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  • November 30, 1999

Archives For November 30, 1999

Real Estate Agent Indicted For Defrauding Homebuyers Out Of Down Payments

Stephanie Abbott —  July 3, 2019 — Leave a comment

Min Jin Zhao, a/k/a Michael Zhao, a/k/a Michael West, 56, San Francisco, California, a real estate agent has been indicted on charges of wire fraud, mail fraud, and money laundering.

According to the indictment filed May 9, 2019, and unsealed today, Zhao, defrauded his clients out of down payments meant for the purchase of homes in and around the Bay Area.  From 2014 through 2015, Zhao misrepresented to prospective homebuyers and investors that Portfolio Consulting, Inc., offered a loan program that would enable his clients to procure financing to make all-cash offers on real property.  Zhao told his victims that, as part of the loan program, they had to wire, transfer, or deposit 10% to 20% of the sale price of the real property they sought to purchase into Portfolio’s bank account.  According to the indictment, Zhao told his clients that once they delivered their funds to Portfolio, the company then would provide the remaining portion of the purchase price.  In reality, however, after Zhao’s victims deposited their funds into Portfolio’s account, Zhao either spent the funds or transferred the funds to another bank account in Portfolio’s name.  Further, Zhao used the funds to make purchases unrelated to the purchase of real property for the victims, including for purchases for Zhao’s benefit and the benefit of businesses he controlled.  In sum, Zhao is charged with three counts of wire fraud, in violation of 18 U.S.C. § 1343; two counts of mail fraud, in violation of 18 U.S.C. § 1341; and one count of money laundering, in violation of 18 U.S.C. § 1957.

Zhao was arrested in San Francisco, California on July 2, 2019, and made his initial federal court appearance this morning in Oakland, California.  Zhao is currently out on bond.  His next scheduled appearance is on September 11, 2019, at 10:30 a.m., for an initial appearance before the Honorable James Donato, U.S. District Judge.

The announcement was made by United States Attorney David L. Anderson; Internal Revenue Service, Criminal Investigation (IRS-CI), Special Agent in Charge Kareem Carter; and Federal Bureau of Investigation (FBI) Special Agent In Charge John F. Bennett.

An indictment merely alleges that crimes have been committed, and all defendants are presumed innocent until proven guilty beyond a reasonable doubt.  If convicted, Zhao faces a maximum sentence of 20 years in prison and a fine of $250,000, plus restitution for each violation of wire and mail fraud, as well as 10 years in prison and a fine of $250,000, plus restitution for the money laundering count.  However, any sentence following conviction would be imposed by the court after consideration of the U.S. Sentencing Guidelines and the federal statute governing the imposition of a sentence, 18 U.S.C. § 3553.

Assistant U.S. Attorney Jose Apolinar Olivera is prosecuting the case with the assistance of Jessica Rodriguez Gonzalez and Katie Turner.  The prosecution is the result of an investigation by the IRS-CI and the FBI.

 

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Man Sentenced in Foreclosure Rescue Scheme

Stephanie Abbott —  July 1, 2019 — Leave a comment

Phillip Yoder, 41, Ligonier, Indiana, was sentenced on his guilty pleas to wire fraud, bank fraud, mail fraud and bankruptcy fraud.

According to his plea agreement, beginning in or about 2014 and continuing until in or about July 2015, Yoder and others, sometimes working through the entity, KOH Enterprises, LLC, defrauded persons via a “Foreclosure Rescue Scheme.” As part of the scheme to defraud, Yoder and others monitored foreclosure notices of properties, and would then approach distressed homeowners and convince them to transfer title of the property in exchange for false promises of being able to avoid further foreclosure obligations. They falsely represented to these homeowners that they would handle their mortgage arrearages and the foreclosure process.  Because of these false representations, the homeowners vacated the property and transferred their interest in the property through a Quitclaim deed to business entities. Those entities then furthered the scheme by recording the Quitclaim at the local Recorder’s Office. However, the Quitclaim deed did not extinguish the homeowner’s outstanding mortgage debt.  Yoder and others would use the mail to send a fraudulent document, entitled an “International Promissory Note”, purporting to satisfy the outstanding mortgage debt to the financial institution holding the mortgage.  Simultaneously, Yoder and others would cause a fraudulent “Satisfaction of Mortgage” to be filed with the county recorder’s office in an attempt to discharge the mortgage.  They would then convey another Quitclaim deed to an investor or purchaser of the properties, even though the property was still encumbered.   The total loss to investors and insurers was $1,466,136.20.

With regard to the bankruptcy fraud, which resulted from a referral by the U.S. Trustee for Region 10, according to his plea agreement, on or about February 24, 2016, Yoder knowingly and fraudulently made a material false declaration, certificate and verification under the penalty of perjury in his bankruptcy proceeding.  He claimed as an asset a “Billion dollar gold bond” when he knew that the purported bond was fraudulent and worthless.  In his bankruptcy proceeding, Yoder claim $792,592.46 in debts.

Yoder was sentenced to serve 87 months each on the mail fraud, bank fraud, and mail fraud counts, and 60 months on the bankruptcy fraud count, all to run concurrently.   Yoder also was sentenced to two years of supervised release and ordered to pay a total of $581,386.04 in restitution.

The announcement was made by U.S. Attorney Kirsch.

“Creating a scheme that enriches the defendant while defrauding banks, insurers and average home owners, jeopardizes our financial system,” said U.S. Attorney Kirsch.  “My Office in coordination with all our law enforcement partners will continue to aggressively prosecute these type of cases.”

“Everyone has the right to expect honest representation from those they do business with.  Targeting homeowners with this type of fraudulent activity when they are already dealing with financial hardship is not only illegal but a violation of trust and won’t be tolerated by the FBI,” said Grant Mendenhall, Special Agent in Charge of the FBI’s Indianapolis Division.  “The FBI and our law enforcement partners will continue to investigate and pursue those who try to line their pockets at the expense of others and hold them accountable.”

HUD Special Agent in Charge Geary stated, “At such a critical time for the Department of Housing and Urban Development, with programs that are vital to the well-being of so many in our communities, it is critical that those resources are completely dedicated to those in need. The HUD Office of Inspector General is committed to partnering with Federal prosecutors and fellow law enforcement to aggressively pursue those engaged in activities that harm HUD’s Single Family housing programs.”

“Today’s sentence sends a strong message to those who abuse the bankruptcy system,” stated Nancy J. Gargula, United States Trustee for Indiana and Southern and Central Illinois (Region 10).  “Providing false documents such as fictitious “bonds” to the United States Bankruptcy Court undermines the integrity of the system and will not be tolerated.  We appreciate the commitment of U.S. Attorney Kirsch and our law enforcement partners to holding those who abuse the bankruptcy system accountable.  We welcome information that will help detect fraud and abuse in the bankruptcy system and we encourage citizens to report suspected bankruptcy fraud through our Internet hotline at USTP.Bankruptcy.Fraud@usdoj.gov.”   The United States Trustee Program is the component of the Justice Department that protects the integrity of the bankruptcy system by overseeing case administration and litigating to enforce the bankruptcy laws.

This case was investigated by the Federal Bureau of Investigation and the U.S. Department of Housing and Urban Development’s Office of Inspector General in collaboration with the Northern Indiana Bankruptcy Fraud Working Group coordinated by the U.S. Trustee.  The case was handled by Assistant U.S. Attorney John M. Maciejczyk.

 

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Man Convicted for Soliciting Homeowners in Default

Stephanie Abbott —  June 28, 2019 — Leave a comment

Christopher Coburn, 34, Winter Garden, Florida has been found guilty of five counts of bankruptcy fraud and two counts of falsification of records in a bankruptcy proceeding.

According to testimony and evidence presented at trial, Coburn solicited homeowners whose mortgages were in default and offered to rescue their homes from foreclosure. In order to prevent the Federal National Mortgage Association (“Fannie Mae”) and multiple financial institutions holding mortgages from lawfully foreclosing on homeowners’ properties, Coburn engaged a bankruptcy fraud scheme in which he filed or caused to be filed fraudulent bankruptcy petitions in the name of the homeowner, without homeowner’s knowledge or consent, just prior to the scheduled foreclosure sale dates. These fraudulent bankruptcies invoked the automatic stay provision of the bankruptcy code, preventing Fannie Mae and the financial institutions from conducting lawful foreclosure sales and obtaining title to the property. The fraudulent bankruptcy petitions filed by Coburn enabled him to collect fees and allowed him to refer the properties to real estate agents in order to obtain ill-gotten commissions for short-sales. Coburn also filed other false and fraudulent bankruptcy forms in the names of some homeowners relied on by the Office of the United States Trustee and the United States Bankruptcy Court for the Middle District of Florida. https://www.mortgagefraudblog.com/?s=Christopher+Coburn

Coburn faces a maximum penalty of 5 years’ imprisonment for each bankruptcy fraud count and up to 20 years in prison for each falsification of records count. His sentencing hearing has been scheduled for September 9, 2019.

United States Attorney Maria Chapa Lopez made the announcement.

This case was investigated by the Federal Housing Finance Agency—Office of Inspector General, with substantial assistance from the Office of the United States Trustee for the Middle District of Florida. It is being prosecuted by Special Assistant United States Attorney Chris Poor.

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Man Charged In Mortgage Fraud Scheme

Stephanie Abbott —  June 26, 2019 — Leave a comment

Anthony Garvin, 49, Jersey City, New Jersey was charged in a superseding indictment returned June 25, 2019 for his role in running a large-scale mortgage fraud scheme that involved properties in Jersey City, Union, and elsewhere in New Jersey and caused losses of millions of dollars.

According to the documents filed in this case:

From January 2011 through November 2017, Garvin and others engineered fraudulent short sale “flips” of various New Jersey properties with mortgages that were in default, and also fraudulently obtained numerous home equity lines of credit, or “HELOC” loans, using fraudulent documents and information.

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

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

Garvin and others allegedly rigged the short sale process at each step to maximize the difference in price between the two transactions and keep the victim financial institutions from detecting the fraud. The conspirators used various kinds of phony documents and misrepresentations, including generating false pre-approval letters from a New Jersey corporation controlled by a conspirator and generating phony deeds that backdated the closing date of the first transactions.

To obtain HELOC loans, the conspirators allegedly submitted loan applications in the name of straw borrowers, who did not in fact reside at the subject properties, and used false and fraudulent information – including false pay stubs and tax information – to make it appear as though the straw borrowers made more money than they actually did. The conspirators frequently applied for multiple HELOC loans on the same property nearly contemporaneously, withholding from each lender the existence of other applications.

The conspirators then disbursed the funds received from financial institutions – which totaled millions of dollars – into various accounts they controlled to conceal their illegal activities and split the profits.

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

Garvin was charged with one count of bank fraud conspiracy and five counts of bank fraud. Garvin was originally indicted on one count of bank fraud conspiracy and one count of bank fraud on January 11, 2019.

U.S. Attorney Craig Carpenito made the announcement today.

U.S. Attorney Carpenito credited special agents of the FBI, under the direction of Special Agent in Charge Gregory W. Ehrie in Newark, postal inspectors of the U.S. Postal Inspection Service, under the direction of Inspector in Charge James Buthorn, and special agents of the Federal Housing Finance Agency (FHFA) – Office of Inspector General, under the direction of Special Agent in Charge Steven Perez in Newark, with the investigation leading to the superseding indictment.

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

The charges and allegations in the superseding indictment are merely accusations, and the defendant is presumed innocent unless and until proven guilty.

Defense counsel: Murdoch Walker II Esq., Atlanta, Georgia; Charles D. Dawkins Jr. Esq., Elizabeth, New Jersey.

 

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A.G. Announces Payments To Borrowers From Settlement With PHH Mortgage Corporation

Stephanie Abbott —  June 3, 2019 — 8 Comments

A settlement agreement was reached today with 800 New Yorkers for a $45 million settlement with New Jersey-based mortgage lender and servicer PHH Mortgage Corporation.

The settlement agreement reached by 49 states, the District of Columbia and 45 state mortgage regulators resolves allegations that PHH, the nation’s ninth largest non-bank residential mortgage servicer, improperly serviced mortgage loans from January 1, 2009 through December 31, 2012. The $45 million settlement includes $30.4 million in payments to borrowers, and additional payments to states and mortgage regulators for costs and fees related to the investigation.

Over 800 New York borrowers applied for payments. Rust Consulting, the settlement administrator, issued checks to claimants on Friday, May 31, 2019. Borrowers who lost their homes to foreclosure during the eligible period will receive approximately $1,500, and borrowers referred (but did not ultimately lose their home) to foreclosure will receive approximately $540. Total payments to New York State borrowers exceeds $666,000.

The settlement agreement also requires PHH to adhere to comprehensive mortgage servicing standards, conduct audits, and provide audit results to a committee of states. The settlement does not release PHH from liability for conduct that occurred beginning in 2013.

Attorney General Letitia James made the announcement.

“Today, homeowners who were unfairly and unwittingly victimized receive a piece of justice that they deserve,” said Attorney General Letitia James. “It is unfortunate that New York homeowners were victimized by improper mortgage servicing in the first place, but are at least now receiving the financial compensation owed to them. We will continue to use every resource at our disposal to reverse the damaging practices that helped to create the foreclosure crisis, and hold bad-acting mortgage companies accountable.”

“Empire Justice Center applauds Attorney General Letitia James for representing New York homeowners in the recent multi-state settlement with PHH Mortgage Corporation,” said Kirsten Keefe, Senior Attorney and Program Director for HOPP Anchor Partner Program at the Empire Justice Center. “The settlement requires PHH to clean-up its mortgage servicing practices so that they help, rather than harm homeowners. In addition, over 800 New Yorkers will share in a total of cash payments of more than $660,000. Fortunately in New York State, many homeowners who might have otherwise lost their homes because of the misconduct of PHH, received assistance from housing counseling and legal service providers funded through the Attorney General’s Homeowner Protection Program (HOPP) and so remain in their homes. We are very fortunate to have an Attorney General who is continuing to press for the rights of New York’s homeowners and communities.”

“We commend the Attorney General’s office for holding mortgage servicer’s accountable for their actions to protect New Yorker’s homes, which is their largest and most important asset,” said Susan Boss, Executive Director of The Housing Council at PathStone. “Along with the A.G’s office, we will continue to advocate for all New York homeowners.”

“We are thankful to Attorney General James for her dedicated support of New York homeowners,” said Christie Peale, CEO and Executive Director of the Center for NYC Neighborhoods. “This settlement provides direct compensation to hundreds of families, some of whom lost their homes to foreclosure during the financial crisis. Just as importantly, it shows that New York State will hold other mortgage lenders and servicers accountable for fully complying with all servicing regulations, and treating homeowners equitably.”

The case was handled Deputy Bureau Chief Laura J. Levine under the supervision of Bureau Chief Jane M. Azia in the Consumer Frauds and Protection Bureau, and Executive Deputy Attorney General of Economic Justice Christopher D’Angelo.

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Mortgage Broker Sentenced to Six 1/2 Years in Prison

Rachel Dollar —  January 10, 2018 — 2 Comments

James Nassida, IV, 50, West Mifflin, Pennsylvania, was sentenced in federal court to 78 months of incarceration on his conviction of conspiracy to commit bank fraud, wire fraud, and mail fraud.

According to information presented to the court, Nassida owned and operated a mortgage broker 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 of fraud.

Some of the aspect 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 Nassida’s receipt of kickbacks from the settlement company that he failed to disclose to the borrowers and lenders, as required.

Nassida also submitted multiple fraudulent documents associated with loans in which he served as a loan officer, but also that the loan officers working under his direction regularly submitted false information to lenders and borrowers. In addition, Nassida 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 investments 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.

“This case was a breeding ground for many of the other investigations led by the Western Pennsylvania Mortgage Fraud Task Force,” said FBI Special Agent in Charge Robert Johnson. “Mortgage fraud cases are a priority for the FBI because mortgage lending and the housing market have such a significant effect on the overall economy. At the time of this case, James Nassida was living a fancy lifestyle, in a million dollar home, taking money from victims who put their trust in him. That is why today’s sentencing is significant. Since the task force formation in February, 2008, more than 100 people were charged and more than a half billion dollars in fraudulent loans were uncovered,” added SAC Johnson.

United States Attorney Scott W. Brady announced the sentence.  Assistant United States Attorneys Brendan T. Conway and Cindy Chung prosecuted this case on behalf of the government. Senior United States District Judge Donetta Ambrose imposed the sentence.

United States Attorney Brady commended the Mortgage Fraud Task Force for the investigation leading to the successful prosecution of Nassida. The Mortgage Fraud Task Force is comprised of investigators from federal, state and local law enforcement agencies and others involved in the mortgage industry. Federal law enforcement agencies participating in the Mortgage Task Force include the Federal Bureau of Investigation; the Internal Revenue Service, Criminal Investigations; the United States Department of Housing and Urban Development, Office of Inspector General; the United States Postal Inspection Service; and the United States Secret Service. Other Mortgage Fraud Task Force members include the Allegheny County Sheriff’s Office; the Allegheny County District Attorney’s Office; the Pennsylvania Attorney General’s Office, Bureau of Consumer Protection; the Pennsylvania Department of Banking; the Pennsylvania Department of State, Bureau of Enforcement and Investigation; and the United States Trustee’s Office.

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Man gets new mortgage fraud trial because of sleeping lawyer – ABC News

Rachel Dollar —  May 3, 2017 — 1 Comment

A businessman will get a new trial on mortgage fraud charges because his defense attorney was seen sleeping by the judge, witnesses and the federal court jurors who convicted him last year. U.S. District Judge Donetta Ambrose ruled James Nassida was denied a fair trial because Stan Levenson dozed during the October trial. Levenson has acknowledged that he fell asleep because he was taking cold medicines that made him drowsy.

Source: Man gets new mortgage fraud trial because of sleeping lawyer – ABC News

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Cook County judge indicted on mortgage fraud charges – Chicago Tribune

Rachel Dollar —  April 13, 2017 — 2 Comments

Judge Jessica O’Brien, a small-claims judge in Cook County, Illinois, was indicted on allegations that she lied and concealed relevant facts from lenders to obtain more than $1.4 million in mortgages on two South Side investment properties that she purchased and sold between 2004 and 2007.

Source: Cook County judge indicted on mortgage fraud charges – Chicago Tribune

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Syracuse couple on the run for five years arrested in mortgage fraud case | syracuse.com

Rachel Dollar —  September 23, 2016 — Leave a comment

Alexander and Sima March fled to Canada after their 2011 indictment on mortgage fraud charges.

Source: Syracuse couple on the run for five years arrested in mortgage fraud case | syracuse.com

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Judge says convicted Utah scamster addicted to defrauding others | The Salt Lake Tribune

Rachel Dollar —  August 2, 2016 — Leave a comment

A convicted fraudster who got out of prison early after completing a drug addiction program was sent back for 2½ more years on Tuesday by a judge who said he was addicted to defrauding people.

U.S. District Judge Ted Stewart sent Christopher D. Hales, 35, back to prison for 30 months for violations of his conditions of parole, finding that Hales had violated federal laws in defrauding his own father. Hales was indicted in 2010 on charges of mail, wire and bank fraud, and money laundering. Those charges involved a real estate scam operation that involved the purchase of properties in Lindon in Utah County and the Mill Creek area of Salt Lake County.

Source: Judge says convicted Utah scamster addicted to defrauding others | The Salt Lake Tribune

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