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Archives For August 2017

Fake Businesses, Fake Employees, Fake Mortgage Applications

Rachel Dollar —  August 31, 2017 — Leave a comment

Ralph Christopher Cirino was indicted in the Eastern District of Pennsylvania on six counts of mail fraud, four counts of misrepresentation of a social security number, four counts of wire fraud, two counts of making false statements in mortgage loan applications and one count of unlawful possession of authentication feature.

According to the indictment, Cirino falsely reported to the Pennsylvania Department of Labor that two corporations, Fast Care Home Care P.C. and Juris Clarity were legitimate corporations with multiple employees earning wages in 2015 and 2016.  In fact, these companies did not conduct any business, have employees or pay wages and the employees were fictitious.  Cirino sought to obtain unemployment benefits by purporting to be several of the fictitious employees and by submitted unemployment claims on behalf of those fictitious employees and on his own behalf. On of the fictitious employee names identified in the indictment is Benjamin Hunt.

The indictment alleges that Cirino made false statements to American Internet Mortgage, Inc. and Fairway Independent Mortgage Corporation for the purpose of influencing the actions of the mortgage companies on loans.  He caused loan applications containing knowing false statements to be submitted including an application in December 2016 to AIM falsely stating the applicant’s name was Benjamin Hunt, he was employed by Fast Care and earned a weekly salary of $1,960 and an application in March 2017 to Fairway falsely stating the applicant’s name was Benjamin Hunt, he was employed by Fastcare and earned a monthly salary of $9,880.

The indictment also seeks forfeiture of $87,259.

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Money Laundering Plea in Debt Elimination Scheme

Rachel Dollar —  August 30, 2017 — Leave a comment

Urmila Sri Thakur, also known as Urmila Buddhu-Thakur and Indro Buddhu-Thakur, 72, Wethersfield, Connecticut, pleaded guilty in New Haven federal court to a money laundering offense stemming from a fraudulent debt elimination scheme.

According to court documents and statements made in court, from 2009 to June 2012, Thakur, her former husband, Deowraj “Deo” Buddhu and their daughter, Sunita Buddhu, sold a debt elimination “program” to vulnerable individuals through various businesses, including Paradise Consulting Service, Hema, Inc., and Secured Redemption. In exchange for substantial fees, Deo Buddhu told victims about a little-known government fund that could be used to pay off their mortgages and other debts. In fact, no such fund exists. Buddhu instructed his victims to stop making payments on their mortgages, credit cards and other debts, and to stop paying their property taxes. He also provided his victims with fictitious promissory notes, which he called “bonds,” as well as other frivolous documentation, and advised his victims to use them to pay their debts.

On June 12, 2012, the day after Deo Buddhu’s arrest, Thakur withdrew $75,000 from a certificate of deposit account that contained funds from the scheme. She also obtained several cashier’s checks, including one for $50,000 made payable to Thakur, which she thereafter negotiated using accounts in the name of SDK SYS Solutions and TRK Consulting Services.

Thakur pleaded guilty to one count of money laundering, which carries a maximum term of imprisonment of 10 years. She is scheduled to be sentenced by U.S. District Judge Alvin W. Thompson in Hartford on November 20, 2017.

As part of her plea, Thakur has agreed to pay restitution in the amount of $335,072, which is the amount attributable to the underlying fraudulent debt elimination scheme.

Thakur is released on a $250,000 bond pending sentencing.

Deo Buddhu and Sunita Buddhu were previously convicted in Hartford federal court.

Deirdre M. Daly, United States Attorney for the District of Connecticut, announced the plea. The matter is being investigated by the Internal Revenue Service – Criminal Investigation Division and the U.S. Department of Housing and Urban Development – Office of Inspector General. The case is being prosecuted by Assistant U.S. Attorneys John T. Pierpont, Jr. and Liam Brennan.

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Appraiser ID Theft and Inflated HECM Appraisals Underlie Indictment

Rachel Dollar —  August 30, 2017 — 2 Comments

Eugene Peter Kenworthy, Jr., 50, appraiser, Ambler, Pennsylvania, was charged by Indictment with wire fraud, false statements for the purpose of influencing the Federal Housing Administration, aggravated identity theft, and failure to file a tax return.

The indictment alleges that, beginning as early as 1993, Kenworthy worked at Tech Review LTD, a real estate appraisal company owned by Kenworthy’s father.  Kenworthy began managing Tech Review after his father’s death in 2003 and sold the company in 2012 after which he formed two other companies, Global Appraisal Management and East Coast Appraisal Management.

According to the indictment, from March 2010 to February 2016, Kenworthy appraised approximately 714 properties which were the subject of HECM loan applications.  Kenworthy used the electronic signatures of five certified appraisers without their knowledge and consent to certify approximately 294 of those appraisals reports.  Those appraisers did not appraise the properties or write the reports.  Kenworthy used his own signature to certify the other approximately 420 appraisal reports he wrote. Most of the appraisals were for a single mortgage broker/origination company which paid Kenworthy about $450 per appraisal.

Also according to the indictment, Kenworthy made false statements in some of the HECM appraisal reports which resulted in falsely inflated valuations for the properties and, fraudulently inflated the HECM loan amounts. The indictment details several of these transactions.

As of July 2017, of the 714 properties for which Kenworthy wrote an appraisal report for a HECM, FHA had paid 53 claims totaling almost $3.7 million on foreclosed properties where the sales price of the home was insufficient to cover the HECM loan.

Kenworthy was added to the FHA appraiser roster in 1999 and, in or about January 2016, HUD suspended Kenworthy, barring him from performing FHA appraisals.

If convicted the defendant faces a maximum possible sentence is 166 years’ imprisonment, five years of supervised release, a $5,050,000 fine, and a $1,000 special assessment

The indictment was announced Acting United States Attorney Louis Lappen. The case was investigated by the United States Department of Housing and Urban Development – Office of Inspector General and the Internal Revenue Service – Criminal Investigation, and is being prosecuted by Assistant United States Attorney Karen L. Grigsby.

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Real Estate Investor Sentenced to 30 Months

Rachel Dollar —  August 30, 2017 — Leave a comment

Thomas L. Boyd, 44, real estate investor, Memphis, Tennessee, was sentenced to 30 months in federal prison for his role in a scheme to fraudulently obtain mortgage loans. An indictment returned last September by a federal grand jury alleged that Boyd, the owner of Wonderful Properties, LLC, made false statements and presented false documents to Regions Bank, First Tennesse Bank, Bank of America and Oak Tree Funding on behalf of persons who were financing the purchase of properties from Boyd and Wonderful Properties.

Boyd pled guilty in May to a charge of bank fraud and admitted at his plea hearing to making false statements to Regions Bank in connection with a mortgage loan being made to an individual who was financing the purchase of a property from Boyd.

In imposing the sentence, U.S. District Judge Sheryl H. Lipman also ordered Boyd to pay total restitution in the amount of $383,375.43 and to serve a 3-year term of supervised release following his release from prison.

Lawrence J. Laurenzi, Acting U.S. Attorney, announced the sentence. The case was investigated by the FBI; Federal Housing Finance Agency (FHFA) – OIG; Department of Housing and Urban Development (HUD); Postal Inspection Service and IRS. Assistant U.S. Attorneys Carroll L. Andre III and Lorraine Craig prosecuted this case on the government’s behalf

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Pennsylvania Mortgage Fraud Plea

Rachel Dollar —  August 30, 2017 — Leave a comment

James Nassida, 49, West Mifflin, Pennsylvania, pleaded guilty to one count of bank and wire fraud conspiracy before Senior United States District Judge Donetta Ambrose.

In connection with the guilty plea, the court was advised that Nassida owned operated a mortgage brokerage business called Century III Home Equity (Century III), which assisted borrowers in obtaining loans collateralized by real estate. At the time of the events at issue, which was between 2002 and 2008, Century III was one of the largest mortgage broker businesses in the Western District of Pennsylvania, and during the course of that timeframe brokered hundreds of millions of dollars worth of loans using more than a dozen different lenders. Many of those loans, however, involved one or more aspects.

Some of the aspects of the fraud included the following:

  • Appraisals that fraudulently inflated the true value of the properties;
  • Settlement statements that falsely reflected that the borrowers made substantial payments associated with the purchases of real estate;
  • Settlement statements that failed to disclose secondary financing;
  • Settlement statements that failed to include cash payments charged by Century III and paid by the borrowers;
  • Settlement statements and closing documents that were backdated to reflect that the settlements had occurred on a date prior to the actual settlement date; and
  • Various loan documents, including loan approval forms, good faith estimates, and underwriting transmittal forms, that failed to disclose secondary financing and falsely represented the combined loan-to-value ratio.

The fraud also involved misrepresentations to some of the borrowers to induce them to enter into the transactions, including concealing the fees Century III received from lenders for the borrowers’ transactions and the impact of those fees on the borrowers’ interest rates; and concealing the nature of the mortgage products, including that some of the mortgage products could negatively amortize. Lastly, the fraud also involved James Nassida’s receipt of kickbacks from the settlement company that he failed to disclose to the borrowers and lenders, as required.

James Nassida submitted multiple fraudulent documents associated with loans in which he served as a loan officer. In addition, loan officers working under his direction regularly submitted false information to lenders and borrowers. Nassida also caused the submission of fake documents to the lender in connection with his purchase of a $300,000 vacation home near Seven Springs, including the following: (1) a settlement statement that overstated the sales price; (2) a loan application that falsely stated his income and assets; and (3) fake statements from an investment company that falsely verified that he had more than $600,000 in investment when he really had about $15,000. In the loan application, James Nassida reported that he earned approximately $980,000 in 2006, but he did not even file his tax returns in 2006, and his reported taxable income in 2004 and 2005 was not even close to that figure.

Judge Ambrose scheduled sentencing for January 10, 2018. The law provides for a total sentence of 30 years in prison, a fine of $1,000,000, or both. Under the Federal Sentencing Guidelines, the actual sentence imposed is based upon the seriousness of the and the prior criminal history, if any, of the defendant.

The plea was announced by Acting United States Attorney Soo C. Song.

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Warehouse Lending Scheme Indicted in New York

Rachel Dollar —  August 30, 2017 — 4 Comments

Edward E. Bohm, 39, Nissequogue, New York, Edward J. Sypher, Jr., 40, Scarsdale, New York, and Matthew T. Voss, 42, Northport, New York, all senior executives at Long Island mortgage lender Vanguard Funding, LLC (Vanguard), were the subject of a criminal complaint charging conspiracy to commit wire and bank fraud in connection with their obtaining more than $8.9 million of warehouse loans for Vanguard to fund mortgages.  The defendants allegedly misused the loans to pay personal expenses and compensation, as well as to repay earlier fraudulently obtained loans.

According to the complaint unsealed in federal court in Central Islip, New York, between August 2016 and March 2017, Voss, Vanguard’s Chief Operating Officer, Sypher, the Chief Financial Officer, and Bohm, the President of Sales, engaged in a scheme in which they obtained warehouse loans, or short-term loans, for Vanguard by falsely representing that Vanguard would use the proceeds of those loans to fund mortgages or mortgage refinancing for Vanguard’s clients.  Once Vanguard received the loans, however, the defendants used the monies to pay personal expenses and compensation and to pay off loans they had previously obtained with fraudulent loan submissions for improper purposes.  Nearly $9 million of fraudulently obtained, and subsequently misused, loans have been identified so far.

In a recorded conversation with a co-conspirator in 2017, Bohm expressed confidence that they would evade criminal liability because the victims of their fraudulent scheme were financial institutions. “At the end of the day, the s— we did wasn’t to the public,” Bohm stated in part, according to the complaint.

If convicted, the defendants face a statutory maximum of 30 years’ imprisonment for bank fraud conspiracy and 20 years’ imprisonment for wire fraud conspiracy.

The arrests were announced by Bridget M. Rohde, Acting United States Attorney for the Eastern District of New York, William F. Sweeney, Jr., Assistant Director-in-Charge, Federal Bureau of Investigation, New York Field Office (FBI), and Maria T. Vullo, Superintendent, New York State Department of Financial Services.

“As alleged, the defendants – executives of a mortgage lender – defrauded banks into lending them money by stating that the money would fund new mortgages or refinance existing ones,” stated Acting United States Attorney Rohde.  “We will continue to address dishonesty in the mortgage industry whether the victims are financial institutions, investors, or homeowners, as it ultimately hurts all of us as a community.”

“As alleged, the defendants sought short-term loans from financial institutions that served as a repository for lenders,” stated FBI Assistant Director-in-Charge Sweeney. “They then allegedly took the money, which is typically intended for borrowers looking to purchase a home, and used it for their own personal gain. Today’s charges are proof of our continued determination to root out those whose business practices attempt to harm the financial integrity of banks and financial institutions that facilitate homeownership.”

“These defendants, for their own gain, allegedly defrauded the financial institutions that provide funding for individuals to buy homes, and they must be held accountable,” said Financial Services Superintendent Vullo.  “As the regulator and protector of financial services companies in New York, the Department of Financial Services is proud to have assisted the Acting United States Attorney in bringing these defendants to justice.”

The government’s case is being handled by the Office’s Business and Securities Fraud Section.  Assistant United States Attorneys Whitman G.S. Knapp and Elizabeth Losey Macchiaverna are in charge of the prosecution.

 

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Allegations of Forged Mortgage Documents in Attorney Indictment

Rachel Dollar —  August 30, 2017 — Leave a comment

Thomas M. Murtha, 61, attorney, Newtown, Connecticut, and Birmingham, Michigan, was indicted by a grand jury and charged with four counts of wire fraud.  Murtha previously operated a law practice in Bridgeport, Connecticut.

As alleged in the indictment, between approximately November 2011 and April 2017, Murtha fraudulently obtained and converted hundreds of thousands of dollars from his victims, including clients of his law practice, family members and friends.  Murtha falsely represented to client-victims that he had safeguarded and disbursed the proceeds from legal representations when, in fact, he had used their money for his own benefit, including making payments to other victims.  In furtherance of the fraud, Murtha used false and forged documents, including at least one mortgage and a trust document.

It is alleged that Murtha used some of the stolen funds to purchase a $725,000 house in Michigan, a 2.11 carat diamond engagement ring, and other items.

If convicted, Murtha faces a maximum term of imprisonment of 20 years on each count of the indictment.

The indictment seeks the forfeiture of the Michigan house and the engagement ring, as well as a money judgment of at least $1,991,628.83, which constitutes proceeds of the alleged fraud scheme.

Murtha was arrested on a criminal complaint on April 5, 2017, and is released on a $10,000 bond.  His arraignment is not yet scheduled.

In September 2016, Murtha resigned from the bar after three grievance complaints were filed against him.

Deirdre M. Daly, United States Attorney for the District of Connecticut, announced the indictment and noted that the investigation is ongoing.  Anyone with information that may be helpful to the investigation, or those who believe they have been victimized by this alleged scheme, are encouraged to contact Detective Robert McKiernan at (203) 382-6660.

The matter is being investigated by the Federal Bureau of Investigation and the Greenwich Police Department.  This case is being prosecuted by Assistant U.S. Attorneys Jennifer Laraia and David Huang.

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Chicago Real Estate Developer Sentenced to 3 Years

Rachel Dollar —  August 30, 2017 — Leave a comment

Laurance H. Freed, 54, Chicago, Illinois, a real estate developer and the president of Joseph Freed & Associates LLC, was sentenced to three years in prison in connection with a fraud scheme related to a $105 million line of credit secured by city and suburban properties, including the Streets of Woodfield Mall in Schaumburg, Illinois.  The scheme also involved the theft of millions of dollars from his business partner, Kimco Realty Corp. Freed also fraudulently obtained more than $575,000 in publicly funded loans from the city of Chicago, and attempted to fraudulently obtain an additional $1 million from the city.

A federal jury last year convicted Freed on three counts of bank fraud, one count of mail fraud, and four counts of making a false statement to a financial institution. In addition to the 36-month prison term, U.S. District Judge Robert M. Dow also fined Freed $250,000, and ordered him to pay $575,759 in restitution to a victim bank.

 

The investigation also resulted in the conviction of JFA’s vice president, CAROLINE WALTERS. Walters, of Palatine, pleaded guilty last year to one count of making a false statement to a financial institution. Judge Dow previously sentenced Walters to six months in prison.

According to evidence at Freed’s trial, the city of Chicago in 2002 issued two Tax Increment Financing notes to Uptown Goldblatts Venture LLC, a company formed by JFA to redevelop the former Goldblatt’s store in the Chicago’s Uptown neighborhood. The TIF notes had a combined principal of $6.7 million, and Freed pledged one of the notes to Cole Taylor Bank as collateral.

Four years later, JFA-affiliated entities entered into agreements with a bank consortium for a revolving line of credit worth up to $105 million. Uptown Goldblatts became a borrower under the revolving loan agreement through a subsequent deal with LaSalle Bank, which was one of the banks in the consortium and had recently been acquired by Bank of America. In the LaSalle deal, Uptown Goldblatts pledged the two TIF notes as collateral and also represented that the notes were owned free of other secured interests. The deal did not mention that one of the notes had already been pledged to Cole Taylor.

Evidence at trial also revealed that in 2009 and 2010 Freed signed false affidavits seeking to obtain more than $1.5 million in TIF payments from the city, knowing that he was not entitled to the payments.

As Freed’s business experienced financial difficulties, he withdrew more than $7 million from the Streets of Woodfield partnership without the knowledge and consent of his business partner Kimco, which owned 45% of the venture. Freed fraudulently recorded the money as “loans.”

“These were serious offenses that merit serious punishment,” Assistant U.S. Attorney Matthew F. Madden argued in the government’s sentencing memorandum. “The defendant was at the heart of this scheme to defraud and the lies told in furtherance of it.”

The sentence was announced by Joel R. Levin, Acting United States Attorney for the Northern District of Illinois; Michael J. Anderson, Special Agent-in-Charge of the Chicago Office of the Federal Bureau of Investigation; and Joseph M. Ferguson, Inspector General for the City of Chicago.

 

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Arizona Loan Officer Sentenced to 3 Years in Prison

Rachel Dollar —  August 15, 2017 — 1 Comment

Michael Quiroz, Tucson, Arizona, was sentenced by U.S. Chief District Judge Raner C. Collins to 36 months in prison.  Quiroz was previously found guilty at trial of wire fraud and conspiracy to commit wire fraud.

The evidence established that Quiroz, a loan officer and mortgage broker, was involved in a multi-year, multi-million dollar cash-back mortgage fraud conspiracy.  Quiroz and others recruited straw buyers to purchase residential properties at inflated prices and Quiroz also helped the straw buyers fraudulently obtain the loans needed to purchase the properties.  The methods used to obtain the loans included fake lease agreements, fake letters of employment, fake letters of credit, and false statements of intent to occupy a property as a primary residence.  Portions of the fraudulently-obtained mortgages were diverted to the bank accounts of Quiroz’s co-conspirators, who would thereafter send kickbacks to Quiroz.  Many of the properties purchased during the scheme eventually went into foreclosure, and the lenders’ losses relating to Quiroz’s conduct during the conspiracy totaled approximately $2.3 million.

The investigation in this case was conducted by the Internal Revenue Service-Criminal Investigation.  The prosecution was handled by the U.S. Attorney’s Office, District of Arizona, Tucson.

 

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First rule of holes: When in one, stop digging

Rachel Dollar —  August 15, 2017 — Leave a comment

Margie P. Shephard, 51, Kansas City, Missouri, pleaded guilty to obstruction of justice after forging a court order to get another inmate released from prison.

Shephard was incarcerated as an inmate at Federal Prison Camp-Bryan in Bryan, Texas, after being sentenced to 10 years for conspiracy to commit bank fraud and identity theft, aggravated identity theft and obstruction of justice.

By pleading guilty, Shephard admitted that, while incarcerated, she fabricated a document purporting to be an Amended Judgment in a Criminal Case for fellow inmate Leann Raejeana Turner, 48, Blue Springs, Missouri. Turner was also incarcerated at Federal Prison Camp-Bryan after being sentenced to three years in prison for her role in an $11 million mortgage fraud scheme. The fake court order, with a reduced sentence of 120 days of imprisonment for Turner (which would have resulted in her immediate release), included the forged signature of U.S. District Judge Greg Kays.

Shephard mailed the fake court order to her sister, who then faxed it to prison officials from a Sunfresh grocery store in Kansas City, Mo., on November 9, 2014. Upon receiving the document, prison officials determined it was a forgery.

Under federal statutes, Shephard is subject to a sentence of up to 20 years in federal prison without parole.

Tom Larson, Acting United States Attorney for the Western District of Missouri, announced the plea.This case is being prosecuted by Assistant U.S. Attorney Rudolph R. Rhodes, IV. It was investigated by the FBI.

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