The following examples of financial institution fraud
investigations are written from public record documents on file in the
court records in the judicial district in which the cases were
prosecuted.
Former Bank Vice President Sentenced for Bank Fraud
On June 1, 2012, in Phoenix, Ariz., William Robert Liddle, a former
bank vice president, was sentenced to 180 months in prison and five
years of supervised release for defrauding Yuma’s AEA Federal Credit
Union (AEA) out of more than $20 million. On May 21, 2012, Rhonda Monica
Liddle, Williams’s wife, was sentenced to 12 months of home
imprisonment and four years of supervised release for her supporting
role in the fraud. William Liddle was convicted of 54 counts, including
conspiracy, federal credit institution fraud, wire fraud and money
laundering. Rhonda Liddle was convicted of 36 of those counts. According
to court documents, AEA hired William Liddle in 2004 to launch its
business lending department, and in 2006, Liddle became AEA’s Vice
President of Business Lending. Using his position as a bank insider,
Liddle approved risky business loans and loan increases to several
entities owned in whole or part by Frank Ruiz. In exchange for approving
the loans, Ruiz paid kickbacks to Liddle in the form of at least
$250,000 in cash, a $600,000 house, a Toyota Sequoia and a Corvette. The
entities Ruiz used to obtain the loans were financially unstable and
unqualified for the loans, and the few legitimate projects that were
funded by the loans ended in failure. Ruiz was recently sentenced to 24
months in prison and five years of supervised release.
California Realtor Sentenced for Falsifying Loan Application
On May 24, 2012, in San Francisco, Calif., Abraham Valentino was
sentenced to 18 months in prison for falsifying his income on a
multi-million dollar loan application. Valentino pleaded guilty in July
2011 to one count of wire fraud and one count of money laundering.
According to court documents, in April 2006, Valentino applied for two
loans as part of a refinancing of his residence in Tiburon, California.
The first loan was for approximately $5,100,000 from HTFC Corporation.
The second loan was a home equity line of credit for approximately
$500,000, from Greenpoint Mortgage. Around June 2006, Valentino
refinanced the Greenpoint Mortgage Loan with a loan of approximately
$500,000 from Countrywide Bank, N.A. In connection with the HTFC Loan,
the Greenpoint Loan, and the Countrywide Loan, Valentino falsified his
loan application by representing that his monthly base employment income
was $132,000, when in fact, it was $4,500 to $6,000 per month. Based
on the defendant’s loan application, HTFC wired approximately $5,100,000
from HTFC’s bank account to the bank account established by the escrow
company for the refinancing transaction.
California Man Sentenced in Multi-Million Dollar Mortgage Fraud Scheme
On May 23, 2012, in San Francisco, Calif., Justin Batemon was
sentenced to 37 months in prison and ordered to pay restitution for his
role in a multi-million dollar mortgage fraud scheme. Batemon pleaded
guilty on January 31, 2012, to conspiracy to commit bank and wire fraud
and to wire fraud. According to court documents, from 2006 until early
2007, Batemon was involved in a scheme to fraudulently obtain mortgage
loans for parcels of real property located in Northern California.
Batemon referred his friends, who included members and associates of the
Hells Angels, to co-defendant Jacob Moynihan, a loan officer in San
Francisco. As part of the conspiracy, Batemon obtained fraudulent
mortgage loans by making up a company where he was self-employed.
Batemon inflated his income and then had Moynihan and others provide
altered bank statements. In addition, Batemon was involved in
rehabilitating properties to be flipped to sell to other fraudulent
buyers in the scheme. In total, the scheme involved more than $15
million in fraudulent mortgage loans.
Former Real Estate Attorney Sentenced in Million Dollar Mortgage Fraud Scheme
On May 15, 2012, in Providence, R.I., James D. Levitt, a disbarred
real estate attorney from Pawtucket, R.I., was sentenced to 12 months
and one day in prison, three years of supervised release, fined $25,000
and ordered to pay $610,500 in restitution. Levitt pleaded guilty on
February 1, 2012, to three counts of bank fraud and two counts of filing
false tax returns for his role in a $1.1 million mortgage fraud
scheme. According to his plea agreement, between July 2006 and November
2007, based on fraudulent information, Levitt received three mortgages
totaling more than $1.1 million for two properties in Providence and one
in East Providence. Levitt falsely purported to obtain a buyer for the
properties who was qualified to obtain financing to purchase the
properties. To finance the purchases, Levitt induced a business
associate to apply for the mortgages by representing to the investor
that they would be partners, would refurbish the properties as
condominiums and sell them at a profit. Levitt admitted that the
mortgage applications and settlement statements contained false
information, including failing to identify the true purchaser of the
property and falsely stating that the buyer was putting a down payment
in excess of $100,000 for each property. Additionally, Levitt conducted
the closings on the properties despite his financial interest and the
fact he was a disbarred attorney. After the closings, Levitt deposited
the majority of the proceeds of the sale of the properties,
approximately $270,000, into bank accounts which he controlled. He
provided $25,000 of the proceeds to the seller of the properties shortly
after the closing, and he later made periodic payments. Levitt
admitted, however, that he used the majority of the proceeds for his
business and for personal expenses. The two properties eventually went
into foreclosure. Levitt used the third mortgage to buy a property from
another company he controlled. He applied for the mortgage in his own
name. The application also contained false statements and omissions,
including an affirmation by Levitt that there were no outstanding
judgments against him. Levitt admitted that he knew that there was an
outstanding judgment against him of approximately $432,728 by the State
of Rhode Island, which represented restitution owed to the state on a
prior criminal conviction. Levitt also failed to disclose to the
Internal Revenue Service in tax filings in October 2007 and October 2008
income derived from the ventures as well as from other sources.
Minnesota Man Sentenced for Orchestrating Multi-Million-Dollar Mortgage Fraud Scheme
On May 11, 2012 in Minneapolis, Minn., Michael Prieskorn was
sentenced to 72 months in prison for orchestrating a mortgage fraud
scheme that resulted in at least $18 million in losses by mortgage
lenders. According to court documents, Prieskorn admitted he and others
conspired to obtain mortgage loan proceeds by luring buyers to purchase
properties. In return, Prieskorn promised the buyers $5,000 for every
property purchased. He also promised to make all mortgage payments and
pay all other bills associated with the properties for a specific term,
after which, he would sell the properties at no cost to the original
buyers or “investors.” Prieskorn maintained that the mortgage loans
were risk free to their investors, knowing all the while the 20
investors were responsible for the loans. Following the closing of
these real estate transactions, many investors defaulted on their
mortgage loans and were forced into short sales or foreclosure. Yet,
Prieskorn admitted receiving at least $1 million in gross receipts as a
result of the scam. Prieskorn also admitted concealing from mortgage
lenders that he temporarily deposited funds into the bank accounts of
some investors to misrepresent the true financial status of those
buyers, thereby inducing lender approval of the mortgage loans. He also
concealed from the 20 mortgage lenders that he paid the down payments
and closing costs for the investors. Prieskorn transferred money, by
wire, into investors’ bank accounts and caused the faxing of fraudulent
mortgage loan applications to potential mortgage lenders. He also caused
lenders to make wire transfers of mortgage loan proceeds on related
real estate transactions. Specific to the monetary transaction count,
Prieskorn structured financial transactions to conceal that he was the
recipient of funds from the fraud.
California Man Sentenced for Role in Mortgage Fraud Scheme
On May 2, 2012, in Oakland, Calif., James Delbert McConville, of
Fremont, was sentenced to 93 months in prison, three years of supervised
release and ordered to pay more than $7 million in restitution.
McConville pleaded guilty on January 25, 2012, to conspiracy to commit
mail and wire fraud and money laundering. According to the plea
agreement, McConville admitted to conspiring with others from March 2008
through approximately 2009 to present fraudulent loan applications to
lending institutions. He admitted that members of the conspiracy paid
straw buyers between $5,000 and $10,000 to use their names and credit
histories to obtain financing from lenders. McConville also admitted
that he received, on average, $150,000 per loan transaction as a
marketing fee that was concealed from the lender approving the loan.
McConville admitted that for each of the approximately 80 properties
involved in the scheme, the escrow officer sent the lender a fraudulent
settlement statement (HUD-1) that did not disclose the large marketing
fee. The scheme resulted in the approval of almost $20 million in
fraudulent loans.
Connecticut Man Sentenced for Participating in Scheme to Defraud Bank
On May 1, 2012, in Bridgeport, Conn., Kevin W. Caffrey, of Wolcott,
was sentenced to 12 months and one day in prison and three years of
supervised release for his role in his ex-wife’s scheme to defraud a
bank of more than $6.2 million. Caffrey pleaded guilty to one count of
bank fraud and one count of filing a false tax return. According to
court documents and statements made in court, between approximately May
2000 and May 2006, Caffrey was married to Susan Curtis, who worked in
the Property Services Division of a bank. The Property Services
Division was responsible for, among other things, the acquisition and
leasing of properties for the bank’s Retail Banking business. In 2002,
Curtis and Caffrey formed New House LLC and the only listed member for
New House was Caffrey. Curtis, with Caffrey’s assistance, falsely
represented to the bank’s Vendor Management Department that New House
was a legitimate company entitled to certain fees because of real estate
transactions with the bank. In fact, New House was a sham company that
never acted as a broker or landlord in any real estate transactions.
Between 2002 and at least 2008, Curtis and Caffrey caused the bank to
make approximately 90 payments totaling nearly $4.3 million to New
House. Caffrey had access and control over the New House's bank account
and was aware of the fraudulent deposits made to the bank account. He
was also involved in disbursing funds from the bank account to himself
and others. In addition, Caffrey did not file federal tax returns on
behalf of New House and failed to report the proceeds of the fraud on
his personal federal tax returns. In tax years 2005 through 2008,
Caffrey failed to report more than $353,000 in income, resulting in a
tax loss to the government of $90,054. The judge also ordered Caffrey
and Curtis to pay $4,295,588 in restitution to the bank. Caffrey also
was ordered to pay $110,256 in back taxes and interest.
California Man Sentenced in $9 Million Mortgage Fraud and Tax Evasion Scheme
On April 16, 2012, in Los Angeles, Calif., Scott Dority, of San
Marino, was sentenced to 121 months in prison for defrauding banks and
other lenders by using “straw borrowers” and bogus documents to obtain
millions of dollars in loans for houses and high-end vehicles. Dority
pleaded guilty on March 14, 2011, to wire fraud, conspiracy, aggravated
identity theft and two counts of tax evasion. According to his guilty
plea, Dority admitted that his fraudulent conduct caused at least $4
million in losses to financial institutions that issued mortgages and
approximately $5 million in losses to institutions that issue loans for
the sports cars and recreational vehicles. Dority also admitted in
court that he failed to file tax returns for 2005 and 2006, even though
he had hundreds of thousands of dollars in income in each of those
years. According to court documents, Dority, along with others,
recruited individuals with good credit to act as straw buyers to
purchase residential homes or expensive vehicles. Dority created a
package of materials – including fake bank statements, fake pay stubs
and bogus fake tax returns – to make it appear that these straw buyers
had sufficient assets and income to pay back loans used to purchase the
real estate and vehicles. These fake documents were then submitted to
lenders who relied upon them to issue more than $9 million in mortgage
and vehicle loans.
California Developer Sentenced for Mortgage Fraud Scheme
On April 13, 2012, in Sacramento, Calif., Anthony G. Symmes, of
Paradise, was sentenced to 35 months in prison and three years of
supervised release for conspiring to commit fraud and one count of money
laundering. Symmes was also ordered to forfeit $4 million. According
to court documents, from 2006 through 2008, Symmes sold 62 homes to
straw buyers recruited by Garret G. Gililland III and others. The
purchase price on each home was inflated by up to $60,000. One day after
the close of escrow on each property, Symmes would write a check back
to front companies controlled by Gililland and others. The rebates on
the purchase price were not disclosed to the lenders who financed the
properties for the straw buyers. Gililland pleaded guilty and is
awaiting sentencing.
Former Executive of Florida-Based Ocean Bank Sentenced for Participating in Bribery Scheme and Filing False Tax Returns
On April 4, 2012, in Miami, Fla., Danilo P. Perez, a former vice
president of Ocean Bank headquartered in Miami, was sentenced to 37
months in prison and one year of supervised release. In January 2012,
Perez pleaded guilty to one count of conspiracy to solicit or demand
money and other things of value to influence an employee of a financial
institution and three counts of tax offenses. The charges against Perez
stemmed from his accepting nearly $500,000 in cash and other items from
co-conspirators in connection with his supervision of certain customer
business with the bank. As vice president, Perez generally oversaw Ocean
Bank’s lending relationships with corporate customers of the bank.
Perez admitted to accepting bribes, including payments for expensive
watches, Super Bowl tickets and other items for his personal use, as
well as substantial amounts of cash. Perez accepted the payments
intending to be rewarded and influenced in connection with his role in
approving Ocean Bank’s issuance of letters of credit, loans and
overdraft privileges to his co-conspirators. Perez also admitted that he
failed to report income from those bribes for tax years 2005, 2006 and
2007, resulting in lost tax revenue of approximately $91,000.
Hells Angels Leader Sentenced in Mortgage Fraud Scheme
On April 4, 2012, in San Francisco, Calif., Josh Leo Johnson was
sentenced to 12 months in prison, three years of supervised release, and
ordered to pay $130,000 in restitution to Sun Trust Mortgage for his
role in a mortgage fraud scheme. Johnson, the current Vice President of
the Hells Angels Sonoma Chapter, pleaded guilty on December 13, 2011
to wire fraud. According to the plea agreement, Johnson admitted that
from 2006 until 2007, he was involved in a conspiracy with others to
fraudulently obtain mortgage loans. Specifically, in May 2007 he signed
loan applications, containing materially false statements, for real
property in Healdsburg, Calif. These false statements caused interstate
wire transfers of loan funds from mortgage lenders directly to
Johnson’s account. Some examples of the false statements contained in
the loan applications included that Johnson was the owner of a
fictitious company for several years and making a large and recurring
salary. The documents supporting the loan applications also contained
altered bank statements in Johnson’s name to reflect a series of
inflated balances in his bank account. The loan applications Johnson
submitted ultimately resulted in a loss to the lender of approximately
$135,000, though the amount of loss in the overall conspiracy is at
least several million dollars.
North Carolina Woman Sentenced for Mortgage Fraud Conspiracy
On April 2, 2012, in New Bern, N.C., Mary Rose Wright, of Raleigh,
N.C., was sentenced to 52 months in prison, three years of supervised
release and ordered to pay $1,416,022 in restitution. Wright pleaded
guilty to wire fraud and conspiring to commit mail fraud, wire fraud and
bank fraud. According to the criminal information, from August 2006 to
November 2006, Wright, working as a mortgage broker, worked with others
to defraud various financial institutions through the submission of
false and fictitious mortgage loan applications. The purpose of the
conspiracy was to fraudulently obtain mortgage loans by falsifying loan
applications and HUD-1 statements and by fabricating supporting
documentation to insure that banks would approve the loan
applications. Based on these misrepresentations, Wright and others
obtained loans and Wright took possession of a property in North
Carolina. Since 2006, neither Wright nor the conspirators have made any
mortgage payments.
Woman Sentenced for Orchestrating $6 Million Embezzlement Scheme
On March 29, 2012, in Bridgeport, Conn., Susan A. Curtis, of
Naugatuck, was sentenced to 102 months of in prison and five years of
supervised release, for defrauding Webster Bank and Bank of America of
more than $6.8 million and for failing to pay more than $1 million in
federal income taxes. In addition to her prison term, Curtis was
ordered to pay restitution of $6,194,589 to Webster Bank, $617,228 to
Bank of America and $1,680,128 to the Internal Revenue Service for back
taxes. According to court documents and statements made in court, Curtis
was employed by Webster Bank with responsibilities that included
negotiating and managing bank property leases where Webster Bank was a
landlord or tenant. Curtis and her then husband Kevin W. Caffrey
established a company called New House, LLC. Later, Curtis and her
current husband, Gary Stocking, Jr., established a company called Equity
Realty, LLC. Curtis falsely represented to Webster Bank’s Vendor
Management Department that both companies were brokers and therefore
exempt from due diligence and annual review. Between 2002 and 2007,
Curtis falsely represented to Webster Bank that New House and Equity
Realty were due millions of dollars of fees for over one hundred real
estate-related transactions, causing Webster Bank to make payments of
approximately $5 million to New House and Equity Realty. Curtis also
caused persons doing business with Webster Bank to send approximately
$723,620 in payments for tenant improvements and reimbursements, which
were owed to Webster Bank, directly to Curtis; certain of these checks
were altered to make them payable to Webster Bank c/o Equity Realty and
then were deposited into an Equity Realty account at another bank.
Curtis also caused a representative of Webster Bank to send a $450,000
payment, which was owed to Webster Bank, directly to Curtis; the check
was made payable to Equity Realty c/o Webster Bank, and was subsequently
deposited into the Equity Realty bank account. Finally, Curtis
fraudulently applied for, and received, a $649,000 mortgage loan from
Bank of America for a property in East Hampton, Connecticut,
misrepresenting and concealing the real source of her income and extent
of her liabilities. In addition to these fraud schemes, Curtis filed
false federal tax returns for the 2006 through 2009 tax years, during
which she failed to report more than $3.79 million in embezzled funds.
As part of this case, the Government is seeking the forfeiture of more
than $1.1 million in property, vehicles, artwork, jewelry and other
items purchased by the defendants, and a money judgment in the amount of
$7,002,589. On October 14, 2010, Kevin Caffrey pleaded guilty to one
count of bank fraud and one count of filing a false tax return. He
awaits sentencing. On March 31, 2011, Gary Stocking, Jr. pleaded guilty
to three counts of failing to file a return, supply information, and pay
federal income taxes. On September 22, 2011, he was sentenced to 24
months in prison.
Former Arizona Real Estate Agent Sentenced in Mortgage Fraud Scheme
On March 19, 2012, in Phoenix, Ariz., Joseph Bowen Brown, of Mesa,
Ariz., was sentenced to 51 months in prison for conspiracy to commit
wire fraud as part of a mortgage fraud scheme based in Phoenix.
According to court documents, Brown acknowledged in his guilty plea that
as a principal of The Solid Group, a local real estate firm that has
since collapsed, he orchestrated illegal “cash back” mortgage sales on
homes. From mid-2005 through mid-2007, he and others at The Solid Group
purchased properties at or below market value and re-sold them based on
inflated appraisals. They used some of the profits to provide cash
kickbacks to the buyers and failed to disclose those cash payments to
the mortgage lenders. Brown and his co-conspirators then pocketed the
difference. Many of the buyers were vastly unqualified for the mortgage
loans and only obtained them because of false statements made on loan
applications concerning income, employment, and assets. In total, 49
properties were involved in the scheme, all of which have gone into
foreclosure. The scheme resulted in nearly $10 million in losses to the
mortgage lenders. Brown admitted in his plea agreement that he and his
co-conspirators pocketed almost $2.5 million in the deals. Five others
have entered guilty pleas in the same scheme. Co-defendant Benjamin
Jackson was sentenced to 13 months in prison earlier this year and the
remaining four are awaiting sentencing.
California Real Estate Consultant Sentenced for Mortgage Fraud and Tax Evasion
On March 16, 2012, in San Diego, Calif., John J. Borzellino, a former
Carlsbad-based real estate consultant, was sentenced to 60 months in
prison, three years of supervised release, and ordered to pay $4,138,660
in restitution. According to court documents, Borzellino, aka John J.
Ross, was a self-proclaimed real estate consultant with business
ventures throughout the United States. During 2006-2007, Borzellino
fraudulently induced lenders to fund millions of dollars in mortgage
loans to purchase real estate in Florida, Georgia and California.
Borzellino arranged to purchase homes in these various states by
offering more than the seller’s asking price – with the understanding
that the money over-and-above the asking price would be funneled to an
entity under Borzellino’s control. Borzellino disguised the funds
diverted to him by falsely characterizing them as “commissions” or
“consulting fees” to be paid by the sellers at closing. In order to
induce lenders to extend the mortgage loans needed to fund these
fraudulent transactions, Borzellino caused numerous false and misleading
statements to be made to lenders. Borzellino defrauded lenders into
making over $8 million in mortgage loans to purchase properties in the
name of his wife and several others. Borzellino further admitted that
during these same years he wilfully failed to file individual federal
income tax returns with the Internal Revenue Service, and took other
steps to evade his tax obligations. Borzellino opened numerous bank
accounts in his wife’s name, and used these and other nominee accounts
to conduct all of his financial transactions. Borzellino regularly took
his “commission” and “consulting fee” payments in cash, and used cash
transactions as a means of concealing his income. As a result,
Borzellino admitted that he failed to declare to the IRS almost $1
million in income.
California Man Sentenced for Fraudulently Obtaining Credit and Filing False Claims Against the IRS
On March 12, 2012, in Los Angeles, Calif., Jeff Sean Riley, of North
Hollywood, was sentenced to 64 months in prison and ordered to pay
$722,547 in restitution to the Internal Revenue Service (IRS). Riley
pleaded guilty in December 2008 to one count of wire fraud. According
to the plea agreement, Riley submitted a fraudulent loan application to a
federal credit union, which falsely overstated his income. As proof of
income, Riley submitted a false tax return claiming he earned an annual
income of $107,598, when in fact, he earned an annual income of
approximately $20,000. In June 2010, prior to the sentencing on Riley’s
guilty plea, a two-count supplemental information was filed charging
Riley with fraudulently obtaining a credit card in the name of another
person and using that credit card to make unauthorized purchases. Riley
pleaded guilty to aggravated identity theft fraud and access device
fraud. According to the supplemental plea agreement, in October 2008,
Riley fraudulently obtained a MasterCard in the name of another person.
Riley made various unauthorized charges to the fraudulently obtained
MasterCard totaling approximately $17,243. In addition to the losses on
the fraudulently obtained account, Riley further caused losses to
financial institutions from unauthorized or fraudulent credit
applications totaling approximately $135,000. According to a stipulated
sentencing agreement filed with the court, Riley agreed to an enhanced
sentence due to multiple incidents of misconduct while his sentencing
was pending, including misconduct involving false claims against the
IRS. In conjunction with Riley’s cooperation with the government, the
IRS is seeking to forfeit $55,626 held in bank accounts Riley controlled
. Riley admitted that the funds constitute the proceeds of his illegal
filing activity with the IRS.
Former Loan Officer Sentenced on Mortgage Fraud and Other Federal Charges
On March 7, 2012, in Phoenix, Ariz., Paige Kinney, aka JamieLee
Lawler, was sentenced to 180 months in prison and ordered to pay
$22,000,000 in restitution. Kinney pleaded guilty in May 2011 to various
charges related to a mortgage fraud scheme and to charges of bankruptcy
fraud, wire fraud, mail fraud, and bank fraud in two separate
indictments. According to court documents related to the first
indictment, Kinney played a leadership role in a $40 million mortgage
fraud scheme that targeted Countrywide Home Loans and other lenders.
According to Kinney’s plea, from January 2005 through December 2007,
Kinney and others used unqualified straw buyers to purchase properties,
knowing that the straw buyers did not intend to live in the homes or be
responsible for the loan payments. Kinney would obtain mortgage
financing to purchase homes in the names of the straw buyers by
submitting fraudulent mortgage loan applications and altering documents,
such as bank statements, to misrepresent the straw buyers’ assets,
income, and employment status. Based on these misrepresentations
regarding the buyers’ ability to qualify for loans, lenders issued loans
that exceeded the homes’ sales prices. Once the funds were obtained
from the lenders, the extra proceeds, known as “cash-back,” were
directed to bank accounts that Kinney controlled. In total, Kinney
caused lending institutions to issue $38,745,215 in fraudulent loans.
According to her plea agreement on the second indictment, Kinney
declared bankruptcy and then attempted to hide assets and liabilities
from the Bankruptcy Court by falsifying her name and social security
number. Kinney also committed additional financial fraud by arranging
for friends to fraudulently obtain a loan to purchase a Mercedes. In
addition, she committed insurance fraud by staging a phony burglary of
her residence and then collecting $130,000 from Allstate Insurance
Company.
Michigan Office Manager Sentenced for Embezzlement and Tax Fraud
On March 1, 2012, in Detroit, Mich., Tracy McInchak was sentenced to
15 months in prison and three years of supervised release for
embezzlement and making a false statement on a federal tax return.
According to court documents, from August 2004 until March 2010,
McInchak was employed as an office manager at an investment bank in
Detroit, Michigan. During that time, she embezzled approximately
$462,000 by writing corporate checks to herself and to credit card
companies to pay personal expenses. Over the six year period, checks
were created for up to $6,000, several times a month. She also knowingly
failed to report over $224,000 of her embezzled monies on her 2009
federal income tax return.
Massachusetts Man Sentenced in Mortgage Fraud Scheme
On February 29, 2012, in Boston, Mass., David Tarczynski, formerly of
South Hadley, was sentenced to 20 months in prison, three years of
supervised release and ordered to pay $923,000 in restitution for
defrauding multiple lending institutions in connection with a mortgage
fraud scheme. According to court documents, had the case proceeded to
trial, the government’s evidence would have proven that Tarczynski was
part of a mortgage and bank fraud conspiracy involving two properties in
Florida, one property in South Hadley, and a $100,000 line of credit
originating out of a West Springfield branch bank. The scheme involved
loans in excess of $1 million and losses of nearly $1 million.
Defendants Sentenced in Mortgage Fraud Scheme
On February 24, 2012, in Dallas, Texas, two defendants who pleaded
guilty to their respective roles in a three-year, multi-million dollar
mortgage fraud scheme were sentenced to prison. Michael Baker, a Dallas
resident at the time of the fraud, was sentenced to 180 months in prison
and ordered to pay $7,546,739 in restitution. Baker pleaded guilty in
August 2011 to one count of wire fraud and one count of money
laundering. Koreem Dujuan Baker, Michael Baker’s brother, who pleaded
guilty to one count of wire fraud and one count of engaging in monetary
transactions with criminally derived property, was sentenced to 57
months in prison. According to court documents, the scheme, led by
Michael Baker, involved defrauding and obtaining money from lending
institutions by, among other things, using straw buyers to purchase
homes and submitting false/fraudulent documents to lenders. The
defendants obtained nearly $22 million in fraudulently obtained loan
proceeds through the scheme. Another defendant in this case, Monique
Untae Stallworth, of Garland, Texas, was sentenced in January 2012 to 42
months in prison. Stallworth pleaded guilty to one count of wire fraud
and one count of engaging in monetary transactions with criminally
derived property. All the defendants were also ordered to pay
significant amounts of restitution to the victim lenders who suffered
losses because of the fraudulent mortgage loans.
Couple Sentenced for Embezzling Over $1 Million from Federal Credit Union
On February 1, 2012, in Los Angeles, Calif., Mireya Guadalupe
Gonzalez was sentenced to 18 months in prison and ordered to pay
$868,122 in restitution to the National Credit Union Administration
(successor to Sharebuilder) and Cumis Insurance Society, Inc. Her
husband, Jorge Luis Gonzalez, was sentenced to six months in prison.
Both were ordered to pay $301,244 in restitution to the Internal Revenue
Service (IRS). Both defendants pleaded guilty in May 2011 to one count
of subscribing to a false income tax return for the 2006 tax year. In
addition, Mireya Gonzalez pleaded guilty to embezzling funds from a
federally insured credit union. According to Mireya's plea agreement,
between January 2005 and March 2007 she worked as the manager of
Sharebuilders Federal Credit Union. Mireya Gonzalez had access to the
computerized records of the credit union and was able to authorize
transfers between accounts. During her employment at Sharebuilders,
Mireya Gonzalez identified various “dormant accounts” that were inactive
and had minimal or no customer funds on deposit. She used the
computers to generate electronic transfers of funds to accounts over
which she had signatory authority, including a joint checking account
with her husband and two accounts in the names of her children. After
transferring the funds to the Gonzalez family accounts, Mireya Gonzalez
and her husband withdrew money and used it to buy personal items such as
jewelry, automobiles, and luxury items. During tax years 2005, 2006,
and 2007, Mireya Gonzalez and her husband received income related to her
scheme to embezzle funds from Sharebuilders and did not report that
income on their tax returns. According to her plea agreement, Mireya
admitted that she and her husband received unreported income of $676,000
for 2005; $338,000 for 2006; and $150,000 for 2007.
Minnesota Man Sentenced for Role in $2 Million Fraudulent Loan Scheme
On February 2, 2012, in Minneapolis, Minn., Donald Krause was
sentenced to 18 months in prison, three years of supervised release and
ordered to pay $1,289,481 in restitution. In March 2011, Krause pleaded
guilty to one count of aiding and abetting wire fraud and one count of
aiding and abetting money laundering. According to his plea agreement,
Krause admitted using property transactions to defraud a lending
institution. Specifically, on February 21, 2008, a purchase agreement
was executed for the $1.6 million sale of an Orono residence to a
corporation, RSN Companies, at which Krause was a general partner. The
next day Krause sold that residence to the mother of co-defendant
Richard Sand for $2.6 million, $1 million more than was paid for it the
previous day. Under the terms of that transaction, Sand’s mother was to
pay approximately $600,000 in cash, and the balance of the purchase
price was to be acquired through a bank loan. To obtain the $2 million
loan, a false loan application was submitted, and based on that
application, a $2 million loan was approved by a bank. On March 20,
2008, the loan proceeds were wired to co-defendant Brenda Epperly, a
closing agent at a title company, for distribution at the time of
closing. However, the following day, Epperly dispersed $900,000 of the
loan funds to RSN Companies. Then, on March 22, 2008, Krause used some
of that money to purchase a $602,018 cashier’s check, which was
subsequently submitted as the cash payment Sand's mother was to make as
her equity contribution to the property purchase. Epperly then falsified
the HUD-1 Settlement Statement provided to the lending institution,
indicating that Sand’s mother had provided over $600,000 in cash. As a
result, the bank was misled into believing that Sands’ mother had a
financial stake in the purchase, when, in truth, that was not the case.
On March 22, 2008, Krause purchased another cashier’s check with loan
proceeds. This $224,371 check was payable to the Ramsey County Sheriff’s
Department and was used by Krause and Sand to redeem a foreclosed
property Sand owned in St. Paul. In addition, Sand admitted using
$170,000 in loan proceeds for his own benefit. At their plea hearings,
Krause admitted receiving approximately $50,000 as a result of this
fraud, while Epperly indicated she received approximately $250 for her
role in the scam. On August 25, 2011, Sand was sentenced to 30 months in
prison and on August 9, 2011, Brenda Epperly was sentenced to six
months in prison.
New Jersey Woman Sentenced for Role in Structuring and Mortgage Fraud
On January 23, 2012, in Newark, N.J., Kim S. Morris, of Belleville,
N.J., was sentenced to 33 months in prison, three years of supervised
release and ordered to forfeit $708,855 for participating in a mortgage
fraud scheme and structuring money orders to evade transaction reporting
and identification requirements. Morris, a part-time court clerk at
the Essex County Courthouse, pleaded guilty to an information charging
her with one count of bank fraud and one count of structuring. According
to the court documents and statements made in court, Morris admitted
that she applied for a mortgage loan from a bank in January 2008 by
completing a fraudulent Uniform Residential Loan Application to procure
approximately $624,000 for a home loan. The loan application contained
material misrepresentations, including inflating Morris’ personal income
and falsifying the name of her employer. These fraudulent
misrepresentations caused the bank to extend a home loan to Morris.
Morris also admitted that from March 2008 through late June 2009, she
structured approximately 110 money orders, totaling $84,855, for the
purpose of evading the reporting and identification requirements.
Texas Woman Sentenced in Mortgage Fraud Scheme
On January 13, 2012, in Dallas, Texas, Monique Stallworth was
sentenced to 42 months in prison, two years of supervised release and
ordered to pay $1,724,497 in restitution for money laundering.
According to court documents, Stallworth and others opened bank accounts
that they used to receive money from title companies for “upgrades” to
residential real estate properties based on bogus invoices that were
submitted to the title companies at closing. The defendants profited
from loans to purchase residences in the Dallas area, fraudulently
obtained mortgages in others’ names and obtained mortgages for more than
the sales price. In addition, they found individuals with sufficient
credit to qualify for the loans and made each borrower appear to be a
qualified, bona fide purchaser who intended to reside in the property,
when the borrower had no intention of doing so. They also created
surplus loan proceeds by creating bogus invoices for repairs/upgrades
which were never done, allowed the residences to go into foreclosure
after no, or just a few, payments were made on the loan and shared in
the surplus loan proceeds.
Three Sentenced in Mortgage Fraud Scheme
On December 14, 2011, in Salt Lake City, Utah, Christopher Ethington,
of Riverton, was sentenced to 37 months in prison for his role in a
mortgage fraud scheme involving properties in Davis, Salt Lake and Utah
counties. Janet H. Ethington, of Riverton, was sentenced to five years
probation, with 30 days in a county jail as a condition of supervision.
In addition, Christopher and Janet Ethington were ordered to pay
$1,336,773 in restitution. James Merrill Roberts, of Cedar Hills, was
sentenced to 37 months in prison in the case. According to the
indictment, the three defendants operated a scheme to identify
residential properties, recruit straw buyers, and, through false
statements on loan applications, falsely inflate the apparent value of
the properties to induce lenders to grant loans for amounts in excess of
their fair market value. According to court documents, Roberts formed
Amerifinance Group, LLC, which promoted residential real estate
transactions in Utah. Roberts admitted that he and Christopher Ethington
recruited straw buyers to participate in purchasing many of the
Amerifinance properties. Janet Ethington worked in the real estate
business in the roles of loan processor, loan broker, and loan officer.
As a part of her plea agreement, Janet Ethington admitted that she acted
as a loan officer or broker in closing approximately 30 Amerifinance
loans, although she was not a licensed by the State of Utah as a loan
officer or mortgage broker. Roberts admitted he induced the straw
buyers to participate in purchasing the properties by telling them they
would not have to make a down payment or invest any of their own money
to buy the home and that Amerifinance, not the straw buyers, would make
the loan payments. These false representations were not disclosed to the
mortgage lenders. When the loan payments were not made on the
properties, the loans went into default and each was eventually the
subject of a foreclosure sale or short sale, each resulting in a loss to
the victim lender.
New York Man Sentenced for Participating in Mortgage Fraud Conspiracy
On December 13, 2011, in Hartford, Conn., Gary Snook, of Yorktown
Heights, N.Y., was sentenced to 24 months in prison and three years of
supervised release for participating in a mortgage fraud conspiracy. On
May 14, 2010, Snook pleaded guilty to one count of conspiracy to commit
wire fraud. According to court documents and statements made in court,
between approximately October 2003 and August 2006, Snook and others
engaged in a conspiracy to defraud various residential mortgage lenders
in connection with the financing of residential properties in
Connecticut. Snook owned and operated York Accounting and Financial
Services, which had an office in Danbury. At the request of an
individual who was a loan originator working for several mortgage
brokerage firms, Snook created false loan documentation, including
fraudulent letters and phony tax returns that inflated prospective
borrowers’ income. The documents were then faxed to the lenders to
qualify prospective borrowers for mortgage loans. Snook created
fraudulent documentation for 18 mortgage loans. Many of the loans ended
in default, and the properties were foreclosed on. As a result, lenders
suffered losses of more than $1 million.
Colorado Woman Sentenced for Role in Mortgage Fraud Scheme
On December 9, 2011, in Denver, Colo., Kimberly K. White, of
Elizabeth, Colo., was sentenced to five years probation of which 12
months will be served in home confinement, and ordered to pay $1,088,912
in restitution. White pleaded guilty in July 2011 to one count of wire
fraud related to a mortgage fraud scheme. According to the stipulated
facts contained in the plea agreement and indictment, between March 26,
2005, and June 30, 2005, White worked with her co-defendants, Shawn
Tieskotter and Craig Patterson, to execute a scheme to defraud various
financial institutions as well as commercial mortgage lenders in
connection with residential mortgage loan applications related to 13
properties in the Denver, Colorado metropolitan area. White, a licensed
real estate agent, helped find various residential properties available
for purchase and drafted contracts for the purchase of the properties.
Tieskotter and Patterson prepared and submitted applications for two
loans, a first mortgage and a second mortgage. Each of these
applications contained materially false and fraudulent representations
that Tieskotter intended to use the property as his primary residence.
Most of the applications also contained materially false and fraudulent
representations about the extent of Tieskotter’s liabilities related to
other residential mortgage loans, in that they failed to include a
complete list of the properties Tieskotter owned or was in the process
of purchasing and falsely indicated that one of Tieskotter’s other
properties was leased. Some of the applications were supported by
fictitious leases. Tieskotter was previously sentenced to 9 months in
prison, followed by 9 months of home detention and three years of
supervised release. Patterson was sentenced to serve 10 months in
prison, followed by 10 months of home detention and three years of
supervised release. In addition, Tieskotter and Patterson were ordered
to pay $1,181,528 in restitution.
Minnesota Man Sentenced for Conspiring to Commit Bank Fraud and Money Laundering
On December 2, 2011, in St. Paul, Minn., William Schluter was
sentenced to 12 months in prison on one count of conspiracy to commit
both bank fraud and money laundering. According to court documents,
Schluter admitted that from 2002 through 2006, he conspired with an
unnamed individual to obtain money fraudulently from the bank through
the use of straw borrowers. Schluter and the companies he owned had
reached the limits on the loan amounts allowed to any one borrower. To
bypass those limits, Schluter arranged for straw borrowers to apply for
loans and then transfer the loan proceeds to business concerns owned by
him. Many of the straw borrowers were companies that had no ability to
repay the loans. Schluter also commingled various funds, including
deposits and loan repayments, among his various ownership interests in
an effort to cover up the conspiracy. Schluter and the unnamed
individual created and submitted to the bank false loan-purpose
statements as well as falsified bank records. Once the loan proceeds
were secured, Schluter used them for his personal use. In September
2005, Schluter submitted a false loan-purpose statement to the bank in
order to obtain a $174,431 loan in the name of a straw company, then,
later that day, the loan proceeds were transferred to an entity he
owned; and, ultimately, the money was used for his own benefit and for
the benefit of his companies. The total estimated loss amount from this
scheme was between $1 million and $2.5 million.
Two Sentenced for Conspiring to Commit Bank Fraud, Money Laundering
On December 1, 2011, in Minneapolis, Minn., Golden Osagiede and
Angelo Banks were both sentenced to 33 months in prison and ordered to
pay $186,939 in restitution for conspiracy to commit bank fraud and one
count of conspiracy to commit money laundering. According to his plea
agreement, Osagiede admitted that between April and December 2009, he
and Banks conspired to defraud banks. First, they deposited counterfeit
checks into bank accounts they controlled and then withdrew funds before
the counterfeit nature of the checks was discovered. Second, they
obtained access to victims’ bank accounts and transferred money from the
victims’ bank accounts to the defendants’ accounts. Withdrawals of
fraud proceeds were made in amounts of less than $10,000 per withdrawal
in order to avoid a reporting requirement. According to Banks' plea
agreement, he admitted presenting for payment checks which he knew to be
counterfeit; withdrawing fraud proceeds from automatic teller machines;
and opening bank accounts in the names of non-existent businesses.
Banks also admitted that he received from Osagiede a number of
counterfeit checks drawn against the accounts of various Twin
Cities-area health care facilities, which Banks negotiated for cash.
The total amount of fraud loss is approximately $250,000, while the
amount of money laundered is approximately $90,000.
Colorado Real Estate Agent Sentenced in Mortgage Fraud Scheme
On November 23, 2011, in Denver, Colo., Cedric Lipsey was sentenced
to 63 months in prison and three years of supervised release. According
to the indictment, beginning in April 2004 and continuing until about
March 2006, Lipsey and his co-defendant devised a scheme to defraud
lending companies that funded residential mortgage loans and to obtain
money from them by means of materially false and fraudulent pretenses,
representations, and promises. Lipsey, a licensed real estate agent,
held himself out as a successful real estate agent and investor. He
orchestrated the purchase and resale or refinancing of numerous
residential properties, including the sale of one of his own homes, by
paying individuals to participate as “investors” in what he referred to
as an investment “opportunity.” Lipsey arranged for these so-called
“investors” to use their good credit to obtain mortgage loans to
purchase the properties. Shortly after the first set of loans that
helped these individuals purchase properties, Lipsey caused them to sell
the properties to a second set of buyers at substantially higher
prices, with Lipsey and his co-defendant taking a combination of
commissions, fees, and proceeds from the first and second transactions.
Lipsey falsely represented that the first buyers would be purchasing
and had purchased the properties for less than their actual market
value. The first sales were not “distressed”, as the defendants
sometimes represented to facilitate their fraud. In fact, the first
buyers purchased the properties at or near their market value, and there
was no legitimate reason for the substantial increase in price when the
same properties were resold shortly thereafter.
Former New Jersey Resident Sentenced in Mortgage Fraud Scheme
On November 18, 2011, in Springfield, Mass., Jason Foisy, formerly of
South Hadley, N.J., was sentenced to 54 months in prison, five years of
supervised release and ordered to pay $15 million in restitution for
defrauding multiple lending institutions in connection with a mortgage
fraud scheme. Foisy pleaded guilty on May 21, 2011 to conspiracy, wire
fraud, bank fraud and money laundering. Had the case proceeded to trial
the Government’s evidence would have proven that Foisy was part of a
multi-million mortgage and bank fraud conspiracy involving more than 100
real estate transactions in Florida and western Massachusetts and
multiple lines of credit originating out of a West Springfield branch
bank. The scheme involved an aggregate loan value of at least $75
million and that the vast majority of the loans went into default. The
scheme reached its pinnacle in October 2006, when co-defendant James
June and Foisy started construction of a $6.6 million waterfront home in
an exclusive area of Fort Lauderdale, Fla.
Loan Officer and Title Agent Sentenced
On November 3, 2011, in Miami, Fla., Kimberly Mackey, of Pittsburgh,
Pa., was sentenced to 60 months in prison, five years of supervised
release and ordered to pay $1,654,805 in restitution. Marcos
Echevarria, of Palm Beach, Fla., was sentenced to 24 months in prison
and five years of supervised release. Mackey, Echevarria and two
additional defendants (Louis Gendason, of Delray Beach, Fla., and John
Incandela, of Palm Beach, Fla.) previously pleaded guilty to a criminal
information charging them with one count of conspiracy to commit wire
fraud for their participation in a $2.5 million home equity conversion
mortgage (aka. reverse mortgage) scheme that defrauded unwitting
borrowers, a reverse mortgage company, and the Federal Housing
Administration (FHA). Defendants Gendason and Incandela worked as loan
officers and solicited individuals, ages 62 and older, from around the
country to refinance their existing mortgages with a reverse mortgage
loan. Gendason altered real estate appraisals to fraudulently inflate
the value of the borrowers’ properties since none of the borrowers had
sufficient equity in their properties to qualify for a reverse mortgage.
Based on the false documentation, the reverse mortgage company approved
and the FHA insured more than $2,572,813 in reverse mortgage loans.
Mackey, a licensed title agent in Pittsburgh, Pa., fraudulently closed
the loans, failing to pay off the borrowers existing mortgage loans. To
perpetuate the fraud, the defendants engaged in a loan modification
scheme to conceal the existence of the reverse mortgage transactions
from the original mortgage lenders, whose loans remained unpaid. Between
May 2009 and November 2010, Mackey received loan proceeds from the
scheme totaling $2,572,813. Mackey fraudulently diverted at least
$988,086 to a bank account controlled by Incandela and Gendason, who
used this money for their personal benefit. Defendants Louis Gendason,
of Delray Beach, Fla., and John Incandela, of Palm Beach, Fla., are
awaiting sentencing.
Owner of Florida Company Sentenced for Scheme to Defraud the U.S. Export-Import Bank
On November 1, 2011, in Washington, D.C., Guillermo O. Mondino was
sentenced to 46 months in prison and three years of supervised release.
Mondino was also ordered to pay $13.3 million in restitution and $2.7
million in forfeiture. Mondino pleaded guilty on June 23, 2010, to one
count of conspiracy to commit mail fraud and one count of money
laundering in connection with a scheme to defraud the Export-Import Bank
of the United States (Ex-Im Bank) of approximately $24 million.
According to court documents, Mondino was the owner of Texon Inc., an
export company located in Miami, Florida, which purported to export
various types of equipment to South and Central America buyers. Mondino
admitted that he assisted numerous foreign buyers to obtain fraudulent
loans that were insured by the Ex-Im Bank. According to court records,
Mondino and others misappropriated the loan proceeds for their own use
and benefit. According to court records, all of the loans involving
Mondino were fraudulent. As a result of the fraud, the loans went into
default, causing the Ex-Im Bank to pay claims to the lending banks on
$14.1 million of loans.
Top Bank Executives and Borrower are Sentenced
On October 25, 2011, in Fort Myers, Fla., Thomas Hebble, former
executive vice president of Orion Bank, was sentenced to 30 months in
prison; Angel Guerzon, former senior vice president of Orion Bank, was
sentenced to 24 months in prison; and Francesco Mileto, a former Orion
Bank borrower, was sentenced to 66 months in prison. Hebble, Guerzon,
and Mileto pleaded guilty in May 2011 to participation in a conspiracy
to mislead state and federal regulators that Orion Bank was in a better
capital position than it was in truth and fact. Hebble was also
sentenced for his participation in a second round-trip stock transaction
which occurred in June and July 2009. According to court documents,
the conspiracy to which the defendants were sentenced had two
objectives: 1) to finance the sale of promissory notes secured by
mortgages held by Orion Bank on distressed properties, thereby creating
the illusion that non-performing loans were performing loans; and 2) to
conceal the financing for the sale of Orion Bancorp, Inc. stock to a
borrower to create the illusion of a legitimate capital infusion into
the bank. The defendants accomplished these objectives by falsifying the
books and records of Orion Bank and deceiving state and federal
regulators over a period of seven months, from May 2009 until November
13, 2009. The Florida Office of Financial Regulation closed Orion Bank
on November 13, 2009, and appointed the Federal Deposit Insurance
Corporation (FDIC) as the receiver. The FDIC requested $33,512,618 in
restitution for Hebble and Guerzon's participation in the scheme and a
restitution hearing will be held to apportion liability among the
defendants. Mileto was ordered to pay $65,214,491 in restitution to the
FDIC. As part of their sentence, the three were also ordered to pay a
money judgment of $2,000,000, part of the proceeds of Mileto’s charged
criminal conduct.
South Carolina Man Sentenced in Mortgage Fraud Case
On October 25, 2011, in Columbia, S.C., Laney Earl Allen, of Ft.
Mill, South Carolina, was sentenced to 21 months in prison for
conspiracy to commit mail fraud. Evidence presented established that
Allen owned and ran Flex Buy Homes and Blue Granite Homes in Ft. Mill.
He and co-conspirator Samuel Cowles, who was sentenced to 15 months
imprisonment in July, took pre-qualification documents from investors
and used them to obtain loans for real estate purchases. Cowles, with
Allen’s knowledge and cooperation, falsified multiple loan applications
by submitting to lenders that investment properties were going to be
primary residences, which reduced the down payments. By falsifying loan
applications, Cowles made it possible for Allen to make smaller down
payments, increasing the profit Allen expected when he flipped the
property. Allen and Cowles were responsible for falsifying
approximately 20 loan applications, resulting in fraudulent loans
totaling $2,160,650.
Three Sentenced in Mortgage Fraud Conspiracy
On October 18, 2011, in Portland, Ore., Chadwick Amsden was sentenced
to 27 months in prison and five years of supervised release. On
October 5, 2011, Joel Rosabal was sentenced to 33 months in prison and
five years of supervised release. On September 19, 2011, Adam Perkins
was sentenced to 21 months in prison and ordered to pay over $1.2
million in restitution. Amsden and Rosabal were indicted by a grand
jury on May 18, 2010, on charges of conspiracy, mail fraud, wire fraud,
money laundering, and a forfeiture allegation. The conspiracy was to
defraud lending institutions by inducing them to lend funds for the
purchase of residential properties at an inflated price through the use
of materially false representations and omissions, and in doing so, to
fraudulently obtain a portion of those funds. During the course of the
conspiracy, defendants ensured that loan proceeds were paid to borrowers
as incentives or cash “kickbacks.” These cash kickbacks were not
disclosed to the lender and ranged from approximately $8,000 to as much
as almost $90,000. Defendants manipulated the underwriting process in
order to qualify borrowers to purchase homes they would not have
otherwise been able to buy. Perkins, through Rosabal and Amsden,
purchased eleven homes in eight months, totaling more than $5.8 million
in real estate using materially false representations to obtain cash
kickbacks. The loss to lenders from the defendants’ scheme was over
$3.8 million.
Former Arizona Loan Officer Sentenced for His Role in Mortgage Fraud Conspiracy
On October 11, 2011, in Phoenix, Ariz., Jaco Huguet, a former Arizona
loan officer who worked in the metropolitan-Phoenix area, was sentenced
to 24 months in prison and ordered to pay over $500,000 in restitution.
Huguet pleaded guilty in July 2011 to one count of conspiracy to commit
wire fraud and one count of conspiracy to commit transactional money
laundering. According to court documents, Huguet, while acting as a
loan officer for a mortgage broker, took part in a conspiracy to submit
mortgage loan applications on behalf of straw buyers that contained at
least one or more of the following material false statements: false
statements concerning the intent of the loan applicant to occupy the
property as a primary residence; inflated income; false representations
concerning employment; or failed to disclose that the loan applicant had
recently purchased another property that contained a major liability, a
mortgage. After the title company received the proceeds from the
fraudulently obtained loans, Huguet directed others to convert portions
of these proceeds into cash. In Huguet’s plea agreement, he admitted to
his involvement in this scheme relating to the sale of nine properties
that were purchased between January and February 2007. Each of these
properties went into foreclosure after the buyers failed to pay the
mortgage payments. The estimated losses to the various financial
institutions and/or the Federal Deposit Insurance Corporation (FDIC)
relating to these transactions exceeded $1,000,000.
Former Missouri Real Estate Agent Sentenced for Mortgage Fraud Conspiracy
On October 3, 2011, in Kansas City, Mo., Angela R. Clark, of Lee’s
Summit, Mo., was sentenced to 20 months in prison and ordered to pay
$5,634,747 in restitution for her role in a $12.6 million mortgage fraud
conspiracy. According to court documents, Clark orchestrated the
mortgage fraud scheme, which also involved two mortgage loan officers
and 15 straw buyers who purchased homes at inflated prices. Buyers
obtained mortgage loans for more than the actual sale price by providing
false information to mortgage lenders. The buyers, without the lenders’
knowledge, then kept the extra loan proceeds. These kickbacks were paid
by submitting false invoices to the title companies, which showed
payment was due to business entities that, in reality, were shell
companies created by co-conspirators to conceal the fact that the
buyers were receiving cash back from the loan proceeds. Buyers received
kickbacks of about $100,000 on each house. Clark knew the loan
applications and supporting documentation that contained material false
information would be submitted to mortgage lenders. Clark submitted
false documentation and made fraudulent material representations to
title companies. In total during the course of the conspiracy, mortgage
lenders approved loans for 25 homes totaling more than $12.6 million.
From that total, buyers received more than $2.3 million without the
lenders’ knowledge. Clark received commissions and other payments from
the inflated prices totaling $405,197. According to court documents,
Clark engaged in a similar mortgage fraud scheme with six other
properties that are not part of this conspiracy, shortly before and
during the same time frame as the conspiracy. The government contends
that Clark received an additional $168,361 in commissions and other
payments from those fraudulent purchases.
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