraising Brannan’s remaining properties sold to straw buyers. As a result of the fraudulent appraisals, he and his co-conspirators were able to inflate the values for his properties and deceive the lenders into approving home loans at those exorbitant amounts.

All of the straw buyers defaulted on the mortgages, and all 10 of the beach properties ended up in foreclosure.

The fraudulent mortgage loan scheme resulted in a loss of $5,317,350 to Wells Fargo Bank and the other lenders. Brannan paid $2,401,368 to his co-conspirators as part of the scheme.

U.S. District Judge Lee Rosenthal accepted the plea and set sentencing for Aug. 29, 2018, at which time Brannan faces up to 30 years in federal prison and a possible $1 million maximum fine. He was permitted to remain on bond pending that hearing.

Co-conspirators Chucoboie Lanier, 41, Houston, Texas, David Lee Morris, 55, Houston, Texas, and Derwin Jerome Blackshear, 50, Houston, Texas, previously pleaded guilty for their roles in the scheme. They are set for sentencing Sept. 26, 2018.

U.S. Attorney Ryan K. Patrick made the announcement.

The Texas Department of Public Safety and the FBI conducted the investigation. Assistant U.S. Attorneys Robert Johnson and Michael Day are prosecuting the case.

Aleksandr Kovalev, 54, Rocklin, California, was sentenced to three years and ten months in prison for wire fraud involving financial institutions,

According to court documents, Kovalev was in the business of developing, building and selling real property in Sacramento, Fairfield, and Stockton, California. As the real estate market began to weaken, Kovalev offered to make incentive payments to purchasers, through “down payment assistance” or by making other payments to the buyers to be used in whatever manner the buyers wanted. Most of the payments to the buyers were out of escrow and were often paid through intermediaries, originating in Kovalev’s bank account. These payments were not disclosed to the lenders, and had the effect of substantially reducing the sales price below what was represented to the lenders.

Dozens of properties were involved in Kovalev’s mortgage fraud scheme, with several million dollars of losses to the lenders. Kovalev is the last to be sentenced out of nine individuals who were prosecuted as part of this mortgage fraud scheme. http://www.mortgagefraudblog.com/down-payment-assistance-results-in-guilty-plea

Kovalev was sentenced by U.S. District Judge Morrison C. England Jr.

This case was the product of an investigation by the Federal Bureau of Investigation and the IRS Criminal Investigation. Assistant U.S. Attorney Todd A. Pickles prosecuted the case. The sentencing was announced by U.S. Attorney McGregor W. Scott.

James Nassida, 49, West Mifflin, Pennsylvania, pleaded guilty to one count of bank and wire fraud conspiracy before Senior United States District Judge Donetta Ambrose.

In connection with the guilty plea, the court was advised that Nassida owned operated a mortgage brokerage business called Century III Home Equity (Century III), which assisted borrowers in obtaining loans collateralized by real estate. At the time of the events at issue, which was between 2002 and 2008, Century III was one of the largest mortgage broker businesses in the Western District of Pennsylvania, and during the course of that timeframe brokered hundreds of millions of dollars worth of loans using more than a dozen different lenders. Many of those loans, however, involved one or more aspects.

Some of the aspects of the fraud included the following:

  • Appraisals that fraudulently inflated the true value of the properties;
  • Settlement statements that falsely reflected that the borrowers made substantial payments associated with the purchases of real estate;
  • Settlement statements that failed to disclose secondary financing;
  • Settlement statements that failed to include cash payments charged by Century III and paid by the borrowers;
  • Settlement statements and closing documents that were backdated to reflect that the settlements had occurred on a date prior to the actual settlement date; and
  • Various loan documents, including loan approval forms, good faith estimates, and underwriting transmittal forms, that failed to disclose secondary financing and falsely represented the combined loan-to-value ratio.

The fraud also involved misrepresentations to some of the borrowers to induce them to enter into the transactions, including concealing the fees Century III received from lenders for the borrowers’ transactions and the impact of those fees on the borrowers’ interest rates; and concealing the nature of the mortgage products, including that some of the mortgage products could negatively amortize. Lastly, the fraud also involved James Nassida’s receipt of kickbacks from the settlement company that he failed to disclose to the borrowers and lenders, as required.

James Nassida submitted multiple fraudulent documents associated with loans in which he served as a loan officer. In addition, loan officers working under his direction regularly submitted false information to lenders and borrowers. Nassida also caused the submission of fake documents to the lender in connection with his purchase of a $300,000 vacation home near Seven Springs, including the following: (1) a settlement statement that overstated the sales price; (2) a loan application that falsely stated his income and assets; and (3) fake statements from an investment company that falsely verified that he had more than $600,000 in investment when he really had about $15,000. In the loan application, James Nassida reported that he earned approximately $980,000 in 2006, but he did not even file his tax returns in 2006, and his reported taxable income in 2004 and 2005 was not even close to that figure.

Judge Ambrose scheduled sentencing for January 10, 2018. The law provides for a total sentence of 30 years in prison, a fine of $1,000,000, or both. Under the Federal Sentencing Guidelines, the actual sentence imposed is based upon the seriousness of the and the prior criminal history, if any, of the defendant.

The plea was announced by Acting United States Attorney Soo C. Song.

Richard Pierce, a Michigan business owner, was sentenced to serve a year and a day in prison for obstructing and impeding the internal revenue laws and committing bank fraud.

According to documents filed with the court, in 2007, Pierce  committed bank fraud by submitting a fraudulent loan application to a mortgage lender on which he failed to disclose that the buyer of a residential property was receiving a kickback from the seller.

Pierce also filed fraudulent 2004 through 2013 individual income tax returns. Those returns failed to report more than $9 million in gross business receipts that several of his real estate businesses earned, including Phoenix Real Estate Company, Phoenix Preferred Properties LLC, Detroit Matrix, First Metro Properties LLC, First Metro Real Estate Services LLC, Phoenix Office Plaza-II LLC, Rosedale/Grandmont Properties LLC, and RFP Ventures LLC. As a result of those fraudulent filings, Pierce caused a tax loss of more than $400,000.

In addition to the term of prison imposed, Pierce was ordered to serve two years of supervised release and to pay restitution to the Internal Revenue Service (IRS), the amount of which will be determined at a later date. Pierce pleaded guilty in February 2015.

Acting Deputy Assistant Attorney General Stuart M. Goldberg of the Justice Department’s Tax Division commended special agents of IRS Criminal Investigation, who conducted the investigation, and Trial Attorneys Mark McDonald and Christopher O’Donnell of the Tax Division, who prosecuted the case. Acting Deputy Assistant Attorney General Goldberg also thanked the U.S. Attorney’s Office for the Eastern District of Michigan for their substantial assistance.

Thomas L. Boyd, 44, Memphis, Tennessee, are real estate investor, pled guilty to bank fraud.  In September 2016, Boyd was indicted by a federal grand jury in connection with a scheme to fraudulently obtain mortgage loans. The indictment alleged that Boyd, the owner of Wonderful Properties, LLC made false statements and presented false documents to Regions Bank, First Tennessee Bank, Bank of America and Oak Tree Funding on behalf of persons who were financing the purchase of properties from Boyd and Wonderful Properties.

According to the indictment, Boyd often made false statements on the loan closing documents by failing to disclose to the lenders on HUD-1 settlement statements that he was kicking back a portion of the loan proceeds to borrowers. Boyd’s scheme caused the lenders to disburse approximately $635,000 in loan proceeds.

At his plea hearing, Boyd admitted making false statements to Regions Bank in connection with a mortgage loan being made to an individual who was financing the purchase of a property from Boyd.

Boyd faces a maximum penalty of 30 years of imprisonment on the bank fraud charge and a fine of up to $1,000,000 and 5 years supervised release and a mandatory special assessment of $100.

The defendant is scheduled to be sentenced on August 9, 2017, by U.S. District Judge Sheryl H. Lipman.

Lawrence J. Laurenzi, Acting U.S. Attorney for the Western District of Tennessee, announced the guilty plea. The case was investigated by the FBI; Federal Housing Finance Agency (FHFA) – OIG; Department of Housing and Urban Development (HUD); Postal Inspection Service and IRS. Assistant U.S. Attorney Carroll L. Andre III is prosecuting this case on the government’s behalf.

Dianna Woods, 60, Citrus Heights, California, was sentenced to three years in prison for four counts of making false statements on loan applications.

According to evidence presented at her four-day trial in December 2016, Woods was a licensed real estate salesperson who worked at a company called VLD Realty, doing business as Trade House USA, in the Sacramento area. VLD built and sold houses in residential developments in Sacramento, Carmichael, and Copperopolis, Caifornia. As the housing market began to weaken from 2006 through 2008, VLD sought to sell the houses by offering money to buyers in the form of paying the down payment or giving the buyers money after the transaction, neither of which was disclosed to the lenders.

For her part, Woods purchased two houses based on the undisclosed kickbacks. Further, for the purpose of obtaining mortgage loans to purchase the properties, Woods also signed and submitted loan applications and other documents that contained false statements as to Woods’s income, employment, assets, the purpose of the property, the sales price, and whether the down payment was borrowed. Woods also assisted another buyer in making false statements to the lenders to get loans for the purchase of two properties in the housing developments and falsely verified his employment. The banks suffered nearly $2 million in losses with respect to fraudulent transactions in which Woods was involved.

Woods was sentenced by Senior U.S. District Judge William B. Shubb. The sentence was announced by U.S. Attorney Phillip A. Talbert and the case was the product of an investigation by the Federal Bureau of Investigation and Internal Revenue Service-Criminal Investigation. Assistant U.S. Attorneys Shelley Weger and Todd Pickles prosecuted the case.

Miguel Soto, Jr., 46, Miami, Florida; Hector Raul Santana, 38, Miami Lakes, Florida; Miguel Faraldo, 52, Miami, Florida; Barbara E. Zas, 46, Miami, Florida; Maria Rosa Diaz, 45, Miami Springs, Florida; Heberto Elias Gamboa, 31, Miami, Florida; Michael Jose Gonzalez, 31, Miami, Florida; Jenny Nillo, 50, Miami, Florida; Jaime Jesus Sola Avila, 59, Miami, Florida; Jorge Angel Sola, 31, Miami, Florida; Emily Marie Echavarria, 50, Miami, Florida; Eduardo Cruz Toledo, 50, Miami, Florida;  Yanet Huet, 44, Miami, Florida; Carlos Mesa, Jr., 36, St. Petersburg, Florida;  Yipsy Rabelo Clavelo, 45, Pompano Beach, Florida; Jose Salazar, 49, Miami, Florida; and Cynthia Velasquez, 39, Miami, Florida were charged a 17-count indictment with conspiracy to commit bank fraud and various substantive bank fraud offenses.

According to allegations contained in the indictment:

During 2007 and 2008, the defendants conspired to perpetrate a complex mortgage fraud scheme against various FDIC-insured lenders.

The defendants conspired to fraudulently obtain mortgage loans for unqualified buyers of units in two condominium projects on the west coast of Florida: Portofino at Largo, also known as Indian Palms, Largo, Florida; and Bayshore Landing, Tampa, Florida.

Miguel Soto, Jr. was the acting manager of two Florida companies that sold the condominium units to the unqualified buyers: Indian Palms Holdings, LLC, and 5221 Bayshore, LLC. Hector Raul Santana served as the Director of Sales for Indian Palms Holdings, LLC.

Maria Rosa Diaz was the president of Crisvan Investment Group, Inc., a Miami-based mortgage broker business that prepared and submitted the unqualified buyers’ fraudulent loan applications and supporting documents to the lenders.

Miguel Faraldo, Jenny Nillo, Jorge Angel Sola, and Heberto Elias Gamboa operated “marketing companies” that were used to launder the fraudulently obtained loan proceeds and perpetuate the fraud scheme. In particular, Faraldo operated All Florida Marketing, Inc., Nillo and Jorge Sola operated One Stop Consulting Solutions, Inc., and Gamboa operated HHWC Management Group, Inc.

Soto, Santana, Faraldo, Zas, Diaz, Nillo, Jaime Sola, Emily Echavarria, Eduardo Cruz Toledo, and other co-conspirators recruited unqualified buyers to purchase units in Portofino at Largo and Bayshore Landing. These unqualified buyers included Michael Gonzalez, Yanet Huet, Carlos Mesa, Jr., Yipsy Rabelo Clavelo, Jose Salazar, Jorge Sola, and Cynthia Velasquez.

Soto, Santana, Faraldo, Zas, Diaz, Nillo, Jaime Sola, Echavarria, Cruz, and other co-conspirators, made fraudulent statements to unqualified buyers to induce their purchases.

The defendants submitted fraudulent loan applications to induce the lenders to make mortgage loans to the unqualified buyers. The submitted loan applications contained false and fraudulent statements relating to: the borrower’s occupation of, or intent to occupy, the mortgaged property as a residence; the borrower’s employment, income, and assets; the borrower’s liabilities; the borrower’s payment of an earnest money deposit and cash-to-close; the sellers’ payment of kick-backs to the borrowers; and other information that was material to the borrower’s qualifications to borrow money from the lenders and the values of the mortgage properties.

Miguel Soto, Jr., Hector Santana, Maria Diaz and their co-conspirators agreed to submit the unqualified buyers’ fraudulent mortgage loan applications to the lenders through certain mortgage broker firms, including Diaz’s company, Crisvan Investment Group, Inc.

Miguel Soto, Jr. and Hector Santana agreed with one another, and with other co-conspirators, that the settlement agents for the purchase transactions would disburse mortgage loan proceeds for the purchase of condominium units in Portofino at Largo and Bayside Landing, even though the borrowers would not pay the earnest the money deposits and/or cash-to-close required by their loan applications and HUD-1 Settlement Statements.

Miguel Soto, Jr. and Hector Santana agreed with Miguel Faraldo, Jenny Nillo, Jorge Sola, and Heberto Gamboa, and with other co-conspirators, that the settlement agents would use some of the proceeds from certain of the fraudulently obtained mortgage loans to pay a fictitious “marketing fee” to one of the “marketing companies.” Faraldo, Nillo, Sola, and Gamboa would then cause their companies to pay some of those funds to the unqualified buyers as an undisclosed kick-back for buying their units.

If convicted, the defendants face a statutory maximum term of 30 years’ imprisonment, a $1 million fine, and mandatory restitution, on each count in the indictment.

Wifredo A. Ferrer, United States Attorney for the Southern District of Florida, Timothy Mowery, Special Agent in Charge, Federal Housing Finance Agent, Office of Inspector General (FHFA-OIG), Southeast Region, George L. Piro, Special Agent in Charge, Federal Bureau of Investigation (FBI), Miami Division, and Juan J. Perez, Director, Miami-Dade Police Department (MDPD), made the announcement.

Mr. Ferrer commends the investigative efforts of the FHFA-OIG, FBI and MDPD. The case is being prosecuted by Assistant United States Attorney Dwayne E. Williams.

Dianna F. Woods, 59, Citrus Heights, California, was found guilty after a four–day trial, a federal jury found day of four counts of making false statements on loan applications.

According to evidence presented at trial, Woods was a licensed real estate salesperson who worked at a company called VLD Realty, doing business as Trade House USA, in the Sacramento, California, area. VLD built and sold houses in residential developments in Sacramento, Carmichael, and Copperopolis, California. As the housing market began to weaken from 2006 through 2008, VLD sought to sell the houses by offering incentives to buyers. VLD offered to pay the down payment or offered to give the buyers money after the sale, neither of which was disclosed to the lenders. For her part, Woods purchased two houses based on the undisclosed kickbacks. Further, for the purpose of obtaining loans to purchase the properties, Woods signed and submitted loan applications and other documents that contained false statements as to Woods’s income, employment, assets, the purpose of the property, the sales price, and whether the down payment was borrowed. Woods also assisted another buyer in making false statements to the lenders to get loans for the purchase of two properties in the housing developments and falsely verified his employment.

To date, six other defendants have been found guilty or have pleaded guilty in three related cases.

Woods is scheduled to be sentenced by United States District Judge William B. Shubb on February 27, 2017. Woods faces a maximum statutory penalty of 30 years in prison and a $1 million fine on each count.

The verdict was announced United States Attorney Phillip A. Talbert.  This case is the product of an investigation by the Federal Bureau of Investigation and Internal Revenue Service-Criminal Investigation. Assistant United States Attorneys Shelley Weger and Todd Pickles are prosecuting the case.