Archives For Mortgage Elimination

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.

 

 

Ernesto Diaz, 66, a former El Monte, California, who managed the sales staff for a program that falsely promised to eliminate the debt owed by struggling homeowners has been found guilty for his role in a scheme that caused customers to lose money and, in many cases, their homes.

Diaz is a former realtor who operated a purported mortgage elimination program in Montebello, California known as Crown Point Education Inc., was found guilty of three counts of mail fraud and one count of conspiracy to commit mail fraud. Prior to the start of the trial, he also pleaded guilty to one count of failure to appear.

According to evidence presented at trial, Diaz and others advertised to distressed homeowners who sought relief from foreclosure and elimination of their mortgage debt. Diaz and others conducted seminars to convince homeowners that the Crown Point program could eliminate all or part of the existing balances on their mortgages, as well as save homes that were near or in foreclosure. Diaz told clients and prospective clients that the Crown Point program involved sending a series of documents to lenders and others to eliminate the clients’ mortgages. Clients were falsely told that the Crown Point program would result in the elimination of their mortgage within six to eight months and that they would be able to obtain up to hundreds of thousands of dollars from their lenders.

After clients signed up for the program and paid a fee, usually $15,000 per property, Diaz and a codefendant directed others to mail packets of information to the clients’ lenders which 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 a notary’s stamp without that notary’s knowledge or consent. Clients were instructed not to make their mortgage payments while the program was implemented.

Bankruptcy petitions and other legal papers were filed in order to delay foreclosure and eviction actions brought by mortgage lenders. This was done by forging the names of clients in the petitions filed. These delays had the effect of lulling homeowners into believing that the Crown Point program had been effective. In some cases, Diaz and others would cause some clients to unknowingly execute quitclaim deeds that would convey ownership of their homes.

Crown Point obtained nearly $5 million from approximately 400 clients who paid to participate in the Crown Point program. Numerous clients lost their properties in foreclosure sales and were evicted from their properties despite having participated in the Crown Point program.

Diaz entered into a plea agreement in 2012; however, he failed to appear on October 15, 2012, for a change of plea hearing following his arraignment. Diaz was not located after failing to appear and agents believed at the time that he fled to Mexico. Diaz remained a fugitive for approximately seven years until his arrest on October 30, 2019, when he was arrested by the FBI in Santa Ana. He is scheduled to be sentenced on November 15 and faces 130 years in federal prison.

This investigation was conducted by the FBI and is being prosecuted by the United States Attorney’s Office, Central District of California.

 

Christopher Castle, 57, formerly of Petaluma, California was found guilty on Monday of 35 counts in a bank fraud scheme that sought to fraudulently eliminate home mortgages and then profit on the subsequent home sales.

According to court documents, between April 22, 2010, and November 18, 2011, Castle was the leader of a conspiracy that ran a “mortgage elimination program” that purported to help distressed homeowners avoid foreclosure. The conspirators fraudulently altered the chain of title on residential properties, sold the properties, and received the sales proceeds.

As a requirement for participation in the “mortgage elimination program,” the conspirators enrolled homeowners as members in a Nevada City-based church named Shon-te-East-a, Walks With Spirit, or its successor entity Pillow Foundation. The conspirators told the homeowners that these entities would offer protection against the banks.

Castle directed other co-conspirators in all aspects of the mortgage elimination program, including recruiting homeowners into the scheme, marshaling the necessary recorded documents, and guiding the homes through sale. Once the homeowner enrolled with Shon-te-East-a or Pillow Foundation, Castle would cause a sham deed of trust to be created and recorded, giving the impression that the homeowner had refinanced the mortgage loan with a new lender. In reality, the new lender was a fake entity controlled by the conspirators, and the homeowner owed no money to the purported new lender.

The next step in the process was also a recorded document. The conspirators caused a fake deed of reconveyance to be recorded, giving the appearance that the true mortgage loan had been discharged and that the true lienholder no longer had a security interest in the home.

With title appearing to be clear, the conspirators caused the sale of the home and split the proceeds between the co-conspirators and the homeowners.

In total, 37 properties were sold through the Shon-te-East-a conspiracy. The conspirators recorded fraudulent documents on an additional approximately 100 homes but were unable to sell these before the scheme unraveled.

In May 2020, Castle was extradited to the United States from Australia. Castle had fled to New Zealand and then Australia in 2011 when it became clear that his scheme was unraveling. After a three-year extradition process, Castle was transported back to the United States by the U.S. Marshals Service to stand trial in the United States.

The U.S. Marshals Service successfully conducted this extradition during the height of the pandemic,” said Acting U.S. Marshal Lasha R. Boyden for the Eastern District of California. “To minimize exposure, the extradition was conducted expeditiously with minimal time on the ground. All safety precautions were implemented, and Mr. Castle was extradited back to the United States without incident.

This was the first jury trial in the Eastern District of California since the onset of the COVID-19 pandemic in March 2020.

Acting U.S. Attorney Phillip A. Talbert made the announcement.

Castle decided to game the system so that he could profit in the midst of the then looming financial crisis, to which his actions contributed,” said Acting U.S. Attorney Talbert. “We are gratified by the jury’s verdict for this significant fraud scheme.

Mortgage fraud is not a victimless crime. Identifying and investigating those who abuse the system for their own personal gain ensures the mortgage system is safer and fairer for everyone. The FBI affirms our commitment to pursuing those who leverage false statements made to financial institutions to enrich themselves while threatening the stability of the banking system and taking advantage of distressed homeowners desperate to retain their homes or start anew without significant losses,” said Special Agent in Charge Sean Ragan of the FBI Sacramento Field Office. “We thank our domestic and international law enforcement partners for their continued efforts to ensure fugitives will face justice regardless of the distance traveled or time that has elapsed.”

This case is the product of an investigation by the Federal Bureau of Investigation. Assistant U.S. Attorneys Audrey B. Hemesath and Tanya B. Syed are prosecuting the case.

Three other co-defendants have previously entered guilty pleas. On April 21, 2017, Remus A. Kirkpatrick, formerly of Oceanside, California pleaded guilty to one count of falsely making writings of lending associations. On May 26, 2017, Michael Romano, Benicia, California pleaded guilty to conspiracy. On July 14, 2017, Laura Pezzi, Roseville, California pleaded guilty to falsely making writings of lending associations.

In related cases, on September 4, 2015, Tisha Trites and Todd Smith, both of San Diego, California pleaded guilty to related charges.

Two other co-defendants, George B. Larsen and Larry Todt, were convicted of conspiracy and bank fraud following a jury trial in December 2017.

Co-defendant John Michael DiChiara passed away on Aug. 24, 2019, while awaiting trial.

Castle is scheduled to be sentenced by U.S. District Judge Morrison C. England Jr. on October 28, 2021, at which time he faces a maximum penalty of 30 years in prison and a $1 million fine for bank fraud, 10 years in prison and a $250,000 fine for falsely making documents of a lending association, and five years in prison and a $250,000 fine for conspiracy. 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.

Carlo Hamrahi, Los Angeles, California, was arrested for bilking Florida seniors, on a warrant issued out of Lee County, Florida. The arrest follows an investigation by DFS and OSP uncovering massive mortgage fraud targeting dozens of seniors.

According to an investigation, Hamrahi, using the alias Roberto Colleoni, defrauded home and business owners in Florida by claiming to be a mortgage fraud investigator. Hamrahi promised targets he could get mortgage payments reduced or eliminated by discovering fraud in loan documents. Hamrahi invited victims to seminars and solicited thousands of dollars in upfront fees for these fraudulent services. Hamrahi defrauded at least 24 victims, many 60 or older.

Authorities in California convicted Hamrahi twice previously of similar crimes on the West Coast. Indiana authorities also convicted Hamrahi on similar charges.

Attorney General Ashley Moody’s Office of Statewide Prosecution and Chief Financial Officer Jimmy Patronis’s Department of Financial Services made the announcement.

Attorney General Ashley Moody said, “For many seniors, their homes are their most valuable asset and a cornerstone of their retirement plan. The defendant in this case used the allure of reducing or eliminating mortgage payments to defraud Florida seniors. He promised them financial freedom and in doing so risked losing his own freedom for decades to come. I want to commend my Statewide Prosecutors and DFS investigators for their diligent efforts in this case. I also want to thank California authorities for apprehending the suspect.”

Chief Financial Officer Jimmy Patronis said, “Orchestrating a fraud scheme to take advantage of Floridians is despicable and it’s especially heinous when it’s our seniors who fall victim. These individuals worked their entire lives to build a nest egg and unfortunately scam artists like this will do anything to steal their money. I thank Attorney General Moody’s Office and my fraud investigators for their hard work together in uncovering this scheme and bringing this fraudster to justice.”

Hamrahi is charged with one count of being involved in an organized scheme to defraud, in violation of F.S. 817.034(4)(1). If convicted, Hamrahi faces up to 30 years in prison. Attorney General Moody’s Assistant Statewide Prosecutor Russell C. Stoddard will prosecute the case.

Jacqueline Graham, 54, formerly of Antioch, California, and Levittown, Pennsylvania was sentenced today to 132 months in prison in connection with a $38 million fraudulent mortgage debt elimination scheme.

According to the Indictment in the case, the evidence presented at trial, and statements made in public court filings and proceedings, including Graham’s sentencing hearing:

From at least 2011 to at least 2012, Graham partnered with Bruce Lewis, 67, formerly of Alaska and Washington State, and John Ruzza 49, formerly of Mahopac, New York in operating the Valhalla, New York-based Terra Foundation, which held itself out as a business that would investigate and eliminate mortgage loans in exchange for fees, soliciting clients who were having difficulties making their mortgage payments.  In fact, however, Terra engaged in a wide-ranging scheme to defraud clients, county clerks’ offices, and banks.

The fraudulent scheme, which was created by Graham and Lewis, involved Terra performing “audits” of clients’ mortgages, sending pseudo-legal paperwork to the banks and/or lenders holding the mortgages, and ultimately filing purported mortgage discharges with the relevant county clerks’ offices.  As a result, anyone doing a title search for one of Terra’s clients would see that the client’s mortgage had been satisfied.  The mortgages had not, however, been discharged, and the mortgages were eventually reinstated, after the clients paid their fees.

In order to effectuate the scheme, Graham, Lewis, and Ruzza involved others, including Rocco Cermele, 57, Yonkers, New York the director of operations, Paula Guadagno, 62, Verplanck, New York, who filed discharges on behalf of Terra, and Anthony Vigna, 61, Thornwood, New York, a lawyer and CPA who worked in Terra’s offices.  Vigna was formerly an Assistant Corporation Counsel for the City of Yonkers, and a college accounting and law professor, including stints on the faculties of Mercy College, Iona College, SUNY Maritime College, College of Mount St. Vincent, and Westchester Community College.

In total, Graham and her co-conspirators filed over 60 fraudulent discharges in Westchester and Putnam Counties in New York, and in Connecticut.  The fraudulent discharges claimed to discharge mortgages with a total loan principal of nearly $38 million. http://www.mortgagefraudblog.com/?s=Jacqueline+Graham

In addition to her prison term, Graham was sentenced to five years of supervised release and ordered to pay restitution to her victims in the amount of $694,450 and forfeiture of $138,941.86.

Lewis was previously was sentenced by Judge Román to seven years in prison, three years of supervised release, and forfeiture of $149,408.

Vigna was previously was sentenced by Judge Román to one year and one day in prison, three years of supervised release, and $250,500 of restitution.

Ruzza was previously pled guilty before U.S. District Judge Cathy Seibel to one count of participating in a conspiracy to commit mail fraud, wire fraud, and bank fraud relating to the Terra scheme, as well as one count of participating in a conspiracy to commit wire fraud, two counts of bank fraud, two counts of wire fraud, and one count of obstruction of justice.

Cermele and Guadagno previously pled guilty to their participation in the scheme.

Graham previously was convicted in June 2019 after a two-week trial before U.S. District Judge Nelson S. Román, who also imposed today’s sentence.

Geoffrey S. Berman, the United States Attorney for the Southern District of New York, made the announcement.

Manhattan U.S. Attorney Geoffrey S. Berman said:  “Jacqueline Graham brazenly defrauded vulnerable homeowners during the housing crisis by falsely promising that, for substantial fees, she could make millions of dollars of their mortgage debt disappear.  In reality, she pilfered her victims’ money, leaving them far worse off, and some ended up losing their homes.  Now Graham will spend 11 years in federal prison for preying upon her many victims.”

Mr. Berman praised the outstanding investigative work of the Federal Bureau of Investigation.  Mr. Berman also thanked the Westchester County District Attorney’s Office and the Department of Housing and Urban Development for their assistance in the case.

This case is being handled by the Office’s White Plains Division.  Assistant United States Attorneys David Felton, Michael Maimin, and James McMahon are in charge of the prosecutions.

James Ignatius Diamond, 69, Riverside, California was sentenced today for defrauding hundreds of victims, mainly distressed homeowners who paid thousands of dollars after attending seminars that promoted a “Free and Clear” program pitched by the defendant and his salespeople.

Between 2010 and 2013, Diamond sold fraudulent debt-elimination services to desperate victims whose finances had been ravaged by the Great Recession. Diamond owned and operated a number of businesses, including the Riverside, California based Transmitting Assets Inc., Operation Safe Haven, Buyer Beware, and Unlimited Logistics Corp., through which he fraudulently offered services that he claimed could wipe out the debts of homeowners behind on their mortgage payments and other debts.

Diamond personally pitched the “Diamond Home Reclamation Method” to solicit victims with false promises that his methods would entirely eliminate their mortgages and allow people to own their homes “free and clear.”

Relying on the false representations, victims paid substantial fees, including an upfront fee, typically $3,500, payable only in cash, money orders or cashier’s checks, periodic program fees, and inflated notary fees. After paying the upfront fee, victims were required to sign and notarize documents, which they were instructed to send to financial institutions and government agencies, documents prosecutors described in court documents as “fraudulent and nonsensical.”

When victims of the scheme in 2011 began receiving mortgage default notices and lost their homes, Diamond launched another debt-elimination scam called the “EFT Program,” under which Diamond claimed to be able to eliminate victims’ debt with “EFT” checks. This scam required victims to pay Diamond 13 percent of the debt that was to be eliminated.

Diamond knew that his methods did nothing to discharge debts. In fact, when FBI agents searched his business in 2013, they recovered hundreds of “rejection letters” from financial institutions indicating that documents submitted as part of the debt-elimination programs did nothing to help the victims. Diamond’s email accounts contained numerous complaints and refund requests from victims, all of which he ignored.

Investigators have identified more than 500 victims who suffered losses of at least $1.6 million. Diamond spent victims’ money on luxury hotels, jewelry, alcoholic beverages, and living expenses.

At the conclusion of a six-day trial in June 2019, Diamond was found guilty by a jury of 15 counts of mail fraud affecting a financial institution and 15 counts of wire fraud affecting a financial institution.

Previously in this case, a Diamond associate,  Tricia Mae Gruber, 43, Riverside, California, pleaded guilty to conspiracy to commit mail fraud and admitted helping operate the scheme. Her sentencing hearing is scheduled for October 21, 2019.

This case was investigated by the FBI.

This matter was prosecuted by Assistant United States Attorneys Marina A. Torres of the International Narcotics, Money Laundering, and Racketeering Section and Kevin B. Reidy of the General Crimes Section.

 

Jacqueline Graham, 53, formerly of Levittown, Pennsylvania was convicted at trial on Wednesday, June 12, 2019, of participating in a conspiracy to commit bank fraud, wire fraud, and mail fraud in connection with a fraudulent debt-elimination scheme to defraud homeowners and banks.

According to the Indictment in the case and the evidence presented at trial:

From at least 2011 to at least 2012, Graham partnered with Bruce Lewis, 67, formerly of Alaska and Washington State and John Ruzza in operating the Valhalla, New York-based Terra Foundation (“Terra”) ,which was originally known as the Pillow Foundation, which held itself out as a business that would investigate and eliminate mortgage loans in exchange for fees, soliciting clients who were having difficulties making their mortgage payments.  In fact, however, Terra engaged in a wide-ranging scheme to defraud clients, county clerks’ offices, and banks.

The fraudulent scheme, which was created by Graham and Lewis, involved Terra performing “audits” of clients’ mortgages, sending pseudo-legal paperwork to the banks and/or lenders holding the mortgages, and ultimately filing purported mortgage discharges with the relevant county clerks’ offices, which discharges were signed by Lewis or other co-conspirators, claiming falsely to represent the banks and/or mortgage lenders.  As a result, anyone doing a title search for one of Terra’s clients would see that the client’s mortgage had been satisfied.  The mortgages had not, however, been discharged, and the mortgages were eventually reinstated, after the clients paid their fees.

In order to effectuate the scheme, Graham, Lewis, and Ruzza involved others, including Rocco Cermele, 56, Yonkers, New York , who was Terra’s director of operations and who recruited clients, among other duties; Paula Guadagno, who did real estate title work for, and filed discharges on behalf of, Terra; and Anthony Vigna, 61, Thornwood, New York,  a lawyer and CPA who worked in Terra’s offices.

To profit from their scheme, Graham and her co-conspirators charged various fees to Terra’s clients.

In total, Graham and her co-conspirators filed over 60 fraudulent discharges in Westchester and Putnam Counties in New York, and in Connecticut.  The fraudulent discharges claimed to discharge mortgages with a total loan principal of nearly $38 million.

Graham was convicted of one count of conspiracy to commit bank fraud, wire fraud, and mail fraud.  The count carries a maximum sentence of 30 years in prison.

Lewis pled guilty to one count of wire fraud relating to the Terra scheme, which carries a maximum sentence of 20 years in prison.

Vigna pled guilty to one count of participating in a conspiracy to commit bank fraud, wire fraud, and mail fraud relating to the Terra scheme, which carries a maximum sentence of five years in prison.

Cermele pled guilty to one count of participating in a conspiracy to commit mail, wire, and bank fraud, and one count of wire fraud, each relating to the Terra scheme, each of which carries a maximum potential sentence of 30 years in prison, and three additional counts of wire fraud relating to other crimes, each of which carries a maximum potential sentence of 20 years in prison.

Graham was found guilty of the one count she faced after a two-week trial before U.S. District Judge Nelson S. Román.

The statutory maximum penalties are prescribed by Congress and are provided here for informational purposes only, as any sentencings of the defendants would be determined by the court.

All defendants are awaiting sentencing.

Geoffrey S. Berman, the United States Attorney for the Southern District of New York, made the announcement.

Manhattan U.S. Attorney Geoffrey S. Berman said:  “Jacqueline Graham preyed on vulnerable homeowners who could not afford their mortgage payments during a time of crisis in the housing market.  Because of her greed, these homeowners ended up financially worse off than when they found her.  We will continue to work with our law enforcement partners to bring to justice those who victimize the vulnerable.”

Mr. Berman praised the outstanding investigative work of the Federal Bureau of Investigation.  Mr. Berman also thanked the Office of the Westchester County District Attorney’s Office and the Department of Housing and Urban Development for their assistance in the case.

This case is being handled by the Office’s White Plains Division.  Assistant United States Attorneys David Felton, Michael Maimin, and James McMahon are in charge of the prosecutions.

Larry Allen Todt, 66, formerly of Malibu, California was sentenced to over seven years in prison and ordered to pay over $3,000,000 in restitution for his role in a fraudulent mortgage elimination scheme.

On December 6, 2017, Todt was convicted following trial on one count of conspiracy and one count of bank fraud.

According to court documents, between April 22, 2010, and November 18, 2011, Todt was a member of a conspiracy that ran a mortgage elimination program purporting to help distressed homeowners avoid foreclosure. The conspirators fraudulently altered the chain of title on residential properties, sold the properties, and received the sales proceeds.

As a requirement for participation in the “mortgage elimination program,” the conspirators enrolled homeowners as members in a Nevada City-based church named Shon-te-East-a, Walks With Spirit, or its successor entity, Pillow Foundation. The conspirators indicated to the homeowners that these entities would offer protection against the banks.

Todt ran a branch of the mortgage elimination program, recruiting homeowners into the scheme, marshaling the necessary recorded documents, and guiding the sale of the homes. Once the homeowner enrolled with Shon-te-East-a or Pillow Foundation, Todt would have a sham deed of trust created and recorded, giving the impression that the homeowner had refinanced the mortgage loan with a new lender. In reality, the new lender was a fake entity controlled by the conspirators, and the homeowner owed no money to the purported new lender.

The next step in the process was also a recorded document. The conspirators caused a fake deed of reconveyance to be recorded, giving the appearance that the true mortgage loan had been discharged and that the true lien holder no longer had a security interest in the home.

With title appearing to be clear, the conspirators caused the sale of the home with the proceeds split between the co-conspirators and the homeowners.

In total, 37 properties were sold through the Shon-te-East-a conspiracy. The conspirators recorded fraudulent documents on an additional approximately 100 homes, but were unable to sell these before the scheme unraveled.

One co-defendant, George B. Larson, formerly of San Rafael, California was convicted at trial along with Todt and sentenced to 121 months in prison. One other co-defendant, Michael Romano, Benicia, California was sentenced to 37 months in prison following his guilty plea. Remus A. Kirkpatrick, formerly of Oceanside, California and Laura Pezzi, Roseville, California have previously pleaded guilty. Tisha Trites and Todd Smith, both of San Diego, California pleaded guilty in related cases. All are awaiting sentencing.

Co-defendants John Michael DiChiara, Penn Valley, California, and James Castle, Santa Rosa, California are awaiting trial. The charges against DiChiara and Castle are only allegations; both defendants are presumed innocent unless and until proven guilty beyond a reasonable doubt.

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

This case is the product of an investigation by the Federal Bureau of Investigation. Assistant U.S. Attorneys Audrey B. Hemesath and Todd A. Pickles are prosecuting the case.

 

George B. Larsen, 56, formerly of San Rafael, California was sentenced to 10 years and one month in prison and ordered to pay $1,759,100 in restitution for his role in a fraudulent mortgage elimination scheme.

On December 6, 2017, Larsen was convicted following trial on one count of conspiracy and four counts of bank fraud. http://www.mortgagefraudblog.com/?s=+George+B.+Larsen

According to court documents, between April 22, 2010, and November 18, 2011, Larsen was a member of a conspiracy that ran a mortgage elimination program purporting to help distressed homeowners avoid foreclosure. The conspirators fraudulently altered the chain of title on residential properties, sold the properties, and received the sales proceeds.

As a requirement for participation in the “mortgage elimination program,” the conspirators enrolled homeowners as members in a Nevada City-based church named Shon-te-East-a, Walks With Spirit, or its successor entity Pillow Foundation. The conspirators indicated to the homeowners these entities would offer protection against the banks.

Larsen ran a branch of the mortgage elimination program, recruiting homeowners into the scheme, marshalling the necessary recorded documents, and guiding the sale of the homes. Once the homeowner enrolled with Shon-te-East-a or Pillow Foundation, Larsen would have a sham deed of trust created and recorded, giving the impression that the homeowner had refinanced the mortgage loan with a new lender. In reality, the new lender was a fake entity controlled by the conspirators, and the homeowner owed no money to the purported new lender.

The next step in the process was also a recorded document. The conspirators caused a fake deed of reconveyance to be recorded, giving the appearance that the true mortgage loan had been discharged and that the true lienholder no longer had a security interest in the home.

With title appearing to be clear, the conspirators caused the sale of the home, with the proceeds split between the co-conspirators and the homeowners.

In total, 37 properties were sold through the Shon-te-East-a conspiracy. The conspirators recorded fraudulent documents on an additional approximately 100 homes, but were unable to sell these before the scheme unraveled.

One co-defendant, Larry Todt, formerly of Malibu, California was convicted at trial along with Larsen. Three other co-defendants have previously entered guilty pleas: Remus A. Kirkpatrick, formerly of Oceanside, California, Michael Romano, Benicia, California and Laura Pezzi, Roseville, California. Tisha Trites and Todd Smith, both of San Diego, California pleaded guilty in related cases. All are awaiting sentencing.

Co-defendants John Michael DiChiara, of Penn Valley, and James Castle, of Santa Rosa, are awaiting trial. The charges against DiChiara and Castle are only allegations: both defendants are presumed innocent unless and until proven guilty beyond a reasonable doubt.

Co-defendants John Michael DiChiara, Penn Valley, California and James Castle, Santa Rosa, California are awaiting trial. The charges against DiChiara and Castle are only allegations: both defendants are presumed innocent unless and until proven guilty beyond a reasonable doubt.

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

This case is the product of an investigation by the Federal Bureau of Investigation. Assistant U.S. Attorneys Audrey B. Hemesath and Todd A. Pickles are prosecuting the case.

 

George B. Larsen, 56, formerly of San Rafael, California was found guilty of conspiracy and four counts of bank fraud. Larry Todt, 65, formerly of Malibu, California was found guilty of conspiracy and one count of bank fraud. The two men were found guilty today in a bank fraud scheme that sought to fraudulently eliminate home mortgages and then profit on the subsequent home sales.

According to court documents, between April 22, 2010, and November 18, 2011, Larsen and Todt were members of a conspiracy that ran a “mortgage elimination program” purporting to help distressed homeowners avoid foreclosure.  The conspirators fraudulently altered the chain of title on residential properties, sold the properties, and received the sales proceeds.

As a requirement for participation in the “mortgage elimination program,” the conspirators enrolled homeowners as members in a Nevada City-based church named Shon-te-East-a, Walks With Spirit, or its successor entity Pillow Foundation. The conspirators indicated to the homeowners these entities would offer protection against the banks.

Larsen and Todt each ran branches of the mortgage elimination program, recruiting homeowners into the scheme, marshalling the necessary recorded documents, and guiding the homes through sale. Once the homeowner enrolled with Shon-te-East-a or Pillow Foundation, Larsen and Todt would have a sham deed of trust created and recorded, giving the impression that the homeowner had refinanced the mortgage loan with a new lender. In reality, the new lender was a fake entity controlled by the conspirators, and the homeowner owed no money to the purported new lender.

The next step in the process was also a recorded document. The conspirators caused a fake deed of reconveyance to be recorded, giving the appearance that the true mortgage loan had been discharged and that the true lien holder no longer had a security interest in the home.

With title appearing to be clear, the conspirators caused the sale of the home, with the proceeds split between the co-conspirators and the homeowners.

In total, 37 properties were sold through the Shon-te-East-a conspiracy. The conspirators recorded fraudulent documents on an additional approximately 100 homes, but were unable to sell these before the scheme unraveled.

Three other co-defendants have previously entered guilty pleas. On April 21, 2017, Remus A. Kirkpatrick, formerly of Oceanside, California, pleaded guilty to one count of falsely making writings of lending associations. On May 26, 2017, Michael Romano, Benicia, California pleaded guilty to conspiracy, and on July 14, 2017, Laura Pezzi, Roseville, California, pleaded guilty to falsely making writings of lending associations. They are scheduled to be sentenced on February 23, 2018.     Co-defendants John Michael DiChiara, Penn Valley, California and James Castle, Santa Rosa, California are still awaiting trial. The charges against DiChiara and Castle are only allegations:  both defendants are presumed innocent unless and until proven guilty beyond a reasonable doubt.

In related cases, on September 4, 2015, Tisha Trites and Todd Smith, both of San Diego, California pleaded guilty to related charges before U.S. District Judge Garland E. Burrell, Jr. They are scheduled to be sentenced on February 9, 2018. http://www.mortgagefraudblog.com/?s=George+B.+Larsen

Larsen and Todt are scheduled to be sentenced by U.S. District Judge Garland E. Burrell, Jr. on March 16, 2018, at which time they each face a maximum penalty of five years in prison and a $250,000 fine. The maximum penalty for bank fraud is 30 years and a $1 million fine. The actual sentences, 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 Phillip A. Talbert made the announcement.

This case is the product of an investigation by the Federal Bureau of Investigation. Assistant U.S. Attorneys Audrey B. Hemesath and Todd A. Pickles are prosecuting the case.