Archives For Short Sale Fraud

Casey Padula, 48, Port Charlotte, Florida, was sentenced to 57 months in prison for conspiring to commit tax and bank fraud.

According to court records, Padula had a mortgage on his Port Charlotte, Florida home of approximately $1.5 million with Bank of America (BoA).  In 2012, he sent a letter to the bank stating that he could no longer repay his loan.  At the same time, Padula provided Robert Robinson III, 43, who acted as a nominee buyer, with more than $625,000 from his IPPI bank account in Belize to fund a short sale of Padula’s home. Padula and Robinson signed a contract, which falsely represented that the property was sold through an “arms-length transaction,” and agreed that Padula would not be permitted to remain in the property after the sale. Padula in fact never moved from his home and less than two months after the closing, Robinson conveyed it back to Padula by transferring ownership to one of Padula’s Belizean entities for $1. Robinson was also sentenced  to five years of probation for signing a false Form HUD-1 in connection with his role in the scheme.

Padula was also involved in a tax fraud scheme that used secret numbered bank accounts, foreign shell companies and phony deductions to hide millions and evade taxes, according to Acting Deputy Assistant Attorney General Stuart M. Goldberg of the Justice Department’s Tax Division, who announced the sentence.

In addition to the term of prison imposed by U.S. District Court Judge Sherri Polster Chappell, Padula was ordered to serve three years of supervised release and to pay a fine of $100,000 and to pay restitution of $728,609 to the IRS and to BoA in the amount of $739,459.90. He was remanded into custody.

Acting Deputy Assistant Attorney General Goldberg thanked special agents of IRS CI, who conducted the investigation, and Assistant Chiefs Todd Ellinwood and Caryn Finley of the Tax Division, who prosecuted this case. Acting Deputy Assistant Attorney General Goldberg also thanked the U.S. Attorney’s Office of the Middle District of Florida for its assistance.

Joseph Atias, 52, Great Neck, New York, and Sofia Atias, 47, Great Neck, New York were convicted of bank fraud, conspiracy to commit bank fraud and Medicaid fraud by a jury in federal court in Central Islip., New York. The fraud was designed to, and did, defraud Bank of America of over half a million dollars.  The defendants face penalties of up to 35 years’ imprisonment, the forfeiture of $560,000, and restitution of over $700,000.  After the verdicts, Joseph Atias was remanded to custody pending sentencing by United States District Judge Denis R. Hurley.

The defendants were convicted of bank fraud and conspiracy to commit bank fraud in connection with the sale of property adjacent to Sacred Heart Academy for $925,000, after the defendants had sold the property in a short sale for $480,000 to discharge their mortgage debt.  In the short sale process, the defendants and a co-conspirator, an attorney who pleaded guilty and testified against the defendants at trial, concealed the offer from Sacred Heart Academy from Bank of America.  In the short sale process, the defendants submitted a fraudulent contract of sale and other documents with false statements to Bank of America, and obtained approval of a short sale, wherein the proceeds from the sale of the property were less than the total amount of the mortgages on the property.  The defendants submitted these documents to Bank of America, falsely representing that there were no funds to pay the mortgages when, in fact, the defendants knew that Sacred Heart Academy, a high school in Hempstead, New York, had offered to buy the property for an amount sufficient to cover the mortgages on the property.  To accomplish the fraudulent short sale scheme, the defendants used a relative as a straw buyer of the property to create the appearance of an arms-length sale.  Shortly after that sale, the defendant’s straw buyer sold the property to Sacred Heart Academy for approximately half a million dollars in profit.

Regarding the Medicaid fraud count conviction, the jury found the defendants guilty of theft of government funds in connection with their receipt of hundreds of thousands of dollars in Medicaid funds from 2009-2015.  The defendants concealed their self-employment from Medicaid, as well as their available cash resources, including trust fund monies, an inheritance and the $465,000 in proceeds from the above bank fraud, in order to continue on Medicaid, which paid the defendants approximately $2,500 per month.

The convictions were announced by Bridget M. Rohde, Acting United States Attorney for the Eastern District of New York, and William F. Sweeney, Jr., Assistant Director-in-Charge, Federal Bureau of Investigation, New York Field Office.

Through a web of lies and false documentation, these defendants stole more than half a million dollars from Bank of America and from Medicaid, which they used to line their own pockets,” stated Acting United States Attorney Rohde.  “The fine work of the FBI to bring these defendants to account for these crimes sends a clear message to anyone who contemplates engaging in mortgage fraud or Medicaid fraud: Do not even attempt it, because you will be caught and held responsible.”  Ms. Rohde extended her grateful appreciation to the Federal Bureau of Investigation, the agency responsible for leading the government’s investigation.

The government’s case was prosecuted by Assistant United States Attorneys Charles P. Kelly and Burton T. Ryan, Jr. of the Office’s Long Island Criminal Division.

Jasmin Polanco, 37, Methuen, Massachusetts, a real estate closing attorney, and Vanessa Ricci, 40, Methuen, Massachusetts. a mortgage loan officer, each pleaded guilty to one count of conspiracy to commit bank fraud in connection with a sweeping conspiracy to defraud banks and mortgage companies by engaging in sham “short” sales of residential properties in Merrimack Valley, Massachusetts.

Separately, a real estate broker from Methuen, Greisy Jimenez, 49, Methuen, Massachusetts, was indicted on two counts of bank fraud and one count of conspiracy to commit bank fraud in connection with the same alleged scheme. In addition, U.S. District Court Judge Rya W. Zobel sentenced Hyacinth Bellerose, 51, a real estate closing attorney from Dunstable, Massachusetts, to time served and one year of supervised release to be served in home detention after pleading guilty to participating in the same conspiracy.

The charges arise out of an alleged scheme to defraud various banks via bogus short sales of homes in Haverhill, Lawrence and Methuen, Massachusetts, in which the purported sellers remained in their homes, with their debt substantially reduced.

The alleged conspiracy began in approximately August 2007 and continued through June 2010, a period that included the height of the financial crisis and its aftermath. Home values in Massachusetts and across the nation declined precipitously, and many homeowners found themselves suddenly “underwater” with homes worth less than the mortgage debt they owed. As part of the alleged scheme, Jimenez, Polanco, Ricci, Bellerose and others submitted materially false and misleading documents to numerous banks in an effort to induce them to permit the short-sales, thereby releasing the purported sellers from their unpaid mortgage debts, while simultaneously inducing the purported buyers’ banks to provide financing for the deals. In fact, the purported sellers simply stayed in their homes, with their debt substantially reduced.

The charging documents allege that as part of the conspiracy:

The conspirators falsely led banks to believe that the sales were arms-length transactions between unrelated parties, when in fact, the transactions were not arms-length; the buyers and sellers were frequently related, and the sellers retained control of (and frequently continued to live in) the properties after the sale;

The conspirators submitted phony earnings statements in support of loan applications that they submitted to banks in order to obtain financing for the purported sales; and

The conspirators submitted phony “HUD-1 Settlement Statements” to banks that did not accurately reflect the disbursement of funds in the transactions.

The charge of bank fraud and conspiracy to commit bank fraud provides for a sentence of no greater than 30 years in prison and a fine of $1 million.

U.S. District Court Senior Judge Douglas P. Woodlock scheduled Ricci’s sentencing for June 22, 2017. Polanco’s sentencing hearing has not yet been scheduled.

Acting United States Attorney William D. Weinreb; Christina Scaringi, Special Agent in Charge of the Department of Housing and Urban Development, Office of Inspector General, New York Field Office; and Christy Goldsmith Romero, Special Inspector General of the Troubled Asset Relief Program, made the announcement. Assistant U.S. Attorney Stephen E. Frank, Deputy Chief of Weinreb’s Economic Crimes Unit is prosecuting the cases.

Rosemary Anton, Phoenix, Arizona, was charged by information in a short sale fraud and pled guilty to one count of conspiracy in the United States District Court for the District of Arizona. Sentencing is scheduled for May 8, 2017.

According to the Information, in March 2005, Anton purchased a home located at 3612 East Elm Street, Phoenix, Arizona for $712,000 and obtained two mortgage loans to finance the purchase.

In July 2011, Anton, with the assistance of a real estate agent who is not identified in the information, began trying to sell the property to get her out of the large loan.  Anton and the real estate agent devised a plan whereby Anton would short sell the property to a person who was related to both Anton and the real estate agent.  Anton was to provide all the funds for the relation to purchase the property and Anton would continue to live in the property.  This would allow Anton to stay in the property for half of the amount she originally paid.

Anton and the relation signed a purchase contract with a sales price of $340,000.

As part of the short sale process, they both also signed a “Purchaser Eligibility Certification” which provided that the transaction was arm’s length, that the buyers, sellers and real estate agent did not have a family or business relationship, and there were no agreements by which the seller would remain in the property as tenant or regain ownership.

Anton stated in the short sale package that she had $13,000 in retirement assets when, in fact, she had over $316,000 in retirement assets.

The short sale was approved and completed based on the information and certification submitted.

Anton continued to reside in the property and, less than three years after the short sale, Anton purchased the property from the relation for $340,000, an amount far below the market value of the property in June 2104. The relation received a wire from Anton via the title company for the net proceeds of this sale and, that same day, the real estate agent and relation wired all of the sales proceeds into Anton’s bank account.  Anton then wrote a check to the real estate agent for $90,000. The wires and checks formed the basis of the charges for conspiracy to engage in monetary transactions derived from specified unlawful activity.

Lillian Marquez, 41, Stockton, California was sentenced by U.S. District Judge John A. Mendez to three years and one month in prison for conspiring to commit mortgage fraud.

Marquez pleaded guilty on June 14, 2016. On September 20, 2016, co-defendant Michael Keatts, 59, Stockton, California was also sentenced to three years and one month in prison for his role in the conspiracy. Both Marquez and Keatts were ordered to pay $193,134 in restitution to financial institutions harmed by their scheme.

According to court documents, from February of 2006, through at least August of 2012, Marquez and Keatts operated Colonial Home and Business Services in Stockton, California. Both defendants were licensed real estate agents who assisted clients in purchasing and selling homes. They both participated in supplying false information to mortgage lending institutions indicating that clients were employed by various businesses that the defendants set up and controlled. In fact, these clients were not employed by those businesses and their actual income from their true employment was far less than what was represented to lending institutions. To support these false claims, the defendants created and submitted fraudulent paystubs and tax documents falsely stating that their clients were so employed.

In addition, both defendants engaged in short sale fraud, in which they assisted clients facing default on their current loans to arrange for short sales of their properties. Unbeknownst to the lending institutions, the defendants arranged for the properties to be sold to straw buyers. The original owners would remain in the properties, and enjoy the benefits of the new loans that the lenders assumed were made to other individuals.

Acting U.S. Attorney Phillip A. Talbert announced the sentence.  The case was the product of an investigation by the Federal Bureau of Investigation and the Office of the Inspector General for the Department of Housing and Urban Development. Assistant United States Attorney Philip Ferrari prosecuted the case.

Naum Morgovsky was named in a criminal complaint filed in the United States District Court for the Northern District of California on August 24, 2016, alleging that he committed bank fraud in violation of 18 U.S.C. Section 1344.

The Affidavit in Support of the Criminal Complaint alleges that, in 2009 and 2010, Morgovsky used the name Gary Piper as a straw purchaser in the short sale of two condominiums in Hawaii for the benefit of his associate Mark Migdal who owned the properties and owed money on mortgages. Gary Piper died in 1969 at the age of 16.  Morgovsky transacted business, obtained false identification and opened bank accounts in the name of Gary Piper.

The Affidavit further alleges that, after the sale of the properties to Morgovsky, they remained under the control of Migdal,  For intstance, Midghal continued to collect the rent on the properties and transferred money to the Gary Piper account each month preceding the payment of Homeowner’s Association payments on the condominiums.  In 2016, Morgovsky transferred the properties to Migdal’s wife, using her maiden name.  The escrow instructions in one transaction stated “There will be no funds exchanged between the parties in connection with this escrow transaction.  Said consideration amount will be reimbursed to the buyer in full satisfaction of an unsecured note between the parties.”  The escrow instructions in the other transaction stated “Property is sold at the same price as it was purchased to seller a prom note.”    Four months later, Migdal’s wife transferred the properties to the Migdal family trust.

The conduct underlying the complaint was discovered by the SA during the investigation of Morgovsky and his wife for the unlawful export of night vision equipment that is controlled for export pursuant to the United States Munitions List and Commerce Control LiIst.

Morgovsky’s arraignment is scheduled for September 19, 2016.

Adel Afkarian, 42, Carlsbad, California, and Atef Afkarian, 40, Slidell, Louisiana, were sentencedto prison for their role in a fraudulent “debt elimination” scheme that purported to eliminate the mortgages on several million-dollar homes in San Diego, California.

U.S. District Judge John A. Houston sentenced Adel Afkarian to serve 18 months in custody and Atef Afkarian to serve 13 months.  In addition to the time in custody, the brothers who are both former real estate brokers, were both ordered to pay more than $5.5 million in restitution to the victims of the scheme.

To implement the scheme, the Afkarians identified underwater homeowners—including themselves—and began a process to make it appear as though the homeowners’ debts had been satisfied.  To do so, they recorded fraudulent deeds that purported to extinguish the large mortgage loans encumbering each property.  They then sold the properties to innocent purchasers, deceiving the buyers into paying the full purchase price to the Afkarians or their co-conspirators.  The mortgage lenders, unaware of the fraudulent documents recorded on title or unable to prevent the sale in time, were left unpaid.  Continue Reading…

Michelle M. Borzillo, 59, Bristow, Virginia, a former attorney with the Federal Deposit Insurance Corporation (FDIC) was sentenced  to 12 months and one day in prison, followed by two years of supervised release, for defrauding Wells Fargo Bank in connection with the sham short sale of her home to her live-in boyfriend.  She was also ordered to pay $288,497 in restitution and to forfeit the proceeds of her offense.

Borzillo pleaded guilty on November 17, 2015 to committing bank fraud.  According to court documents, the defendant was a senior attorney at the FDIC until September 2014.  In 2007, she purchased a home in Nokesville, Virginia, for $850,000, with mortgages totaling $807,500 from Wells Fargo Bank.  In 2013, she engineered the short sale of her Nokesville home to her boyfriend, who had been living with her at the property for several years.  Continue Reading…

Jaime Olaya Marroquin, a/k/a Jaime Olaya, 53, was sentenced to 30 months in prison, followed by three years of supervised release for arranging a fraudulent short sale of a 10-acre residential property in Southwest Ranches, Florida. Marroquin previously pled guilty to one count of bank fraud.  As part of his plea agreement, Olaya agreed to forfeit the 10-acre property involved in the transaction.

According to court documents, in 2005, Olaya purchased a 10-acre residential property in Southwest Ranches, Florida. In 2008, he quitclaimed ½ of the property to AJZ Investments (AJZ), a company he controlled. To avoid having to continue making payments on the $1.6 million mortgage debt, Olaya submitted a request to the bank for a short sale on the property while intentionally excluding the portion of the property he quitclaimed to AJZ. Continue Reading…

Dahianara Moran, 40, Methuen, Massachusetts, pleaded guilty to one count of conspiracy to commit bank fraud for to participating in a conspiracy to defraud banks and mortgage companies by engaging in sham “short” sales of residential properties in the Merrimack Valley of Massachusetts.

Moran conspired with others – including a Methuen loan officer and a Haverhill real estate agent who were not identified in the charging document – to defraud various banks via bogus short sales of homes in Haverhill, MassachusettsLawrence, Massachusetts, and Methuen, Massachusetts. Continue Reading…