Archives For Short Sale Fraud

Woman Pleads Guilty to Real Estate Bank Fraud

Stephanie Abbott —  October 25, 2023 — Leave a comment

Maria Esperansa Salgado, 64, Ft. Washington, Maryland, pleaded guilty today to bank fraud.

According to court documents, from at least August of 2012 through April 2019, Salgado devised a scheme to defraud a mortgage lender into agreeing to a short sale, or pre-foreclosure sale, of a residential property in Alexandria, Virginia that was pending foreclosure for non-payment of the mortgage. The defendant and her brother had purchased and lived in the property for about ten years.

After filing a Chapter 7 petition for bankruptcy to discharge her debts in 2013, Salgado used the identity of an unsuspecting victim to obtain a home mortgage from a lender. Salgado then entered into fraudulent sales contracts with straw purchasers and the victim to make it appear as if she was selling the property to third parties as part of an arms-length transaction. A straw purchaser is someone who buys a property on behalf of another person when the real buyer cannot complete the transaction. The fraudulent sales contracts made it appear as if the straw purchasers and the victim were buying the house on behalf of themselves. In truth, Salgado’s intention was to retain ownership of the property and the proceeds from the fraudulent short sale.

In 2015, Salgado executed a fraudulent refinance of the property using the name of straw purchasers and kept the proceeds. The victim was unaware of the re-finance.  In 2019, Salgado used a nominee owner to sell the property to a third-party buyer. Salgado and the nominee owner received the proceeds of the fraudulent sale and paid off the remaining loan balance and used a portion to purchase a new property in Ft. Washington, Maryland.

To date, the victim has been unable to qualify for a loan to purchase her own home because of the fraudulent mortgage taken out in her name. The scheme also resulted in $146,188 of loss to the mortgage lender. As part of her plea agreement, Salgado agreed to pay restitution to the victim and to forfeit the proceeds of the bank fraud.

Salgado is scheduled to be sentenced on February 21, 2024. She faces a maximum penalty of 30 years in prison. Actual sentences for federal crimes are typically less than the maximum penalties. A federal district court judge will determine any sentence after taking into account the U.S. Sentencing Guidelines and other statutory factors.

Jessica D. Aber, U.S. Attorney for the Eastern District of Virginia, and Javan Wilson, Special Agent in Charge of the U.S. Department of Treasury, Office of Inspector General, made the announcement after U.S. District Judge Rossie D. Alston, Jr. accepted the plea.

The Fairfax County Police Department, the Arlington County Police Department, the Prince William County Police Department, the City of Hyattsville (MD) Police Department – Criminal Investigations Section, and the U.S. Department of Homeland Security, Homeland Security Investigations also provided significant assistance in this investigation.

Assistant U.S. Attorney Kimberly Riley Pedersen is prosecuting the case. Former Assistant U.S. Attorney Carina Cuellar provided significant assistance to the investigation and prosecution of this case.

A copy of this press release is located on the website of the U.S. Attorney’s Office for the Eastern District of Virginia. Related court documents and information are located on the website of the District Court for the Eastern District of Virginia or on PACER by searching for Case No. 1:23-cr-154.

 

 

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Former Sheriff’s Officer Admits Role in Connection with Fraudulent Short Sale

Stephanie Abbott —  May 23, 2023 — Leave a comment

Osbado Hernandez, 54,  Avenel, New Jersey, a former Hudson County Sheriff’s Officer admitted conspiring to make false statements to a bank in connection with an application to discharge a mortgage through a fraudulent short sale.

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

From September 2015 to Dec. 30, 2015, in order to induce a bank to discharge the mortgage he owed on his house in Keansburg, New Jersey, Hernandez agreed with others to make false statements in connection with a fraudulent short sale of the property, including that he did not have any money to apply toward his mortgage delinquency and that he did not intend to stay in the house for more than 90 days following the short sale. As a result of the fraudulent short sale, the bank discharged over $98,000 of debt against Hernandez.

The false statements conspiracy charge is punishable by a maximum potential penalty of five years in prison and a maximum fine of up to $250,000. Sentencing is scheduled for Oct. 4, 2023.

Hernandez pleaded guilty before U.S. District Judge Michael A. Shipp in Trenton federal court on May 22, 2023, to an information charging him with one count of conspiracy to make false statements in connection with the release of a loan.

U.S. Attorney Sellinger credited special agents with the U.S. Attorney’s Office, under the direction of Special Agent in Charge Thomas Mahoney, and special agents with IRS – Criminal Investigation, under the direction of Special Agent in Charge Tammy Tomlins, with the investigation leading to the guilty plea.

U.S. Attorney Philip R. Sellinger made the announcement.

The government is represented by Assistant U.S. Attorney Elaine K. Lou, Chief of the U.S. Attorney’s Office’s Opioid Abuse Prevention and Enforcement Unit.

 

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Short Sale Negotiator Sentenced for Defrauding Mortgage Lenders

Stephanie Abbott —  March 30, 2022 — Leave a comment

Gabriel T. Tavarez, 40, Westminster, Massachusetts, he principal and co-founder of a mortgage short sale assistance company was sentenced yesterday in connection with defrauding mortgage lenders and investors out of nearly $500,000 in proceeds from about 90 short sale transactions.

Tavarez founded and co-operated Loss Mitigation Services, LLC, a short sale assistance company in North Andover, Massachusetts,  with co-conspirator Jaime L. Mulvihill. A short sale occurs where a mortgage debt on a home is greater than the home’s market value—such a mortgage loan is commonly referred to as being “under water”—and a mortgage lender agrees to a sale of the home even though it will take a loss on the transaction. Loss Mitigation Services, purportedly acting on behalf of homeowners whose mortgage loans were under water, negotiated with mortgage lenders for approval of short sales in lieu of foreclosure. Mortgage lenders typically forbid short sale negotiators, such as Loss Mitigation Services, from receiving any proceeds of a short sale.

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

Mulvihill pleaded guilty to his role in the conspiracy and was sentenced in February 2020 to six months in prison.

Tavarez was sentenced by U.S. District Court Judge Nathaniel M. Gorton to seven months in prison and two years of supervised release. Tavarez was also ordered to pay restitution in the amount of $475,458. In June 2020, Tavarez pleaded guilty to conspiracy to commit wire fraud and aggravated identity theft.

United States Attorney Rachael S. Rollins; Joseph R. Bonavolonta, Special Agent in Charge of the Federal Bureau of Investigation, Boston Division; Robert Manchak, Special Agent in Charge, Federal Housing Finance Agency, Office of Inspector General, Northeast Region; Christina Scaringi, Special Agent in Charge of the U.S. Department of Housing and Urban Development, Office of Inspector General, Northeast Regional Office; and Joleen D. Simpson, Special Agent in Charge of the Internal Revenue Service’s Criminal Investigation in Boston made the announcement. Assistant U.S. Attorney Brian M. LaMacchia of Rollins’ Affirmative Civil Enforcement Unit prosecuted the case.

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Former Sheriff’s Officer Charged in Connection with Fraudulent Short Sale

Stephanie Abbott —  July 21, 2021 — Leave a comment

Osbado Hernandez, 52, Avenel, New Jersey, a former Hudson County Sheriff’s officer, was charged for making false statements to a bank in connection with an application to discharge a mortgage through a fraudulent short sale.

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

From September 2015 to Dec. 30, 2015, in order to induce a bank to discharge a mortgage on a property in Keansburg, New Jersey, Hernandez made false statements in connection with a fraudulent short sale of the property, including that he did not have any money to apply toward his mortgage delinquency and that he intended to vacate the property following the short sale. Hernandez fraudulently withheld information regarding the availability of funds in a savings account he failed to disclose to the bank. Hernandez also signed a sworn affidavit that he would not stay in the property for more than 90 days following the short sale, even though he intended to, and did, continue living at the property. As a result of the fraudulent short sale, the bank discharged over $98,000 of debt against Hernandez.

The false statements charge is punishable by a maximum potential penalty of 30 years in prison and a maximum fine of up to $1 million.

Hernandez appeared this afternoon via videoconference before U.S. Magistrate Judge Jessica S. Allen in Newark federal court and was released on $100,000 unsecured bond.

Acting U.S. Attorney Rachael A. Honig made the announcement.

Acting U.S. Attorney Honig credited special agents with the U.S. Attorney’s Office, under the direction of Special Agent in Charge Thomas Mahoney, and special agents with IRS – Criminal Investigation, under the direction of Special Agent in Charge Michael Montanez, with the investigation leading to the charge.

The government is represented by Assistant U.S. Attorney Elaine K. Lou of the Special Prosecutions Division in Newark.

The charge and allegations contained in the complaint are merely accusations, and the defendant is presumed innocent unless and until proven guilty.

 

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Man Sentenced to Prison for Short-Sale Scheme

Stephanie Abbott —  April 8, 2021 — Leave a comment

David Litman, 41, the village of Foosland, Illinois, has been ordered to report to federal prison to begin serving a two-year sentence for conspiracy to commit bank fraud and bank fraud in connection with a real estate short-sale scheme.

On Dec. 17, 2019, Litman pleaded guilty to conspiring with others, between 2008 and 2010, to defraud lending institutions in a series of short-sale transactions. Specifically, Litman caused false broker price opinions undervaluing residential properties to be submitted to financial institutions holding the mortgages of the properties, which he intended to purchase via a short sale. Litman submitted additional false documents to the financial institutions to induce them to approve requested short sales, including falsified listing agreements and proof-of-funds letters. The financial institutions, relying on the false broker price opinions, false real estate commission expenses, false listing agreements, and other false documentation, approved short sales of properties to Litman for payments that were less than they otherwise would have been likely to receive.

In addition, Litman caused the recording of false expenses, including false real estate commissions, on HUD-1 settlement statements documenting the short sales into which he entered. Litman also attempted to conceal certain of these false real estate commission expenses through the late issuance of commission checks.

Following the March 10, 2021, sentencing, U.S. District Judge James E. Shadid further ordered Litman to pay $279,900 in restitution and to serve two years on supervised release upon completion of his prison term.

“The defendant’s repeated acts of fraud over several years caused lending institutions to lose a significant amount of money,” stated Acting U.S. Attorney Doug Quivey. “The defendant’s participation in the scheme thwarted the lenders’ ability to accurately value the homes involved and prevented them from recouping a greater portion of their losses on the homeowners’ mortgages. Fraud in any part of the mortgage industry ultimately costs both lenders and borrowers and can’t be tolerated.”

Assistant U.S. Attorneys Katherine V. Boyle and Eugene L. Miller represented the government in the prosecution. The charges were investigated by the Department of Housing and Urban Development’s Office of the Inspector General and the Federal Bureau of Investigation.

 

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Final Family Member Sentenced in Short Sale Mortgage Fraud Scheme

Stephanie Abbott —  March 22, 2021 — Leave a comment

Ana Cummings, 61, Davie, Florida, the last of six South Florida family members was sentenced today to a term of imprisonment, and ordered to pay a total of $1,342,928.77 in restitution, following her conviction by way of guilty plea in August 2020, to conspiracy to commit bank fraud.

During prior hearings, Cummings’s sons, Valentin Pazmino, 34, and Rene A. Pazmino, 36, were sentenced to 27 months and 18 months of imprisonment, respectively. Her daughters, Grace Pazmin, 43, and Diana Pazmino, 31, were sentenced to 27 months and 22 months of imprisonment, respectively. Her son-in-law Jared Marble, 43, Grace Pazmino’s husband, was sentenced to 16 months of imprisonment. All sentences were imposed by United States District Judge Jose E. Martinez following guilty pleas. Pursuant to their plea agreements, the defendants made a full payment of the restitution judgment prior to their sentencings.

According to court documents, various defendants participated in a series of ten fraudulent real estate short sale transactions in South Florida between May of 2012 and June of 2015. Cummings and Grace Pazmino participated in all ten of the fraudulent short sales. Diana Pazmino and Valentin Pazmino each participated in nine of the fraudulent short sales. Marble participated in three of the fraudulent short sales. Rene A. Pazmino participated in two of the fraudulent short sales.  In each short sale transaction in which they participated, the defendants made materially false statements to a financial institution in order to defraud it into approving the short sale. Specifically, the defendants executed short sale affidavits and affidavits of arm’s length transactions falsely attesting that the sales were between unrelated, unaffiliated parties. In reality, the sales were between and among the defendants, companies controlled by the defendants, and/or individuals recruited by a defendant to participate in the fraud scheme. Members of the conspiracy also executed HUD-1 Settlement statements misrepresenting that the named buyer made the required cash-to-close payment.  In reliance on these material representations, various financial institutions authorized property sales for amounts less than the outstanding principal balances due on mortgages they held on the properties, thereby incurring losses.

Ariana Fajardo Orshan, United States Attorney for the Southern District of Florida, Tyler R. Hatcher, Acting Special Agent in Charge, Internal Revenue Service-Criminal Investigation, Miami Field Office, and Special Agent in Charge Edwin S. Bonano of the Federal Housing Finance Agency – Office of Inspector General (FHFA-OIG) Southeast Region made the announcement.

U.S. Attorney Fajardo Orshan commended the investigative efforts of the Internal Revenue Service-Criminal Investigation, Miami Field Division and the Federal Housing Finance Agency – Office of Inspector General Southeast Region.

A copy of this press release may be found on the website of the United States Attorney’s Office for the Southern District of Florida at www.usdoj.gov/usao/fls. Related court documents and information may be found on the website of the District Court for the Southern District of Florida at www.flsd.uscourts.gov or on http://pacer.flsd.uscourts.gov, under case number 19-cr-20606-JEM.

 

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U. S. Files Civil Fraud Suit Alleging Mortgage Fraud Scheme

Stephanie Abbott —  January 4, 2021 — Leave a comment

Iskyo Aronov (also known as “Isaac Aronov”) Middle Village, New York, Ron Borovinsky, Hollis Hills, New York and Michael Konstantinovskiy, Roslyn Heights, New York have been charged in a wide-ranging mortgage fraud scheme to defraud the government.

In a complaint unsealed today, Aronov, Borovinsky, Konstantinovskiy, and companies that they owned or controlled (175 Vernon Ave. Inc., 308 Linde St. LLC, 725 Management LLC, 1021 B Holdings LLC, 1083 Lafayette Ave. LLC, 1178 Gates Ave. Inc., 2320 Baeumont Ave Unit 3d LLC, 1S8C Holdings LLC , Ag2 Equities, Inc., Arbie Management Inc., Bedstuy Group LLC, Bert Holdings LLC, BNE Management LLC, Etuy Equities LLC, IA Investors LLC, IJ Development LLC, LL Fund Inc., LL Organization Inc., MI 1 Holdings LLC, MIP Management Inc., My Ideal Property Group LLC, My Ideal Property Rockaway Blvd. LLC, National Homeowners Assistance Inc., Phase 2 Development LLC, Pim Equities Inc., Settle NY Corp, ZOR Equities LLC, ZT Equities LLC), have been charged in engaging in a fraudulent short sales of residential properties insured by the Federal Housing Administration (FHA) of the United States Department of Housing and Urban Development (HUD).

Pursuant to HUD’s Pre-Foreclosure Sale Program, qualifying homeowners with defaulted, FHA-insured mortgages may sell their properties in a “short sale” for less than the balance of the mortgage if the sale is for the fair market value of the property.  If a homeowner obtains approval for a short sale, the lender releases the mortgage after the short sale and submits an FHA insurance claim to HUD to cover the outstanding mortgage balance net of the short sale proceeds, plus approved costs and interest.  HUD, in turn, pays the lender’s claim from federal funds.

Aronov was the founder, Chief Executive Officer and President of defendants My Ideal Property Inc., My Ideal Property Group LLC and MIP Management Inc., and also controlled other affiliated corporate entities that he allegedly established to help him fraudulently acquire residential properties.  Borovinsky identified himself as a co-founder with Aronov of My Ideal Property.  Konstantinovskiy worked as an agent for My Ideal Property where he allegedly conspired with others to fraudulently obtain properties.

As alleged in the complaint, from at least 2013 through 2016, the defendants defrauded HUD by manipulating the short sale process to acquire residential properties from numerous distressed homeowners for below-fair market value prices in non-arm’s-length transactions.  The individual defendants used various corporate entities in furtherance of the fraudulent scheme.  In the process, defendants made a host of material misrepresentations in critical transaction documents.  As a result, defendants not only acquired the properties for below-fair market value prices, but obtained broker fees in the transactions and induced lenders to release the FHA-insured mortgages at a loss.  In turn, HUD paid the lenders’ claims for FHA insurance from federal funds.  These payments by HUD were artificially inflated as a result of the defendants’ fraudulent conduct.

Seth D. DuCharme, Acting United States Attorney for the Eastern District of New York, Christina Scaringi, Special Agent-in-Charge, U.S. Department of Housing and Urban Development, Office of the Inspector General, Northeast Region (HUD-OIG), and Robert Manchak, Special Agent-in-Charge, Federal Housing Finance Agency, Office of Inspector General, Northeast Region (FHFA-OIG), announced the filing.

“As alleged, these defendants fraudulently obtained homes at depressed prices at the expense of a taxpayer-funded program designed to assist borrowers seeking the American Dream of home ownership,” stated Acting U.S. Attorney Seth DuCharme.  “This Office is committed to protecting the integrity of the FHA insurance program from those who try to enrich themselves through predatory mortgage fraud schemes.”

“The defendants allegedly engaged in a scheme of wholesale deception when they provided false, misleading, and incomplete information to lending institutions, homeowners, and the Federal Housing Administration (FHA) causing millions of dollars in damages to the FHA, which typically results in higher premiums being charged to future first-time homeowners.  In addition, the artificial devaluation of residential properties will slow the recovery of market values at a time of economic challenge when affordable housing is at a premium,” stated HUD-OIG Special Agent-in-Charge Scaringi.

“The Federal Housing Finance Agency, Office of Inspector General (FHFA-OIG) is committed to holding accountable those who waste, steal, or abuse the resources of the Government-Sponsored Enterprises regulated by FHFA.  We are proud to have partnered with the U.S. Attorney’s Office for the Eastern District of New York in this case,” stated FHFA-OIG Special Agent-in-Charge Manchak.

The suit is brought pursuant to the False Claims Act (FCA) and the Financial Institutions Reform, Recovery and Enforcement Act (FIRREA).

The government’s complaint intervenes in a lawsuit originally brought by under the qui tam provisions of the FCA.  Under the FCA, private citizens with knowledge of fraud against the government can bring a lawsuit on behalf of the United States and share in the recovery.  The act also permits the government to intervene in such actions, as the government has done in this case.  The government’s case is being handled by Assistant United States Attorney Michael J. Castiglione, with assistance from Affirmative Civil Enforcement Auditor Michael Gambrell.

 

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Mortgage Short Sale Negotiator Pleads Guilty to Defrauding Mortgage Lenders

Stephanie Abbott —  June 3, 2020 — Leave a comment

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

Tavarez founded and co-operated Loss Mitigation Services, LLC, with co-conspirator Jaime L. Mulvihill, 40, North Andover, Massachusetts who previously pleaded guilty and was sentenced in February 2020 to six months in prison.

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

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

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

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

Tavarez is scheduled for sentencing on October 7, 2020.

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

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Short Sale Negotiator Sentenced for Defrauding Mortgage Lenders

Stephanie Abbott —  February 26, 2020 — Leave a comment

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

Mulvihill and her co-defendant Gabriel T. Tavarez founded and operated Loss Mitigation Services, LLC. The charges arise out of the defendants’ scheme to steal undisclosed and improper fees from mortgage lenders in connection with short sales of homes. A short sale occurs where the mortgage debt on the home is greater than the sale price, and the mortgage lender agrees to take a loss on the transaction.

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

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

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

Mulvihill was sentenced by U.S. Senior District Court Judge Rya W. Zobel to six months in prison, two years of supervised release, and ordered to pay restitution in the amount of $478,458 and forfeiture of $239,229. In November 2019, Mulvihill pleaded guilty to conspiracy to commit wire fraud.

Tavarez has pleaded not guilty and is presumed to be innocent unless and until proven guilty beyond a reasonable doubt in a court of law.

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

 

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Short Sale Negotiator Pleads Guilty to Defrauding Mortgage Lenders

Stephanie Abbott —  November 20, 2019 — Leave a comment

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

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

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

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

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

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

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

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

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

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

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