Archives For Wire Fraud

Hollie Darlene Dustin, 60, Punta Gorda, Florida has pleaded guilty to wire fraud. She faces a maximum penalty of 20 years in federal prison.

According to the plea agreement, Dustin, a licensed real estate broker, owned Home Choice Real Estate (HCRE), a company that contracted with the Federal National Mortgage Association (Fannie Mae) to manage and perform preservation services on various Fannie Mae foreclosed properties and potentially list those properties for sale. As part of a Master Listing Agreement with Fannie Mae, Dustin’s company was prohibited from using any vendors that she controlled or with which she had a conflict of interest to perform preservation services on Fannie Mae properties. Dustin fraudulently used ProPreserve, a company that she controlled, to perform preservation services on the properties without Fannie Mae’s knowledge or consent. Dustin submitted approximately 550 fraudulent ProPreserve invoices to Fannie Mae requesting approximately $146,280.46, which Fannie Mae paid to HCRE.

Dustin also created inflated ProPreserve invoices for work already performed by other vendors, then submitted those false invoices to Fannie Mae for payment.  Dustin used interstate wires to submit the fraudulent invoices to Fannie Mae.

Dustin’s sentencing hearing is scheduled for September 17, 2018.

This case was investigated by the Federal Housing Finance Agency – Office of Inspector General. It is being prosecuted by Assistant United States Attorney Jeffrey F. Michelland.

Abolghasseni “Abe” Alizadeh, 59, Granite Bay, California was sentenced today to four years and eight months in prison.  Alizadeh pleaded guilty on January 12, 2018 to wire fraud, bank fraud and making false statements to a federally insured financial institution.

According to court documents, Alizadeh, a Sacramento-area commercial real estate developer, restaurateur and owner of Kobra Properties, came up with a scheme to fraudulently purchase land that he planned to develop. Banks usually loan up to 60 to 65 percent of the loan to-value ratio (LTV) on undeveloped commercial property. (LTV ratio is the comparison between the amount of the loan and the value of the property.) To circumvent the banks and fraudulently get a higher level of financing, Alizadeh submitted altered purchase contracts to the banks that greatly inflated the purported purchase price. The banks, which competed for Alizadeh’s business, were unaware that the purchase prices were inflated and sometimes loaned well in excess of the loan-to-value ratio. By concealing the true purchase price from the banks, Alizadeh received substantial amounts of cash, sometimes millions of dollars, at the close of escrow and avoided making the full down payment or, in some instances, any down payment.

Alizadeh was assisted in this scheme by co-defendant Mary Sue Weaver, 64, currently of Scottsdale, Arizona and formerly of Lincoln, California, who was employed at a local title company. According to the plea agreement, Alizadeh would write checks for the down payment, but because he lacked funds to cover the checks, he would call Weaver and ask her to delay depositing the checks until after escrow closed. Once escrow closed, Weaver disbursed funds from the title company’s escrow trust account to Kobra Properties. Kobra Properties then used those funds to cover its down payment and other costs. In this way, it appeared as though Alizadeh was making a substantial down payment when in fact he was not.

On April 29, 2005, Alizadeh submitted a fraudulent purchase contract to Central Pacific Bank, which induced the bank to lend him nearly $4 million for the purchase of 10.3 acres of property. This loan represented over 96 percent loan-to-value ratio. Similarly, on October 21, 2005, Alizadeh received over $22 million in funding and loans to purchase the Turtle Island property, when in actuality, the original purchase price was $10 million. In March 2006, Alizadeh also falsely claimed to Bank of Sacramento that he was paying $36 per square foot for a piece of property where he intended to build a TGI Friday’s restaurant. In reality, Alizadeh was paying only $21 per square foot. This resulted in a $650,000 inflation of the true purchase price. Alizadeh’s entire scheme, involving no fewer than six properties in the Sacramento area, resulted in a loss to various financial institutions of over $22 million.

U.S. District Judge Garland E. Burrell Jr. also ordered Alizadeh to pay $15,879,945 in restitution to the victims of his crimes.

On December 15, 2017, Weaver pleaded guilty to one count of wire fraud and one count of bank fraud and is scheduled for sentencing on June 22, 2018. She faces a maximum statutory penalty of 30 years in prison on each count and a $1 million fine. The actual sentence, however, will be determined at the discretion of the court after consideration of any applicable statutory factors and the Federal Sentencing Guidelines, which take into account a number of variables.

The announcement was made by U.S. Attorney McGregor W. Scott.

The defendant used his reputation as a local business leader to perpetrate a complex fraud scheme to enrich himself at the expense of others,” stated U.S. Attorney Scott. “The U.S. Attorney’s Office will continue to work diligently with its law enforcement partners to expose schemes like this and bring criminals like the defendant to justice.

The scope of the fraud is staggering,” said Michael T. Batdorf, Special Agent in Charge, IRS Criminal Investigation. “As a well-known real-estate developer, title companies and banks competed for Mr. Alizadeh’s business. He submitted altered purchase contracts that greatly inflated the purchase price. This scheme cost financial institutions over $22 million. While this sentence cannot reverse the damage caused by Alizadeh and his co-defendant, it highlights the ongoing commitment of IRS-CI to hold accountable those involved in these types of crimes.

Today’s sentencing holds defendant Alizadeh accountable for causing more than $22 million in losses to the financial institutions, by corruptly inflating the value of property to obtain millions of dollars in fraudulent bank loans,” stated FDIC Inspector General Jay N. Lerner. “This case is a powerful example of law enforcement cooperation to combat fraud and bring such swindlers to justice.”

This case is the product of an investigation by the Federal Bureau of Investigation, the IRS Criminal Investigation, and the Federal Deposit Insurance Corporation, Office of Inspector General. Assistant U.S. Attorneys Michael D. Anderson and Heiko P. Coppola are prosecuting the case.

Frank Giacobbe, 43, East Amherst, New York; Patrick Ogiony, 34, Buffalo, New York; Kevin Morgan, 42, Pittsford, New York; and Todd Morgan, 29, Rochester, New York, have been charged in a  62-count indictment with conspiracy to commit wire fraud and bank fraud, and substantive wire fraud and bank fraud charges. The charges carry a maximum penalty of 30 years in prison and a $1,000,000 fine.

According to the indictment, between March 2011 and June 2017, the defendants conspired to defraud financial institutions, such as Arbor Commercial Mortgage, LLC and Berkadia Commericial Mortgage, LLC, and government sponsored enterprises, including Federal Home Loan Mortgage Corporation (Freddie Mac), and the Federal National Mortgage Association (Fannie Mae). The indictment alleges that the defendants conspired to engage in a variety of conduct to induce mortgage lenders to issue loans for residential apartment complexes (1) for greater amounts than they would have issued had they known the truth; and (2) that the lenders would not have issued at the time of issuance had they known the truth.

The defendants are accused of:

  • Conspiring to provide lending institutions with false rent rolls suggesting that properties had more occupied units, at higher rental rates, and generated more income than they, in fact, did;
  •  Conspiring to provide false information about other income received at the complexes. On one occasion, when one defendant asked another where storage space income figures came from, another defendant replied, “Magic;”
  • Conspiring to provide lenders with fraudulently altered leases; and
  • Conspiring to prevent inspectors touring the properties from discovering vacant units by, among other things, turning on radios inside vacant units, placing mats and shoes outside apartment doors, and, on at least one occasion, hiring someone to stage an apartment as lived in and pretend to be a tenant of an inspected unit.

The indictment alleges fraud at seven different properties, not all of which involved all charged defendants, but which resulted in total loans issued of $167,591,000. The properties are Morgan Ellicott Apartments and Amherst Garden, both in Buffalo, New York; Rugby Square in Syracuse, New York; Avon Commons, in Avon, New York; Rochester Village, Southpointe, and Eden Square, all in the Pittsburgh, Pennsylvania area.

U.S. Attorney James P. Kennedy, Jr. made the announcement today.

The defendants are charged with fraudulently obtaining over $167.5 million worth of loans relating to seven residential apartment complexes located here in New York and in Pennsylvania,” noted U.S. Attorney Kennedy. “Most of those loans were in turn sold to Fannie Mae or Freddie Mac, entities which were created by Congress to perform and an important role in our country’s housing finance system. As a result of the fraudulent conduct alleged in this indictment, defendants’ conduct not only unjustly enriched them but threatened to undercut the very foundations upon which our mortgage banking and investment systems are based.”

We must protect the tens of thousands of investors who own mortgage backed securities,” said Gary Loeffert, Special Agent-in-Charge of the Buffalo Division. “This investigation is focused on stopping people from undermining the residential and commercial financing industry. Fraud for profit aims to misuse the mortgage lending process to steal cash.”

Some of the defendants are scheduled to be arraigned on May 23, 2018, at 2:00 p.m. before U.S Magistrate Judge H. Kenneth Schroeder.

The indictment is the result of an investigation by the Federal Bureau of Investigation, under the direction of Special Agent-in-Charge Gary Loeffert, and the Federal Housing Finance Agency, Office of Inspector General, under the direction of Special Agent-in-Charge Mark P. Higgins.

The fact that a defendant has been charged with a crime is merely an accusation and the defendant is presumed innocent until and unless proven guilty.

Arlando Jacobs, 52, The Woodlands, Texas, has pleaded guilty today to conspiracy to commit wire fraud.

According to information presented in court, from October 2011 through April 2017, Jacobs conspired with others to create and submit fraudulent mortgage lien documents to title companies and financial institutions in order to receive transfers of funds they were not entitled to receive. Jacobs was indicted by a federal grand jury in October 2017.  Co-defendant, Clarence Roland, is scheduled for trial in September 2018.

Under federal statutes, Jacobs faces up to 30 years in federal prison at sentencing.  The maximum statutory sentence prescribed by Congress is provided here for information purposes, as the sentencing will be determined by the court based on the advisory sentencing guidelines and other statutory factors.  A sentencing hearing will be scheduled after the completion of a presentence investigation by the U.S. Probation Office.

U.S. Attorney Joseph D. Brown made the announcement.

Arlando Jacobs pleaded guilty before U.S. Magistrate Judge Kimberly Priest Johnson.

This case is being investigated by the Federal Housing Finance Agency-Office of  Inspector General, Federal Bureau of Investigation, and Housing & Urban Development-Office of Inspector General.  This case is being prosecuted by Assistant U.S. Attorney Christopher Eason.

Herzel Meiri, 64, and Amir Meiri, 35, pled guilty yesterday to conspiracy to commit wire fraud and bank fraud, in connection with their scheme to fraudulently induce distressed homeowners to sell their homes for little or no consideration to a company they owned and controlled.

According to allegations in the contained documents filed in federal court, including the Indictment and Complaint:

From 2013 to 2015, Herzel Meiri and Amir Meiri defrauded distressed homeowners throughout the Bronx, Brooklyn, and Queens, New York.  The Meiris and others falsely represented to these homeowners – some of whom were elderly or in poor health – that they could assist them with a loan modification or similar relief from foreclosure that could result in the homeowners saving their homes.  But rather than actually assisting these homeowners, the defendants deceived them into selling their homes for less than the homes’ actual values to Launch Development LLC (“Launch Development”), a for-profit company owned and controlled by the Meiris.

Specifically, the Meiris’ direction fraudulently induced the homeowners to engage in a type of short sale in which the homeowner would sell the property to Launch Development.  The Meiris and their conspirators falsely assured the homeowners that their homes would be returned to them after a short period, and that they could remain in their homes throughout the entire process.  At the closing that followed, homeowners were encouraged to sign fraudulent documents, that unbeknownst to the homeowners transferred the homes Launch Development.  Homeowners often were then forced to vacate their homes, and in many cases had no other place to live. Launch Development resold many of the homes, which were purchased at fraudulently deflated prices, for an enormous profit.

Herzel Meiri, pled guilty to one count of conspiracy to commit wire fraud, which carries a maximum sentence of 30 years in prison and a maximum fine of $1,000,000 or twice the gross gain or loss from the offense.  He also consented to forfeit $6,469,291.41, as well as 31 real properties, four bank accounts, and one escrow account, as proceeds traceable to the offense.

Amir Meiri, pled guilty to one count of conspiracy to commit wire fraud, which carries a maximum sentence of 30 years in prison and maximum fine of $1,000,000 or twice the gross gain or loss from the offense.  He also consented to forfeit the same 31 real properties, four bank accounts, and one escrow account, as proceeds traceable to the offense.

The defendants will be sentenced by before U.S. District Judge Edgardo Ramos on July 27, 2018.

Robert S. Khuzami, the Attorney for the United States praised the outstanding work of the Federal Bureau of Investigation, the Special Inspector General for the Troubled Asset Relief Program, and the New York State Department of Financial Services for their investigative efforts and ongoing support and assistance with the case.

The prosecution of this case is being overseen by the Office’s General Crimes Unit.  Assistant U.S. Attorneys Andrew Thomas and Sheb Swett are in charge of the case.

Barclays Capital, Inc. and several of its affiliates (together, Barclays) have reached an agreement with the United States to settle a civil action filed in December 2016 in which the United States sought civil penalties for alleged conduct related to Barclays’ underwriting and issuance of residential mortgage-backed securities (RMBS) between 2005 and 2007.

Following a three-year investigation, the complaint in the action, United States v. Barclays Capital, Inc., alleged that Barclays caused billions of dollars in losses to investors by engaging in a fraudulent scheme to sell 36 Residential Mortgage-Backed Securities (“RMBS”) deals, and that it misled investors about the quality of the mortgage loans backing those deals.  It alleged violations of the Financial Institutions Reform, Recovery, and Enforcement Act of 1989 (FIRREA), based on mail fraud, wire fraud, bank fraud, and other misconduct.

The scheme alleged in the complaint involved 36 RMBS deals in which over $31 billion worth of subprime and Alt-A mortgage loans were securitized, more than half of which loans defaulted.  The complaint alleged that in publicly filed offering documents and in direct communications with investors and rating agencies, Barclays systematically and intentionally misrepresented key characteristics of the loans it included in these RMBS deals.  In general, the borrowers whose loans backed these deals were significantly less creditworthy than Barclays represented, and these loans defaulted at exceptionally high rates early in the life of the deals.  In addition, as alleged in the complaint, the mortgaged properties were systematically worth less than what Barclays represented to investors.  These are allegations only, which the Defendants dispute, and there has been no trial or adjudication or judicial finding of any issue of fact or law.

Barclays will pay the United States two billion dollars ($2,000,000,000) in civil penalties in exchange for dismissal of the Amended Complaint.

Agreement has also been reached with the two former Barclays executives who were named as defendants in the suit:  Paul K. Menefee, Austin, Texas, who served as Barclays’ head banker on its subprime RMBS securitizations, and John T. Carroll, Port Washington, New York, who served as Barclays’ head trader for subprime loan acquisitions.  In exchange for dismissal of the claims against them, Menefee and Carroll agree to pay the United States the combined sum of two million dollars ($2,000,000) in civil penalties.

The settlement was announced by Richard P. Donoghue, United States Attorney for the Eastern District of New York, and Laura S. Wertheimer, Inspector General, of the Federal Housing Finance Agency Office of the Inspector General (FHFA-OIG).

This settlement reflects the ongoing commitment of the Department of Justice, and this Office, to hold banks and other entities and individuals accountable for their fraudulent conduct,” stated United States Attorney Donoghue. “The substantial penalty Barclays and its executives have agreed to pay is an important step in recognizing the harm that was caused to the national economy and to investors in RMBS.”

The actions of Barclays and the two individual defendants resulted in enormous losses to the investors who purchased the Residential Mortgage-Backed Securities backed by defective loans,” stated FHFA-OIG Inspector General Wertheimer.  “Today’s settlement holds accountable those who waste, steal or abuse funds in connection with FHFA or any of the entities it regulates.  We are proud to have partnered with the U.S. Department of Justice and the U.S Attorney’s Office for the Eastern District of New York on this matter.”

The government’s case has been handled by this Office’s Civil Division.  Senior Counsel F. Franklin Amanat, and Assistant United States Attorneys Matthew R. Belz, Charles S. Kleinberg, Evan P. Lestelle, Matthew J. Modafferi, Josephine M. Vella and Alex S. Weinberg have been in charge of the litigation.  Mr. Donoghue thanks the FHFA-OIG for its assistance in conducting the investigation in this matter.

Oscar Cantalicio Ortiz, 54, Kingwood, Texas has received a second federal sentence for failing to appear in court. Today, U.S. District Judge Kenneth Hoyt handed Ortiz another 12 months and one day to be served consecutively to the already-imposed 262 months for his conviction of bank fraud.

Ortiz was originally convicted for a mortgage fraud scheme in which he admitted he conspired to commit bank, mail and wire fraud. He was permitted to remain on bond pending his sentencing in that case, but was ordered to wear a GPS monitoring device secured around his leg as a condition of his release.

On April 21, 2017, he cut off the device and left it on the side of the road in southwest Houston, Texas. His vehicle was later found abandoned in a parking lot in the same area of town.

On April 24, 2017, Ortiz was set to appear before U.S. District Judge Kenneth M. Hoyt for sentencing in the mortgage fraud scheme. He failed show for that hearing.

He was residing in Mexico and turned himself in to the U.S. Embassy in Mexico City, Mexico on August 23, 2017. Ortiz told the FBI at the Embassy that he was a fugitive from the United States and had decided to flee because he wanted more time to work on a project. He was flown back to Houston the following day.

Ortiz pleaded guilty December 4, 2017.

Upon his arrival, agents noted that Ortiz had changed his appearance by growing facial hair and dying it and his hair red. Ortiz admitted he had purchased a second car to replace the one he abandoned and drove across the border into Mexico where he stayed until his arrest.

While a fugitive, Judge Hoyt imposed the nearly 22-year sentence in absentia which will be served consecutively to the term imposed today. http://www.mortgagefraudblog.com/?s=Oscar+Cantalicio+Ortiz

The announcement was made by U.S. Attorney Ryan K. Patrick.

The FBI conducted the investigation of both cases. Assistant U.S. Attorney Melissa Annis is prosecuting the cases.

Moctezuma Tovar, 46, Sacramento, California and Sandra Hermosillo, 53, Woodland, California pleaded guilty to conspiring to commit wire fraud in connection with a mortgage fraud scheme.

According to court documents, Tovar was the founder and president of Delta Homes and Lending Inc., a Sacramento, California based real estate and mortgage lending company. Delta Homes opened one office in 2003 and eventually had five offices in Sacramento and Woodland, California. As the president of Delta Homes, Tovar managed the day-to-day operations of the company and prepared and submitted residential home loan applications on behalf of Delta Homes’ clients. Hermosillo was a loan officer at the Woodland office and was also responsible for submitting residential home loan applications on clients’ behalf. Continue Reading…

Matthew Kent, University City, Missouri, vice president and co-operator of Coral Mortgage Bankers Corporation’s University City, Missouri, office has pled guilty to stealing investor funds.

Continue Reading...