Archives For Bankruptcy Fraud

Terrylle Blackstone, 37, Woodbridge, Virginia, was sentenced today for participating in a conspiracy that fraudulently promised thousands of homeowners across the U.S. legal help in avoiding foreclosure. The scheme generated at least $15 million for the conspirators but never provided any legal services to the client-victims.

According to court documents, from January 2018 until February 2021, Blackstone worked with attorneys David Maresca of Virginia, Scott Marinelli of New Jersey, and Sam Babbs of Florida. The co-conspirators told homeowners that they operated a “national law firm” based in Washington, D.C.; that attorneys would review the homeowner’s file and provide legal representation to the homeowners; that an attorney in the homeowner’s local area would be assigned to assist them; that the homeowner could meet and consult with those attorneys about the case; and that attorneys in their law firm could help the homeowner, if necessary, file for bankruptcy.

From 2016 until 2019, the conspirators marketed Synergy Law with telephone, television, and internet advertising which told homeowners that attorneys at Maresca and Marinelli’s Synergy Law (Synergy) in Manassas could help them avoid foreclosure. During 2018 and 2019, bankruptcy judges, Synergy clients, and the U.S. Trustee’s Program raised concerns about Synergy’s practices in bankruptcy matters. Blackstone attended court hearings on behalf of Synergy where he made false statements to the court about the firm’s operations. In early 2019, Marinelli was incarcerated in Pennsylvania. Yet Blackstone, Maresca, Marinelli, and others continued to operate Synergy and collect monthly payments purportedly for legal services. During this time, there was no attorney who was a member of Synergy who could practice law. Synergy never had attorneys review all homeowner files and Synergy never had attorneys contact a client’s lender to discuss a mortgage resolution. They also continued to use the interstate wires to operate their “law firm” in ways that were essential to the scheme, such as soliciting clients by telephone.

From 2019 until at least 2022, the conspirators marketed another firm, Themis Law, with television and website advertising which told homeowners that attorneys with Themis could help them avoid foreclosure. Themis operated a call center at an office in Manassas, Virginia. Call center workers used scripts during their phone calls with homeowners in which Themis falsely promised that an attorney would review the homeowner’s case file; that this attorney knew their lender’s “internal guidelines” for a “mortgage resolution”; and that an assigned “legal team” would contact the homeowner’s lender to negotiate a resolution. Themis required homeowner-clients to pay an initial retainer amount followed by a monthly recurring amount for as long as the firm represented the homeowner. When Themis clients faced imminent foreclosure, Themis advised those clients to consider filing for bankruptcy to save their home and referred the clients to Babbs at the Babbs Law Firm. Those clients then signed a new retainer agreement and paid additional fees to Babbs.

During his dates of employment at Synergy Law and Themis Law, Blackstone received no less than $159,145.35 in direct payments from the companies. Judge Moss ordered that Blackstone pay a forfeiture money judgment in that amount.

The sentence was announced U.S. Attorney Matthew M. Graves, Special Agent in Charge David Geist of the FBI Washington Field Office Criminal and Cyber Division, and Special Agent in Charge Kareem Carter of the Internal Revenue Service – Criminal Investigation (IRS-CI) Washington, D.C. Field Office.

Blackstone pleaded guilty on June 6, 2024, to a count of conspiracy to commit mail fraud and wire fraud before U.S District Court Judge Randolph D. Moss. In addition to the prison term, Judge Moss ordered Blackstone to serve three years of supervised release and pay $159,145.35 in restitution.

This case was investigated by the FBI Washington Field Office and the Washington, D.C. Field Office of IRS-CI.

It is being prosecuted by Assistant United States Attorney John Borchert.

 

Lorin Kal Buckner, 66, Hamilton, Ohio, and Dessalines Sealy, 59,  Brooklyn, New York, were two of four defendants who were convicted of crimes related to their participation in a foreclosure rescue scheme that defrauded at least 780 financially distressed homeowners throughout the United States. The defendants preyed on homeowners who had defaulted on their mortgages and convinced the victims to pay to take part in fraudulent programs on the promise it would save their homes

According to court documents and trial testimony, from 2013 through 2018, the defendants took advantage of homeowners’ desperation to save their homes and used money from homeowner victims to personally enrich themselves.

Co-conspirators used companies to engage in a multi-level marketing scheme. The companies named in this case include:

  • MVP Home Solutions, LLC, also known as
    • Stay In or Walk Away;
  • Bolden Pinnacle Group Corp., also known as
    • Home Advisory Services Network
    • Home Advisory Services Group Inc.; and
  • Silverstein & Wolf Corp.

Defendants promised affiliates commissions by recruiting distressed homeowners to the above-named companies.

They used multiple ways to recruit affiliates, including conference calls and direct mailings. For example, some co-conspirators hosted weekly conference calls where participants from across the country dialed in to hear details of the scheme and share sales strategies. During the calls, defendants encouraged affiliates to recruit homeowners to their companies on the promise of easy money.

Affiliates were encouraged to be aggressive in recruiting homeowners. Affiliates used online databases and court records to identify vulnerable, financially distressed homeowners who had recently received notice of foreclosure on their home.

Co-conspirators mailed more than 56,000 postcards in the Southern District of Ohio and elsewhere promising that they could “stop foreclosure” or “stop the sheriff sale” for a fixed fee. Co-conspirators also reached out to homeowners using Craigslist ads, websites, email and social media platforms.

On the promise of reducing or eliminating mortgage obligations in exchange for a fee, initial recruiters would collect payments from homeowners and refer the victims to the co-conspirator companies.

Among other things, the referral programs promised:

  • to negotiate with mortgage lenders on the homeowners’ behalf for the purchase of the mortgage notes at a discount;
  • to negotiate the sale of their home and release of their mortgage loans through a short sale and/or deed in lieu of foreclosure sale;
  • to stop an imminent foreclosure sale;
  • to remove the mortgage lien via a tender offer; and
  • achieve short sale prices at a fraction of the value of the outstanding lien/note.

Further, defendants represented that they had “proprietary” methods or “legal tactics” to help homeowners stall or completely avoid foreclosure. In actuality, the defendants persuaded homeowners to file chapter 13 bankruptcies to delay foreclosure actions.

Defendants filed skeletal bankruptcy petitions that they called “pump fakes” or “missiles,” These petitions intentionally failed to disclose the co-conspirators as preparers giving the appearance that the homeowners had filed the petitions pro se. Any relief from foreclosure delay was temporary until the bankruptcy court dismissed the proceeding.

Buckner and Sealy’s verdicts were announced today following the trial before Senior U.S. District Judge Michael R. Barrett. The other two trial defendants, Joel Harvey, 40, Cincinnati, Ohio and Garrett Stevenson, 45, Cincinnati, Ohio, pleaded guilty during the trial.

The jury convicted Buckner and Sealy of conspiracy to commit mail and wire fraud as well as conspiracy to commit bankruptcy fraud.

Buckner, Sealy, Harvey and Stevenson are four of 13 total defendants in this case.

The defendants took advantage of folks’ financial despair and emotional vulnerabilities to fill their own pockets,” said U.S. Attorney Kenneth L. Parker. “It was a priority for our office and our law enforcement partners to address this nationwide foreclosure scheme.”

Kenneth L. Parker, United States Attorney for the Southern District of Ohio; Robert Manchak, Special Agent in Charge, Federal Housing Finance Agency –  Office of Inspector General (FHFA-OIG), Northeast Region; J. William Rivers, Special Agent in Charge, Federal Bureau of Investigation (FBI), Cincinnati Division; Lesley C. Allison, Inspector in Charge, U.S. Postal Inspection Service (USPIS), Pittsburgh Division; and Philip R. Bartlett, Inspector in Charge, USPIS, New York Division, announced today’s verdict. Assistant United States Attorneys Ebunoluwa A. Taiwo and Timothy S. Mangan are representing the United States in this case.

 

 

James Lee Clark ,61, Wilton Manors, Florida has been sentenced to 48 months in federal prison for conspiracy to commit bankruptcy fraud and wire fraud.

According to court documents, from January 2010 through February 2017, Clark, who was a licensed attorney, conspired with his paralegal, Eric Liebman, to defraud mortgage creditors and guarantors holding notes on properties in foreclosure. Clark and Liebman falsely and fraudulently represented to distressed homeowners that they would negotiate with creditors and guarantors to prevent foreclosures in exchange for the homeowners’ execution of quitclaim or warranty deeds for the properties to an entity controlled by Liebman. Clark and Liebman also convinced the homeowners to pay rent or agree to sell their houses.  In order to continue collecting ill-gotten rents and/or profit from the property sales, Clark filed fraudulent bankruptcy petitions in the names of the homeowners to prevent the mortgage creditors from lawfully foreclosing and taking title to the properties.

Additionally, from January 2012 to February 2017, Clark defrauded his clients out of approximately $1.3 million. As part of his practice, Clark acted as a trustee for clients and held their money in various bank accounts.  Instead of using the funds for the purpose intended by his clients, Clark diverted the money into his law firm’s bank accounts, and used it for personal expenses, like gambling, travel, and automobiles.

Liebman previously pleaded guilty to conspiracy to commit bankruptcy fraud. He was sentenced to 15 months’ imprisonment.

Clark had pleaded guilty on December 14, 2021.

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

 

Eric Liebman, 34, Tampa, Florida has been sentenced to 15 months in federal prison for conspiracy to commit bankruptcy fraud.

According to court documents, from January 2010 through February 2017, Liebman conspired with his co-defendant, James Lee Clark, to defraud mortgage creditors and guarantors, such as Fannie Mae, which held mortgage notes on properties that were in foreclosure. Liebman and Clark 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. Liebman and Clark 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 sales of the properties, Liebman filed fraudulent bankruptcy petitions in the names of the homeowners to prevent the mortgage creditors from lawfully foreclosing and taking title to the properties.

Liebman had pleaded guilty on September 24, 2019.

This case was investigated by the Federal Bureau of Investigation and 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 investigative support. It was prosecuted by Special Assistant United States Attorney Chris Poor.

 

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.