Real Estate Developer Pleads Guilty To Condo Conversion Fraud

Stephanie Abbott —  December 2, 2019 — Leave a comment

Marek Harrison, 56, Plant City, Florida has pleaded guilty to bank fraud.

According to the plea agreement, between September 2007 and December 2008, Harrison created and executed a mortgage fraud scheme involving Saratoga Resort Villas, a condominium conversion of a former hotel located in Kissimmee, Florida.  Harrison’s scheme to defraud financial institutions involved kickbacks of mortgage proceeds to buyers and co-conspirators, as well as misrepresentations regarding the source of down payment funds for the transactions. None of the incentives and kickbacks were disclosed to the mortgage lenders. Harrison also recruited otherwise unqualified buyers, and provided down payment money for the buyers.  http://www.mortgagefraudblog.com/?s=Marek+Harrison

Harrison faces a maximum penalty of 30 years in federal prison. A sentencing date has not yet been set.

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

 

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Two Plead Guilty To Conspiracy To Make False Statements To Banks

Stephanie Abbott —  November 22, 2019 — Leave a comment

Mordechai Boaziz, 68, Fort Lauderdale, Florida and Jonathan Marmol,41, Odessa, Florida have pleaded guilty to conspiracy to make false statements to financial institutions.

According to their plea agreements, beginning around the summer of 2006 and continuing through August 2008, Boaziz and Marmol conspired with others to execute a scheme to influence the credit decisions of financial institutions in connection with the sale of condominium units at The Preserve at Temple Terrace, a 392-unit condominium complex. Boaziz was converting The Preserve from an apartment complex into a condominium complex and hired Marmol to market the units.

In order to recruit and entice otherwise unqualified buyers to purchase units at The Preserve, the conspirators offered to pay the prospective buyers’ down payments (“cash-to-close”). The conspirators then intentionally concealed from the financial institutions the cash-to-close payments made on behalf of the buyers.

In particular, the HUD-1 Settlement Statements submitted to the financial institutions falsely stated that the buyers brought their own cash-to-close funds to purchase the condominium units, which influenced the financial institutions’ mortgage loan approval decisions. In reality, Boaziz funded the buyers’ cash-to-close and routed the payments through Marmol and others. As a result of the conspiracy, the financial institutions that financed the condominium unit purchases at The Preserve sustained a total loss of approximately $5 million.

Each faces a maximum penalty of 5 years in federal prison. A sentencing date has not yet been set.

This case was investigated by the Federal Housing Finance Agency–Office of Inspector General and the Federal Bureau of Investigation. It is being prosecuted by Special Assistant United States Attorney Chris Poor and Assistant United States Attorney Jay L. Hoffer.

 

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Short Sale Negotiator Pleads Guilty to Defrauding Mortgage Lenders

Stephanie Abbott —  November 20, 2019 — Leave a comment

Jaime L. Mulvihill, 40, the principal and co-founder of a North Andover mortgage short sale assistance company, pleaded guilty today in connection with defrauding mortgage lenders and investors out of nearly $500,000 in proceeds from about 90 short sale transactions.

Mulvihill was charged on November 8, 2019, with co-conspirator Gabriel T. Tavarez.

Together the defendants founded and operated Loss Mitigation Services, LLC. The charges arise out of the defendants’ scheme to steal undisclosed and improper fees from mortgage lenders in connection with short sales of homes. A short sale occurs where the mortgage debt on the home is greater than the sale price, and the mortgage lender agrees to take a loss on the transaction.

Loss Mitigation Services, purportedly acting on behalf of underwater homeowners, negotiated with mortgage lenders for approval of short sales in lieu of foreclosure. Mortgage lenders typically forbid short sale negotiators, such as Loss Mitigation Services, from receiving any proceeds of a short sale.

According to the court documents, from 2014 to 2017, Mulvihill and, allegedly, Tavarez, directly or through their employees, falsely claimed to homeowners, real estate agents and closing attorneys that mortgage lenders had agreed to pay Loss Mitigation Services fees known as “seller paid closing costs” or “seller concessions” from the proceeds of the short sales. In reality, the mortgage lenders had never approved Loss Mitigation Services to receive those fees. When the short sales closed, at the instruction of Mulvihill, or others working with him and Tavarez, settlement agents paid Loss Mitigation Services the fees, which typically were 3% of the short sale price above and beyond any fees to real estate agents, closing attorneys and others involved in the transaction. To deceive mortgage lenders about the true nature of the fees, Mulvihill or Tavarez filed, or caused others to file, false short sale transaction documents with mortgage lenders, including altered settlement statements and fabricated contracts and mortgage loan preapproval letters. Mulvihill and, allegedly, Tavarez, fabricated the transaction documents, or caused them to be fabricated, in order to justify the additional fees and conceal that they were being paid to Loss Mitigation Services.

The defendants defrauded the Federal National Mortgage Association, the Federal Home Loan Mortgage Corporation and the U.S. Department of Housing and Urban Development.

Mulvihill pleaded guilty to conspiracy to commit wire fraud before U.S. Senior District Court Judge Rya W. Zobel who scheduled sentencing for February 25, 2020.

The charge of conspiracy to commit wire fraud provides for a sentence of up to 20 years in prison, three years of supervised release, and a fine of $250,000 or twice the gross gain or loss. Sentences are imposed by a federal district court judge based upon the U.S. Sentencing Guidelines and other statutory factors.

United States Attorney Andrew E. Lelling; Joseph R. Bonavolonta, Special Agent in Charge of the Federal Bureau of Investigation, Boston Field Division; Robert Manchak, Inspector General of the Federal Housing Finance Agency; Christina Scaringi, Special Agent in Charge of the U.S. Department of Housing and Urban Development, Office of Inspector General, Northeast Regional Office; and Kristina O’Connell, Special Agent in Charge of the Internal Revenue Service’s Criminal Investigation in Boston made the announcement today. Assistant U.S. Attorneys Sara Miron Bloom and Brian M. LaMacchia of Lelling’s Office are prosecuting the case.

The details contained in the charging documents are allegations. The remaining defendant is presumed to be innocent unless and until proven guilty beyond a reasonable doubt in a court of law.

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Man Sentenced in Multimillion Dollar Mortgage &Foreclosure Rescue Fraud Scheme

Stephanie Abbott —  November 15, 2019 — Leave a comment

Omar Anabo, 57, Vallejo, California has been sentenced to three years in prison for conspiracy to make false statements on loan applications and ordered to pay $379,068 in restitution to victims of the conspiracy.

According to court documents, between Oct. 2004 and May 2007, Anabo and co‑conspirators Sergio Roman Barrientos, 66, and Zalathiel Aguila, 46, operated Capital Access LLC in Vallejo, a company that preyed on homeowners nearing foreclosure. The defendants convinced homeowners to sign over the title to their homes to Capital Access and then spent any equity those homeowners still had, which was then used for operational expenses of the scheme and personal expenses of Anabo and his co-conspirators. http://www.mortgagefraudblog.com/?s=Omar+Anabo

The defendants also used straw buyers to obtain home loans under false pretenses and defraud federally insured financial institutions out of millions of dollars. Vulnerable homeowners across California lost their homes and savings as a result of the scheme, and lenders lost an estimated $10.47 million from the fraud.

Barrientos was sentenced on Nov. 2, 2018, to 14 years in prison for his role in the scheme. Aguila was sentenced on July 26, 2019, to four years in prison.

U.S. Attorney McGregor W. Scott made the announcement.

This case was the product of an investigation by the Federal Bureau of Investigation and the United States Postal Inspection Service. Assistant U.S. Attorneys Matthew M. Yelovich and Christina McCall prosecuted the case.

 

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Settlement in Claims for Fraud with Residential Mortgage-Backed Securities

Stephanie Abbott —  November 14, 2019 — Leave a comment

Paul Mangione, a former Deutsche Bank executive, has reached agreement, with the United States to settle a civil action filed in September 2017 in which the United States sought civil penalties for Mangione’s conduct in connection with Deutsche Bank’s marketing and sale of two residential mortgage-backed securities (RMBS) in 2007.

The complaint in the action, United States v. Paul Mangione, alleged that Mangione, a former Managing Director and head of subprime trading at Deutsche Bank, engaged in a scheme to defraud investors in two Deutsche Bank RMBS, ACE 2007-HE4 and ACE 2007-HE5, by misrepresenting the characteristics of the loans backing the two securities and misleading potential investors about the loan origination practices of Deutsche Bank’s wholly-owned subsidiary, DB Home Lending LLC (f/k/a Chapel Funding, LLC), which originated a number of the loans backing the two RMBS.  The complaint stated claims for relief under the Financial Institutions Reform, Recovery, and Enforcement Act of 1989 (FIRREA), based on mail fraud and wire fraud.

The agreement provides for payment of $500,000 in civil penalties in exchange for dismissal of the complaint.

Richard P. Donoghue, United States Attorney for the Eastern District of New York, announced the settlement.

“This Office’s settlement with a bank executive in connection with RMBS fraud reflects our commitment to holding individuals accountable for their role in corporate fraud,” stated United States Attorney Donoghue.  Mr. Donoghue thanked the Federal Housing Finance Agency’s Office of the Inspector General for its assistance in conducting the investigation in this matter.

The settlement agreement does not constitute an admission by Mangione of any of the facts or of liability or wrongdoing by Mangione, and there has been no trial or adjudication or judicial finding of any issue of fact or law.

The government’s case was handled by Assistant United States Attorney Edward Newman.

To report RMBS fraud, go to: http://www.stopfraud.gov/rmbs.html.

E.D.N.Y. Docket No. 17-CV-5305 (NMG/RL)

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Duo Sentenced In Fraudulent Short Sale Scheme To Defraud Mortgage Lenders

Stephanie Abbott —  November 14, 2019 — Leave a comment

George Bussanich Sr., 60, of Park Ridge, New Jersey and George Bussanich Jr., 39, Upper Saddle River, New Jersey, a father and son, were sentenced today to 27 months in prison and eight months of home detention, respectively, for their roles in a scheme to use straw buyers and short sales on properties to defraud mortgage lenders out of hundreds of thousands of dollars and to avoid paying taxes on the proceeds of the scheme.

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

Between 2009 and 2012, Bussanich Sr. and Bussanich Jr. conspired to defraud mortgage lenders through the sham short sales of two properties, located on Jefferson Avenue, Emerson, New Jersey, and Lillian Street, Park Ridge, New Jersey.

Bussanich Sr. controlled various purported medical clinics and surgical centers in New Jersey. He recruited his business partner and an employee from a sleep clinic in Cliffside Park, New Jersey, to pose as legitimate, unrelated buyers of the properties. In order to conceal his involvement, Bussanich Sr. used a business entity he controlled to fund each short sale transaction and the subsequent repurchase of those properties. Bussanich Jr., the owner of record of both properties, negotiated the short sales with the lenders using materially false information that misrepresented the circumstances of the short sales, the relationships of the parties, and the source of funding for the transactions.

Approximately two years after the fraudulent short sales, Bussanich Sr. bought the properties back from the straw purchasers using money that he owed his business partner from an earlier venture.

Bussanich Sr. and Bussanich Jr. also failed to disclose on their tax returns income that they received from the purported medical clinics and surgical centers. Bussanich Sr. and Bussanich Jr. used those funds to purchase high-end luxury vehicles and to purchase official bank checks to fund the fraudulent short sales.

Bussanich Sr., was sentenced to 27 months in prison. He previously pleaded guilty before U.S. District Judge Claire C. Cecchi to a superseding information charging him with one count of bank fraud conspiracy and one count of tax evasion. Bussanich Jr., was sentenced to eight months of home detention. He previously pleaded guilty to tax evasion. Judge Cecchi imposed both sentences today in Newark federal court.

In addition to the prison terms, Judge Cecchi sentenced Bussanich Sr. to five years of supervised release and Bussanich Jr. to three years of supervised release.

U.S. Attorney Craig Carpenito made the announcement.

U.S. Attorney Carpenito credited special agents of the FBI, under the direction of Special Agent in Charge Gregory W. Ehrie in Newark, and special agents of IRS – Criminal Investigation, under the direction of Special Agent in Charge John R. Tafur, with the investigation leading to today’s sentencings.

The government is represented by Assistant U.S. Attorney Ari B. Fontecchio of the Office’s Economic Crimes Unit, and Nicholas P. Grippo, Attorney in Charge of the Trenton Office.

Defense counsel: Stacy Biancamano Esq., Jersey City, New Jersey

 

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Mortgage Short Sale Negotiators Charged w/ Defrauding Mortgage Lenders

Stephanie Abbott —  November 8, 2019 — Leave a comment

Gabriel T. Tavarez, 39, and Jaime L. Mulvihill, 40, who together founded and operated Loss Mitigation Services, LLC, a mortgage short sale assistance company were charged today in connection with defrauding mortgage lenders and investors out of nearly $500,000 in proceeds from about 90 short sale transactions.

The defendants allegedly defrauded the Federal National Mortgage Association, the Federal Home Loan Mortgage Corporation and the U.S. Department of Housing and Urban Development.

Tavarez and Mulvihill were charged with conspiracy to commit wire fraud. Tavarez also was charged with aggravated identity theft.

The charges arise out of the defendants’ alleged scheme to steal undisclosed and improper fees from mortgage lenders in connection with short sales of homes. A short sale occurs where the mortgage debt on the home is greater than the sale price, and the mortgage lender agrees to take a loss on the transaction.

Loss Mitigation Services, purportedly acting on behalf of underwater homeowners, negotiated with mortgage lenders for approval of short sales in lieu of foreclosure. Mortgage lenders typically forbid short sale negotiators, such as Loss Mitigation Services, from receiving any proceeds of a short sale.

According to the court documents, from 2014 to 2017, Tavarez and Mulvihill, directly or through their employees, falsely claimed to homeowners, real estate agents, and closing attorneys that mortgage lenders had agreed to pay Loss Mitigation Services fees known as “seller paid closing costs” or “seller concessions” from the proceeds of the short sales. In reality, the mortgage lenders had never approved Loss Mitigation Services to receive those fees. When the short sales closed, at the instruction of Tavarez or Mulvihill, or others working with them, settlement agents paid Loss Mitigation Services the fees, which typically were 3% of the short sale price above and beyond any fees to real estate agents, closing attorneys and others involved in the transaction. To deceive mortgage lenders about the true nature of the fees, Tavarez or Mulvihill filed, or caused others to file, false short sale transaction documents with mortgage lenders, including altered settlement statements and fabricated contracts and mortgage loan preapproval letters. Tavarez and Mulvihill fabricated the transaction documents, or caused them to be fabricated, in order to justify the additional fees and conceal that they were being paid to Loss Mitigation Services. In addition, Tavarez created fake letters from mortgage brokers claiming that the brokers had approved buyers for financing, in order to convince mortgage lenders to approve the additional fees.

The charge of conspiracy to commit wire fraud provides for a sentence of up to 20 years in prison, three years of supervised release, and a fine of $250,000 or twice the gross gain or loss. The charge of aggravated identity theft carries a mandatory two-year sentence that must run consecutively to any other sentence imposed, one year of supervised release, and a fine of $250,000, or twice the gross gain or loss. Sentences are imposed by a federal district court judge based upon the U.S. Sentencing Guidelines and other statutory factors.

United States Attorney Andrew E. Lelling; Joseph R. Bonavolonta, Special Agent in Charge of the Federal Bureau of Investigation, Boston Field Division; Robert Manchak, Inspector General of the Federal Housing Finance Agency; Christina Scaringi, Special Agent in Charge of the U.S. Department of Housing and Urban Development, Office of Inspector General, Northeast Regional Office; and Kristina O’Connell, Special Agent in Charge of the Internal Revenue Service’s Criminal Investigation in Boston made the announcement today. Assistant U.S. Attorneys Sara Miron Bloom and Brian M. LaMacchia of Lelling’s Office are prosecuting the case.

The details contained in the charging documents are allegations. The defendants are presumed to be innocent unless and until proven guilty beyond a reasonable doubt in a court of law.

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Woman Pleads Guilty in Real Estate Wire Fraud Case

Stephanie Abbott —  November 6, 2019 — Leave a comment

Alysia Franco, formerly known as Martha Orozco, pleaded guilty to participating in a real estate wire fraud scheme.

In September 2015, a Tucson resident contacted the Federal Bureau of Investigation (FBI) Phoenix Field Division’s Tucson Resident Agency to report the theft of closing funds during a real estate transaction. The victim had wired $189,500 in closing funds to a bank account in the name of SkySea Logistics Services after receiving an email indicating the bank account information for the closing had changed.  The victim, believing the email was from a party to the real estate transaction, wired the funds as instructed in the email. However, SkySea Logistics Services was a front business controlled by Franco and was not a legitimate party to the real estate transaction. Franco provided SkySea Logistics Service’s business and account information to others for use in receiving the proceeds of criminal activity between September 2013 and September 2015.

During the investigation, the FBI discovered another Tucson victim who transferred closing funds to the same SkySea Logistics Services’ account. The funds wired by both victims totaled $391,500.

Attorney General Mark Brnovich made the announcement.

The Attorney General’s Office seized the full amount of the funds from the bank account and returned the money to the victims.

“This type of real estate wire fraud is becoming more common as more of these transactions take place electronically,” said Attorney General Mark Brnovich. “Con artists like Franco and her associates use sophisticated and legitimate-looking emails to trick home buyers out of their funds. Before wiring any money in a real estate deal, consumers should call their lender or real estate agent to verify the dollar amount and also that the transaction is legitimate.”

On Tuesday, November 5, 2019, Franco pleaded guilty to one count of attempted Money Laundering in the Second Degree.

Franco faces up to 3.75 years in prison. A sentencing hearing is set for December 16, 2019.

This matter was investigated by the FBI Phoenix Field Division’s Tucson Resident Agency.  Assistant Attorney General Rachel R. Heintz is prosecuting the case.

The Arizona Department of Real Estate issued this wire fraud advisory with more tips for Arizona consumers.

 

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Former Delta Homes & Lending Inc. Employee Sentenced for Mortgage Fraud Scheme

Stephanie Abbott —  November 4, 2019 — Leave a comment

Manuel Herrera, 39, Davis, California was sentenced today to serve one year in prison for conspiring to commit wire fraud.

According to court documents, between October 2004 and May 2007, Herrera was an employee of Delta Homes and Lending Inc., a now-defunct Sacramento-based real estate and mortgage lending company that was founded by co-defendant Moctezuma “Mo” Tovar, 50, Sacramento, California. Herrera, Tovar, and other Delta Homes employees and co-defendants agreed to commit fraud to obtain home loans from mortgage lenders. As part of the scheme, Herrera submitted fraudulent mortgage loan applications and supporting documents, which falsely represented the borrowers’ assets and income, liabilities and debts, employment status, citizenship status, and intent to occupy the property. Herrera also provided money to the borrowers in order to inflate their bank account balances. Once the loans were secured, the borrowers returned the money to Herrera. The aggregate sales price of the homes involved in the overall conspiracy was in excess of $10 million. As a result of the conspiracy, mortgage lenders and others suffered losses of at least $4 million.

Herrera is the fifth defendant sentenced as part of the scheme. Co-defendant Tovar was sentenced to four and a half years in prison; Jun Jun Michael Dirain, 47, Antelope, California was sentenced to six months in prison, followed by six months of home detention; Sandra Hermosillo, 57, Woodland, California was sentenced to nine months of home detention; Christian Parada Renteria, 43, formerly of Sacramento, California was sentenced to serve one year in prison.

Co-defendants Jaime Mayorga, 40, and Ruben Rodriguez, 42, both of Sacramento, California were convicted of conspiracy to commit wire fraud at a jury trial. They are scheduled to be sentenced by U.S. District Judge John A. Mendez on December 10, 2019. Each defendant faces a maximum statutory penalty of 20 years in prison and a $250,000 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.

U.S. Attorney McGregor W. Scott made the announcement.

This case was the product of an investigation by the Federal Bureau of Investigation. Assistant U.S. Attorneys Brian A. Fogerty and Justin L. Lee prosecuted the case.

 

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Duo Sentenced In HUD Fraud Scheme

Stephanie Abbott —  November 1, 2019 — Leave a comment

Sergio Garcia, Sr., 50, Chicago, Illinois and Sergio Garcia, Jr., 30, of Lowell, Indianapolis were sentenced on their guilty pleas to conspiracy to commit mail fraud.

According to documents in the case, between January 1, 2011 and May 31, 2014, the Garcias conspired with others to engage in a scheme to defraud HUD and to obtain money and property by means of false pretenses, representations and promises.  The scheme involved contracting with HUD to buy more than 87 homes in Indiana and Illinois and attempting to sell them for a profit the same day. The purchase contracts the conspirators provided to HUD stated that they or one of their businesses were purchasing the properties as investors and would pay with cash or use other financing not involving FHA. To support their claimed ability to pay for the homes, the conspirators mailed fraudulent letters purporting to show that they or their company had access to the funds needed to complete each purchase.  Many of the letters purported to be written by a private venture capital business and falsely stated that the Garcias or their business held a line of credit of up to $500,000.00, when in fact, as the conspirators well knew: the letters were forged and counterfeited; the lines of credit referenced therein did not exist; and the signatures thereon were forged and unauthorized.

Once under contract to purchase homes from HUD, the conspirators advertised the homes for subsequent resale and placed their own “for sale” signs at the homes. When the conspirators could not find a subsequent purchaser to buy the homes, they allowed their purchase contracts with HUD to expire and filed false liens on the homes for the full purchase price, impeding HUD’s ability to sell the homes to others. In some instances, the conspirators demanded money from would-be subsequent purchasers to release the false liens on the HUD-owned homes.

Garcia, Sr. was sentenced to serve 70 months in prison followed by 2 years of supervised release and was ordered to pay $471,571.06 in restitution to the Department of Housing and Urban Development (“HUD”) and $3,862 in restitution to other victims of his crime.

Garcia, Jr. was sentenced to serve 18 months in prison followed by 1 year of supervised release and was ordered to pay $24,819.53 in restitution to HUD and $202.25 to other victims of his crime

“This sentencing serves as an example that when housing professionals defraud the system of rules sponsored by  HUD, the HUD Office of Inspector General will continue to partner with both the U. S. Attorney’s Office and the FBI to pursue those individuals to ensure the integrity of its federal housing programs.”

“If you attempt to defraud the system and violate public trust, we will find you, we will investigate you, and we will ensure you are held accountable for your illegal actions,” said Special Agent in Charge Grant Mendenhall, FBI Indianapolis. “Today’s sentence should serve as a warning to others that the FBI and our partners will continue to pursue those who would seek to blatantly commit fraud.”

The case was investigated by the Federal Bureau of Investigation and the HUD Office of Inspector General.  The case was handled by Assistant United States Attorney Jill R. Koster.

 

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