Archives For Short Sale Fraud

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…

Christopher Brecciano, 37, of Stamford, Connecticut was sentenced  to 14 months of imprisonment, followed by five years of supervised release, for conspiring to defraud financial institutions through an extensive mortgage fraud scheme that involved dozens of properties in Fairfield County, Connecticut.

According to court documents and statements made in court, between 2006 and 2010, Brecciano, while working as an associate at a Stamford law firm, participated in mortgage fraud conspiracy that involved the purchase of numerous single and multi-family properties, primarily in Bridgeport, Norwalk and Stamford, Connecticut. Brecciano acted as a closing attorney for at least 50 mortgage loan transactions in which materially false information was provided to mortgage lenders by Brecciano or his co-conspirators. The fraudulent information included false verifications of down payments for real estate transactions, false deeds, and false HUD-1 Forms. In many of the transactions, Brecciano knew that the borrower was a “straw buyer,” and that other individuals intended to control the property and collect rent from the property. In many transactions, Brecciano distributed mortgage loan funds to the straw buyer and other co-conspirators at the closing. Continue Reading…

Christopher Nelson, 46, Henderson, Nevada, and Niket Kulkarni, 38, Los Angeles, California were indicted by the Clark County, Nevada, Grand Jury, along with Thomas J. Adams,  Robyn D. Reese, and James Sheridan Reese, in connection with a short sale rescue fraud scheme. The charges include racketeering, pattern of mortgage lending fraud, theft, theft from a person over the age of 60, and failure to place a mortgage fee of over $1,000 in escrow. The defendants operated their business, the American Equity Foundation, between July 2012 and May 2013.

According to the indictment, the defendants are accused of soliciting customers to participate in a short sale program purportedly associated with the federal government called the Neighborhood Stabilization Plan. Defendants falsely represented to their clients that their business could facilitate the short sales of customers’ homes to investors. Clients were also told that they could then lease their homes from the investors for two to four years, before having the opportunity to repurchase those homes at a cost of 90-100% of the home’s market value. Through these representations, the defendants are alleged to have unlawfully obtained more than $133,000 from their clients.

Continue Reading…

George Bussanich Sr., 56, Park Ridge, New Jersey, and his son, George Bussanich Jr., 35, Upper Saddle River, New Jersey, were arrested for engaging in a short sale buy-back scheme that used straw buyers and short sales on two Bergen County, New Jersey, properties to defraud mortgage lenders out of hundreds of thousands of dollar.  Each were charged by indictment with one count of conspiracy to commit bank fraud and two counts of bank fraud. They are scheduled to appear this afternoon before U.S. Magistrate Judge Cathy L. Waldor in Newark federal court.   Continue Reading…