FACTS: On Feb. 13, Patricia Ann King of Bakersfield, pleaded guilty to aiding and assisting the preparation of a false tax document and to three counts of mail fraud for her role in a mortgage fraud scheme.
In the tax fraud case, King willfully aided, assisted, and counseled a taxpayer in the preparation and presentation to the Internal Revenue Service of a false and fraudulent individual income tax return (Form 1040) for the year 2005. The tax return falsely claimed Schedule A and Schedule C expenses that King knew were not valid.
In the mortgage fraud case, from approximately October 2005 to July 2006, King assisted other defendants in carrying out a scheme to defraud mortgage lenders, including WMC Mortgage Corp. and SunTrust Mortgage Inc. by submitting false documentation in support of loan applications prepared by the co-defendants. During this time period, King was a tax return preparer and owned The Tax Kings, a tax return business in Bakersfield. King prepared and provided to her co-defendants false and misleading verification letters that purported to verify loan applicants' self-employment history and income, among other information. King received compensation payments from the co-defendants for providing the verification letters. King knew that the verification letters were to be submitted by the co-defendants to lenders in support of applications for loans for the purchase or refinance of properties and that the lenders would rely on the letters to approve the loans. King admitted that her actions caused lenders to incur losses of approximately $530,000.
As an example, in November 2005, King provided a false verification letter in support of applications by one of the co-defendants to WMC Mortgage to refinance a property in Bakersfield. In the letter, King falsely verified that she had prepared the co-defendant's taxes for the previous five years, that the co-defendant had received self-employment income for the previous five years from “business operations,” and that such purported income supported the co-defendant's living and personal expenditures. King also falsely claimed to be a CPA. Additionally, when WMC Mortgage subsequently contacted King in a prefunding audit, King verified the letter that she had submitted. WMC Mortgage ultimately funded loans for approximately $232,000 and $58,000 by wire transfer for the refinancing of the property. The property subsequently went into foreclosure when the co-defendant failed to make payments.
The mortgage fraud case is the product of a joint investigation by the IRS-Criminal Investigation and the Federal Bureau of Investigation, working with a Mortgage Fraud Task Force based in Fresno. The U.S. Attorney's Office and the FBI created the Mortgage Fraud Task Force, which is composed of federal and local law enforcement, to further the prosecution of mortgage fraud cases arising out of the southern half of the Central Valley. Assistant U.S. Attorneys Kirk E. Sherriff and Henry Z. Carbajal III are prosecuting the mortgage fraud case.
King is scheduled to be sentenced by United States District Judge Anthony W. Ishii in both cases on April 23, 2012. The maximum statutory penalty for aiding and assisting the preparation of a false tax document is three years in prison, a $250,000 fine, and up to five years of supervised release. The maximum statutory penalty for each of the three counts of mail fraud is 20 years in prison, a $250,000 fine, and up to three years of supervised release.
CALIFORNIA MAN GETS FOUR YEARS AND NINE MONTHS IN FEDERAL PRISON FOR MORTGAGE FRAUD
FACTS
On Feb. 17, Gabriel Viramontes, of Elk Grove was sentenced to four years and nine months in prison for his role in an $8 million mortgage fraud scheme.
A jury found him guilty on bank and mail fraud charges. Viramontes and his partners, James Roy Martin and Mario Fellini III, recruited straw buyers who purchased 19 homes in the Sacramento area using phony documentation. The sales generated illegal kickbacks and "substantial loan broker commissions," federal prosecutors said.
Martin and Fellini pleaded guilty and testified against Viramontes. Martin received 20.5 months in prison, while Fellini will get six months in prison and five months home detention. (sacbee21812)
MORAL
A falling out among thieves? Get to your lawyer first and you may win something good. At least that has been our experience.
FOUR MORE INDICTED FOR MORTGAGE FRAUD IN SACRAMENTO
FACTS
Four more Sacramento-area residents face criminal charges as part of the federal government's investigation into one of the region's largest alleged mortgage fraud schemes.
A federal grand jury indicted Timofey Gurin, Anna Kuzmeko, Vitaliy Andreyev and his brother Andrey Andreyev on wire fraud charges for allegedly using phony loan documents to purchase homes that later went into foreclosure.
The indictments, unsealed on Feb. 17, said the foreclosures cost lenders over $2 million. The federal investigation has produced charges against 55 people, mostly in the region's Russian American community. (sacbee21812)
MORAL
Did you notice how things are picking up in California indictments? It will continue in this one attorney's opinion through and including all of 2011 and 2012 based upon the knowledge I have. This is a guess but it is an educated guess and I thing a good and valid one. If anyone has been involved in stated income loans, owner occupied when the properties were investments, I suggest they see their attorneys now. When the FBI visits you will have lost valuable advice from your attorney.
THREE MEN PLEAD GUILTY IN SAN DIEGO TO LOAN MODIFICATION FRAUD
FACTS
On Feb. 14, three individuals charged with conspiracy to commit wire fraud and mail fraud for their roles in operating a fraudulent mortgage loan modification business pled guilty in federal court in San Diego.
Ziad Nabil Mohammed Al Saffar and Sara Beth Bushore Rosengrant admitted that they operated the fraudulent loan audit and modification business, located in San Diego, under the names Compliance Audit Solutions, Inc., and CAS Group, Inc. Daniel Al Saffar admitted that he worked as a sales representative in connection with the operation. Daniel Al Saffar admitted that he worked as a sales representative in connection with the operation. The defendants targeted homeowners who were unable to afford their mortgage payments and falsely advertised to them that CAS and CAS Group were affiliated with the federal government. The defendants admitted to using false and fraudulent statements and representations to induce customers to purchase an “audit” of their home mortgage loans, supposedly to identify “violations” in the loan documents that could then be used to force banks to renegotiate their loans. The audit fees ranged from $995 to $3,500.
Among the misrepresentations made to customers were claims that CAS and CAS Group were affiliated with the United States Department of Housing and Urban Development, that they were participating in a federal program called “Hope for Homeowners,” that the audit fees were tax deductible, and that CAS and CAS Group had an “attorney” on staff who could finalize negotiations with banks on behalf of homeowners. The indictment further alleged that, as part of the conspiracy, the defendants fraudulently induced certain homeowners to make payments to CAS or CAS Group by falsely promising that such “good faith” payments were necessary to reduce their loan balance and interest rate, and that those payments would be kept in an “escrow account” by CAS or CAS Group. The false representations also included telling homeowners that banks demanded a “settlement fee” in order to modify a first mortgage and eliminate a second mortgage; that a one-time payment to cover taxes and insurance on the property was needed; and that the homeowners should make their monthly mortgage payments to CAS or CAS Group, instead of to their lender, and that the funds would be held in an escrow account for the benefit of a new lender.
Defendants agreed to pay restitution to the victims of their criminal conduct to be determined by the court. Each defendant also agreed to make a restitution payment in an amount of $30,000 prior to the sentencing hearing. (usattysdca21412)
MORAL
Notwithstanding all the news, publicity, media broadcasting about not paying advance fees, people still pay advance fees.
IN A CALIFORNIA CONVICTION FOR MORTGAGE FRAUD RESTITUTION AMOUNT MUST BE COMPUTED PROPERLY
FACTS
Judy Yeung of Northern California was convicted of various crimes related to fraudulent real estate investment scheme. The government set restitution at $1,3 million. The calculation was the outstanding balance on the defaulted loans, less any money recovered from the sale of the property. This was wrong.
The case was appealed on the amount of the restitution and the appeals court said under the Mandatory Victims Restitution Act, the court must order a defendant to make restitution and provide guidance in computing the amount.
In computing the direct lender's loss in a fraudulent real estate scheme, the restitution is the amount of any unpaid balance due on the fraudulent loan, less the value of the real property collateral as of the date the direct lender took control of the property. The award must contain an adequate evidentiary basis and reasoning by the court. There was no evidence of the value of the loans at the time they were acquired by the victim lender and no value found for the collateral when the victim received control of it. (U.S. v. Yeung, USCA, 9th Cir. No. 10-10381, 2-13-12.
MORAL
The attorney for the defendant should review this at the time of the sentencing or if there is a plea bargain go over it with the U.S. Attorney to get an agreed amount if the amount used by the government seems too high.
GEORGIA MAN ONCE A CANDIDATE FOR MAYOR GETS OVER TWO YEARS IN FEDERAL PRISON FOR MORTGAGE FRAUD
FACTS
On Feb, 17, H. Gregory Cordell, a real estate broker and developer who had run for mayor of Cartersville, and had pleaded guilty was sentenced to two years and three months in a federal prison to be followed by five years of supervised release in Atlanta. This is for a million-dollar mortgage fraud scheme that involved kickback, arson and luxury vehicles. He was ordered to pay $1 million in restitution.
To get over $1 million in loans, he fraudulently inflated the purchase price to get a bigger mortgage and then was paid a kickback under the table from the proceeds. (ex.com22012)
MORAL
Even with counsel and a guilty plea he gets two years in prison.
NEW JERSEY MAN INDICTED IN PENNSYLVANIA FOR LOAN AND CREDIT APPLICATION FRAUD
FACTS
On Feb. 16, Mitchell F. Deutsch of Tintion Falls, N.J., was charged by federal indictment with making false statements on loan and credit applications.
If convicted, the defendant faces a maximum possible sentence of 150 years' imprisonment, five years of supervised release, a $5,000,000 fine, and a $500 special assessment. (usattyedpa21612)
MORAL
And everyone thought it was fun and games to falsify a 1003! Remember though, he is innocent until proven guilty in a court of law.
CO-OWNERS OF HOME SAVERS CONSULTING CORP. OF NEW YORK SENTENCED IN NEW JERSEY FOR FORECLOSURE CONSULTING FRAUD
FACTS
On Feb. 15, two Brooklyn, N.Y., men, Phil A. Simon and Garth Celestine got 66 months and 36 months in prison respectively for conspiring with each other and others in a mortgage fraud scheme that falsely promised to help homeowners facing foreclosure keep their homes and repair their damaged credit. Both defendants previously pleaded guilty to conspiracy to commit wire fraud in a Newark, N.J. federal court.
From 2004 to 2007, Simon and Celestine owned and operated Home Savers Consulting Corp., which held itself out as a foreclosure rescue company with two locations in New York. Simon and Celestine conspired with each other and others to defraud both homeowners facing foreclosure and mortgage lenders by making false statements and promises. Simon and Celestine defrauded more than 40 homeowners and mortgage lenders, causing losses to the victims of more than $3.3 million.
Home Savers advertised to homeowners and promised to help them avoid foreclosure, keep their homes and repair their damaged credit. Simon and Celestine told the homeowners they could avoid foreclosure by signing contracts of sale and transferring title to their homes to individuals who would act as “straw buyers” of the properties. Simon and Celestine promised the homeowners that after they transferred their title to these straw buyers, Home Savers would help them improve their credit ratings, help them obtain more favorable mortgages on their homes, and ultimately direct the straw buyers to transfer the title to their homes back to the homeowners within six months to one year. Simon and Celestine typically told the homeowners the equity withdrawn from their properties would be kept in a separate account and used to pay the mortgages and expenses on their homes.
After the homeowners were signed up, Simon and Celestine recruited individuals with good credit scores to act as straw buyers and paid them about $10,000 per property. Using the homeowners' properties and the good credit ratings of the straw buyers, Simon and Celestine applied for mortgages in the names of the straw buyers to extract the maximum available equity from the homes.
To increase the creditworthiness of the straw buyers and to ensure they would be approved for the loans, Simon and Celestine submitted to the mortgage lenders loan applications that contained false personal and financial information about the straw buyers, such as their stated employment history and income. They also falsely represented to the mortgage lenders that the straw buyers intended to occupy the property that would secure each mortgage loan as their primary residence, when, in fact, the homeowners planned to stay in their homes.
After each homeowner's debt was paid off and other fees were satisfied, the defendants deposited the remainder of the loan proceeds into the bank accounts of Home Savers and other companies that Simon and Celestine owned and controlled. (usattynj21512)
MORAL
Stated income gets people in prison. Stating that the borrower will occupy the residence as their primary home gets people in prison.
THE INFORMATION CONTAINED HEREIN IS NOT LEGAL ADVICE.
AN ATTORNEY SHOULD BE CONSULTED IF YOU DESIRE LEGAL ADVICE
