FORMER ARIZONA LOAN OFFICER INDICTED FOR $6 MILLION CONSPIRACY IN MORTGAGE LOAN FRAUD - FACTS - On Feb. 16, a federal grand jury in Tucson returned a four count indictment against Rex Adams for Conspiracy to Commit Wire Fraud, and False Statement to Influence a Financial Institution. At the time of the allegations raised in the indictment, Adams worked as a manager and loan officer for a mortgage broker in Tucson. The indictment charges Adams for his involvement in a “cash back” mortgage fraud conspiracy that occurred between February and June 2006. The indictment alleges that the co-conspirators used straw buyers to purchase nine properties in Tucson, Nogales, and Vail, Ariz. These properties were purchased between February and June 2006, for prices ranging from $530,000 to $1,300,000. The co-conspirators obtained approximately $6,000,000 in fraudulent loans to purchase these properties. Adams was the seller of four of the properties.
According to the indictment, the mortgage loan applications used to obtain these loans contained at least one or more of the following material misrepresentations: (1) false statement concerning the applicant's intent to reside at the property as a primary residence; (2) false statement concerning monthly income; (3) false representation concerning employment, or (4) failed to disclose that the buyer had recently purchased another property. In some of the transactions, the co-conspirators concealed from the lenders that large payments were made to an unrelated third party using a portion of the fraudulently obtained proceeds. Each of the loans or properties in the indictment went into default, “short sale,” or foreclosure after the loan applicants failed to make payments on the mortgages.
A conviction for Conspiracy to Commit Wire Fraud, Wire Fraud affecting a financial institution, and False Statement to Influence a Financial Institution carries a maximum penalty of 30 years imprisonment, a $1,000,000 fine or both for each count. (uaattyaz22212-casemo. cr-12-397-tuc-dcb)
MORAL
The federal prosecutors are chasing loans in Arizona funded six years ago and moving forward to the present. Part of the criminal fraud is claiming the property would be the borrower's principal residence. Remember; consult your attorney before it goes too far. That is the very best time (s)he can start assisting you.
SAN DIEGO REAL ESTATE AGENT AND EIGHT OTHER INDUSTRY PROFESSIONALS CHARGED IN MASSIVE MORTGAGE FRAUD SCHEME THAT CAUSED AT LEAST $15 MILLION IN LOSSES
FACTS
On February 21, 2012 a federal indictment was unsealed charging Eric Elegado, Charmagne Elegado, Theodore Cohen, Minh Nguyen, Regidor Pacal, Alexander V. Garcia, Roman Macabulos, Ramin Lotfi and Roderick Huerto with multiple counts of conspiracy, wire fraud, money laundering, and criminal forfeiture.
According to court proceedings, these defendants engaged in a multi-million dollar mortgage fraud scheme which targeted vulnerable low-income immigrants in San Diego. All of the defendants were arraigned in federal court before U.S. Magistrate Judge William McCurine, Jr.
According to the indictment, Eric Elegado owned and operated real estate and mortgage brokerage businesses in San Diego and employed Theodore Cohen, Minh Nguyen, Regidor Pacal, Alexander V. Garcia, Roman Macabulos, Ramin Lotfi, and Roderick Huerto. These defendants conspired together and with others to obtain mortgage loans for unqualified buyers by falsifying and assisting others in falsifying the employment and salary information on the loan documents.
According to the indictment, Eric Elegado directed the mortgage loans to be processed through his wife, Charmagne Elegado, who was working at the subprime mortgage lender. In order to further the fraudulent scheme, the defendants allegedly created and caused others to create false financial records for the purpose of verifying income listed on the false loan applications, such as W-2s, bank statements, rental income statements, ownership records, and bank deposit documents.
According to court proceedings, the defendants caused these fraudulent loan documents to be submitted to mortgage lenders in order to induce the lenders to loan more than $50 million dollars in mortgage loans. As a result of their scheme to defraud, defendants and others caused the mortgage companies, lending institutions, and financial institutions to lose more than $15 million.
The charges are:
Count 1: Title 18, United States Code, Section 1349 – Conspiracy to Commit Mail and Wire Fraud
Maximum penalties: 20 years' imprisonment, $250,000 fine or twice the gross pecuniary gain or twice the gross pecuniary loss (whichever is greatest), $100 special assessment, three years of supervised release.
Counts 2-7: Title 18, United States Code, Section 1343 – Wire Fraud
Maximum penalties per count: 20 years' imprisonment, $250,000 fine or twice the gross pecuniary gain or twice the gross pecuniary loss (whichever is greatest), $100 special assessment, three years of supervised release.
Count 8: Title 18, United States Code, Section 1956(h) – Conspiracy to Commit Money Laundering Maximum penalties: 10 years' imprisonment, $250,000 fine, $100 special assessment, three years of supervised release.
Counts 9-12: Title 18, United States Code, Section 1957 – Money Laundering, Maximum penalties per count: 10 years' imprisonment, $250,000 fine, $100 special assessment, three years of supervised release. (case no. 12cr0404-ajb, san diego, ca)
MORAL
Twelve counts, nine defendants, up to 30 years in a federal prison with no possibility of parole since the federal system does not have parole. I would say these people need competent attorneys. The federal prosecutors have been burning up northern California and Central California with well over 300 arrests and convictions in the last 12 months. Now they are working on Southern California.
TWO SOUTHERN CALIFORNIA WOMAN CHARGED WITH TARGETING WESTMINSTER, CALIFORNIA VIETNAMESE AMERICANS IN REAL ESTATE FRAUD SCHEME
FACTS
On Feb. 22, two women, Loan Thituong Nguyen and Lynn Eichenberger were arrested and charged with stealing over $2 million from 17 victims in a fraudulent real estate investment scheme. They are each charged with 15 felony counts of grand theft, two felony counts of money laundering, and one felony count of conspiracy to commit grand theft with sentencing enhancements for property loss over $1.3 million, aggravated white collar crime over $500,000, and money laundering over $1 million. Nguyen faces one additional felony count each of forgery and the false recording of documents.
If convicted, Nguyen faces a maximum sentence of 24 years in state prison and Eichenberger faces a maximum sentence of 22 years and eight months in state prison. Nguyen and Eichenberger are being held on $2 million bail each and must prove that the money is from a legal and legitimate source before posting bond.
Between August and December 2009, Nguyen and Eichenberger are accused of conspiring to defraud investors of millions of dollars in a real estate fraud scheme. During this time, Nguyen is accused of being a licensed real estate broker who managed two companies, Suncoast Mortgage Corp. and Suncoast Investment Realty. Nguyen is accused of targeting victims in the Vietnamese-American community. The conspiracy operated using two different schemes to defraud 17 investors.
First, Nguyen is accused of soliciting victims by claiming to have investment opportunities in properties in foreclosure. Nguyen and Eichenberger are accused of having no legal or financial claims to these properties and no ability to sell them to investors. Nguyen is accused of claiming to victims that the homes could be purchased at a low price and held as an investment property. Nguyen is accused of instructing the victims to pay 50 percent of the cost of the home up-front to secure it in escrow and accepting payment from the victims. The defendants are accused of transferring the money from Nguyen's escrow account to a business account set up by Eichenberger.
In the second scheme, Nguyen is accused of soliciting victims who were distressed and in foreclosure. She is accused of instructing the victims to pay her 50% of the balance owed on the mortgage with the false promise of using those funds to refinance and secure a lower loan payment. The victims borrowed money from friends and relatives in order to pay Nguyen. When the victims paid Nguyen, the defendants are accused of transferring the money from Nguyen's escrow account to a business account set up by Eichenberger.
The defendants are accused of then draining the money from Eichenberger's account. Nguyen and Eichenberger are accused of stealing over $2 million from their victims. When confronted by the victims about the properties, Nguyen is accused of claiming that the deal had fallen through. The defendants are accused of failing to return any of the stolen money to any of their victims.
Several of the victims reported the theft to the Westminster Police Department who began investigating this case. The Federal Bureau of Investigation and Department of Real Estate participated in this investigation. Nguyen and Eichenberger were arrested by WPD and the Orange County District Attorney's Bureau of Investigation. (dre22212)
MORAL
Being a state prosecution, the state tends to land harder with prison sentences than the federal system. Next with an ongoing investigation, it would seem there are others that are believed to be involved. If so, I would suggest they see their attorneys now rather than later.
COLORADO ATTORNEY GENERAL AND U.S. ATTORNEY FILE JOINT LAWSUIT IN DENVER AGAINST BELLA HOME OF GEORGIA AND ITS PRINCIPALS TO END NATIONAL FORECLOSURE RESCUE SCAM
FACTS
On Feb. 17, Colorado Attorney General John Suthers and U.S. Attorney John Walsh announced they have filed a joint lawsuit against Georgia-based Bella Homes and its principals on suspicion that they ran a nationwide foreclosure-rescue scam between March 2010 and February 2012.
According to the joint lawsuit, filed in U.S. District Court in Denver, Bella Homes preyed on homeowners facing foreclosure by accepting more than $3 million in fees disguised as “rent” while they did little to actually help homeowners avoid foreclosure. Bella Homes is accused of asking homeowners to give the company the titles to their homes and then to enter into a lease agreement with Bella Homes where they would “rent” their homes while Bella Homes allegedly worked to halt the foreclosure and purchase their mortgages.
According to the complaint, Bella Homes told consumers they would:
Avoid foreclosure; Allow Bella Homes to purchase or settle their mortgages; Be protected under federal law from eviction during the terms of the lease agreements; Be able to repurchase their homes in three years for 90% of its fair market value and receive credit for 60% of the rent paid to Bella Homes; Enjoy a mortgage payment following their repurchase that is 40% to 60% lower than previous payments; and Not have foreclosures noted on their credit reports.
According to the complaint, the promises made by Bella Homes were false and Bella Homes did not provide any meaningful assistance to homeowners to avoid foreclosure and remain in their homes.
The Office of the Attorney General and the U.S. Attorney's Office received a temporary restraining order against Bella Homes on Feb. 15. The temporary restraining order barred the company and its principals from engaging in their foreclosure-rescue business and froze Bella Homes' bank accounts. On Feb. 22, the defendants agreed to a preliminary injunction ceasing further operations and transferring approximately $500,000 to the government for homeowner restitution, pending final resolution of the case.
“Bella Homes gave false hope to desperate homeowners, taking advantage of their desire to do anything to save their homes,” said U.S. Attorney John Walsh. “Bella Homes's actions not only hurt those vulnerable homeowners, but the housing market generally. The company will now face the consequences of its misconduct.”
Bella Homes accepted money from more than 450 consumers, including five in Colorado. Bella Homes' suspected activities affected consumers living in more than two dozen states. According to the complaint, most of the more than $3 million Bella Homes derived from “rent” payments were diverted to the company's principals for personal use.
It is illegal in Colorado for a loan modification company to charge an upfront fee. Loan modification companies can only charge once their services are completed. (usattyco21712)
MORAL
Nothing stops the federal people from proceeding criminally, although it appears unlikely based upon the above. However, since all the assets are frozen, how are the principals going to defend themselves? That is an interesting question.
VIRGINIA SUPREME COURT HOLDS THE BORROWER CANNOT DEMAND THAT THE HOLDER OF THE PROMISSORY NOTE PROVE IT HAS THE RIGHT TO FORECLOSE
FACTS
In an unpublished opinion in the case of Jimenez v. Citibank, N.A., the Virginia Supreme Court held that a borrower in Virginia cannot force the beneficiary of his or her mortgage to prove its authority, to foreclose under the declaratory judgment statute or by action to quiet title.
Ms. Jimenez argued that Citibank lacked authority to foreclose because: (a) it was not named in the Note or Deed of Trust; (b) no assignment to Citibank had been filed in the land records; (c) and neither Citibank nor the substitute trustee under the Deed of Trust had demonstrated how Citibank came to possess the Note.
The Court rejected this argument, holding: (1) the holder of a promissory note need not demonstrate the chain of possession; (2) recorded assignments are not required under Virginia law; (3) Virginia's non-judicial foreclosure scheme does not give a borrower the right to demand that the note-holder prove its right to enforce the Note; and (4) a quiet title action is only available where the plaintiff alleges that his or her title is held free and clear of the defendant's interest.
Although the Virginia Supreme Court's opinion in Jimenez is unpublished, it should leave no doubt that Virginia law does not permit bare challenges to lenders' authority to foreclose. (Thank you Weiner, Brodsky)
MORAL
This is similar to California law. If you are challenging title then a Lis Pendens should be filed and recorded.
THE INFORMATION CONTAINED HEREIN IS NOT LEGAL ADVICE.
AN ATTORNEY SHOULD BE CONSULTED IF YOU DESIRE LEGAL ADVICE
