Archives For Straw Buyer

David W. Schwarz, 60, Orlando, Florida, the former  Chief Financial Officer of Cay Clubs Resorts and Marinas (Cay Clubs), was sentenced to 40 years in prison.  Schwarz was convicted at trial by a federal jury on March 3, 2017 of conspiracy to commit bank fraud, two counts of bank fraud, and one count of interference with the administration of the IRS.  Chief U.S. District Judge K. Michael Moore, sitting in Key West, sentenced Schwarz to 40 years in prison. Judge Moore found that the criminal conduct resulted in $303 million in fraudulent proceeds and approximately $170 million in victim losses. A restitution hearing has been set for July 10, 2017, in Key West.

According to evidence at trial, Schwarz was the Vice President and Chief Financial Officer of Cay Clubs, which operated purported luxury resorts in the Florida Keys, Clearwater, Orlando, Las Vegas, and elsewhere. Between 2004 and 2008, Cay Clubs grew to more than 1,000 employees and became one of the largest employers in the Florida Keys. Schwarz, who was the one-third owner, and Fred Davis Clark, Jr., a/k/a Dave Clark,  59, formerly a resident of Tavernier, Florida, who was the two-thirds owner, began Cay Clubs in 2004 with fraudulent sales of Cay Clubs units to insiders, using money from Cay Clubs bank accounts to fund the cash to close for purchases, while obtaining mortgage financing from lending institutions. These fraudulent sales were used in marketing materials to falsely show demand for Cay Clubs units and to inflate prices, as Cay Clubs was in reality purchasing units from itself. Proceeds of these sales were diverted to Schwarz and Clark.

Trial evidence established that Cay Clubs raised more than $300 million from approximately 1,400 investors, who purchased units in Cay Clubs developments. Schwarz and Clark failed to remodel the dilapidated properties as they promised investors, while taking millions of dollars out of the company for their own benefit. During the operation of Cay Clubs from 2004 through 2008, Schwarz and Clark diverted more than $30 million in proceeds for themselves, including millions of dollars in cash transfers that were used to purchase property and other businesses, including a gold mine, a rum distillery, aircraft, and a coal reclamation business.

Trial evidence further showed that as Cay Clubs faced dwindling sales due to its failure to upgrade the dilapidated properties in 2006, Schwarz, Clark, and others engaged in additional fraudulent sales of Cay Clubs units to insiders, including Clark’s family members. These mortgage loans were used to prevent Cay Clubs from defaulting on commercial debts. The documents used to obtain these mortgages included falsified signatures and notary attestations, and had Cay Clubs acting as the seller while Schwarz provided the cash to close so that mortgage loans could be obtained to fund the sales.

During the course of this scheme, Schwarz and Clark did not file any corporate tax return for $74 million in income generated by the Cay Clubs entities. Furthermore, neither Schwarz or Clark filed any individual tax return for these years until after an investigation of Cay Clubs by the U.S. Securities and Exchange Commission. In 2010 and 2011, Schwarz filed false individual tax returns for tax years 2004, 2005 and 2006, respectively, in which he substantially underreported his income for these tax years and concealed his receipt of millions of dollars in proceeds.

On December 11, 2015, Clark was convicted by a federal jury in connection with related bank fraud charges and obstruction of the SEC. He was sentenced on February 21, 2016, to 40 years in prison by U.S. District Judge Jose E. Martinez. Former Cay Clubs sales executives Barry Graham, 59, formerly of Ft. Myers, Florida,and Ricky Lynn Stokes, 54,formerly of Ft. Myers, Florida, previously pled guilty to conspiracy to commit bank fraud in related cases and were sentenced to 60 months, and 30 months, respectively.

Benjamin G. Greenberg, Acting United States Attorney for the Southern District of Florida, Kelly R. Jackson, Special Agent in Charge, Internal Revenue Service, Criminal Investigation (IRS-CI), and Timothy Mowery, Special Agent in Charge, Federal Housing Finance Agency, Office of Inspector General (FHFA-OIG), made the announcement. Mr. Greenberg commended the investigative efforts of the IRS-CI and FHFA-OIG, and the extensive assistance of the SEC’s Miami Regional Office. This matter was prosecuted by Assistant U.S. Attorneys Jerrob Duffy, James V. Hayes, and Alison Lehr.

Karim Akil, also known as Scott Kinney, 50, Vallejo, California, was sentenced to 120 months in prison for conspiracy to commit mortgage fraud and money laundering.  Akil pled guilty on July 10, 2012, admitting his role as the organizer and leader of a mortgage fraud scheme.

According to Akil’s plea agreement, he knowingly conspired with others to commit wire fraud, involving the purchase of properties located in the Northern and Eastern Districts of California.  Akil acknowledged he directed co-defendants to create and submit loan applications that contained materially false information to financial institutions.  Akil acknowledged that the conspiracy involved using the names of fictitious persons and straw buyers, the creation of purchase contracts that reflected inflated sale properties above the original sales price, and the submission of fraudulent loan applications for 100 percent financing based upon the properties’ inflated purchase prices.  Akil agreed that more than 18 properties were involved in the conspiracy to defraud, and agreed that he was an organizer and leader of five or more participants in the conspiracy.  Akil directed an escrow officer to distribute “profits” to co-conspirators and to businesses that he owned or controlled, including Hiddenbrooke Mortgage and Marsh Group.

Mr. Akil enjoyed a lavish lifestyle, with outrageous expenditures,” said Michael T. Batdorf, Special Agent in Charge, IRS-CI. “Akil left a path of destruction, from properties that went into default and foreclosure, to straw buyers whose credit was ruined, to an escrow company that went out of business.  Although this sentence cannot reverse the damage caused by Akil and his co-conspirators, it highlights the ongoing commitment of IRS-CI and our law enforcement partners to hold accountable those involved in these types of crimes.”

On October 29, 2009, a federal grand jury indicted Akil and six co-conspirators, for their alleged roles in this extensive scheme.  For his part, Akil was charged with one count of conspiracy to commit mail fraud, in violation of 18 U.S.C. § 1349, 34 counts of wire fraud, in violation of 18 U.S.C. § 1343, and 16 counts of money laundering, in violation of 18. U.S.C. § 1957(a).  On July 10, 2012, Akil pleaded guilty to the conspiracy charge and one count of money laundering.

While out on pretrial release, between late 2012 and early 2013, Akil became involved in a series of new acts, which involved violating the terms of his plea agreement.  During the sentencing hearing, the Honorable Phyllis J. Hamilton, Chief U.S. District Judge, found that Akil breached his plea agreement in seven different ways.  These acts constituting breaches of the plea agreement included convincing a San Francisco property owner to take out a loan against a valuable property she had inherited.  The lender foreclosed on the property after Akil received $493,514 in net proceeds from the loan and loan payments were not made.  In a second alleged scheme, Akil also defrauded a victim in Southern California by promising to provide a $1.1 million stand-by letter of credit.  Akil received $197,600 in fraudulent proceeds from that victim.  That victim never received a legitimate letter of credit and never got his money back from Akil or anyone else involved in the alleged scheme.  In a third alleged scheme, Akil also forged numerous documents to gain control of a Southern California property and did a cash-out finance without the owner’s knowledge or permission.  Akil channeled almost $270,000 in net proceeds from the alleged fraudulent activity in that scheme through his other financial accounts, and spent all the money.

Judge Hamilton emphasized at the sentencing hearing that “individuals’ lives [  ] are ruined or significantly impacted by people who are gaming the system in some way, who are gaming the individuals.” Judge Hamilton found Akil’s “behavior to be entirely disturbing and suggestive of not only a failure to accept responsibility for his criminal conduct but a level of incorrigibility.”   The judge also stated, “I ponder whether or not any sentence will deter Mr. Akil.”  Judge Hamilton voice her concern that Akil’s statements to the Court during the sentencing hearing did not reflect true remorse for having ruined people’s financial lives.

In additional to the prison term, Judge Hamilton ordered Akil to serve a three-year period of supervised release, and ordered him to submit his person, residence and any property under his control to a search by Probation Officers or law enforcement officers at any time, with or without cause.  Akil will begin serving the sentence immediately.  The restitution hearing, scheduled for July 12, 2017, will determine the amounts Akil will be ordered to pay to the victims of his crimes.

Co-defendants Amy Schloemann (Akil’s former wife), Darnell Thomas, and Louisa Wonda Kidd each pleaded guilty to related crimes and were sentenced for their respective roles in the scheme.  On June 12, 2013, Schloeman was sentenced to 36 months for her role in the scheme and on November 7, 2012, Thomas was sentenced to 36 months of imprisonment for his role in the scheme.  On November 20, 2013, Kidd received a sentence of 36 months of probation for her role.  Co-defendants Michelle McGuire and Kashka Clay have entered guilty pleas and are scheduled to be sentenced on June 28, 2017.

U.S. Attorney Brian J. Stretch and Internal Revenue Service, Criminal Investigation (“IRS-CI”), Special Agent in Charge Michael T. Batdorf made the investigation. Assistant U.S. Attorney Christina McCall prosecuted the case with the assistance of Allen Williams, Noble Hughes, Vanessa Vargas, and Kathleen Turner.  The prosecution is the result of an investigation by IRS-CI with the assistance of the Alameda County District Attorney’s Office.

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.

Joseph W. Witkowski, 70, former New Jersey lawyer, Flemington, New Jersey, was sentenced to 48 months in prison for participating in a conspiracy that caused lenders to release $40.8 million based on fraudulent mortgage loan applications and laundered the proceeds of the fraud.  Witkowski previously pleaded guilty to an indictment charging him with one count each of conspiracy to commit wire fraud and conspiracy to commit money laundering. U.S. District Judge Joseph H. Rodriguez imposed the sentence in Camden federal court.

According to documents filed in this case and statements made in court:

Witkowski and his conspirators located oceanfront condominiums overbuilt by financially distressed developers in Wildwood Crest, New Jersey; premier real estate in vacation destinations in Georgia and South Carolina; and properties in New Jersey owned by financially distressed homeowners facing foreclosure. They then recruited “straw buyers” – people with good credit scores but lacking the financial resources to qualify for mortgage loans – to purchase those properties.

Witkowski and his conspirators created false documents, including fake W-2 forms, income tax returns, investment statements, and rental agreements, to make the straw buyers appear more creditworthy than they actually were. They also established numerous telephone lines for companies owned by some of the conspirators so that when a lender contacted the telephone number, the conspirators could falsely verify that a straw buyer was employed by the company listed on his or her fraudulent loan application.

Witkowski also caused fraudulent mortgage loan applications in the name of the straw buyers and supporting documents, which attributed to the straw buyers inflated income and assets, to be submitted to mortgage lenders. Once the loans were approved and the mortgage lenders sent the loan proceeds in connection with real estate closings on the properties, Witkowski and his conspirators had some of the funds wired or checks deposited into various accounts that he and his conspirators controlled.

In addition to the prison term, Judge Rodriguez sentenced Witkowski to three years of supervised release and ordered restitution of $13,105570. As part of his plea agreement, he must forfeit $2,412,899, representing the proceeds of the fraud.

U.S. Attorney Paul J. Fishman announced the sentence.

U.S. Attorney Fishman credited special agents of the FBI, under the direction of Special Agent in Charge Timothy Gallagher; and special agents of IRS-Criminal Investigation, under the direction of Special Agent in Charge Jonathan D. Larsen, with the investigation leading to today’s sentencing.

The government is represented by Assistant U.S. Attorney Diana Carrig of the U.S. Attorney’s Office in Camden.

Defense counsel: Maggie Moy Esq., Assistant Federal Public Defender, Camden

Michael Gerard Camphor, 60, Baltimore, Maryland, was sentenced to 27 months in prison, followed by three years of supervised release on charges arising from the fraudulent purchase of four properties in Baltimore, Maryland, using fraudulent loan documentation and straw purchasers, resulting in losses of over $735,000. Camphor was also ordered to pay restitution of $735,363.47 and to forfeit $962,274.95.

According to Camphor’s plea agreement and other court documents, since 2002, co-conspirator Andreas E. Tamaris, 46, Bel Air, Maryland, purchased, renovated, and then resold distressed row houses in Baltimore City, Maryland, primarily in the Highlandtown neighborhood. Camphor had worked as a real estate agent for a company and also operated a real estate consulting business called Ron Gerard LLC, a/k/a Ron Gerard & Associates.

From approximately February 2008 to July 2009, Camphor and his co-conspirators, including Cecil Sylvester Chester, 70, Mitchellville, Maryland, found buyers for Tamaris’ properties and for other property owners. They sought potential buyers who were inexperienced with residential real estate transactions to act as straw purchasers. Camphor and his co-conspirators advised these “straw purchasers,” who lacked the funds needed to pay the down payment and closing costs, that they didn’t need to contribute these funds to buy the properties. Because the straw purchasers also lacked the earnings to keep up the mortgage payments, the conspirators typically promised that they would place tenants in the properties whose rent payments would cover the monthly mortgage payments after the transactions closed. The conspirators promised to collect the rent and make the mortgage payments.

The government contended at sentencing that Camphor and his co-conspirators set the purchase price for the properties to exceed their actual fair market value, thereby generating excess proceeds from the transactions from which they could profit. The conspirators provided false information about the straw purchasers’ employment, income and financial assets to the mortgage loan brokers to enable the straw purchasers to qualify for home mortgage loans. The conspirators falsely indicated to the mortgage loan brokers that the straw purchasers each intended to use the property as their primary residence following the purchase. Tamaris and other individuals supplied the funds needed for the down payment and closing costs on each of the transactions, and were in turn reimbursed from the loan proceeds at settlement.

One of the conspirators brought the straw purchaser to the closing and then caused the straw purchaser to falsely sign certifications in the closing documents affirming that the property was to be used as the primary residence, and that no portion of the down payment and closing costs were borrowed. Following the settlement on each transaction in which they participated, Camphor and his co-conspirators received substantial payments drawn from the proceeds of the loan. Few, if any, payments were made towards the mortgages.

Camphor was integrally involved in the fraud scheme by which four of the properties handled by the conspirators were sold and financed: 126 S. Curley Street, Baltimore, Maryland; 1720 W. Pratt Street, Baltimore, Maryland; 322 S. Robinson Street, Baltimore, Maryland; and 8020 Gough Street, Baltimore, Maryland. All four properties went into foreclosure, resulting in a loss of at least $735,000.

Camphor has agreed to forfeit property retained or obtained as a result of the fraudulent conspiracy, including 1619 W. Baltimore Street, Baltimore, Maryland; 2040 Linden Avenue, Unit A, Baltimore, Maryland; and 1610 N. Smallwood Street, Baltimore, Maryland.

Chester previously pleaded guilty to the same charges and was sentenced to two years in prison and was ordered to pay restitution of at least $1.483 million.

In related proceedings, Tamaris, Christopher A. Kwegan, 59, Randallstown, Maryland, and Alexander Sivels, II, 32, Baltimore, Maryland, previously pleaded guilty to their roles in this, or related mortgage fraud schemes. Tamaris was sentenced to 15 months in prison and was ordered to pay $1,229,206.28 in restitution. Sivels and Kwegan were each sentenced to 27 months in prison. Judge Bredar ordered Sivels to pay restitution of $1,317,314.35, and ordered Kwegan to pay restitution of $530,641.27.

U.S. District Judge James K. Bredar sentenced Camphor. The sentence was announced by United States Attorney for the District of Maryland Rod J. Rosenstein; Special Agent in Charge Gordon B. Johnson of the Federal Bureau of Investigation, Baltimore Field Office; Special Agent in Charge Bertrand Nelson of the U.S. Department of Housing and Urban Development Office of Inspector General; and Special Agent in Charge Brian Murphy of the United States Secret Service – Baltimore Field Office.

United States Attorney Rod J. Rosenstein commended the FBI, HUD OIG – Office of Investigations and the U.S. Secret Service for their work in the investigation. Mr. Rosenstein thanked Assistant U.S. Attorney Jefferson M. Gray, who prosecuted the case.

James Bayfield, 44, Queens, New York, a self-described mortgage specialist, was convicted by a federal jury in Brooklyn, New York, on all four counts charging bank fraud and conspiracy to commit wire fraud and bank fraud for his role in defrauding mortgage lending institutions and large financial institutions, including Amtrust Bank (Amtrust), Bank of America N.A. (BOA) and J.P. Morgan Chase & Co. (Chase), in a multi-million-dollar mortgage fraud scheme. The jury’s verdict followed a two-week trial before United States District Judge Eric N. Vitaliano. Bayfield is the sixth and final defendant convicted in the case.

The evidence at trial established that Bayfield, together with others, caused mortgage loan applications with false information to be submitted to lending institutions in connection with the purchase of residential properties located within the Eastern District of New York. These applications contained fraudulently inflated purchase prices, as well as false information about the assets and income of the purchasers of the properties, many of whom were being compensated as part of the scheme to act as straw purchasers. The defendant and his co-conspirators also provided false down payment checks to make it appear as if the straw purchasers and the other borrowers had made down payments in connection with the purchase of the properties, which was a condition of the lending institutions for issuing the mortgage loans.

To carry out their scheme, the defendant conducted simultaneous purchases and sales of the properties, sometimes called “flips,” in an effort to conceal their criminal involvement and to inflate the value of the properties. For example, a conspirator would purchase a property from a homeowner. That same day, the conspirator would sell the property to a straw purchaser at an inflated value. The defendant and his conspirators, through the use of backdated and falsified documents, concealed from the lending institutions the fact that the purchase and sale had occurred on the same day and made it appear as if the transaction between the homeowner and the conspirator had occurred over 60 days prior to the sale from the conspirator to the straw purchaser.

As a result of the false applications and appraisals, the lending institutions were fraudulently induced to issue millions of dollars of mortgage loans secured by properties that had inflated appraisal values to individuals who had insufficient income and assets to qualify for the mortgage loan. In many instances, the straw purchasers and the other borrowers failed to make required mortgage payments to the lending institutions, which caused the mortgage loans to be placed into default status.

When sentenced by United States District Judge Eric N. Vitaliano, Bayfield faces a sentence of up to 20 years in prison.

The guilty verdict was announced by Robert L. Capers, United States Attorney for the Eastern District of New York. Mr. Capers thanked the Federal Bureau of Investigation (FBI); the Federal Housing Finance Agency, Office of Inspector General (FHFA-OIG); the U.S. Department of Housing and Urban Development, Office of Inspector General (HUD-OIG); the Federal Deposit Insurance Corporation, Office of Inspector General (FDIC-OIG); and the New York State Department of Financial Services (DFS) for their hard work and dedication over the course of this multi-year investigation and prosecution.The government’s case was prosecuted by the Office’s Business and Securities Fraud Section. Assistant United States Attorneys David Pitluck, Mark Bini and Michael Keilty are in charge of the prosecution.

 

Cecil Sylvester Chester, 70, Mitchellville, Maryland was sentenced to two years in prison, followed by three years of supervised release, for a mortgage fraud scheme involving the fraudulent purchase of seven properties in Baltimore, Maryland using fraudulent loan documentation and straw purchasers, resulting in losses of over $1.4 million.

Chester worked as an accountant from an office located on New Hampshire Avenue in Hyattsville, Maryland.  Co-conspirator Andreas E. Tamaris, 46, Bel Air, Maryland,   purchased, renovated, and then resold distressed row houses in Baltimore City, primarily in the Highlandtown area. Co-conspirators Michael Gerard Camphor, 60, Baltimore, Maryland, was a real estate agent and Christopher A. Kwegan, 59, Randallstown, Maryland,was a real estate agent and general contractor.

According to his guilty plea, from February 2008 to July 2009, Chester and his co-conspirators, found buyers for Tamaris’ properties and for other property owners. Chester persuaded individuals, who were inexperienced with residential real estate transactions and who lacked the funds needed to pay the down payment and closing costs, to purchase Baltimore row houses owned by Tamaris or otherwise located by the conspirators. Chester advised these “straw purchasers” that they didn’t need to contribute funds for the down payment or closing costs to buy these properties. Chester also advised that he would place tenants in the properties whose rent payments would cover the monthly mortgage payments after the transactions closed, and that Chester would collect the rent and make the mortgage payments.

Chester and his co-conspirators set the purchase price for the properties to exceed their actual fair market value, thereby generating excess proceeds from the transactions from which they could profit.  For example, when Kwegan located a house he wanted to sell, he sought assistance from Chester and real estate agent/consultant Camphor, who were already operating a mortgage fraud scheme. Chester, Kwegan and Camphor set the price of a row house in Baltimore at $250,000, rather than the actual market price of approximately $75,000. Kwegan derived over $100,000 in proceeds from the sale of this home to a straw purchaser and paid another $40,000 to Chester for his assistance.

Chester, Camphor, and others recruited buyers to purchase houses, knowing that they did not qualify for the home mortgages.  The conspirators provided false information about the straw purchasers’ employment, income and financial assets, as well as fraudulent supporting documentation to the mortgage loan brokers to enable the straw purchasers to qualify for home mortgage loans. The conspirators falsely indicated to the mortgage loan brokers that the straw purchasers each intended to use the property as their primary residence following the purchase. Tamaris and other individuals supplied the funds needed for the down payment and closing costs on each of the transactions, and were in turn reimbursed from the loan proceeds at settlement.

Chester brought the straw purchasers to the closing, and then caused the straw purchasers to falsely sign certifications in the closing documents affirming that they intended to use the properties as their primary residence and that no portion of the down payment and closing costs were borrowed.  Following the settlement on each transaction in which they participated, Chester and the other conspirators received substantial payments drawn from the proceeds of the loan.

Few, if any, payments were made towards the mortgages.  The seven properties in which Chester was involved all went into foreclosure, resulting in a loss of at least $1.483 million.

Chester was sentenced by U.S. District Judge James K. Bredar. Judge Bredar also ordered Chester to pay restitution of at least $1.483 million, with the exact amount to be determined by the Court.

In related proceedings, Tamaris, Camphor, Kwegan, and Alexander Sivels, II, 32, Baltimore, Maryland, previously pleaded guilty to their roles in this, or related mortgage fraud schemes.  Tamaris was sentenced to 15 months in prison and was ordered to pay $1,229,206.28 in restitution.  Sivels and Kwegan were each sentenced to 27 months in prison.  Judge Bredar ordered Sivels to pay restitution of $1,317,314.35, and ordered Kwegan to pay restitution of $530,641.27. Camphor is scheduled to be sentenced on December 19, 2016.

The sentences were announced by United States Attorney for the District of Maryland Rod J. Rosenstein; Special Agent in Charge Gordon B. Johnson of the Federal Bureau of Investigation; Special Agent in Charge Bertrand Nelson of the U.S. Department of Housing and Urban Development Office of Inspector General; and Special Agent in Charge Brian Murphy of the United States Secret Service – Baltimore Field Office.

United States Attorney Rod J. Rosenstein commended the FBI, HUD OIG – Office of Investigations and the U.S. Secret Service for their work in the investigation.  Mr. Rosenstein thanked Assistant U.S. Attorney Jefferson M. Gray, who is prosecuting the case.

Orlando Ortiz, 53, Luis Enrique Tur, 47, Jeffrey Todd Canfield, 49, Rafael Amador, 34, Osvaldo Sanchez, 40, Mirna Pena, 54, and Pedro Reynaldo Allende, 66,all residents of Miami-Dade County, Florida, pled guilty to one count of conspiracy to commit bank fraud and wire fraud affecting a financial institution. Ortiz, Tur, Canfield, Amador, and Sanchez  are scheduled to be sentenced on January 19, 2017. Pena and Allende are scheduled to be sentenced on March 28, 2017.

The charges arise from the involvement of the defendants in a complex mortgage fraud scheme involving two condominium conversion projects in central Florida.

According to court documents, including the agreed upon factual statements:

In 2007 and 2008, Ortiz, Tur, Canfield, Amador, and Sanchez participated in a mortgage fraud scheme involving two condominium projects: “Portofino at Largo,” in Largo, Florida, and “Bayshore Landing,” in Tampa, Florida.  Pena and Allende were involved in the same mortgage fraud scheme; however, their involvement was limited to units in the Portofino at Largo project.

During the course of the conspiracy, Pena, Allende, and other individuals recruited straw buyers and unqualified buyers, including Ortiz, Tur, and Canfield, to purchase units in the two condominium projects.  Among other things, the recruiters told certain prospective buyers that: buyers did not have to contribute any money to purchase a unit; buyers would receive a cash-back incentive or “kick-back” after closing; and buyers would receive several months’ mortgage payments.

The co-conspirators prepared and submitted false and fraudulent mortgage loan applications and related documents to various lenders including Bank of America, BankUnited, Chase Bank USA, CitiMortgage, First National Bank of Arizona, IndyMac Bank, JPMorgan Chase Bank, and Washington Mutual Bank.  Among other things, the loan applications and related documents contained false and fraudulent statements and omissions regarding: the borrower’s intention to reside in the unit; the borrower’s employment and income; the borrower’s assets and liabilities; the borrower’s payment of an earnest money deposit and cash-to-close; and the use of mortgage loan proceeds to pay “marketing fees” to various “marketing companies.”  In truth and in fact, the marketing companies were fraudulent businesses that did not provide any marketing services.  Instead, the “fraudulently induced marketing fees” were a means of diverting proceeds from the fraud scheme to the marketing companies.  The fraudulent marketing companies would then use the fraud proceeds to pay undisclosed kick-backs to the buyers.

Pena and Allende operated two Miami-based businesses, which were used to perpetrate the mortgage fraud scheme: Mortgage Bankers Lenders, Inc., a mortgage broker business, which submitted false and fraudulent loan applications and related documents to the lenders; and United Title Services & Escrow, Inc., which closed mortgage loan transactions even though the buyers had not paid earnest money deposits or cash-to-close, and used loan proceeds to pay “marketing fees” to a marketing company operated by unindicted co-conspirators.

Ortiz, Canfield, and Tur purchased units in Portofino at Largo.  Tur also purchased units in Bayshore Landing.  Ortiz, Canfield, and Tur engaged a Miami-based mortgage broker business operated by an unindicted co-conspirator to prepare and submit mortgage loan applications for their units.  On their behalf, the co-conspirator prepared and submitted fraudulent loan applications and other documents to various lenders.  The fraudulent loan documents included fabricated W-2 Wage and Tax Statements and pay stubs.  After closing on their units, Ortiz, Canfield, and Tur received substantial undisclosed kick-backs from a marketing company operated by an unindicted co-conspirator.  The kick-backs were funded with fraud proceeds, which had been paid to the marketing company as “marketing fees.”

Amador and Sanchez operated Allegiance Title of America, Inc., which served as the closing agent for mortgage loans involving condominium units in Portofino at Largo and Bayshore Landing.  Among other things, Amador and Sanchez caused Allegiance Title of America to disburse loan proceeds even though the buyers had not paid the earnest money deposits or cash to close, that was required by their loan applications and settlement statements.  Amador and Sanchez also caused Allegiance Title of America to pay fraudulent “marketing fees” to marketing companies.

The defendants face a maximum statutory term of thirty years’ imprisonment for their participation in the mortgage fraud conspiracy.

Wifredo A. Ferrer, United States Attorney for the Southern District of Florida, Timothy Mowery, Special Agent in Charge, Federal Housing Finance Agency, Office of Inspector General (FHFA-OIG), George L. Piro, Special Agent in Charge, Federal Bureau of Investigation (FBI), Miami Field Office, and Juan J. Perez, Director, Miami-Dade Police Department (MDPD), made the announcement.

Mr. Ferrer commended the investigative efforts of the FHFA-OIG, FBI and MDPD.  Both cases are being prosecuted by Assistant United States Attorney Dwayne E. Williams.

 

Marek Harrison, 53, Plant City, Florida, Brian Allard,45, Seminole, Florida, and Scot Rounds, 44, Winter Garden, Florida were indicted and charged with bank fraud and conspiracy to commit bank fraud.

According to the indictment, Harrison and Allard created and executed a mortgage fraud scheme involving Saratoga Resort Villas, a condo conversion of a former hotel located in Kissimmee, Florida.  The scheme involved kickbacks of mortgage proceeds to buyers and co-conspirators and misrepresentations regarding the source of down payment funds.  None of the incentives and kickbacks were disclosed to the mortgage lenders.  Harrison and Allard recruited the buyers and found individuals to front down payment money for those buyers.  Rounds, a mortgage broker, brokered the loans for the transactions, recruited straw purchasers, and distributed kickbacks to buyers.

If convicted, each faces a maximum penalty of 30 years in federal prison on each count.  The indictment also notifies the defendants that the United States is seeking a forfeiture money judgment in the amount of the proceeds of the charged criminal conduct.

The case was investigated by the Federal Housing Finance Agency – Office of Inspector General.  It will be prosecuted by Special Assistant United States Attorney Chris Poor and Assistant United States Attorney Vincent Chiu.

Rachel Siders, 41, Roseville, California, was sentenced to 14 and a half years in prison for her involvement in mortgage fraud schemes that cost financial institutions over $17 million.

Federal juries returned verdicts in two trials, in March 2015 and December 2015 finding her guilty of multiple counts of bank fraud, wire fraud, mail fraud, making a false loan application, and committing aggravated identity theft.

According to evidence presented at the first trial, in 2008 Siders and co-defendant Theo Adams, 50, Roseville, California, applied for a home equity line of credit using his relative’s name on an underwater Roseville property owned by Adams. They submitted false tax returns in the relative’s name with significantly inflated income along with mortgage application documents with forged signatures. Siders, a notary public, falsely notarized the loan application documents, which were sent to Washington Mutual Bank. The bank relied upon the false documents to provide a $250,000 line of credit. Siders received $170,000 of the proceeds. After making minimal payments, the defendants defaulted on the loan.

According to evidence presented at the second trial, from mid-2006 through early 2008, Siders and Vera Kuzmenko, 46, Loomis, California, and other defendants engaged in a mortgage fraud scheme involving over 30 properties in the Sacramento area. They secured more than $30 million in residential mortgage loans on more than 30 homes purchased through straw buyers. The loan applications contained materially false information as to the straw buyers’ income, employment, assets, and intent to occupy the residences. Records introduced at trial showed that Vera Kuzmenko received millions of dollars, and that Rachel Siders received hundreds of thousands of dollars.

Vera Kuzmenko, was a licensed real estate agent for part of the scheme, and Rachel Siders ran the Rocklin office of the escrow company used on the majority of the transactions. She helped funnel millions of dollars to her co-defendants, which was not disclosed to the lenders.

U.S. District Judge John A. Mendez imposed the sentence.

On March 15, 2016, Judge Mendez sentenced Vera Kuzmenko to 14 years in prison. She was found guilty of multiple counts of mail and wire fraud, money laundering and witness tampering. On April 19, 2016, Theo Adams, 50, of Roseville, was sentenced to two years in prison. Previously, Judge Mendez sentenced co-defendants Peter Kuzmenko, 38, West Sacramento, California, to 19 years in prison; Aaron New, 42, Sacramento, California, to 11 years and three months in prison; Nadia Kuzmenko, 37, formerly of Loomis, California, to eight years in prison; and Edward Shevtsov, 52, North Highlands, California, to eight years in prison. They were found guilty on February 13, 2015, after a 21-day trial, of multiple counts of mail and wire fraud associated with the mortgage fraud scheme. In addition, Peter Kuzmenko, Edward Shevtsov, and Aaron New were found guilty of money laundering associated with the scheme, and Nadia Kuzmenko was found guilty of witness tampering.

The sentence today reflects the seriousness of Siders’ crimes, which included participation in two separate mortgage fraud schemes. Over the course of two years, Siders oversaw and participated in numerous fraudulent loans and diverted money into shell accounts for her own benefit. She abused her position as an escrow officer and as a notary public to make this criminal enterprise succeed,” said Acting U.S. Attorney Talbert. “The sentence imposed is a significant reminder that those who engage in such conduct will be held accountable.”

Today’s sentence sends a clear message; anyone profits from fraudulent mortgage transactions—whether by creating the scheme or facilitating it—will not escape justice,” said Supervisory Special Agent Dan Bryant at the FBI Sacramento field office. “The FBI aggressively pursues those involved in such large-scale, complex financial fraud matters to seek justice for the victims and protect the regional economy.”

Rachel Siders was driven by greed in her participation in this mortgage fraud which targeted the Sacramento area,” said Michael T. Batdorf, Special Agent in Charge, IRS‑Criminal Investigation. “Today’s sentencing is a reminder how serious our courts consider this criminal activity and our commitment in providing financial expertise to our federal partners in these types of crimes.”

This case was the product of an investigation by the Federal Bureau of Investigation and the Internal Revenue Service-Criminal Investigation. Assistant U.S. Attorneys Lee S. Bickley, Michael D. Anderson, and Matthew D. Segal prosecuted the case.