Archives For Mortgage Elimination

James Ignatius Diamond, 69, Riverside, California was sentenced today for defrauding hundreds of victims, mainly distressed homeowners who paid thousands of dollars after attending seminars that promoted a “Free and Clear” program pitched by the defendant and his salespeople.

Between 2010 and 2013, Diamond sold fraudulent debt-elimination services to desperate victims whose finances had been ravaged by the Great Recession. Diamond owned and operated a number of businesses, including the Riverside, California based Transmitting Assets Inc., Operation Safe Haven, Buyer Beware, and Unlimited Logistics Corp., through which he fraudulently offered services that he claimed could wipe out the debts of homeowners behind on their mortgage payments and other debts.

Diamond personally pitched the “Diamond Home Reclamation Method” to solicit victims with false promises that his methods would entirely eliminate their mortgages and allow people to own their homes “free and clear.”

Relying on the false representations, victims paid substantial fees, including an upfront fee, typically $3,500, payable only in cash, money orders or cashier’s checks, periodic program fees, and inflated notary fees. After paying the upfront fee, victims were required to sign and notarize documents, which they were instructed to send to financial institutions and government agencies, documents prosecutors described in court documents as “fraudulent and nonsensical.”

When victims of the scheme in 2011 began receiving mortgage default notices and lost their homes, Diamond launched another debt-elimination scam called the “EFT Program,” under which Diamond claimed to be able to eliminate victims’ debt with “EFT” checks. This scam required victims to pay Diamond 13 percent of the debt that was to be eliminated.

Diamond knew that his methods did nothing to discharge debts. In fact, when FBI agents searched his business in 2013, they recovered hundreds of “rejection letters” from financial institutions indicating that documents submitted as part of the debt-elimination programs did nothing to help the victims. Diamond’s email accounts contained numerous complaints and refund requests from victims, all of which he ignored.

Investigators have identified more than 500 victims who suffered losses of at least $1.6 million. Diamond spent victims’ money on luxury hotels, jewelry, alcoholic beverages, and living expenses.

At the conclusion of a six-day trial in June 2019, Diamond was found guilty by a jury of 15 counts of mail fraud affecting a financial institution and 15 counts of wire fraud affecting a financial institution.

Previously in this case, a Diamond associate,  Tricia Mae Gruber, 43, Riverside, California, pleaded guilty to conspiracy to commit mail fraud and admitted helping operate the scheme. Her sentencing hearing is scheduled for October 21, 2019.

This case was investigated by the FBI.

This matter was prosecuted by Assistant United States Attorneys Marina A. Torres of the International Narcotics, Money Laundering, and Racketeering Section and Kevin B. Reidy of the General Crimes Section.

 

Jacqueline Graham, 53, formerly of Levittown, Pennsylvania was convicted at trial on Wednesday, June 12, 2019, of participating in a conspiracy to commit bank fraud, wire fraud, and mail fraud in connection with a fraudulent debt-elimination scheme to defraud homeowners and banks.

According to the Indictment in the case and the evidence presented at trial:

From at least 2011 to at least 2012, Graham partnered with Bruce Lewis, 67, formerly of Alaska and Washington State and John Ruzza in operating the Valhalla, New York-based Terra Foundation (“Terra”) ,which was originally known as the Pillow Foundation, which held itself out as a business that would investigate and eliminate mortgage loans in exchange for fees, soliciting clients who were having difficulties making their mortgage payments.  In fact, however, Terra engaged in a wide-ranging scheme to defraud clients, county clerks’ offices, and banks.

The fraudulent scheme, which was created by Graham and Lewis, involved Terra performing “audits” of clients’ mortgages, sending pseudo-legal paperwork to the banks and/or lenders holding the mortgages, and ultimately filing purported mortgage discharges with the relevant county clerks’ offices, which discharges were signed by Lewis or other co-conspirators, claiming falsely to represent the banks and/or mortgage lenders.  As a result, anyone doing a title search for one of Terra’s clients would see that the client’s mortgage had been satisfied.  The mortgages had not, however, been discharged, and the mortgages were eventually reinstated, after the clients paid their fees.

In order to effectuate the scheme, Graham, Lewis, and Ruzza involved others, including Rocco Cermele, 56, Yonkers, New York , who was Terra’s director of operations and who recruited clients, among other duties; Paula Guadagno, who did real estate title work for, and filed discharges on behalf of, Terra; and Anthony Vigna, 61, Thornwood, New York,  a lawyer and CPA who worked in Terra’s offices.

To profit from their scheme, Graham and her co-conspirators charged various fees to Terra’s clients.

In total, Graham and her co-conspirators filed over 60 fraudulent discharges in Westchester and Putnam Counties in New York, and in Connecticut.  The fraudulent discharges claimed to discharge mortgages with a total loan principal of nearly $38 million.

Graham was convicted of one count of conspiracy to commit bank fraud, wire fraud, and mail fraud.  The count carries a maximum sentence of 30 years in prison.

Lewis pled guilty to one count of wire fraud relating to the Terra scheme, which carries a maximum sentence of 20 years in prison.

Vigna pled guilty to one count of participating in a conspiracy to commit bank fraud, wire fraud, and mail fraud relating to the Terra scheme, which carries a maximum sentence of five years in prison.

Cermele pled guilty to one count of participating in a conspiracy to commit mail, wire, and bank fraud, and one count of wire fraud, each relating to the Terra scheme, each of which carries a maximum potential sentence of 30 years in prison, and three additional counts of wire fraud relating to other crimes, each of which carries a maximum potential sentence of 20 years in prison.

Graham was found guilty of the one count she faced after a two-week trial before U.S. District Judge Nelson S. Román.

The statutory maximum penalties are prescribed by Congress and are provided here for informational purposes only, as any sentencings of the defendants would be determined by the court.

All defendants are awaiting sentencing.

Geoffrey S. Berman, the United States Attorney for the Southern District of New York, made the announcement.

Manhattan U.S. Attorney Geoffrey S. Berman said:  “Jacqueline Graham preyed on vulnerable homeowners who could not afford their mortgage payments during a time of crisis in the housing market.  Because of her greed, these homeowners ended up financially worse off than when they found her.  We will continue to work with our law enforcement partners to bring to justice those who victimize the vulnerable.”

Mr. Berman praised the outstanding investigative work of the Federal Bureau of Investigation.  Mr. Berman also thanked the Office of the Westchester County District Attorney’s Office and the Department of Housing and Urban Development for their assistance in the case.

This case is being handled by the Office’s White Plains Division.  Assistant United States Attorneys David Felton, Michael Maimin, and James McMahon are in charge of the prosecutions.

Larry Allen Todt, 66, formerly of Malibu, California was sentenced to over seven years in prison and ordered to pay over $3,000,000 in restitution for his role in a fraudulent mortgage elimination scheme.

On December 6, 2017, Todt was convicted following trial on one count of conspiracy and one count of bank fraud.

According to court documents, between April 22, 2010, and November 18, 2011, Todt was a member of a conspiracy that ran a mortgage elimination program purporting to help distressed homeowners avoid foreclosure. The conspirators fraudulently altered the chain of title on residential properties, sold the properties, and received the sales proceeds.

As a requirement for participation in the “mortgage elimination program,” the conspirators enrolled homeowners as members in a Nevada City-based church named Shon-te-East-a, Walks With Spirit, or its successor entity, Pillow Foundation. The conspirators indicated to the homeowners that these entities would offer protection against the banks.

Todt ran a branch of the mortgage elimination program, recruiting homeowners into the scheme, marshaling the necessary recorded documents, and guiding the sale of the homes. Once the homeowner enrolled with Shon-te-East-a or Pillow Foundation, Todt would have a sham deed of trust created and recorded, giving the impression that the homeowner had refinanced the mortgage loan with a new lender. In reality, the new lender was a fake entity controlled by the conspirators, and the homeowner owed no money to the purported new lender.

The next step in the process was also a recorded document. The conspirators caused a fake deed of reconveyance to be recorded, giving the appearance that the true mortgage loan had been discharged and that the true lien holder no longer had a security interest in the home.

With title appearing to be clear, the conspirators caused the sale of the home with the proceeds split between the co-conspirators and the homeowners.

In total, 37 properties were sold through the Shon-te-East-a conspiracy. The conspirators recorded fraudulent documents on an additional approximately 100 homes, but were unable to sell these before the scheme unraveled.

One co-defendant, George B. Larson, formerly of San Rafael, California was convicted at trial along with Todt and sentenced to 121 months in prison. One other co-defendant, Michael Romano, Benicia, California was sentenced to 37 months in prison following his guilty plea. Remus A. Kirkpatrick, formerly of Oceanside, California and Laura Pezzi, Roseville, California have previously pleaded guilty. Tisha Trites and Todd Smith, both of San Diego, California pleaded guilty in related cases. All are awaiting sentencing.

Co-defendants John Michael DiChiara, Penn Valley, California, and James Castle, Santa Rosa, California are awaiting trial. The charges against DiChiara and Castle are only allegations; both defendants are presumed innocent unless and until proven guilty beyond a reasonable doubt.

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

This case is the product of an investigation by the Federal Bureau of Investigation. Assistant U.S. Attorneys Audrey B. Hemesath and Todd A. Pickles are prosecuting the case.

 

George B. Larsen, 56, formerly of San Rafael, California was sentenced to 10 years and one month in prison and ordered to pay $1,759,100 in restitution for his role in a fraudulent mortgage elimination scheme.

On December 6, 2017, Larsen was convicted following trial on one count of conspiracy and four counts of bank fraud. http://www.mortgagefraudblog.com/?s=+George+B.+Larsen

According to court documents, between April 22, 2010, and November 18, 2011, Larsen was a member of a conspiracy that ran a mortgage elimination program purporting to help distressed homeowners avoid foreclosure. The conspirators fraudulently altered the chain of title on residential properties, sold the properties, and received the sales proceeds.

As a requirement for participation in the “mortgage elimination program,” the conspirators enrolled homeowners as members in a Nevada City-based church named Shon-te-East-a, Walks With Spirit, or its successor entity Pillow Foundation. The conspirators indicated to the homeowners these entities would offer protection against the banks.

Larsen ran a branch of the mortgage elimination program, recruiting homeowners into the scheme, marshalling the necessary recorded documents, and guiding the sale of the homes. Once the homeowner enrolled with Shon-te-East-a or Pillow Foundation, Larsen would have a sham deed of trust created and recorded, giving the impression that the homeowner had refinanced the mortgage loan with a new lender. In reality, the new lender was a fake entity controlled by the conspirators, and the homeowner owed no money to the purported new lender.

The next step in the process was also a recorded document. The conspirators caused a fake deed of reconveyance to be recorded, giving the appearance that the true mortgage loan had been discharged and that the true lienholder no longer had a security interest in the home.

With title appearing to be clear, the conspirators caused the sale of the home, with the proceeds split between the co-conspirators and the homeowners.

In total, 37 properties were sold through the Shon-te-East-a conspiracy. The conspirators recorded fraudulent documents on an additional approximately 100 homes, but were unable to sell these before the scheme unraveled.

One co-defendant, Larry Todt, formerly of Malibu, California was convicted at trial along with Larsen. Three other co-defendants have previously entered guilty pleas: Remus A. Kirkpatrick, formerly of Oceanside, California, Michael Romano, Benicia, California and Laura Pezzi, Roseville, California. Tisha Trites and Todd Smith, both of San Diego, California pleaded guilty in related cases. All are awaiting sentencing.

Co-defendants John Michael DiChiara, of Penn Valley, and James Castle, of Santa Rosa, are awaiting trial. The charges against DiChiara and Castle are only allegations: both defendants are presumed innocent unless and until proven guilty beyond a reasonable doubt.

Co-defendants John Michael DiChiara, Penn Valley, California and James Castle, Santa Rosa, California are awaiting trial. The charges against DiChiara and Castle are only allegations: both defendants are presumed innocent unless and until proven guilty beyond a reasonable doubt.

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

This case is the product of an investigation by the Federal Bureau of Investigation. Assistant U.S. Attorneys Audrey B. Hemesath and Todd A. Pickles are prosecuting the case.

 

George B. Larsen, 56, formerly of San Rafael, California was found guilty of conspiracy and four counts of bank fraud. Larry Todt, 65, formerly of Malibu, California was found guilty of conspiracy and one count of bank fraud. The two men were found guilty today in a bank fraud scheme that sought to fraudulently eliminate home mortgages and then profit on the subsequent home sales.

According to court documents, between April 22, 2010, and November 18, 2011, Larsen and Todt were members of a conspiracy that ran a “mortgage elimination program” purporting to help distressed homeowners avoid foreclosure.  The conspirators fraudulently altered the chain of title on residential properties, sold the properties, and received the sales proceeds.

As a requirement for participation in the “mortgage elimination program,” the conspirators enrolled homeowners as members in a Nevada City-based church named Shon-te-East-a, Walks With Spirit, or its successor entity Pillow Foundation. The conspirators indicated to the homeowners these entities would offer protection against the banks.

Larsen and Todt each ran branches of the mortgage elimination program, recruiting homeowners into the scheme, marshalling the necessary recorded documents, and guiding the homes through sale. Once the homeowner enrolled with Shon-te-East-a or Pillow Foundation, Larsen and Todt would have a sham deed of trust created and recorded, giving the impression that the homeowner had refinanced the mortgage loan with a new lender. In reality, the new lender was a fake entity controlled by the conspirators, and the homeowner owed no money to the purported new lender.

The next step in the process was also a recorded document. The conspirators caused a fake deed of reconveyance to be recorded, giving the appearance that the true mortgage loan had been discharged and that the true lien holder no longer had a security interest in the home.

With title appearing to be clear, the conspirators caused the sale of the home, with the proceeds split between the co-conspirators and the homeowners.

In total, 37 properties were sold through the Shon-te-East-a conspiracy. The conspirators recorded fraudulent documents on an additional approximately 100 homes, but were unable to sell these before the scheme unraveled.

Three other co-defendants have previously entered guilty pleas. On April 21, 2017, Remus A. Kirkpatrick, formerly of Oceanside, California, pleaded guilty to one count of falsely making writings of lending associations. On May 26, 2017, Michael Romano, Benicia, California pleaded guilty to conspiracy, and on July 14, 2017, Laura Pezzi, Roseville, California, pleaded guilty to falsely making writings of lending associations. They are scheduled to be sentenced on February 23, 2018.     Co-defendants John Michael DiChiara, Penn Valley, California and James Castle, Santa Rosa, California are still awaiting trial. The charges against DiChiara and Castle are only allegations:  both defendants are presumed innocent unless and until proven guilty beyond a reasonable doubt.

In related cases, on September 4, 2015, Tisha Trites and Todd Smith, both of San Diego, California pleaded guilty to related charges before U.S. District Judge Garland E. Burrell, Jr. They are scheduled to be sentenced on February 9, 2018. http://www.mortgagefraudblog.com/?s=George+B.+Larsen

Larsen and Todt are scheduled to be sentenced by U.S. District Judge Garland E. Burrell, Jr. on March 16, 2018, at which time they each face a maximum penalty of five years in prison and a $250,000 fine. The maximum penalty for bank fraud is 30 years and a $1 million fine. The actual sentences, 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 Phillip A. Talbert made the announcement.

This case is the product of an investigation by the Federal Bureau of Investigation. Assistant U.S. Attorneys Audrey B. Hemesath and Todd A. Pickles are prosecuting the case.

 

Sean David Morton, 59, Hermosa, Beach, California was sentenced to six years in federal prison and his wife, Melissa Ann Morton, 51, Hermosa Beach, California, was sentenced to two years in federal prison for using bogus financial instruments in an attempt to pay off debt and for filing fraudulent tax returns with the Internal Revenue Service that sought millions of dollars in refunds.  The Mortons were each ordered to pay $480,322 in restitution to the IRS.

Sean Morton’s sentencing follows a four-day trial in April in which he was found guilty by a federal jury of one count of conspiracy to defraud the United States, two counts of filing false claims against the United States, and 26 counts of passing false or fictitious financial instruments. Sean Morton was originally scheduled to be sentenced in June, but he failed to appear for that hearing and was a fugitive for over two months. Melissa Morton was convicted of conspiracy, two counts filing false claims and 25 counts of passing false or fictitious financial instruments

The Mortons operated a “redemption” scheme, which is the most common scheme used across the nation by tax defiers and “sovereign citizens.” Proponents of this scheme falsely claim that the United States government controls bank accounts – often referred to as “U.S. Treasury Direct Accounts” – for U.S. citizens that can be accessed by submitting paperwork with state and federal authorities. Individuals promoting this scam frequently cite bogus legal theories and may refer to the scheme as “Redemption” or “Strawman.” This scheme, which repeatedly has been rejected by courts, predominately uses fraudulent financial documents that appear to be legitimate.

The Mortons sold the bond scheme to others who were in debt to governmental organizations, such as the IRS and the State of California, and private bank institutions for mortgage or credit card debt. The Mortons charged their clients thousands of dollars to prepare and file useless UCC-1 documents declaring their clients’ “strawman” status, and to prepare and send false bonds to the government or banks which purported to pay off the clients’ debt. “The total amounts of the check/bonds [the Mortons] made and passed are astronomical – the principal amounts of said instruments range from $50,000 to $10 million,” according to court documents.

In sentencing briefs filed with the court, prosecutors said Sean Morton “touted he was a ‘paper terrorist’ when giving seminars regarding his schemes,” and he harassed and burdened the “courts with mountains of frivolous paperwork…in an effort to degrade the court system over time and make it more difficult to efficiently resolve cases, especially tax cases.”

The evidence presented at trial also showed that the Mortons filed income tax returns with the IRS that falsely claimed they had income from various banking institutions reported on Forms 1099-OID. As part of the scheme, the Mortons falsely reported large withholdings and claimed they were owed refunds from the IRS.

As a result of the scheme, the IRS erroneously issued a refund of $480,322.55 to Sean Morton for a 2008 income tax return. On the same day the refund was deposited into the Mortons’ joint bank account, the couple took immediate steps to conceal the money, which included opening two new accounts, transferring over $360,000 to the two new accounts, and withdrawing $70,000 in cash.

When the IRS took steps to collect the erroneous refund, the Mortons began a campaign to thwart the government’s collection efforts. Specifically, when the IRS placed a levy on the couple’s joint bank account, the couple repeatedly sent letters to the IRS that falsely claimed it was Melissa Morton’s sole and separate account.

When the IRS attempted to collect the erroneous refund from the Mortons, the Mortons presented to the IRS various “coupons” and “bonds” that purported to pay off their debt with the IRS. The Mortons created and submitted these bogus documents to the IRS, instructing the agency to draw upon funds with the United States Treasury to satisfy their debt.

While sentencing Sean Morton, Judge Wilson said his conduct “caused a serious disruption” to the tax system and “caused others to engage in fraudulent conduct.”

“The scheme, while outrageous, was also calculated,” Judge Wilson said.

Sean Morton was originally scheduled to be sentenced on June 19, but he failed to appear in court and was a fugitive for 61 days. During that time, Sean Morton “flagrantly flouted the law, appeared on social media, his radio program, and YouTube to brag about his status as a fugitive,” according to court papers filed by prosecutors. Soon after her husband fled, Melissa Morton was ordered not to have any contact with her husband.

The Mortons were arrested on August 21, 2017 while observing the solar eclipse poolside at a hotel in Desert Hot Springs. The following day, a United States Magistrate Judge found that they had violated the terms of their release on bond and ordered them detained.

This is a case where the defendants clearly engaged in a systematic effort to impede the tax system, undermine the efforts of prosecutors, and, in the case of Sean Morton, avoid sentencing after being convicted by a jury of his peers,” said Acting United States Attorney Sandra R. Brown. “This case sends a clear message that we will spare no effort to preserve the integrity of this nation’s institutions. The lengthy sentences also demonstrate that illegal efforts to use bogus legal theories in an effort to defraud fellow taxpayers will not be tolerated.”

The Mortons’ blatant disrespect for the law will now cost them years of valuable freedom,” stated IRS Criminal Investigation Special Agent in Charge R. Damon Rowe. “Today’s sentencing shows how seriously the courts take those individuals who attempt to lead others down a perilous financial and legal path, in addition to devising illegal tax schemes to obtain refunds to which they are not entitled.”

Morton was sentenced by and by United States District Judge Stephen V. Wilson.

The investigation of the Mortons was conducted by IRS Criminal Investigation.

The case is being prosecuted by Assistant United States Attorneys Valerie Makarewicz and James C. Hughes of the Tax Division.

Urmila Sri Thakur, also known as Urmila Buddhu-Thakur and Indro Buddhu-Thakur, 72, Wethersfield, Connecticut, pleaded guilty in New Haven federal court to a money laundering offense stemming from a fraudulent debt elimination scheme.

According to court documents and statements made in court, from 2009 to June 2012, Thakur, her former husband, Deowraj “Deo” Buddhu and their daughter, Sunita Buddhu, sold a debt elimination “program” to vulnerable individuals through various businesses, including Paradise Consulting Service, Hema, Inc., and Secured Redemption. In exchange for substantial fees, Deo Buddhu told victims about a little-known government fund that could be used to pay off their mortgages and other debts. In fact, no such fund exists. Buddhu instructed his victims to stop making payments on their mortgages, credit cards and other debts, and to stop paying their property taxes. He also provided his victims with fictitious promissory notes, which he called “bonds,” as well as other frivolous documentation, and advised his victims to use them to pay their debts.

On June 12, 2012, the day after Deo Buddhu’s arrest, Thakur withdrew $75,000 from a certificate of deposit account that contained funds from the scheme. She also obtained several cashier’s checks, including one for $50,000 made payable to Thakur, which she thereafter negotiated using accounts in the name of SDK SYS Solutions and TRK Consulting Services.

Thakur pleaded guilty to one count of money laundering, which carries a maximum term of imprisonment of 10 years. She is scheduled to be sentenced by U.S. District Judge Alvin W. Thompson in Hartford on November 20, 2017.

As part of her plea, Thakur has agreed to pay restitution in the amount of $335,072, which is the amount attributable to the underlying fraudulent debt elimination scheme.

Thakur is released on a $250,000 bond pending sentencing.

Deo Buddhu and Sunita Buddhu were previously convicted in Hartford federal court.

Deirdre M. Daly, United States Attorney for the District of Connecticut, announced the plea. The matter is being investigated by the Internal Revenue Service – Criminal Investigation Division and the U.S. Department of Housing and Urban Development – Office of Inspector General. The case is being prosecuted by Assistant U.S. Attorneys John T. Pierpont, Jr. and Liam Brennan.

Martin Calzada, 30, Norwalk, California, was sentenced to nine years in prison; Juan Curiel, 38, Visalia, California was sentenced to three years and five months in prison; and Santiago Palacios-Hernandez, 48, Salinas, California, was sentenced to two years and seven months in prison, in connection with their roles in a mortgage elimination scam in Bakersfield, Visalia and Salinas, California.

On March 10, 2017, Calzada was convicted by a jury of one count of conspiracy and eight counts of mail fraud affecting a financial institution. In December 2014, Curiel and Palacios-Hernandez pleaded guilty to conspiracy to commit mail fraud

According to evidence presented during Calzada’s four-day trial, the defendants conspired to defraud homeowners facing foreclosure. The three men operated Star Reliable Mortgage, which had offices in Bakersfield, Visalia, and Salinas, and targeted distressed homeowners with a fraudulent “loan elimination” scheme. Between approximately August 2010 and October 2011, Star Reliable charged clients an upfront fee for its services — ranging from $2,500 up to $4,500 — as well as monthly fees, for ostensibly helping the clients own their homes “free and clear.” Clients paid hundreds of thousands of dollars to Star Reliable and at least $300,000 was transferred from Star Reliable into Calzada’s bank accounts.

To advance the scheme, Calzada, Curiel, and Palacios-Hernandez filed fraudulent documents at county recorders’ offices on behalf of the homeowner-clients. The fraudulent documents purported to replace the legitimate property trustees with fictitious trusts, all in an effort to “cloud title” and halt or stall the foreclosure process. The defendants and other employees working at their direction told Star Reliable clients to stop paying their mortgages. They also falsely represented that Star Reliable clients had $1 million in a U.S. government account that could be used to pay off a homeowner’s mortgage.

As part of their sentences, the defendants were ordered to pay more than $1.1 million dollars in restitution to former Star Reliable clients and mortgage loan owners Fannie Mae and Freddie Mac, which suffered financial losses upon the foreclosure of several clients’ homes.

Chief U.S. District Judge Lawrence J. O’Neill handed down the sentences.  U.S. Attorney Phillip A. Talbert made the announcement.These cases were the product of an investigation by the Federal Bureau of Investigation and the Tulare County District Attorney’s Office. Assistant U.S. Attorneys Christopher D. Baker and Patrick J. Suter prosecuted the cases.

David Tyrone Johnson, 48, Washington, D.C., was sentenced to a year and a day in prison on federal charges arising from a real estate scheme involving forged mortgage satisfaction documents.

Johnson pled guilty in April 2017, in the U.S. District Court for the District of Columbia, to charges of bank fraud and making false statements. He was sentenced by the Honorable Ketanji Brown Jackson. Following his prison term, Johnson will be placed on two years of supervised release. He also must pay $337,105 in restitution to Fidelity National Title Insurance Company, as well as a forfeiture money judgment of $170,688.

According to a statement of offense submitted at the time of the guilty plea, SunTrust Mortgage, Inc. loaned a friend of Johnson’s approximately $470,000 in 2008 to purchase residential real estate in the 100 block of 57th Street SE. By 2009, the friend had failed to repay the mortgage loans, and in 2010, SunTrust Mortgage filed a notice of foreclosure with the District of Columbia’s Recorder of Deeds. In April 2013, SunTrust Mortgage began the process of foreclosing on the mortgage and taking possession of the property, due to the friend’s failure to make good and timely payments on the mortgage loans.

Sometime before October 2, 2013, Johnson caused the creation of two phony and forged certificates of satisfaction, which falsely represented that the SunTrust Mortgage loans at the property on 57th Street SE had been paid and that his friend owned the property “free and clear.” According to the statement of offense, on October 2, 2013, Johnson filed these two phony certificates of satisfaction with the Recorder of Deeds.

In or about December 2013, after the fake certificates of satisfaction allowed the friend to sell the property without paying the outstanding mortgages, the title and escrow company wired out the sales proceeds of $337,105, of which approximately $170,688 was obtained by Johnson.

In addition, in 2015, Johnson was required to submit a financial disclosure form to his government agency employer; however, on that form, Johnson failed to disclose the money he obtained from the sales proceeds of the property, knowing that he had obtained the money. This failure to inform his government agency employer was material or important to his employer, and one that resulted in a false statement on his financial disclosure form.

In announcing the sentence, U.S. Attorney Channing D. Phillips and Andrew Vale, Assistant Director in Charge of the FBI’s Washington Field Office expressed appreciation for the work performed by those who investigated the case and assisted in preparing it for trial from the FBI, including the Washington Field Office and the FBI Laboratory. They also acknowledged the efforts of those working on the case from the U.S. Attorney’s Office, including Paralegal Specialist Christopher Toms; former Paralegal Specialists Corinne Kleinman and Kaitlyn Krueger; Litigation Tech Specialist Ron Royal, and Assistant U.S. Attorney Thomas Swanton, who assisted with forfeiture issues. Finally, they commended the work of Assistant U.S. Attorney Virginia Cheatham, who prosecuted the case.

Martin Calzada, 29, Norwalk, California was found guilty by a federal jury after a four-day trial, of one count of conspiracy to commit mail fraud and eight counts of mail fraud affecting a financial institution.

According to evidence presented at trial, Calzada conspired to defraud homeowners facing foreclosure. Calzada and other employees of Star Reliable Mortgage, which had offices in Bakersfield, Visalia, and Salinas, California, targeted distressed homeowners with a fraudulent “loan elimination” scheme. Between approximately August 2010 and October 2011, Star Reliable charged clients an upfront fee for its services – ranging from $2,500 up to $4,500 – as well as monthly fees, based on false promises that the clients could own their homes “free and clear” as a result of Star Reliable’s services. Clients paid hundreds of thousands of dollars to Star Reliable and at least $300,000 was transferred from Star Reliable into Calzada’s bank accounts. In furtherance of the scheme, Calzada and other employees at Star Reliable filed at county recorders’ offices fraudulent documents on behalf of the homeowner-clients, which purported to replace the legitimate property trustees with fictitious trusts affiliated with the defendant and Star Reliable, all in an effort to “cloud title” and halt or stall the foreclosure process. Additionally, Calzada, and other employees working at his direction told Star Reliable clients to stop paying their mortgages. They also falsely represented that Star Reliable clients had one million dollars in a U.S. government account that could be used to pay-off a homeowner’s mortgage.

Calzada was remanded into custody following the announcement of the verdict. In a related case in December 2014, co-conspirators Juan Ramon Curiel, 38, Visalia, California and Santiago Palacios-Hernandez, 47, Salinas, California, pleaded guilty to conspiracy to commit mail fraud. Curiel additionally pleaded guilty to one count of bankruptcy fraud. They are scheduled to be sentenced by Judge O’Neill on April 10, 2017.

Calzada is scheduled to be sentenced by Judge O’Neill on June 5, 2017. Calzada faces a maximum statutory penalty of 30 years in prison and a $1,000,000 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.

United States Attorney Phillip A. Talbert announced the verdict. The trial was held before United States Chief District Judge Lawrence J. O’Neill.

This case was the product of an investigation by the Federal Bureau of Investigation and the Tulare County District Attorney’s Office. Assistant United States Attorneys Christopher D. Baker and Patrick J. Suter are prosecuting the case.