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Man Admits Swindling Millions from Lenders

Allison Tussey —  August 29, 2012 — Leave a comment

Ronald D. Catrell, 46, Overland Park, Kansas, pleaded guilty to swindling lenders and investors out of more than $5 million by obtaining loans and lines of credit based on false information. 

The defendant pleaded guilty to one count of bank fraud, one count of aggravated identity theft, one count of money laundering, and one count of wire fraud.

In his plea, Catrell admitted devising a scheme in which he defrauded Kansas City-area financial institutions including Valley View Bank, Bank of the West and Marshall & Ilsley Bank by providing them with false financial information in order to obtain lines of credit and loans.

He obtained a $1.3 million line of credit from Valley View Bank, Overland Park, Kansas, by providing false information that he had more than $279,000 in an account at Metcalf Bank when, in fact, his balance there was less than $2,200. He also provided false tax returns and financial statements to the bank. He arranged for a person calling himself “Bill Campbell” to call a loan officer at Valley View Bank to claim that Catrell had more than $2.7 million invested with him. During the conversation, the caller said he was in an office overlooking New York City at 244 Fifth Avenue on the 18th floor, Suite 1882. In fact, Catrell had only a rented mail box at that address, and the building was only four stories.

Catrell borrowed $750,000 from Bank of the West, Lee’s Summit, Missouri, by giving the bank much of the same fraudulent information he gave Valley View Bank.

He obtained a $1 million line of credit from M&I Bank for his company, Software4Biz Consulting using fraudulent documents.

Catrell also co-founded a company called BlueValley Capital Management LLP. Partners in the venture invested $50,000 to start the fund. When soliciting investors, Catrell made false statements overstating the annual return of the partners’ investments. When one of the co-founders requested an audit, Catrell provided a report with false information. He also falsely claimed to have the ability to purchase pre-initial public offering stock in Facebook. At the time, Facebook was not a publicly traded company.

Sentencing is set for December 3. Both parties have agreed to recommend a sentence of 120 months in federal prison and restitution of more than $5.7 million.

U.S. Attorney Barry Grissom announced the guilty plea.

Grissom commended the FBI and Assistant U.S. Attorney Chris Oakley for their work on the case.

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Husband and Wife Indicted in Mortgage Fraud Scheme

admin —  August 21, 2012 — 1 Comment

Timothy McCabe, 47, and Theresa Morales, 48, Hypoluxo, Florida, have been indicted for bank fraud.

According to the indictment, the defendants submitted a fraudulent loan application to a financial institution, JPMorgan Chase Bank, to obtain a $560,000 mortgage on a property in Lewiston, New York. The defendants, who are husband and wife, provided false information in the loan application as to employment, salary, and residency. The defendants conduct resulted in foreclosure on the property.

U.S. Attorney William J. Hochul, Jr. made the announcement.

The charge carries a maximum penalty of 30 years in prison, a $1,000,000 fine, or both.

The indictment is the result of an investigation by the Mortgage Fraud Task Force of WNY which includes agents and personnel from the United States Secret Service, under the direction of Special Agent in Charge Tracy Gast; the Federal Bureau of Investigation, under the direction of Special Agent in Charge Christopher M. Piehota; the U.S. Postal Inspection Service, under the direction of Inspector in Charge Robert Bethel; the Housing and Urban Development Office of Inspector General, under the direction of Cary Rubenstein, Special Agent in Charge, New York Region; and the Internal Revenue Service, under the direction of Acting Special Agent in Charge Toni Weirauch. The Mortgage Fraud Task Force of WNY is led by the U.S. Attorney’s Office and also includes Veterans Affairs Office of Inspector General and the U.S. Bankruptcy Trustee.

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Fugitive Charged with Mortgage Internet Fraud Scheme

admin —  August 14, 2012 — Leave a comment

Sonata Bastien a/k/a Sean Chase, 30, formerly of Boston, Massachusetts, has been charged with fraudulently offering real estate loans over the Internet, then failing to make the loans or refund the application fees.

The indictment alleges that from September 2004 through June 2009, Bastien/Chase advertised loans to be provided by companies known as Lantzy Financial Consulting, Light Docs, Birchmere Mortgage, Lognar Mortgage, and Nileland Mortgage. According to the indictment, each entity operated a corresponding website that offered real estate loans and required an up-front fee or series of fees advertised as refundable. The entities listed bogus mailing addresses on their websites, but in later communications with victims, they asked the victims to send their money to a real address in Boston at which Bastien had lived and from which she continued to collect mail for the scheme. The charges allege that the entities failed to make the loans or refund the fees. Instead, the victims’ fees went into one of the 18 bank accounts that Bastien controlled, and were spent on expenses to perpetuate the fraud and personal expenses, such as purchases at Guitar Center, Target, a gas station, Gold’s Gym and Dunkin’ Donuts.

In February 2011, Bastien/Chase was charged with seven counts of mail fraud for participating in the scheme. If convicted on these charges, Bastien/Chase faces up to 20 years in prison on each count, to be followed by three years of supervised release, restitution, forfeiture and a fine of $250,000 or twice the gain or loss, whichever is highest.

The defendant is currently a fugitive from justice. Bastien is an African-American, with black hair and brown eyes, about 5’5″ tall and approximately 150 pounds. She was born a female with the birth name of Sonata Bastien, but may be living as a transgendered male under the name Sean Chase. Bastien/Chase was last believed to be residing in the New York or New Jersey area.  

Citizens with information about Bastien’s whereabouts should not attempt to apprehend her themselves, but are being asked to call the U.S. Postal Inspection Service at 1-877-876-2455 and select Option 2.

United States Attorney Carmen M. Ortiz; Robert Bethel, Inspector in Charge of the U.S. Postal Inspection Service; and William P. Offord, Special Agent in Charge of the Internal Revenue Service’s Criminal Investigation in Boston made the announced today. The case is being prosecuted by Assistant U.S. Attorneys Scott L. Garland and Amy Harman Burkart of Ortiz’s Cybercrimes Unit.

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

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Forest Hills Lawyers Busted in Mortgage Fraud

admin —  August 1, 2012 — Leave a comment

Two attorneys with a Forest Hills practice were convicted of mortgage fraud this week, according to the U.S. Attorney in Brooklyn. Matthew Burstein and Aaron Rabinowitz, both 40, were found guilty on ten felony counts of fraud for illegally obtaining …Two Queens Attorneys Convicted of Mortgage Fraud Equities.com2 NY Lawyers Convicted in $25M Mortgage-Fraud Case ABA JournalConvicted of Mortgage Fraud, Two Lawyers to Seek New Trial New York Law Journal (registration)all 5 news articles »

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Source: Patch.com

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Jury Convicts 2 Attorneys of Mortgage Fraud

Allison Tussey —  July 31, 2012 — Leave a comment

Matthew Burstein, 40, and Aaron Rabinowitz, 40, both New York attorneys, were convicted by a federal jury on ten felony counts for participating in a mortgage fraud scheme that resulted in over $25 million in fraudulently-obtained loans from Countrywide Financial, Fremont Investment and Loan, IndyMac Bank, Sun Trust Mortgage, Inc., Wells Fargo & Company and New Century Mortgage Corporation.

During a seven-day trial, the government’s evidence established that, from January 2006 to September 2008, the defendants, partners at the law firm Burstein & Rabinowitz, Forest Hill, Queens, New York, worked as attorneys at real estate closings for fraudulent home sales in New York City. The defendants, who would act as both the bank settlement attorneys and the buyers’ attorneys at the closings, worked with co-conspirator real estate agents and loan officers to falsify loan documents in order to induce banks to give mortgage loans for properties located in Queens, Brooklyn and Long Island, New York.

Many of the properties were purchased by straw buyers who had been recruited by the co-conspirator real estate agents and loan officers to purchase the properties. In many instances the straw buyers subsequently failed to make mortgage payments to the lending institutions, and as a result millions of dollars of loans are now in default. The defendants profited by paying themselves attorneys’ fees from the mortgage loan proceeds.

Sentencing is scheduled for November 26, 2012. The maximum term of imprisonment for conspiracy to commit bank and wire fraud is 30 years. The government is also seeking an restitution from the defendants and forfeiture of the criminal proceeds, including a criminal forfeiture money judgment in the amount of proceeds traceable to the offenses.

The convictions were announced by Loretta E. Lynch, United States Attorney for the Eastern District of New York, Janice K. Fedarcyk, Assistant Director-in-Charge of the Federal Bureau of Investigation, New York Field Office, and Jon T. Rymer, Inspector General, Federal Deposit Insurance Corporation.

The government’s case was prosecuted by Assistant United States Attorneys Matthew S. Amatruda and Robert T. Polemeni.

“The defendants violated the trust placed in them as attorneys and further damaged the integrity of the real estate market,” stated United States Attorney Lynch. “We will vigorously investigate and prosecute those who engage in mortgage fraud, including professionals who jettison their responsibility to reap rewards from the fraud.” Ms. Lynch extended her grateful appreciation to the Federal Bureau of Investigation and the Federal Deposit Insurance Corporation.

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Two Queens Attorneys Convicted of Mortgage Fraud

admin —  July 31, 2012 — Leave a comment

A federal jury in Brooklyn returned a verdict late yesterday convicting attorneys Matthew Burstein and Aaron Rabinowitz on ten felony counts for participating in a mortgage fraud scheme that resulted in over $25 million in fraudulently-obtained loans …Forest Hills Lawyers Busted in Mortgage Fraud Patch.com2 NY Lawyers Convicted in $25M Mortgage-Fraud Case ABA JournalConvicted of Mortgage Fraud, Two Lawyers to Seek New Trial New York Law Journal (registration)all 5 news articles »

Click here for full article
Source: Equities.com

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Mortgage Frauster Sentenced for Forging Signatures

admin —  July 19, 2012 — Leave a comment

Arthur Strasnick, 64, New Smyrna Beach, Florida, was sentenced on two counts of mail fraud and one count of identity theft.

As previously reported on Mortgage Fraud Blog, Strasnick’s fraudulent activities began in early 2003 when he lured a Saratoga Springs woman into investing money with Strasnick’s firm; Backstreet Associates, Inc. Investors in Backstreet Associates, Inc. were “guaranteed” high fixed annual rates of returns ranging from 12.0% to 20.0% interest. Strasnick’s investors were paid purported interest and principal payments, when in reality; the investors were receiving monies obtained from the same investor or other investors. 

In the fall of 2006, Strasnick also operated a mortgage fraud scheme in which he tricked other individuals, including the aforementioned Saratoga Springs woman, into providing him money representing equity in their homes. The mortgages were obtained after Strasnick either made false representations to the homeowners or forged the signatures of the actual homeowners.

United States Attorney Richard S. Hartunian and Acting Special Agent-in-Charge Toni Weirauch of the New York Field Office of the Internal Revenue Service, Criminal Investigation Division made the announcement. 

U.S. Attorney Hartunian said that “fraudulent investment schemes such as this prey on vulnerability and hope, and can have devastating effects. With our law enforcement partners, we pursue these cases aggressively, and congratulate IRS-CI for their fine work in this case.” 

Strasnick was sentenced by the Honorable Thomas J. McAvoy in Federal District Court in Albany to 60 months of imprisonment to be followed by three years of supervised release. Strasnick was also ordered to pay $1,994,620.32 in restitution.

This case was investigated by the Internal Revenue Service.

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LexisNexis (MARI) Releases 14th Annual Mortgage Fraud Report

Allison Tussey —  July 12, 2012 — Leave a comment

With still-high delinquency and foreclosure rates, little economic progress in depressed markets, and unscrupulous individuals taking advantage of the financially disenfranchised, 2011 was a bleak year for the mortgage industry. As industry insiders and economic analysts hope for noticeable recovery, 2011’s mortgage loan originations were at their lowest since 2001.

However, the business of home buying continues, albeit slowly and with considerable caution. Industry participants continue to try and manage through this industry volatility, while recognizing heightened oversight and consumer uncertainty.

Increased legislative and regulatory mandates like those from the Office of the Comptroller of the Currency (OCC) (a focus on 2009-10 closed loans and credentialing), the 2010 Dodd-Frank Act (overarching regulation across the financial services industry), the 2008 Secure and Fair Enforcement for Mortgage Licensing (SAFE) Act (originator registration on National Mortgage License System & Registry (NMLS/R)), the Real Estate Settlement Procedures Act (RESPA) (new required disclosures and closing procedures), and FHA Certified Brokers (HUD transitions third party originator risk to lenders and banks) have created a tighter day-to-day reality for professionals involved in all aspects of the mortgage transaction. Such mandates, along with the newly vigilant loan industry, appear to be making a difference in one arena, as a decreased number of loan origination fraud and misrepresentation cases are being reported. However, along with these decreases are increases in potential distressed homeowner fraud and collusion schemes.

This is the LexisNexis 14th Annual Mortgage Fraud Report, formerly known as the MARI Fraud Report. These annual reports examine the current composition of residential mortgage fraud and misrepresentation involving industry professionals in the United States. (See Appendix I at the end of this report for information about the methods used to collect data on mortgage fraud.) In addition, this year we are including statistics that reveal patterns of potential mortgage industry collusion.

LexisNexis’ examination of 2011 data identified that:

– According to the FBI, a total of 93,508 mortgage-related SARS were collected in FY 2011, up almost 33 percent from FY 2010.

– For loans originated in 2011, Florida ranks third on the Mortgage Fraud Index (MFI) with an MFI of 227″”slightly over two times the rate of reported fraud and misrepresentation by industry professionals that would be expected based on the proportion of loans originated in Florida. However, Florida’s Origination MFI is the state’s lowest in the past five years.

– Five states””Florida, Michigan, California, Illinois and New York””occupy space in top ten lists for incidents of reported industry fraud and/or misrepresentation for both 2011 investigations and 2011 originations.

Mandates, along with the newly vigilant loan industry, appear to be making a difference in one arena, as a decreased number of loan origination fraud and misrepresentation cases are being reported.

However, along with these decreases are increases in potential distressed homeowner fraud and collusion schemes.

– The top Metropolitan Statistical Area (MSA) for reported loans originated in 2011 is Los Angeles-Riverside-Orange County, California. Sixteen percent of all reports received included properties in this MSA.

– Reports for loans originated in 2011 have significantly fewer cases of Appraisal fraud and misrepresentation than in previous years. At 17 percent in 2011, this type of misrepresentation is down from a high of 34 percent in 2009.

– The highest categories for all reported 2011 investigations are Application and Appraisal fraud and misrepresentation. The highest categories for reported 2011 originations are Application and Verification of Deposit (and other bank-related documentation) fraud and misrepresentation.

– According to the incident data from MIDEX submissions, there is an increase in reported incidents of potential collusion involving multiple professionals.

– Six states””Alabama, New York, Kentucky, Pennsylvania, Iowa and New Jersey””rank in two different categories on the LexisNexis Collusion Indicator Index (CII) as areas with high levels of potential non-arm’s length collusion activity.

The body of this report presents the data and analysis supporting the findings cited above. The information contained in this report is meant to provide insights into current mortgage market activities.

Data and Information Sources Used in This Case Report

For over two decades, major mortgage lenders, agencies and insurers have been submitting information describing incidents of subscriber-verified fraud and material misrepresentation to an industry-contributed database, known as MIDEX (Mortgage Industry Data Exchange), in order to share adverse experiences involving professionals operating within the mortgage industry. Contributing subscribers use information services derived from  the MIDEX database as a risk management tool to protect against mortgage fraud perpetrated by industry professionals. MIDEX enables subscribers to perform due diligence checks on mortgage professionals and companies as part of their business relationship credentialing process. LexisNexis utilizes MIDEX submissions to develop representative statistics on a wide range of mortgage fraud and misrepresentation characteristics. Findings from this analysis are presented in annual Case Reports to provide key insight into mortgage fraud trends, as reported by the industry.

In addition to MIDEX incident data, the report utilizes Home Mortgage Disclosure Act (HMDA) data sourced by the Mortgage Bankers Association (MBA), a key component used for calculating a state’s Mortgage Fraud Index (MFI) value. Please refer to Appendix II for information on the MFI and its computation.

According to the incident data from MIDEX submissions, there is an increase in reported incidents of potential collusion involving multiple  professionals.

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Hard Money Lender Sentenced in Investment Fraud Scheme

admin —  June 21, 2012 — 1 Comment

Dan Oaheyoh Two Feathers, 56, Hamilton, Montana, has been sentenced in connection with his guilty plea to conspiracy to commit investment fraud, investment fraud, receipt of stolen property in interstate commerce, and money laundering.

As previously reported on Mortgage Fraud Blog, during late 2007 or early 2008, Two Feathers became acquainted with Shawn Swor, a mortgage broker in Missoula, Montana whose business consisted largely of making hard money loans to clients who could not get loans through conventional banking means. At the time, in late 2007 and early 2008, Swor was looking into funding sources from a number of people, mostly over the Internet, who would contact him promoting investment ideas involving securities. One of the funding sources Swor met over the internet in late 2007 was Terrence Paulin, who also presented himself as a hard money lender and broker. Swor started working with Paulin identifying the validity of different funding sources offered over the internet.

When Two Feathers met Swor in late 2007, Two Feathers claimed he knew several different ways to generate cash flow through the purchase and sale of securities in Europe; providing large rates of return for investors as well as the brokers and traders which could be used to funds the hard money loans for Swor and Paulin. In February of 2008, Two Feathers, Swor and Paulin decided to start a business to offer investments in high yield investment opportunities using several different leveraged investment and securities programs. On February 26, 2008, Two Feathers, Swor and Paulin established and registered DTF Consulting Groupas a Missoula, Montana, company.

Two Feathers proposed using a large security, such as a Letter of Credit or a Note, which could be leased from a hedge fund, pension fund or bank. Once the security was in hand, the concept was to borrow against the large security and those funds would be used to invest in a risk free investment such as government securities. Two Feathers explained that he had connections in the world of international finance and international banking experience and could purchase securities at a discount and sell them in Europe at a premium. This would allow for additional profit margin on each transaction completed.

The DTF principals would solicit investors whose money would be used to secure the large security through a lease. Prospective investors would, in a short period of time, receive a substantial profit from buying the government securities at a discount and selling them at a premium.

In March 2008, Two Feathers, claiming to be an international financial trader with Wachovia Bank, met with potential investors in Denver, Colorado, and promoted a leveraging investment opportunity which he represented would produce remarkable profits within 30 days. At that meeting, he assured potential investors that his investment program was sound and had produced results in the past.

On April 11, 2008, Two Feathers and Swor met with potential investors in Nashville, Tennessee, and promoted their leveraging investment opportunity and promised extremely high returns of invested funds within a short period of time. Swor told potential investors that he had personally invested money in the leveraged investment program that he and Two Feathers were promoting. One witness to this meeting indicated that Swor represented that he had made millions from the investment scheme that he and Two Feathers were promoting.

Paulin manufactured a fraudulent Letter of Credit from Wachovia Bank in the amount of $1.5 billion to show potential investors that DTF had the necessary negotiable instrument available to make the investment trading program work. Paulin claimed when interviewed by law enforcement that the fraudulent document was created at Two Feathers’ direction and request. Two Feathers advised investigators that it was Paulin’s idea and that he did not request or direct its creation, although he admitted knowing about the Letter of Credit. It was Paulin’s understanding was that the Letter of Credit was to be used to entice potential investors into DTF’s trading program. However, Two Feathers started using the letter in other ways, including representation of the document as genuine to a real estate agent for the attempted purchase of property.

Swor and Paulin had a falling out with Two Feathers after the real estate agent discovered that the Wachovia Bank Letter of Credit was bogus and turned it over to local law enforcement and both stopped promoting the DTF scheme in June of 2008.

The DTF promotion attracted eight victims. A secondary scheme was tailored more as an advanced fee scheme where the investor would pay money up front for a hard money loan. Three more victims paid the advanced fee on the promise that DTF could and would secure loan funds. The total loss for all 11 victims between February and June of 2008 was approximately $800,000. The money, in whole or in part, was wired to the DTF account at Farmers State Bank in Victor, Montana, which was controlled by Two Feathers.

While the DTF enterprise was in operation, Two Feathers, on his own, was also promoting the DTF leveraging plan, or one similar, using the zero coupon Stripped Treasuries model, directly to investors or intermediaries working for them. Two Feathers again represented that he had a great deal of experience making these types of investments and a working relationship with D.A. Davidson, a regional investment firm in Montana, which allowed him to purchase the Treasuries at a discount and resell them on the open market. Each transaction would generate several points of return on investment. These transactions would be consummated several times a day. By the end of a designated period of time, Two Feathers guaranteed, the investment would provide a substantial rate of return for the investor.

Using a front company called TLT Holdings, Two Feathers told investors that his program was producing very large rates of return buying and selling U.S. Treasury Bonds. TLT Holdings had accounts at the Bank of Bermuda, the Bank of New York (through an intermediate institution called EKN Financial), and at D.A. Davidson in Montana. Approximately $850,000 of the monies provided to Two Feathers from this stage of the scheme was frozen by D.A. Davidson when Two Feathers attempted to get the money out of the country and into Switzerland into accounts under his control.

That portion of the scheme – where Two Feathers did not use associates to promote the leveraging platform – attracted four investors and grossed another $1,100,000 [$850,000 of which was intercepted] between August and September of 2008.

The evidence would have shown that Two Feathers has a history of investment fraud. In 1999, Two Feathers, then known as Dan Latham but using an alias of Dan Two Feathers, was convicted in both the Eastern and Southern Districts of New York, and sentenced to 41 months of incarceration and ordered to pay $5,162,558 in restitution. He later legally changed his name to Dan Oaheyoh Two Feathers. In that case, Latham and his associates used two sham Manhattan, New York companies, John J Barney and Associates, and Barney International Holdings, to convince victims that an overseas lender, Panacea Bank and Trust, would finance their loans.

The investigation was a cooperative effort between the Federal Bureau of Investigation and the Criminal Investigation Division of the Internal Revenue Service.

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Bank and 19 Employees Charged with Mortgage Fraud

Allison Tussey —  June 4, 2012 — Leave a comment

Abacus Federal Savings Bank and eleven of its former employees in a false document mortgage fraud scheme resulting in the sale of hundreds of millions of dollars worth of fraudulent loans to the Federal National Mortgage Association, commonly known as “Fannie Mae.” An additional eight former employees have already waived indictment and admitted their guilt in connection with this conspiracy.

The 184-count indictment charges eleven individuals and Abacus itself with residential mortgage fraud, securities fraud, grand larceny, conspiracy, and falsifying business records, among other related charges.[1] The defendants include former senior managers, as well as former employees who worked in various capacities for the Bank’s lending business. Each defendant faces charges related to his or her involvement in the criminal conspiracy, which the indictment charges occurred between May 2005 and February 2010.

The indictment, representing the culmination of a two-and-a-half-year investigation, charges that Abacus, its employees, and its managers engaged in a conspiracy involving the regular and systematic falsification of residential mortgage application documents. The defendants falsified these documents so that they could earn commissions and fees by ensuring that otherwise unqualified borrowers would receive loans, which Abacus then sold to Fannie Mae pursuant to an ongoing agreement. After purchasing these fraudulent mortgages, Fannie Mae repackaged them into mortgage-backed securities and sold them to outside investors. As a result of the hundreds of millions of dollars in charged fraudulent loans, Abacus earned many millions of dollars in loan origination, purchasing, and servicing fees over the five-year period covered by the indictment.

Abacus is a federally-chartered deposit and lending institution headquartered at 6 Bowery Street, Chinatown, New York. The Bank operates seven branches across New York City, New Jersey, and Pennsylvania, and primarily serves the Chinese-American community. The loan department at Abacus consisted of three separate units: loan origination, processing, and underwriting. All of these units and several of the branches were implicated in the conspiracy.

Charged in the indictment is Yiu Wah Wong, who served as the Bank’s Chief Credit Officer, Vice President, and Underwriting Supervisor. Wong was the most senior Loan Department manager and reported directly to the Bank’s CEO. Also charged in the indictment is Wai Hung “Raymond” Tam, the Loan Origination Supervisor. According to the indictment, these Abacus managers trained lower level employees that the accuracy of loan application information was immaterial; what mattered was making sure that borrowers were able to obtain Fannie Mae-backed mortgages. Managers also encouraged loan officers and processors to be discreet by making sure that the falsified information would be believable in the eyes of the Bank’s regulator, the Office of the Comptroller of the Currency, as well as Fannie Mae.

Abacus loan originators, also called loan officers, are accused of regularly instructing prospective borrowers to make misrepresentations in their loan applications and often authored falsified documents themselves. According to the indictment, originators coached borrowers to inflate their income, assets, and job titles, and to falsify Verification of Employment forms. Loan officers are charged with creating false gift letters to obscure the source of the borrowers’ down payments and disguise borrowers’ liabilities as assets. The loan originators charged in the indictment were: Wen Fang “Fanny” Wang, Ying Chuan “Shelley” Wang, Jie Qiong “Michelle” Nan, Chi Fung “Danny” Lau, and Phoebe Lee. Loan officers Qibin “Ken” Yu, Ruo Lan “Julie” Chen, Lien “Liliy” Quach, Xiaomin “Jane” Huang, and Yim “Katy” Cheng all previously pleaded guilty to felonies for their participation in this scheme. Loan officer Jin Hua “Jenny” Zhang has been charged by felony complaint with Falsifying Business Records in the First Degree and related charges.

Loan processors, including defendants Wai Ching “Alice” Wong and Yuk Yin “Loretta” Lam Cheng, are accused of helping originators concoct inflated incomes for borrowers. Specifically, processors manipulated loan origination software in order to calculate how much income borrowers needed to show in order to qualify for loans. According to the indictment, processors also facilitated the falsification of borrowers’ employment information by providing blank Verification of Employment forms to originators and loan applicants instead of mailing the forms directly to employers. Processor Michelle Wong Li previously pleaded guilty to Falsifying Business Records in the First Degree in connection with her conduct.

According to the indictment, loan underwriters approved loans they knew contained falsehoods, and knowingly failed to conduct adequate scrutiny of obviously false documents. Former underwriters Victoria Tsui and Yi Yi Zhao were charged in the indictment. Andy Chen, who served as an underwriter, previously pleaded guilty to Falsifying Business Records in the First Degree.

Between 2005 and 2010, Abacus is charged with selling hundreds of millions of dollars worth of fraudulent loans to Fannie Mae. Notwithstanding the fact that these loans were replete with misrepresentations and falsified information, Abacus represented to Fannie Mae that the loan documents were accurate and truthful, a prerequisite for purchases made by Fannie Mae. Abacus knew that once the loans were in Fannie Mae’s portfolio, the mortgages would be bundled together with other loans and sold by Fannie Mae as securities in the secondary loan market. Over the course of the fraud, Abacus and its employees earned many millions of dollars in commissions, origination and servicing fees.

Manhattan District Attorney Cyrus R. Vance, Jr., announced the indictment.

The District Attorney’s investigation into this misconduct continues. Anyone with information should call the District Attorney’s Office at (212) 335-3600.

Assistant District Attorneys Edward Starishevsky, Senior Investigative Counsel, and Julieta V. Lozano led the investigation under the supervision of Polly Greenberg, Chief of the Major Economic Crimes Bureau, and Adam Kaufmann, Chief of the Investigation Division. Investigative Analyst Steven Koch and Trial Preparation Assistants Marisa Calleja, Elisabeth Daniels, Melissa Brown, and Kathleen Dougherty assisted in the investigation. In addition, Investigator Jason Malone of the District Attorney’s Investigations Bureau participated in the investigation under the supervision of Supervising Investigator Santiago Batista.

District Attorney Vance thanked the Office of Comptroller of the Currency, Fannie Mae, IRS Criminal Investigations, the Federal Deposit Insurance Corporation, Federal Housing Finance Agency, and the Federal Housing Finance Agency Office of the Inspector General, whose work on this matter was part of the Residential Mortgage-Backed Securities Working Group formed by President Obama and Attorney General Holder, for their respective contributions to this investigation.

“The lessons of the financial crisis are still being learned,” said District Attorney Vance. “The public must have confidence that when a bank issues a loan that it later re-sells to Fannie Mae, and by extension the nation’s investors, it will engage in honest and ethical practices and follow the rules set by regulators,” said District Attorney Vance. “Loan schemes based on fraud inevitably will unravel, as this one did. Today’s indictment re-affirms our commitment to transparency and straight dealing in the financial markets. We cannot settle for less.”

Steve A. Linick, Inspector General of the Federal Housing Finance Agency, said: “We are proud to have contributed to this effort, which to date has produced multiple indictments of individuals who allegedly engaged in this significant fraud scheme. My office is committed to ferreting out fraud throughout the housing system, and partnering with law enforcement agencies making a similar commitment.”

Charles R. Pine, Director of Field Operations for IRS-Criminal Investigation, said: “The public has the right to expect security and integrity from the banks they entrust their money to, regardless of their size. The protection of the nation’s financial system remains a top priority for IRS-Criminal Investigation.”

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