Posts Tagged ‘Mortgage Fraud’
United States Attorney A. Brian Albritton has announced that U.S. District Judge Henry Lee Adams Jr. has sentenced Barry C. Westergom of Jacksonville, Fla. to four years in federal prison for conspiracy to commit wire and bank fraud. The court also ordered restitution in the amount of $866,141.62 and entered a money judgment for $100,000, the amount that Westergom had obtained from the fraud. Westergom had pleaded guilty on Oct. 8, 2009.Read more
Interthinx has launched the Interthinx Conditioned Valuation Model (CVM), a unique, cost-effective integration of robust automated valuation technology and analytics tempered by a professional property inspection. This new approach to property valuation will provide lenders and servicers with a powerful choice that is more accurate than an AVM (Automated Valuation Model) and less expensive than a BPO (Broker Price Opinion). Interthinx is a leading provider of proven risk mitigation, fraud detection, and regulatory compliance tools for the residential mortgage industry.Read more
Kevin Lafavers, 46, formerly of Indianapolis, Indiana, was sentenced to 33 months in federal prison, and Donald T. Brown, 67, Lebanon, Indiana, was sentenced to 27 months in prison. Both were sentenced following Lafavers’ guilty pleas to conspiracy to commit wire fraud and wire fraud and Brown’s guilty pleas to conspiracy to commit wire fraud and money laundering. These proceedings concerned the defendants’ participation in a multi-million dollar mortgage fraud scheme operated by Robert Penn in the Indianapolis, Indiana area.
As previously reported on Mortgage Fraud Blog, between November 2003 and August 2005, at least 136 fraudulent loans, totaling $16,613,850.00, were obtained by Robert Penn and his numerous business entities, assisted by Lafavers and Brown and others. The loans were obtained from Argent Mortgage Company, The MoneyStation, and People’s Choice Mortgage/Countrywide Home Loans.
The mortgage fraud schemes carried out by the defendants were accomplished as follows. Participants in the schemes, including Lafavers, located properties and arranged to purchase them at a fair market value generally by means of an option agreement or unrecorded land contract. Other participants in the scheme located straw purchasers who invested their good credit, but no money, to be the purchasers of these properties at a much higher price than that negotiated with the seller. Co-conspirators, including Brown, funded the down payments.
Lafavers was employed by Penn to locate properties for sale, negotiate the purchases of those properties, and enter into option agreements and land contracts with the sellers on behalf of Penn and his businesses. Lafavers generally received $1,000.00 per property located. Lafavers also attended some property closings on behalf of Penn’s companies and received checks that represented illegal proceeds. Lafavers’ sentence reflected his involvement in approximately 19 fraudulent loans. The total amount of those loans was $3,771,000.00.
Brown was primarily involved in funding down payments for investors on the fraudulent real estate transactions. Brown used a bank account, which was maintained by him and his son in the name of Brown Funding Inc. to fund the down payments. Brown obtained down payment checks and provided those checks to the title company, or to another co-conspirator, to be used for the closing. After the property closing, Brown received repayment of the checks from the fraudulent loan proceeds. In addition, Brown Funding Inc. received a fee of $1,000.00 – $3,000.00 for each down payment provided. The sole purpose of Brown Funding Inc. was to fund down payments for investors.
Brown borrowed some of the money for these down payments from individuals who he knew, but did not tell these people that they were in fact funding a fraudulent real estate scheme. Brown also added investors’ names to the Brown Funding Inc. bank account in order to convince the lenders that the investors had access to money which they did not have. Brown’s sentence reflected his involvement in approximately 113 fraudulent loans, including 86 Windsor Village loans. The total amount of those loans was $12,541,000.00.
According to Assistant U. S. Attorney Susan Heckard Dowd, who prosecuted the cases for the government, Circuit Judge David F. Hamilton also ordered Lafavers to serve three years on supervised release, and Brown to serve two years on supervised release following their incarceration. Judge Hamilton also ordered the defendants to pay restitution as follows: Lafavers – $ 1,475,851.63, Brown – $ 9,985,004.15.
The sentencing follows a lengthy investigation conducted by Special Agents of the Internal Revenue Service – Criminal Investigation Division, with the assistance of the Federal Bureau of Investigation. Judge Hamilton previously imposed sentence on six other individuals charged in the scheme as follows: Robert Penn, 84 months’ imprisonment; Mark Roth, 43 months’ imprisonment; Timothy Brown, 37 months’ imprisonment; Stephen Scott Brown, 37 months’ imprisonment; Jerry Jaquess, 30 months’ imprisonment; Tamara Scott, 24 months’ imprisonment.
Acting United States Attorney Robert S. Cessar has announced that Robert Danenberg, a resident of Pittsburgh has plead guilty in federal court to a charge of wire fraud conspiracy in connection with a mortgage fraud scheme. Danenberg pleaded guilty to one count before United States District Judge Donetta Ambrose.Read more
Pasquale Scavitti, III, 46, Cranston, Rhode Island, a former attorney, has been sentenced to 42 months in prison and ordered to pay a total of $2,496,812 in restitution to various individuals and financial institutions for diverting more than $2.5 million in mortgage funds from his firm’s client account for personal use.
As previously reported on Mortgage Fraud Blog, in June, Scavitti pleaded guilty to wire fraud. At the plea hearing, Assistant U.S. Attorney Andrew J. Reich said the government could prove that Scavitti maintained a law practice in Cranston and shared his office space with other attorneys. As part of his practice, he maintained a client escrow bank account.
Mortgage Guarantee and Title Company, a real estate title and closing company, utilized the services of Scavitti’s law office to facilitate mortgage lending. As part of those services, mortgage and refinancing proceeds were wired into the client escrow account at Scavitti’s firm. The firm’s obligations were to pay off existing liabilities from those loan proceeds.
Between 2003 and August 2008, Scavitti directed that client escrow account funds not be used to pay off the corresponding existing mortgages but rather to pay for various personal and business expenses. Escrow funds were also used to pay off previously negotiated mortgages that were already delinquent, since they had not been paid off in a timely fashion.
Some of the proceeds that Scavitti caused to be diverted were used to pay off personal mortgage expenses. Other diverted funds were used to pay gambling expenses. In a four-day period in 2004, Scavitti bought $23,000 worth of casino chips at Foxwoods Casino.
In September 2007, Mortgage Guarantee terminated the authority of Scavitti’s law office and its attorneys from acting as approved attorneys for Mortgage Guarantee. However, for subsequent mortgages, Scavitti contacted other attorneys to act as title attorneys on real estate transactions and closings. For these transactions, Scavitti falsified letters purporting to authorize his firm to act as the approved attorney for Mortgage Guarantee. As before, loan proceeds were deposited into the escrow account at Scavitti’s firm, and Scavitti directed that they not be used to pay off the corresponding existing mortgages but instead be used for various personal and office expenses.
As a result of Scavitti’s fraudulent scheme, he failed to pay off 13 mortgage loans and refinancing transactions, resulting in total losses of approximately $2.5 million to borrowers and financial institutions.
The Federal Bureau of Investigation conducted the investigation.
Edward William Farley of Hoschton, Ga., has pleaded guilty in federal district court to committing a mortgage fraud, a real estate investment “Ponzi” scam involving over 150 victims, a check-kiting scheme and a bankruptcy fraud. According to Acting United States Attorney Sally Quillian Yates and the information presented in court: Farley, a former mortgage broker, operated through “Creative Home Search,” “Southern Land Partners,” “Georgia Land Group,” and “Global Mortgage” in Dunwoody and Norcross, Ga., to defraud mortgage lenRead more
Cheryl Brooke, 52, Upper Marlboro, Maryland, was sentenced by U.S. District Judge Deborah K. Chasanow to 46 months in prison, followed by three years of supervised release, for conspiracy to commit wire fraud in connection with a scheme in which she and her conspirators offered to help financially vulnerable individuals save their homes from foreclosure, and instead defrauded homeowners and mortgage lenders. Judge Chasanow also entered a preliminary forfeiture judgement against Brooke of $2,228,878, generated as proceeds of the criminal activity in the mortgage fraud scheme.
According to Brooke’s plea agreement, from at least 2004 until May 2008, Michael K. Lewis aired television advertisements that targeted financially-vulnerable individuals, representing that he could improve their credit, save their homes from foreclosure and assist them with bankruptcy. Viewers who called the toll-free number were scheduled to meet with Lewis. At the meetings, they were solicited to purchase a variety of for-fee services for reducing debt, as well as a pre-paid legal plan, income tax return preparation services and bankruptcy petition preparation.
Lewis, Brooke, and co-conspirator Winston Thomas specifically targeted individuals who owned and had equity in their homes, but were facing foreclosure on their homes because of their inability to make monthly mortgage payments. The goal of the conspirators was to steal the homeowners’ equity out of their property by inducing the homeowners to sell their property to co-conspirator Earnest Lewis and converting sale proceeds to the use of the conspirators. Lewis and his co-conspirators did this by fraudulently representing to the homeowners that their “lease/buy-back program” would help the homeowners to keep their homes. Lewis and Thomas, a senior loan officer with a mortgage lender, told the homeowners that the “good credit” of Earnest Lewis would be used to temporarily refinance their homes, that they had to sign their homes over to Earnest Lewis and that they could repurchase the homes in roughly one year, or once they regained their financial footing. During the interim, they could remain in their homes only by paying inflated “rent” and fees, which payments were directly debited from their bank accounts to an account belonging to Cheryl Brooke’s company “In the House Technologies.” Brooke then made payments to Earnest Lewis and Thomas, with the remaining funds being used by Michael K. Lewis and Brooke for their personal benefit.
Lewis, Earnest Lewis and Thomas lied to the homeowners or omitted details as to the amount of money that the homeowners would receive at settlement, what would be done with any equity in the homes and the need to file for bankruptcy protection and failed to inform the homeowners of the particulars of how the lease/buy-back program worked.
In addition, in order to induce mortgage lenders to provide mortgage loans to purchase the homes, Thomas submitted false financial and employment information to mortgage lenders. After financing was obtained to purchase the properties, Brooke would file motions to dismiss the homeowners’ bankruptcy cases so that the settlements could take place.
Michael K. Lewis, 57 and his brother Earnest Lewis, 52, both of Takoma Park, Maryland, were sentenced to 78 months in prison and 54 months in prison, respectively. Winston Thomas, 43, New Carrollton, Maryland was sentenced to 37 months in prison. Judge Chasanow also entered a preliminary forfeiture judgement against all three men of $2,228,878.
United States Attorney for the District of Maryland Rod J. Rosenstein announced the sentencing.
United States Attorney Rod J. Rosenstein thanked the U.S. Postal Inspection Service, the Federal Bureau of Investigation, the Internal Revenue Service- Criminal Investigation and the United States Trustee’s Office (the Department of Justice agency that supervises bankruptcy cases and trustees) for their investigative work. Mr. Rosenstein commended Assistant United States Attorneys Gina L. Simms, Stacy Dawson Belf and Jonathan Su, who prosecuted the case.
Anthony “Gabe” Painton, Jr., 29, Kansas City, Missouri, has pleaded guilty to one count of conspiracy to commit bank fraud.
In his plea, Painton admitted that beginning in 2006 he conspired with Eric M. Rabicoff and eight other defendants to defraud federally insured financial lenders. The scheme called for Painton and others to become straw buyers who bought houses that were for sale by owners. The straw buyers obtained mortgage loans by submitting false loan applications to lenders. Falsified information including employment history, income and rent history was submitted in order for the straw buyers to obtain loans that they would not otherwise qualify to receive. The scheme also called for contract prices to be increased and for conspirators to receive money by submitting false invoices to title companies at closing. At the direction of Rabicoff, Painton set up a shell company called AJs Investment Group to receive proceeds from home sales to straw buyers. The conspirators fraudulently obtained a total of more than $3 million in mortgage loans.
As previously reported on Mortgage Fraud Blog, Painton is one of ten defendants originally indicted earlier this year. The other defendants in the case, all of whom are awaiting trial, include Eric M. Rabicoff, Jason L. Rabicoff, Lucas R. Collier, Anthony E. Carollo, Deborah Saulmon, Bora Ly, Kong Bun Ly, Rebecca Gelwix and Richard Ngek.
Lanny D. Welch, U.S. Attorney for the state of Kansas, announced the plea. Welch commended the Internal Revenue Service, Assistant U.S. Attorney Christine Kenney and Assistant U.S. Attorney Richard Hathaway for their work on the case.
(Update: D.A. declines to comment.)
Investigators with the Orange County district attorney early Thursday morning searched three Ladera Ranch homes believed tied to a foreclosure rescue scam.
Agents served search warrants on two homes on Roshelle Lane and one on Merrill Hill. The homes are connected to Terence Green Sr. and Stefano Marrero of Home Relief Services and Christopher Diener of the Diener Law Firm. (Photo by Ken Steinhardt. Home on Roshelle.)
The three men were not immediately available for comment.
Attorney General Jerry Brown last week said he has filed suit against the men, alleging that they charged homeowners $4,000 in upfront fees and then failed to get them cheaper payments on their home loans.
Brown also charged that the companies sometimes promised to arrange a short sale — when a lender agrees to accept less than the debt owed on a property — but instead attempted to use customers’ personal information for the companies’ own benefit.
The District Attorney’s Office declined to comment. After getting an anonymous tip, a Register photographer took photos of agents entering the homes.
Alan Gordon, assistant chief trial counsel of the California State Bar, confirmed that the Orange County district attorney and some other agencies served search warrants today. He said the bar has been “working closely with several agencies” investigating potential loan mod scams.
Earlier in the week, District Attorney Tony Rackauckas told a group of community leaders that his office is expanding investigations into real estate fraud.
Elizabeth Henderson, an assistant district attorney who spoke at the same event in Garden Grove, said 30% of the cases handled by the office’s major fraud unit are tied to real estate, up from an average 10% in past years. Here’s more of what I wrote about her talk and subsequent interview:
The district attorney has two prosecutors, two investigators and a paralegal focused just on real estate fraud, she said.
The real estate squad is paid for, at least partially, with money from a $3 fee on the filing of certain real estate documents that was approved by the Board of Supervisors earlier this year.
Henderson was more blunt in her speech and in a later interview.
“We want to send people to jail,” she said.
The issue is not just that someone might lose $2,000 or more, but that his or her house proceeds to foreclosure while the homeowner waits for help that never comes, Henderson said.
Defrauding just one person could translate to a maximum penalty of three years in prison for grand theft, she said. Subsequent victims could add eight months to a sentence per person. Loan modification scammers could be committing other crimes, such as fraud, practicing without a license, and breaking rules tied to call centers.
More from this blog…
- These O.C. homes are about to be repo’d
- Democrats renew push for Consumer Finance Agency
- District Attorney steps up real-estate fraud investigations
- O.C. foreclosure starts climb as inland may be hitting bottom
- Foreclosure flip
- Fed plans to raise rates … in distant future
- When will these foreclosures hit the market?
- House committee votes to extend home-loan limits
- Bank failures in perspective
- Buyers dominate foreclosure auction
Post from: Mortgage Insider
