Jared Tornow, 34, San Clemente, California, who acted as a mortgage broker under several umbrellas, including the Orange County, California based Lucrativo Real Estate Solutions, Inc., was sentenced to 70 months in federal prison for his conviction on tax evasion, mail fraud and credit card fraud charges related to a mortgage fraud scheme that caused at least $7 million in losses.
According to court documents, Tornow fraudulently provided mortgage services from 2001 until 2006 through several companies, including Lucrativo Real Estate Solutions, which he operated with Mikhail Kosachevich during the last two years of the scheme. Tornow solicited home buyers and assisted them in obtaining mortgages, often by submitting fraudulent paperwork to lending banks. As a part of the scheme, Tornow and others inflated borrowers’ income and assets on loan applications, leading lenders to believe that their clients were creditworthy. In an effort to substantiate the false statements made on the loan applications, Tornow and others fabricated W-2 forms, paycheck stubs, bank statements and other documents. Relying upon the false statements made on loan applications by Tornow and others, lenders issued more than $40 million in residential loans to Tornow’s clients. When a number of the properties went into foreclosure, the banks suffered losses of more than $7 million.
Tornow and his co-schemers received hundreds of thousands of dollars in commissions and payments from loans that were funded based upon their false statements and submission of fraudulent documents to lenders. Tornow concealed his commission income from the Internal Revenue Service and failed to pay more than $300,000 in federal income taxes. Tornow, who had been ordered not to work in the mortgage industry by California authorities about 10 years ago, used the names of legitimate brokers when he submitted loan packages to lenders. To cash the commission checks he received in the name of licensed brokers, Tornow created fictitious business names that were similar to the companies whose names appeared on the checks, and then cashed the commission checks at a check-cashing business. During the sentencing hearing, United States District Judge David O. Carter directed Tornow to return to court on March 3, 2010, to determine the amount of restitution he will be ordered to pay to victim lenders.
Kosachevich pleaded guilty last year to conspiracy to commit mail fraud and money laundering and faces a statutory maximum penalty of 25 years in prison. A third man involved in the scheme, Jeffrey Gerken, pleaded guilty to conspiracy to commit mail fraud and faces a statutory maximum penalty of five years in federal prison. Judge Carter is scheduled to sentence both men on January 25, 2010.
United States District Judge David O. Carter, called Tornow’s scheme one of the most sophisticated and arrogant frauds he had ever seen.
The investigation of Tornow, Kosachevich and Gerken was conducted by IRS – Criminal Investigation, the Federal Bureau of Investigation and the United States Postal Inspection Service.