Archives For Short Sale Fraud

Joseph Atias, 54, Great Neck, New York was sentenced to 40 months’ imprisonment and his wife Sofia Atias, 48, Great Neck, New York was sentenced to 8 months’ imprisonment, following their March 30, 2017 trial convictions for bank fraud and conspiracy to commit bank fraud in connection with the sale of their real property to Sacred Heart Academy, Hempstead, New York for athletic fields. They were also convicted of Medicaid fraud.

The Bank Fraud Scheme

At trial, the government’s evidence established that shortly before the sale of their property adjacent to Sacred Heart Academy for $925,000, the defendants sold the property in a short sale to Bank of America for $480,000 to discharge their mortgage debt.  In negotiating the short sale with the bank, the defendants and their co-conspirator attorney concealed Sacred Heart Academy’s pending offer and submitted a fraudulent contract of sale and other false documents representing that they did not have funds to pay off the mortgages in full.  As part of the fraudulent short sale, 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.

The Medicaid Fraud Scheme

The government’s evidence at trial established that between 2009 and 2015 the defendants fraudulently obtained Medicaid funds, by concealing their self-employment income and available cash resources, including trust fund monies and the $465,000 in proceeds from the bank fraud scheme.

As part of their sentences, United States District Judge Denis R. Hurley ordered the defendants to pay $465,965 in forfeiture and $49,956 in restitution.

Richard P. Donoghue, 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 (FBI), announced the sentence.

Joseph and Sofia Atias committed fraud schemes to try to get out from under mortgage debt and to fraudulently obtain Medicaid funds, essentially flaunting the laws to which we all must adhere,” stated United States Attorney Donoghue.  “This Office and our law enforcement partners will make every effort to ensure that those who would manipulate the system are called to account.

In a clear case of double dipping, the defendants convinced the lending institution of their eligibility to qualify for a short sale on their property, recruited a relative to serve as a straw buyer for the property, and profited from the funds of a subsequent sale of the property,” stated FBI Assistant Director-in-Charge Sweeney.  “At the same time they were running this scheme, they were also found to have engaged in significant fraud against the government. May today’s sentencing remind those who exploit government programs and manipulate gaps in the mortgage and banking sectors that they will face the error of their ways.”

The government’s case is being handled by the Office’s Long Island Criminal Division.  Assistant United States Attorneys Charles P. Kelly and Burton T. Ryan, Jr., are in charge of the prosecution.  Assistant United States Attorney Madeline O’Connor of the Office’s Civil Division is handling matters related to forfeiture.

James Thornton, Arizona, a real estate agent, was found guilty of Fraudulent Schemes and Theft after defrauding two banks in a short sale home scam.

In 2012, Thornton was the listing real estate agent for the owner of a home who was in default on both mortgages in Mesa, Arizona. Thornton sold the property via short sale to his parents’ LLC for $580,000. There had been other offers to purchase the home for hundreds of thousands of dollars more, including offers for $870,000, $707,000, and $650,000. Both banks approved the short sale price to Thornton’s parents not knowing about any of the other offers to purchase the property for significantly more.

Four days after Thornton’s parents purchased the home, Thornton became their listing agent and tried to sell the home “off the market” for $1,100,000. Thornton eventually sold the home to a third party for $1,050,000 cash approximately two months later. Thornton’s parents earned $540,722 in profit on the sale for $1,050,000, only having owned the home for two months.

In the course of his fraud scheme, Thornton made false statements and misrepresentations to bank representatives, potential buyers, and other real estate agents. To discourage buyers on the short sale and devalue the home, Thornton misrepresented the true number of rooms and bathrooms in the home, pointed out a code violation that didn’t exist to an appraiser, and removed all of the high end, custom appliances from the home. Thornton also falsely told the $1,050,000 cash buyer that the reason there was a substantial gap between his parents’ purchase price of $580,000 and the new list price of $1,100,000 was because there had been a “lien paid outside of escrow.”

Sentencing is set for March 16, 2018. Thornton faces 3 to 12.5 years in prison.

Attorney General Mark Brnovich made the announcement.

The FBI Phoenix Field Office investigated this case.

Assistant Attorney General Maura Quigley and Scott Blake prosecuted this case.

Gary P. DeCicco, 59, Nahant, Massachusetts, and Pamela M. Avedisian, 54, Nahant, Massachusetts, were charged in an indictment with one count of conspiracy to commit wire fraud and one count of wire fraud in connection with the “short sale” of a house in Nahant, Massachusetts. DeCicco was also charged with one count of conspiracy to commit bank fraud, one count of bank fraud, four counts of wire fraud and attempted wire fraud, and six counts of engaging in unlawful monetary transactions.

DeCicco has been in federal custody since he was charged in March 2017 with attempted extortion in connection with arranging and paying for a local business owner to be assaulted. DeCicco and Avedisian made an initial appearance in federal court in Boston and will be arraigned on Tuesday, January 16, 2018.

The indictment alleges that Avedisian owned a property in Nahant that was subject to a mortgage in excess of $1 million.  In October 2015, DeCicco and Avedisian allegedly conspired to defraud the mortgage holder by proposing the sale of the property for significantly less than the outstanding mortgage, in what is commonly referred to as a “short sale.”  By their very nature, short sales are intended to be arms-length transactions in which the buyers and sellers are unrelated and act independently, allowing sellers to cede their ownership of the property in exchange for the short-selling bank’s agreement to release them from their unpaid mortgage debt.  In order to get approval for the sale, DeCicco and Avedisian concealed their long-term romantic and business relationships from the loan servicing company and falsely represented that Avedisian could no longer make payments towards the mortgage on the property.  In fact, just two months before the “short sale” closed, Avedisian purportedly received $3.5 million from the sale of another asset to DeCicco.

The indictment also alleges that from November 2015 to September 2016, DeCicco and a co-conspirator falsified rent rolls and prepared fake leases, which they then provided to financial institutions in support of their applications for a $5.5 million loan secured by a commercial building in Peabody.  The indictment further alleges that between September 2016 and January 2017, DeCicco committed unlawful monetary transactions with the proceeds of the bank fraud scheme, and between February and December 2016, DeCicco engaged in a scheme to defraud multiple insurance companies using fake invoices and other documents to support his claims.

The charges of wire fraud and conspiracy, as well as bank fraud and conspiracy, provides for a sentence of no greater than 30 years in prison, three years of supervised release and a fine of $250,000.  The charges of wire fraud and attempted wire fraud provides for a sentence of no greater than 20 years in prison, three years of supervised release and a fine of $250,000.  The charge of engaging in unlawful monetary transactions provides for a sentence of no greater than 10 years in prison, three years of supervised release and a fine of $250,000.

United States Attorney Andrew E. Lelling; Harold H. Shaw, Special Agent in Charge of the Federal Bureau of Investigation, Boston Field Division; and Joel P. Garland, Special Agent in Charge of the Internal Revenue Service’s Criminal Investigation in Boston, made the announcement today.  Assistant U.S. Attorney Kristina E. Barclay of Lelling’s Public Corruption and Special Prosecutions Unit is prosecuting the case.

 

Jamie Matsuba, 33, Chatsworth, California and her father, Thomas Matsuba, 67, Chatsworth, California, managers of foreclosure rescue companies, were both convicted today for their roles in a foreclosure rescue scheme.

They were convicted after a one-week trial of one count of conspiracy to commit wire fraud, making false statements to federally insured banks and committing identity theft. In addition, both defendants were convicted of one count of making false statements to federally insured banks.

According to evidence presented at trial, from January 2005 to August 2014, Jamie Matsuba, Thomas Matsuba and others engaged in a scheme to defraud financially distressed homeowners by offering to prevent foreclosure on their properties through short sales. Instead, the conspirators rented out the properties to third parties, did not pay the mortgages on the properties, and submitted false and fraudulent documents to mortgage lenders and servicers to delay foreclosure. The evidence further established that the conspirators obtained mortgages in the names of stolen identities. In addition, the defendants used additional tactics, including filing bankruptcy in the names of distressed homeowners without their knowledge and fabricating liens on the distressed properties, the evidence showed.

Sentencing has been scheduled for May 14, 2018 at 10 a.m., before U.S. District Judge R. Gary Klausner, who presided over the trial.

Three other defendants have been charged in this matter. Defendant Dorothy Matsuba, 66, Chatsworth, California, who is the mother of Jamie Matsuba and wife of Thomas Matsuba, and her daughter, Jane Matsuba-Garcia, 41, Camarillo, California, previously pleaded guilty and are awaiting sentencing. Defendant Young Park, Los Angeles, California, is a fugitive. In addition, in related cases, Jason Hong, 36, Chatsworth, California and Ryu Goeku, 47, Canoga Park, California, previously pleaded guilty and are awaiting sentencing.http://www.mortgagefraudblog.com/?s=Jamie+Matsuba

Acting Assistant Attorney General John P. Cronan of the Justice Department’s Criminal Division, Assistant Director in Charge Paul D. Delacourt of the FBI’s Los Angeles Division, Special Agent in Charge R. Damon Rowe of Internal Revenue Service Criminal Investigation’s (IRS-CI) Los Angeles Field Office, Deputy Inspector General for Investigations Rene Febles of the Federal Housing Finance Agency-Office of Inspector General (FHFA-OIG), and Sheriff Jim McDonnell of the Los Angeles County Sheriff’s Department made the announcement.

This case was investigated by the FBI, IRS-CI, FHFA-OIG and the Los Angeles County Sheriff’s Department. Trial Attorney Niall M. O’Donnell, Senior Litigation Counsel David A. Bybee and Trial Attorney Jennifer L. Farer of the Criminal Division’s Fraud Section are prosecuting the case. Senior Trial Attorney Nicholas Acker previously worked on the

Individuals who believe that they may be a victim in this case should visit the Fraud Section’s Victim Witness website for more information.

Christopher Goodson, 44, Newark, New Jersey, a New Jersey attorney and Anthony Garvin, 47, Jersey City, New Jersey, are charged by complaint with one count of conspiracy to commit bank fraud. They were charged with running a large-scale mortgage fraud scheme that involved dozens of properties in Jersey City, Clifton, Union, and elsewhere in New Jersey and caused losses of more than $30 million.

According to the Complaint:

From January 2011 through August 2017, Goodson, Garvin, and others engaged in a short sale mortgage fraud conspiracy targeting various New Jersey properties with mortgages that were in default.

As part of the scheme, the conspirators arranged simultaneous fraudulent transactions on the same target property. In the first transaction, which involved the sale by the current owner, the conspirators convinced the financial institution holding the mortgage to accept the sale of the target property at a loss, usually to a buyer who was secretly a conspirator or an entity controlled by the conspiracy.

In the second transaction, the conspirators flipped the same target property from the first buyer to a second buyer, who typically obtained a mortgage from another financial institution using false loan applications, pay stubs, bank account statements and title reports provided by members of the conspiracy. As a result, the second transaction frequently closed for significantly more or even double the price of the first transaction.

Goodson, Garvin, and others allegedly rigged the short sale process at each step in order to maximize the difference in price between the two transactions and keep the victim financial institutions from detecting the fraud.

For instance, Goodson, an attorney, concealed the fact that he played multiple-roles in the short sale transactions, including allegedly generating false preapproval letters from a New Jersey corporation he owned that purported to be a short-term lending company operating out of California. These letters were used to deceive banks into believing that the purchaser – typically a conspirator or entity controlled by Goodson – had the credit necessary for the transaction. Goodson also negotiated the fraudulent short sales with the banks, generated phony deeds that backdated the closing date of the first transactions, and even served as the closing attorney during some of the short sales.

Garvin was a real estate agent and investor who allegedly coordinated fraudulent transactions as part of the scheme.

The conspirators disbursed the funds into various accounts they controlled to conceal their illegal activities and split the profits. In total, the conspiracy defrauded financial institutions out of more than approximately $30 million.

The conspiracy to commit bank fraud count is punishable by a maximum potential penalty of 30 years in prison and a $1 million fine.

Both defendants were arrested this morning and are expected to appear this afternoon before U.S. Magistrate Judge Leda Dunn Wettre in Newark federal court.

Acting U.S. Attorney Fitzpatrick made the announcement and credited special agents of the FBI, under the direction of Special Agent in Charge Timothy Gallagher in Newark, postal inspectors of the U.S. Postal Inspection Service, under the direction of Acting Inspector in Charge Joseph W. Cronin, and special agents of the Federal Housing Finance Agency (FHFA) – Office of Inspector General, under the direction of Special Agent in Charge Steven Perez in Newark, with the investigation

The government is represented by Assistant U.S. Attorneys David Feder and Zach Intrater of the U.S. Attorney’s Office Economic Crimes Unit in Newark.

The charge and allegations contained in the complaint are merely accusations, and the defendants are considered innocent unless and until proven guilty.

 

John Ballard, 55, Atwater, California, Judy (Calderon) Ballard, 54, Atwater, California, Sherry Herbert, 54, Fresno, California and Andrea Todd, 53, Fresno, California were charged on October 12, 2017 with conspiracy, wire fraud and bank fraud in connection with a fraudulent short-sale scheme.

According to the court documents, Ballard and Calderon were both licensed real estate salespersons and they owned a home in Atwater, California which was their primary residence. When the couple defaulted on a loan on the property, they asked permission to short-sell the property to Herbert and Todd, but had no intention of actually transferring the property to them. They used a series of false and fraudulent representations to obtain approval from banks to conduct this transaction and caused these financial institutions to approve the charge-off of funds and the financing for the short-sale.

Herbert and Todd were arraigned today before U.S. Magistrate Erica P. Grosjean. Ballard and Calderon’s arraignments are currently set for November 29, 2017, before U.S. Magistrate Judge Stanley A. Boone.

The announcement was made by United States Attorney Phillip A. Talbert.

This case is the product of an investigation by the Merced County District Attorney’s Office and the Federal Bureau of Investigation. Assistant United States Attorneys Michael G. Tierney and Christopher D. Baker are prosecuting the case.

If any of the four defendants are convicted, they face a maximum statutory penalty of 30 years in prison and a $1,000,000 fine. Any sentence, however, would be determined at the discretion of the court after consideration of any applicable statutory sentencing factors and the Federal Sentencing Guidelines, which take into account a number of variables. The charges are only allegations; the defendants are presumed innocent until and unless proven guilty beyond a reasonable doubt.

 

Mahendra Prasad, 55, Fremont, California, was sentenced by to 15 months in prison and ordered to pay $328,000 in restitution for his role in a mortgage fraud scheme.

On May 22, 2017, Prasad pleaded guilty to one count of mail fraud affecting a financial institution. Co-defendants Jyoteshna Karan, Praveen Singh, Sunita Singh and Nani Isaac are scheduled for a jury trial in U.S. District Court in Fresno, California, on Monday, December 11, 2017.

According to court documents, in 2006, Prasad caused loan application packages that contained false statements to be submitted to a mortgage lender in order to buy a property in Sacramento. The false statements included statements concerning Prasad’s employer, income, and purported intention to occupy the property as his primary residence. Following his fraudulent purchase, Prasad, with the assistance of others, rented the property as Section 8 housing and collected rents. Prasad did not reside in or occupy the property as his primary residence.

In 2013, Prasad applied to a bank to sell the property to another person at a loss to the bank. He falsely claimed to the bank that the “short” sale was an “arm’s length” transaction, and that neither he nor the buyer were related by commercial enterprise. Prasad’s conduct caused a loss to a financial institution of approximately $328,000.

Prasad was sentenced by U.S. District Judge Lawrence J. O’Neill.  The sentence was announced by U.S. Attorney Phillip A. Talbert.  The case was the product of an investigation by the Federal Bureau of Investigation, the Stanislaus County District Attorney’s Office, the Federal Housing Finance Agency Office of Inspector General, and the Federal Deposit Insurance Corporation Office of Inspector General, with assistance from the Office of the Special Inspector General for the Troubled Asset Relief Program. Assistant U.S. Attorneys Henry Z. Carbajal III and Christopher D. Baker are prosecuting the case.

 

 

Dustin M. Lewis, 42, Henderson, Nevada and Brian Sorensen, 49, Las Vegas, Nevada, were each charged with one count of conspiracy to commit bank fraud and one count of bank fraud arising from a real estate scheme. If convicted, Lewis and Sorenson each face a statutory maximum penalty of 30 years in prison and up to a $1,000,000 fine.

According to allegations made in the indictment, from about August 15, 2011 to about January 17, 2014, Lewis and Sorensen conspired with each other to defraud OneWest Bank. The defendants allegedly devised and executed a scheme to avoid foreclosure so that Lewis could retain ownership of a 5,331 square foot, five-bedroom Henderson, Nevada home. As part of the scheme, Lewis submitted a fraudulent short sale application to the bank, which induced the bank to allow Lewis to sell the property to Sorensen’s family member for much less than Lewis owed under the existing mortgage loan. It is further alleged that Lewis did not disclose that he and Sorensen agreed that Lewis would continue to reside at the property and Sorensen would later cause the property to be sold back to Lewis free of the bank’s mortgage loan. It is further alleged that on or about July 21, 2017, Lewis then listed the property for sale at a price of $1,195,000.

Acting U.S. Attorney Steve W. Myhre for the District of Nevada made the announcement.  The case is being investigated by the FBI, the IRS-Criminal Investigation, with assistance from the U.S. Department of Interior-Office of the Inspector General. The case is being prosecuted by Assistant U.S. Attorney Patrick Burns.

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.