Archives For Bankruptcy Fraud

Ernesto Diaz, 66, former El Monte, California resident, a former realtor and longtime fugitive was sentenced today to 48 months in federal prison for scheming to defraud distressed homeowners out of nearly $4 million by falsely promising them help with their mortgages, but instead pocketing their money, causing many victims to lose their homes.

According to evidence presented at his trial, from March 2010 to March 2011, Diaz and co-defendant Maria Marcella Gonzalez, 51, Whittier, California ran a fraudulent mortgage-elimination program that operated in Montebello, California under the names “Crown Point Education Inc.” and “Crown Point Inc.” Diaz and Gonzalez advertised to distressed homeowners that the Crown Point program could eliminate whatever balance existed on their mortgages.

Several homeowners testified at trial that they had fallen behind on their mortgage payments during the financial crisis of 2007-08 because of workplace injuries, medical bills and other personal circumstances. In exchange, the homeowners paid Crown Point thousands of dollars for its services, typically with a partial payment demanded at the program’s inception, followed by monthly fees.

Diaz and Gonzalez offered seminars describing the Crown Point program to prospective customers but refused to specify – citing the need to protect the company’s proprietary information – how they purportedly eliminated existing mortgages.

At the seminars, Diaz and Gonzalez guaranteed that the Crown Point program would be successful and had cleared the mortgage problems of past customers. Diaz and Gonzalez also met personally with customers and prospective customers to make similar promises of success, assuage concerns of customers who had seen no signs of success, and demand additional payments. Diaz and Gonzalez often counseled customers to cease mortgage payments to their lenders altogether and to pay Crown Point instead.

After clients signed up for the program and paid a fee – usually $15,000 per property – Diaz and Gonzalez directed others to mail packets of information to the clients’ lenders that falsely asserted that the client’s mortgages were invalid and that mortgages would be extinguished if the lenders did not respond. Many of the mailed documents were notarized to create the appearance of legitimacy, at times using the notary stamp of Diaz’s own sister without her knowledge or consent.

In fact, Crown Point had no success in eliminating customer mortgage debt and many customers – including Diaz’s brother – lost their homes.

One integral part of the scheme involved the filing of unauthorized bankruptcy petitions to delay the foreclosure process, leaving victims with the impression that the Crown Point program was working and inducing them to continue making payments, but damaging clients’ credit ratings in the process.

Many, though not all, of [Diaz’s] victims could have qualified for loan modifications or legitimate foreclosure forbearance programs to save their homes but, in reliance on [Diaz’s] lies, were never able to avail themselves of these options,” prosecutors wrote in a sentencing memorandum.

Diaz, who fled to Mexico after entering into a plea agreement in this case in 2012, pleaded guilty on September 9, 2012 to a separate count of failure to appear in court while released on bond. He was a fugitive for seven years until the FBI arrested him in October 2019. A federal grand jury in February 2020 returned a superseding indictment against him, which led to this year’s trial.

Gonzalez pleaded guilty in July 2015 to two-count superseding information charging her with making a false statement in a bankruptcy declaration. Judge Wilson sentenced her to 70 months in federal prison.

At the conclusion of a three-day trial, a federal jury on September 13, 2021 found Diaz guilty of one count of conspiracy, two counts of mail fraud affecting a financial institution, and one count of mail fraud. The jury acquitted him on one mail fraud count.

Diaz was also ordered to pay $3,061,159 in restitution to his victims.

The FBI investigated this matter.

Assistant United States Attorneys Alexander B. Schwab of the Major Frauds Section and Julia Hu of the General Crimes Section prosecuted this case.

 

 

James Lee Clark, 59, Wilton Manor, Florida has been charged with one count of conspiracy to commit bankruptcy fraud, seven counts of bankruptcy fraud, one count of making a falsification of records in a bankruptcy proceeding, and eight counts of wire fraud.

According to the indictment, from January 2010 through February 2017, Clark conspired with his paralegal, Eric Liebman, to defraud mortgage creditors and guarantors, such as Fannie Mae, who were holding mortgage notes on properties that were in foreclosure. The indictment further charges that Clark and Liebman falsely and fraudulently represented to the distressed homeowners facing foreclosure that, in exchange for executing quitclaim or warranty deeds for their properties to an entity controlled by Liebman, they would negotiate with the mortgage creditors to prevent foreclosures. Clark and Liebman convinced the distressed homeowners to pay them rent, or agree to put their houses up for sale. In order to continue to collect ill-gotten rents, or profit from the sale of the properties, Clark allegedly filed fraudulent bankruptcy petitions in the names of the homeowners to prevent the mortgage creditors from lawfully foreclosing and taking title to the property. In some instances, Clark filed multiple fraudulent petitions in the names of distressed homeowners.

Additionally, it is further alleged that, from January 2012 to February 2017, Clark, who was a licensed attorney, defrauded his clients out of approximately $1.3 million. As part of his practice, Clark would act as a trustee for his clients and also hold their money in various bank accounts depending on the purpose of trust.  Instead of using the funds for the purpose intended by his clients, Clark would divert the money into his law firm’s bank accounts and pay for personal expenses, such as gambling, travel, and automobiles.

Liebman pleaded guilty to one count of conspiracy to commit bankruptcy fraud on September 24, 2019. His sentencing hearing is scheduled for January 14, 2021.

United States Attorney Maria Chapa Lopez made the announcement.

If convicted, Clark faces up to 20 years’ imprisonment for the falsification of records count and for each wire fraud count. He faces up to 5 years in federal prison for the conspiracy count, and for each bankruptcy fraud count. The indictment also notifies Clark that the United States is seeking a money judgment of $1.3 million, the proceeds of the charged criminal conduct.

An indictment is merely a formal charge that a defendant has committed one or more violations of federal criminal law, and every defendant is presumed innocent unless, and until, proven guilty.

This case was investigated by the Federal Bureau of Investigation and the Federal Housing Finance Agency – Office of Inspector General. The Office of United States Trustee for the Middle District of Florida, Tampa Division provided substantial investigative assistance. It will be prosecuted by Special Assistant United States Attorney Chris Poor.

 

Tanya Firmani, 47, Jacksonville, Florida has been found guilty of one count of conspiracy to commit bankruptcy fraud and six counts of bankruptcy fraud.

According to testimony and evidence presented at trial, Firmani conspired with others in a foreclosure rescue/bankruptcy fraud scheme. Firmani solicited homeowners whose mortgages were in default and offered to rescue their homes from foreclosure. To prevent the Federal National Mortgage Association (“Fannie Mae”), the Federal Home Loan Mortgage Corporation (“Freddie Mac”), the Federal Housing Administration (“FHA”), and multiple financial institutions from lawfully foreclosing on homeowners’ properties, Firmani filed or caused the filing of fraudulent bankruptcy petitions in the homeowners’ names just prior to the scheduled foreclosure sale dates. The fraudulent bankruptcies triggered the Bankruptcy Code’s automatic stay provision, preventing Fannie Mae, Freddie Mac, FHA, and the financial institutions from conducting foreclosure sales and obtaining the titles to the properties. The fraudulent bankruptcy petitions enabled Firmani to collect fees and allowed her co-conspirators to obtain ill-gotten commissions for short-sales causing losses to creditors.

Firmani faces a maximum penalty of five years’ imprisonment on each count. Her sentencing hearing is scheduled for April 21, 2020.

This case was investigated by the Federal Housing Finance Agency – Office of Inspector General and the U.S. Department of Housing and Urban Development – Office of Inspector General. The Office of United States Trustee for the Middle District of Florida provided substantial investigative assistance. The case is being prosecuted by Special Assistant United States Attorney Chris Poor.

 

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. http://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.

Andrew Valles was sentenced today for operating a $2 million mortgage fraud scheme throughout Southern California.

The scheme occurred between 2012 and 2017. The defendants conspired using a fake insurance company, “SafeCare,” which promised to provide home loan services at a low monthly price to primarily Latino and African American families. During this time, the defendants would delay foreclosures and eviction actions by filing false bankruptcy and other court documents under fictitious names. They would instruct victims to deposit illegal advance fees and other large payments into a bank account controlled by the defendants. When the promised loan did not come through, they would proceed with the fabricated filings. The scheme took place in San Diego, Riverside, Orange, Los Angeles, and San Bernardino Counties in California. http://www.mortgagefraudblog.com/?s=Andrew+Valles

Today, Mr. Valles was sentenced to 13 years in state prison. Restitution was ordered in the amount of $2,342,957. Co-defendant Arnold Millman was previously sentenced to a state prison term of three years and four months.

California Attorney General Xavier Becerra made the announcement.

These con artists stole the life savings of decent Californians who thought they were making a smart decision for their homes and their families,” said Attorney General Becerra. “These actions will not be tolerated. My office will continue to identify, investigate, and prosecute those who prey on hardworking Californians to line their own pockets.

The sentencing and guilty pleas are the product of a joint investigation by the California Department of Justice, the California Department of Insurance, and the Federal Housing Finance Agency Office of the Inspector General (FHFA-OIG). A third codefendant, Jemal Lilly, pled guilty and is scheduled to be sentenced on September 4, 2019.

David Lyle Morgan, 53, Tamp, Florida has pleaded guilty to one count of bankruptcy fraud.

According to the plea agreement, Morgan was a licensed realtor who entered into a contract with a homeowner to sell a property in foreclosure. In order to prevent the Federal National Mortgage Association (commonly known as Fannie Mae) from lawfully foreclosing on the homeowner’s property, Morgan devised and executed a bankruptcy fraud scheme wherein he filed a fraudulent bankruptcy petition in the name of the homeowner, without the homeowner’s knowledge or consent, just prior to the scheduled foreclosure sale date. The fraudulent bankruptcy invoked the automatic stay provision of the bankruptcy code, which prevented Fannie Mae from conducting the foreclosure sale and obtaining title to the property. http://www.mortgagefraudblog.com/?s=David+Lyle+Morgan

The fraudulent bankruptcy petition filed by Morgan allowed him to continue efforts to sell the property in order to obtain ill-gotten real estate commissions.

He faces a maximum penalty of five 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.

Bobbie W. Williams, a.k.a. Robert W. Williams, 56, Akron, Ohio was indicted for using a fraudulent Social Security number and falsely overstating his income to obtain a mortgage of more than $300,000.

The indictment alleges Williams falsified information on his loan application in order to secure the purchase of the property located on Ridgewood Road, Akron, Ohio. Then, after Williams could not make the payments on the property and it went into foreclosure, he falsified information in his bankruptcy petition, including his true identity and his ownership of the Ridgewood Road property.

An indictment is only a charge and is not evidence of guilt.  A defendant is entitled to a fair trial in which it will be the government’s burden to prove guilt beyond a reasonable doubt.

Williams is charged with on one count of bank fraud and two counts of bankruptcy fraud.

If convicted, the defendant’s sentence will be determined by the Court after review of factors unique to this case, including the defendant’s prior criminal record, if any, the defendant’s role in the offense and the characteristics of the violations.  In all cases, the sentence will not exceed the statutory maximum and, in most cases, it will be less than the maximum.

The matter is being prosecuted by Assistant U.S. Attorney Mark S. Bennett, and Special Assistant U.S. Attorney Amy Good, Trial Attorney, United States Trustee, after an investigation conducted by the U.S. Department of Housing and Urban Development, Office of Inspector General and the Cleveland office of the Federal Bureau of Investigation.

Michael Rubino, 59, Clearwater, Florida, was sentenced today to 13 months in federal prison for bankruptcy fraud and equity skimming.

According to court documents, Rubino devised a scheme to defraud mortgage lenders that were holding recorded mortgage notes, as well as the Federal National Mortgage Association (“Fannie Mae”) and the Federal Housing Agency (“FHA”), which guaranteed the mortgage notes. In furtherance of his scheme, Rubino searched Pinellas County Clerk of Court records to find properties in various stages of foreclosure. He then contacted distressed homeowners who had already defaulted on their mortgages and had vacated their properties. Rubino offered to take control of, manage, and rent the properties to new tenants. Rubino told the homeowners that he would use the rental income he obtained to pay the mortgages and, in some instances, pay the homeowner a portion of the rent he collected. At no time did Rubino hold any legal or equitable interest in these properties, or have authorization from the mortgage lenders, Fannie Mae, or FHA, to rent out the properties. Further, he failed to remit any of the collected rent monies to FHA, as required by law.

Additionally, in order to prevent Fannie Mae and the mortgage lenders from lawfully foreclosing on properties secured by mortgage notes, Rubino engaged in a bankruptcy fraud scheme whereby he filed fraudulent bankruptcy petitions in the names of the distressed homeowners, without their knowledge or consent, just prior to the scheduled foreclosure sale. These fraudulent bankruptcies triggered the automatic stay provision of the bankruptcy code, preventing the mortgage note holders from conducting the foreclosure sale. The fraudulent bankruptcy petitions filed by Rubino allowed him to continue to collect rent monies to which he was not entitled.

Rubino had pleaded guilty on January 31, 2018.

This case was investigated by the U.S. Department of Housing and Urban Development – Office of Inspector and the Federal Housing Finance Agency – Office of Inspector General. The Office of the U.S. Trustee for the Middle District of Florida also provided substantial assistance. It was prosecuted by Special Assistant United States Attorney Chris Poor.

Christopher Coburn, 33, Winter Garden, Florida was indicted today on six counts of bankruptcy fraud. If convicted, he faces a maximum penalty of 30 years in federal prison.

According to the indictment, 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 in a bankruptcy fraud scheme whereby he filed or caused to be filed fraudulent bankruptcy petitions in the name of homeowners, without their knowledge or consent, just prior to the scheduled foreclosure sale dates. These fraudulent bankruptcies triggered 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 properties. The fraudulent petitions enabled Coburn to collect fees and allowed him to refer the properties to real estate agents in order to obtain ill-gotten referral fees.

United States Attorney Maria Chapa Lopez made the announcement.

An indictment is merely a formal charge that a defendant has committed one or more violations of federal criminal law, and every defendant is presumed innocent unless, and until, proven guilty.

This case was investigated by the Federal Housing Finance Agency, Office of Inspector General. The Office of the United States Trustee for the Middle District of Florida (Orlando Division) also provided substantial assistance. It will be prosecuted by Special Assistant United States Attorney Chris Poor.

 

David Lyle Morgan, 53, Tampa, Florida, has been charged with two counts of bankruptcy fraud and one count of falsification of records in a bankruptcy proceeding. If convicted, he faces a maximum penalty of 30 years in federal prison.

According to the indictment, Morgan, a licensed realtor, entered into a contract with a homeowner to sell a property in foreclosure. In order to prevent the Federal National Mortgage Association (“Fannie Mae”) from lawfully foreclosing on the homeowner’s property, Morgan engaged in a bankruptcy fraud scheme whereby he filed fraudulent bankruptcy petitions in the homeowner’s name, without the 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 and prevented Fannie Mae from conducting the sale and obtaining title to the property. They also allowed Morgan to continue his efforts to sell the property to obtain illegal real estate commissions.

The indictment further alleges that Morgan made false declarations on a fraudulent bankruptcy petition that he had filed in the name of the homeowner, impeding the proper administration of a bankruptcy proceeding.

An indictment is merely a formal charge that a defendant has committed one or more violations of federal criminal law, and every defendant is presumed innocent unless, and until, proven guilty.

United States Attorney Maria Chapa Lopez made the announcement.

This case was investigated by the Federal Housing Finance Agency – Office of Inspector General. The Office of the United States Trustee for the Middle District of Florida (Tampa Division) also provided substantial assistance. It will be prosecuted by Special Assistant United States Attorney Chris Poor.