Archives For Settlement Agent

Mark Andreotti, 46, Wyckoff, New Jersey, a former settlement agent, was convicted at trial on charges related to the refinancing of properties in Bergen and Morris Counties, New Jersey.  Andreotti was found guilty on all six counts of an indictment charging him with bank fraud, conspiracy to commit bank fraud, tax evasion, and failure to file tax returns. He was convicted following a two-week trial before U.S. District Judge Susan D. Wigenton in Newark federal court. The jury deliberated one and a half hours before returning its verdict.

According to documents filed in this case and the evidence at trial:

In January 2010, Andreotti submitted a loan application to a bank requesting $625,000 to refinance the mortgage on his house in Wyckoff. Andreotti, who owned and operated Metropolitan Title and Abstract (Metropolitan), used Metropolitan as the settlement agent on the transaction. After the bank transferred the $625,000 for the refinance to Metropolitan’s escrow account, Andreotti spent the money on personal expenses instead of paying off the first mortgage on the house.

In April 2011, Andreotti conspired with another individual who worked as a real estate attorney to obtain $480,000 by claiming that the money would be used to refinance the mortgage on the attorney’s house in Montville, New Jersey. After the bank transferred the money for the refinance to Metropolitan’s escrow account, Andreotti kept $110,000 for himself before transferring the remaining funds to the other conspirator.

In 2010, the IRS initiated collection actions against Andreotti for unpaid personal income taxes. Despite numerous liens and levies and having five rental income properties in addition to his primary residence, Andreotti continued to evade his taxes. He also failed to file tax returns for the tax years 2010 and 2011.

The bank fraud counts are each punishable by a maximum potential penalty of 30 years in prison and a $1 million fine. The tax evasion count is punishable by a maximum potential penalty of five years in prison and a $100,000 fine. The counts of failure to file tax returns are each punishable by a maximum potential penalty of one year in prison and a $25,000 fine. Sentencing is scheduled for January 23, 2018.

Acting U.S. Attorney William E. Fitzpatrick announced the conviction and credited special agents of the Federal Housing Finance Agency – Office of Inspector General, under the direction of Special Agent in Charge Steven Perez in Newark; special agents of the FBI, under the direction of Special Agent in Charge Timothy Gallagher in Newark; special agents of IRS-Criminal Investigation, under the direction of Special Agent in Charge Jonathan D. Larsen in Newark; and investigators with the U.S. Attorney’s Office, with the investigation leading to today’s guilty verdicts.

The government is represented by Assistant U.S. Attorney Shana Chen in Newark and Special Assistant U.S. Attorney Charlie Divine of the Federal Housing and Finance Agency – Office of Inspector General.

Defense counsel: John P. McGovern Esq. and Christopher Dunn Esq., of Newark.

David B. Pick, loan originator, 47, Bowie, Maryland, pleaded guilty to making false statements arising from a real estate closing.

Pick was a loan originator responsible for preparing loan applications, obtaining documentation to support the representations in loan applications, presenting loan applications to financial institutions for funding and working with financial institutions to close loans.

In 2005, Pick sought a $900,000 construction loan from a mortgage lender to purchase and construct a residence at 1206 Tilghmans Landing Way, Annapolis, Maryland.  The residence was to be constructed by Richland Homes, Inc., owned and operated by Timothy Ritchie, 44, Annapolis, Maryland .  Continue Reading…

Nine individuals were sentenced on federal charges stemming from a mortgage fraud scheme involving 45 properties and $16 million in mortgage loans used for the purchase of residential real estate in the District of Columbia and Maryland.

The sentencings occurred before the Honorable Reggie B. Walton of the U.S. District Court for the District of Columbia. Defendants include:

  • Edward Dacy, 77, West Melbourne, Florida. He was sentenced on August 6, 2015 to six years in prison. Dacy was found guilty by a jury of 10 counts of conspiracy, bank fraud, and mail fraud. Upon completion of his prison term, Dacy will be placed on three years of supervised release. In addition, Judge Walton ordered that he pay $2,730,345 in restitution and an identical amount as a forfeiture money judgment.
  • Frank Davis, Jr., 49, Washington, D.C. He was sentenced on August 7, 2015 to five years in prison for conspiracy to commit bank fraud. Upon completion of his prison term, Davis will be placed on three years of supervised release. Judge Walton also ordered that Davis pay $2,730,345 in restitution and an amount of $2,296,463 as a forfeiture money judgment;
  • Frederick Robinson, Sr., 52, Montgomery, Alabama. He was sentenced on July 31, 2015 to 27 months in prison for conspiracy to commit bank fraud. Upon completion of his prison term, Robinson will be placed on three years of supervised release. Robinson also was ordered to pay $925,311 in restitution and an amount of $971,900 as a forfeiture money judgment.
  • Lonnie Johnson, 47, Greensboro, North Carolina. He was sentenced on July 15, 2015 to one year and one day in prison for conspiracy to commit bank fraud. Upon completion of his prison term, Johnson will be placed on three years of supervised release. In addition, Judge Walton ordered that he pay $277,000 in restitution.
  • Cheryl E. Morrison, 54, West Melbourne, Florida. She was sentenced on Aug. 5, 2015 to five years of probation for conspiracy to commit mail fraud; she was required to serve 90 days of that time in home detention. She also must pay $42,600 in restitution;
  • Howard Tutman, III, 54, Woodstock, Maryland. He was sentenced on Aug. 4, 2015 to five years of probation for conspiracy to commit bank fraud; he was required to serve 20 weekends in jail. In addition, Judge Walton ordered Tutman to pay $484,370 in restitution and $606,414 in forfeiture;
  • Pauline Pilate, 50, Washington, D.C. She was sentenced on July 16, 2015 to three years of probation for conspiracy to commit bank fraud; she was required to serve eight weekends in jail. In addition, Judge Walton ordered that she pay $1 million in restitution and an identical amount as a forfeiture money judgment;
  • A. Conrad Austin, 49, Bowie, Maryland. He was sentenced on May 15, 2015 to five years of probation for conspiracy to commit bank fraud, mail fraud, and wire fraud; he was required to serve four weekends in jail. In addition, Judge Walton ordered that he pay $5,001 in restitution and an identical amount as a forfeiture money judgment.
  • Anthony Young, 47, Clinton, Maryland. He was sentenced today to five years of probation for conspiracy to commit bank fraud; he is required to serve eight weekends in jail. In addition, Judge Walton ordered that he pay $300,600 in restitution.

Davis and Robinson purchased properties in the names of general partnerships; Davis and Robinson then recruited individuals, or straw buyers, to re-purchase these same properties for higher amounts, funded by fraudulently obtained mortgage loans, by promising the buyers that they would not be required to: make financial contributions toward the purchase of the properties; pay the monthly mortgage payments or expenses; or maintain the properties. These mortgage loans were obtained by fraudulent statements and documents, including false loan applications and real estate contracts, phony cashier’s checks and verifications from banks, fabricated tax returns, and letters from a Certified Public Accountant.

Davis recruited Young, who assisted with recruiting other straw buyers; Pilate, who obtained her real estate license in order to create real estate sales contracts for the straw buyers, and Johnson, a bank employee who assisted in creating false verifications of deposits. In order to obtain mortgage loans in the names of some of the straw buyers, Robinson recruited Austin, a Certified Public Accountant (CPA), to create false CPA letters, inflated tax returns, and unjustified financial statements. Tutman was the loan officer on 14 loans or loan attempts, and knew that the borrowers were merely straw buyers for Davis and Robinson and the loan applications contained inflated salaries.

Morrison worked at the settlement company with Dacy, her husband. The settlement company received the funding from the mortgage lender and should have collected the buyers’ cash contributions; it was under the obligation to disburse the loan money only if all of the mortgage lender’s conditions were met and the buyer’s financial contributions collected. Morrison and Dacy handled the straw buyers’ settlement of the properties, with knowledge that the straw buyers did not pay the cash contribution as required by the lenders.

The sentencings conclude a three-year investigation relating to this mortgage fraud scheme involving the defrauding of banks, mortgage lenders, and the Federal Housing Administration, part of U.S. Department of Housing and Urban Development, of money by obtaining mortgage loans on residential real estate properties through false loan applications and documents and fraudulent settlements. These actions ultimately caused a loss to the banks, lenders, and FHA when mortgages were not paid. Some of the fraudulently-obtained mortgage loans were later resold in the secondary mortgage market to Freddie Mac and Fannie Mae.

In this case, a group of greedy individuals teamed up with a real estate agent, a certified public accountant, employees of a settlement company, and others to carry out a far-reaching scheme that caused millions of dollars in losses to banks and other lending institutions,” said Acting U.S. Attorney Vincent H. Cohen, Jr. “These defendants took money that could have been used to help honest, hard-working people attain the dream of home ownership. They used straw buyers and falsified documents to carry out their long-running fraud. The prosecution in this case demonstrates our resolve to aggressively deal with those who engage in mortgage fraud at the expense of the entire community.”

This was a multi-tiered scheme with multiple individuals playing a role, and every single one of them underestimated the ability and commitment of law enforcement to protect innocent victims and ultimately the taxpayers from mortgage fraud schemes,” said Olga Acevedo, Special Agent in Charge of the Mid-Atlantic Region, Office of the Inspector General, Federal Housing Finance Agency. “We are proud to be a part of the multi-agency effort to hold accountable those who engage in mortgage and bank fraud. FHFA-OIG will continue to carry out this work until all are held accountable.

This sentencing was the result of outstanding investigative work conducted by the HUD OIG, and our law enforcement partners,” said Cary Rubenstein, Special Agent in Charge of the Mid-Atlantic Region of the Office of the Inspector General of the U.S. Department of Housing and Urban Development (HUD-OIG). “This collaborative effort sends a clear message that we will commit the necessary resources to make sure that the fraudsters are brought to justice and are prosecuted to the full extent of the law.”

Even though this $16 million mortgage fraud conspiracy targeted lenders, banks, and the Federal Housing Administration, the result of these criminal actions hurts our entire community,” said Andrew G. McCabe, Assistant Director in Charge of the FBI’s Washington Field Office. “The FBI will continue to work with our law enforcement partners to ensure that these criminal schemes do not go unpunished.”

In announcing the sentences, Acting U.S. Attorney Cohen, Special Agent in Charge Acevedo, Special Agent in Charge Rubenstein, and Assistant Director in Charge McCabe expressed appreciation for the work performed by the Special Agents and analysts from the Offices of Inspector General of the Federal Housing Finance Agency and Department of Housing and Urban Development and the FBI, who investigated the case. They also expressed appreciation for the work of the U.S. Secret Service and the Offices of Inspector General of the Central Intelligence Agency, the Department of Justice, and Department of Homeland Security, which assisted in the investigation. They acknowledged the efforts of those working on the case from the U.S. Attorney’s Office for the District of Columbia, including Paralegal Specialists Ida Anbarian, Donna Galindo, Corinne Kleinman, Kristy Penny, Tasha Harris, and Heather Sales, former Paralegal Specialist Sarah Reis, and Assistant U.S. Attorneys Anthony Saler, Thomas Swanton, and Arvind K. Lal, who assisted with forfeiture issues. Finally, they commended the work of Assistant U.S. Attorneys Virginia Cheatham and David A. Last, who tried the case against Edward Dacy and handled the plea negotiations with Conrad Austin, and Virginia Cheatham who prosecuted the case.

Richard C. Roney, Jr., 46, former title company owner, Laurel Springs, New Jersey, was charged by information with four counts of wire fraud related to an alleged scheme that cost lenders more than $750,000 and involved escrow theft.

Escrow theft, also known in the industry as escrow defalcation, causes significant and immediate losses to homeowners and lenders. On June 4, 2012, Demotech published a study on this form of fraud entitled Escrow Theft: Today’s Challenge in Title Insurance.  The Study examined the relationship between strong state regulations and escrow theft and concluded, unsurprisingly, that when states that adopted strong licensing requirements, strict oversight and financial responsibility regulations regarding escrow agents, escrow theft loss ratios were lower.  Continue Reading…

Bruce Allan Lamchick, Miami, Florida, a settlement attorney, has been suspended from the practice of law for 90 days following an April 9, 2012, court order.

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Trent Christopher Jonas, 42, Golden Valley, Minnesota, was sentenced for stealing money in a mortgage fraud scheme. United States District Court Judge Ann D. Montgomery sentenced Jonas to 24 months in prison on one count of wire fraud and one count of money laundering. In addition, Continue Reading...

Franklin R.York, Pella, Iowa, a former attorney, pled guilty in federal court in Des Moines, Iowa, to one count of wire fraud.

According to the written plea agreement, York owned and operated Escrow and Closing Services of Marion County, LLC since 2005 and provided real estate closing and refinancing

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David Landman, 43, Cheswick, Pennsylvania, pleaded guilty in federal court to charges of bank fraud, money laundering and aggravated identity theft in connection with a mortgage fraud scheme.  The defendant pleaded guilty to three counts before United States District Judge Gustave Diamond.

In connection with the guilty plea, the court was advised that Landman, who was a

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Ronald Johannes Sneijder, 48, Herndon, Virginia, a former owner of a title and escrow company based in the District of Columbia, pled guilty to the lead count in a recently filed indictment, bank fraud.  As previously reported by Mortgage Fraud Blog, the indictment against Continue Reading...

Michael Pahutski, 48, Gastonia, North Carolina, was sentenced to 19 years imprisonment to be followed by five years of supervised release. Pahutski was also ordered to perform 200 hours of community service and pay restitution of approximately $3.5 million.  As previously

Michael Pahutski, 48, Gastonia, North Carolina, was sentenced to 19 years imprisonment to be followed by five years of supervised release. Pahutski was also ordered to perform 200 hours of community service and pay restitution of approximately $3.5 million.  As previously reported by Mortgage Fraud Blog, Pahutski pled guilty prior to trial, without the benefit of a plea agreement, to all twenty-one counts in the indictment then pending against him. 

The sentence is the latest step in an ongoing investigation of mortgage fraud schemes carried out around the Charlotte, North Carolina area, which led to the charging of eight individuals with mail, wire and bank fraud conspiracy, money laundering conspiracy, and related charges in March 2008. The investigation also resulted in the trial of closing attorney and co-defendant Victoria Sprouse in March 2009.

A federal indictment charging Michael Pahutski with mortgage fraud-related offenses, was originally filed in August 2007, followed by a superseding indictment adding charges and five other defendants in March 2008. To date, all six of those defendants have been either convicted at trial or have entered pleas of guilty. The charges represent the results of a local investigation which stemmed from the detection of an original mortgage fraud scheme in September 2002, and focused on a group operating in and around the Charlotte area.

The indictment alleged, and the evidence presented at the sentencing hearing and elsewhere, showed that all the defendants participated in a series of mortgage fraud schemes involving more than $20 million in mortgage loans and hundreds of houses in Charlotte-area neighborhoods. The defendants included Pahutski who served as a loan officer, as well as a closing attorney, a real estate appraiser, another mortgage broker, and two real estate agents. The indictment also identified two other attorneys, three home builders (including one national homebuilder), and several real estate investors as co-conspirators in these schemes. One of the banks victimized by the schemes closed its doors in mid-2007 after 103 years of business in large part due to the scheme.

The indictment alleged that Pahutski participated in a “flip” mortgage fraud scheme where houses were purchased through fraudulent mortgage applications and use of other false documents. Pahutski was originally indicted in this case in connection with a scheme involving closing attorney Victoria Sprouse and real estate investor Stephen Hawfield, in which approximately 210 houses were purchased in a “flip scheme” through fraudulent mortgage applications to nBank for more than $15 million.

U.S. District Judge Martin Reidinger pronounced the 19 year sentence. In doing so, Judge Reidinger explained that he hoped others would note the sentence, and “see that they do not want to become mortgage fraudsters.” The Judge noted that the offense had caused substantial damage to nBank, which failed, and also had caused substantial damage to our financial system. Judge Reidinger said that the heavy sentence was based in part on the fact that Pahutski had been entrusted by the state of North Carolina with a license, and “was supposed to have been part of the firewall to prevent this [mortgage fraud] from happening, but instead became part of the problem.” Following the sentencing hearing, Judge Reidinger ordered that Pahutski be immediately taken into custody and detained as a flight risk.

Michael D. Pahutski, 48, Charlotte, NC,  a Loan Officer, Guilty plea entered 3/3/09 Sentenced 5/6/11 to 228 months imprisonment to be followed by a five-year term of supervised release, 200 hours of community service, and ordered to pay $3,563,125.27 in restitution.

Victoria L. Sprouse, 40, Charlotte, NC, a Closing Attorney, Jury trial 3/23/09 – 4/1/09, Guilty verdict by jury 4/1/09, Awaiting sentencing.

Michael Gee, 61, Hilton Head, SC, an Appraiser, Guilty plea entered 3/10/2009, Sentenced 6/24/10 to 24 months imprisonment to be followed by a three-year term of supervised release and ordered to pay $3,563,125.27 in restitution

Gregory A. Mascaro, 44, Harrisburg, NC, a Real Estate Agent, Guilty plea entered 6/9/08, Sentenced 2/27/09 to 24 months imprisonment to be followed by a three-year term of supervised release and ordered to pay $62,361.21 in restitution.

Jules Springs, 43, Charlotte, NC, a Loan Officer, Guilty plea entered 7/7/08, Sentenced 5/19/09 to 24 months imprisonment to be followed by a three-year term of supervised release and ordered to pay $62,361.21 in restitution.

Gregory D. Rankin, 36, Charlotte, NC, a Real Estate Agent, Guilty plea entered 6/25/08, Sentenced 2/27/09 to five years probation, first 23 months under home confinement.

The United States Attorney’s Office for the Western District of North Carolina announced the sentence.

Joining the U.S. Attorney’s Office in making the announcement are Jeannine Hammett, Special Agent in Charge of IRS-Criminal Investigation Division; Chris Briese, Special Agent in Charge of the Federal Bureau of Investigation, Charlotte Division; Inspector In Charge of the U.S. Postal Inspection Service, Keith Fixel; and Wayne Goodwin, Commissioner, North Carolina Department of Insurance.

The case was investigated by Special Agents of the FBI, Charlotte, Special Agents of the IRS-CI, U.S. Postal Inspectors, and criminal investigative personnel of the NC Insurance Commission. The case was prosecuted by Assistant U.S. Attorneys Kurt W. Meyers and Jenny Sugar of the U.S. Attorney’s Office, Criminal Division, Charlotte, NC, as well as former Assistant U.S. Attorney Matthew Martens.