The scheme claimed that courts have found that most mortgage lenders engaged in predatory lending practices or approved inappropriate loans (well, that part is certainly true), and that the homeowners bank was one of the guilty. As alleged in the lawsuit, defendants preyed on desperate homeowners facing foreclosure by selling them participation as plaintiffs in mass joinder lawsuits against mortgage lenders. Defendants deceptively led homeowners to believe that by joining these lawsuits, they would stop pending foreclosures, reduce their loan balances or interest rates, obtain money damages, and even receive title to their homes free and clear of their existing mortgage. Defendants charged homeowners retainer fees of up to $10,000 to join as plaintiffs to a mass joinder lawsuit against their lender or loan servicer.

It probably comes as no surprise that theses same ‘prominent foreclosure attorneys’ had previously been ‘prominent loan modification specialists’ but it is alleged that Kramer sent an email to another fellow defendant last year stating “Only morons would prefer to ‘sell’ mods from this day forward”.
Homeowners who have paid to be added to one of the lawsuits should contact the State Bar if they feel they may be victims of this scam. They can also contact a HUD-certified housing counselor for general mortgage related assistance. If you have sent money to any of the following seized entities, you should contact the CA Attorney Generals Office at http://oag.ca.gov/.

The Department of Justice has seized the practices of the following non-attorney defendants: Attorneys Processing Center, LLC; Data Management, LLC; Gary DiGirolamo; Bill Stephenson; Mitigation Professionals, LLC; Glen Reneau; Pate Marier & Associates, Inc.; James Pate; Ryan Marier; Home Retention Division; Michael Tapia; Lewis Marketing Corp.; Clarence Butt; and Thomas Phanco as well as seizing the practices and accounts of attorney defendants:The Law Offices of Kramer & Kaslow; Philip Kramer, Esq; Mitchell J. Stein & Associates; Mitchell Stein, Esq.; Christopher Van Son, Esq.; Mesa Law Group Corp.; and Paul Petersen, Esq.

Attorney General Harris is challenging the defendants’ alleged misconduct in marketing their mass joinder lawsuits; her office takes no position as to the legal merits of any claims asserted in the mass joinder lawsuits filed by defendants.

Victims in the following states are known to have received these mailers, or signed on to join the case. This is a preliminary list that may be updated:

Alaska, Arizona, California, Colorado, Connecticut, Florida, Hawaii, Maryland, Massachusetts, Michigan, Missouri, Nevada, New Jersey, New York, Ohio, Texas, Washington.

For more information please go to: http://oag.ca.gov/news/press_release?id=2552

“While California continues its own vigorous efforts to ensure that homeowners facing foreclosure are treated fairly and lawfully,” Brown said, “we are now working together with other attorneys general and regulators to seek solutions that reach across state lines to protect all borrowers at risk of losing their homes in this foreclosure crisis.”

On Friday, Brown called on all lenders in California to halt foreclosing on California homes until they can demonstrate that they are complying with state law. Earlier, Brown sent letters to Ally Financial and J.P. Morgan Chase directing them either to prove they are in compliance with state law or else halt foreclosures. His office also has been in discussions with other lenders, including Wells Fargo, One West and Bank of America. Brown’s office will continue its independent efforts to protect homeowners facing foreclosure.

Bank of America announced on Friday that it was temporarily halting foreclosures nationwide.

The multi-state group will review how lenders verify foreclosure documents nationally. The group was formed after several lenders and loan services admitted that officials, dubbed “robo-signers,” had vouched for the accuracy and completeness of foreclosure documents without reviewing them. Such sham verifications may constitute a deceptive and unfair practice or otherwise violate state laws.

Regulators in the states involved, including California, have already started examining whether mortgage servicers have submitted improper affidavits or other foreclosure documents.

Although each state has its own foreclosure laws, all attorneys general and financial regulators have a common goal of making certain that every lender and servicer conduct a good faith review of foreclosure documents, only foreclose on homeowners after confirming all requirements have been met, and obey all state laws.

California law prohibits lenders from recording notices of default on mortgages made between Jan. 1, 2003, and Dec. 31, 2007, unless – with certain exceptions — the lender contacts or tries diligently to contact the borrower to determine eligibility for loan modification. A notice of default must include a declaration of compliance with California law.

California homeowners who experience problems with foreclosures, or other consumer issues, can file a complaint online with the Attorney General’s office at: www.ag.ca.gov/consumers/general.php.

Brown Calls on Banks to Halt Foreclosures In California

SAN FRANCISCO – Following his office’s negotiations with the state’s top loan servicers and today’s announcement by Bank of America that it is temporarily halting foreclosures nationwide, Attorney General Edmund G. Brown Jr. today called on the state’s other lenders to halt foreclosing on California homes until the banks can demonstrate that they are complying with state law.

“All lenders should halt foreclosures until they clear up this mess and ensure that the process is fair and complies with California law,” Brown said. “Bank of America has taken an important step, and the other major lenders should follow its lead.”

California law prohibits lenders from recording notices of default on mortgages made between January 1, 2003 and December 31, 2007, unless, subject to limited exceptions, the lender contacts or tries diligently to contact the borrower to determine eligibility for a loan modification. A notice of default must include a declaration of compliance with California law.

In the past few weeks, Brown’s office has been in discussions with Bank of America, Ally Financial, JP Morgan Chase, Wells Fargo and OneWest to ascertain whether they are complying with California law. Brown’s office has called on those banks to show they are complying with state law before continuing with foreclosures.

JP Morgan Chase, the nation’s third largest loan servicer, Ally Financial and One West have admitted that employees approved and signed foreclosure documents without first fully reviewing the borrowers’ loan files. As a result, those borrowers lost their homes based on affidavits the bank never confirmed were accurate.

Ally Financial and JP Morgan have suspended foreclosures in 23 other states that, unlike California, require a court order for foreclosures.

“The housing crisis has been devastating for many Californians, and their pain has been sharpened by callous con artists like these,” Brown said. “Their arraignment today serves as a warning to people trying to save their homes from foreclosure that there are fraudulent operators out there who will take their money but do nothing to help.”

Angeline Lisa Lizarrago, 68, of Fremont and Michael Douglas Young, 67, of Los Gatos were scheduled to be arraigned today in Department 502 of the Hayward Hall of Justice on a 23 count complaint for felony fraud and theft they committed at their business, Avemos Financial Group, of Fremont.

If convicted, Lizarrago could face more than 15 years in prison. Young, a licensed real estate broker, faces up to 12 years.

The case was investigated and prosecuted jointly by the Attorney General and the Alameda County District Attorney.

From June 2008 to October 2009, Lizarrago and Young targeted Spanish-speaking homeowners as well as Southeast Asian immigrants, all desperate to save their homes.

People stood in line for hours to get into Avemos’s waiting room, which was decorated with shrines to the Virgin Mary. Clients seeking help typically paid $1,500 initially. Lizarrago, the owner of Avenos, and Young, Avemos’s general manager, promised they would take steps to stop banks from immediately foreclosing on their homes and renegotiate clients’ loans to reflect their homes’ current market value. Lizarrago and Young guaranteed a refund if they were unsuccessful. Many lost their homes in foreclosure and did not receive a refund.

Lizarrago also took advantage of the foreclosure crisis in another way. She told an 89-year-old man and his wife, who wanted to move away from Stockton, that she owned 51 properties, many of which had been foreclosed upon, and she could find them a home in Fremont. She asked for an up-front fee, which she promised to return with interest once the purchase was made. In a series of payments, the couple gave Lizarrago $25,000. She never found them a home, nor returned their money.

The criminal charges against Lizarrago and Young are based on 11 cases of fraud and theft, and prosecutors believe there are 50 more victims who haven’t been identified yet. Anyone with information about the Avemos Financial Group or the defendants should call the Alameda County District Attorney’s Office at 1-877-288-2882.

Lizarrago was moved to Alameda County jail from Chowchilla State Prison, where she was serving a two-year sentence for a prior real estate scam. Young was arrested September 30.

The California Department of Real Estate and the Fremont Police Department assisted in the investigation.

The Attorney General has fought to stop scammers and con artists from taking advantage of people during the housing crisis. He has sought court orders to shut down more than 30 fraudulent foreclosure-relief companies and has brought criminal charges and obtained lengthy prison sentences for dozens of other deceptive loan-modification consultants. For more information on the Attorney General’s action against loan-modification fraud visit: http://ag.ca.gov/loanmod

“These defendants dangled the term ‘forensic loan audit’ as a sure-fire remedy for the mortgage problems of homeowners in distress,” Brown said. “In fact, it was no remedy at all, and hundreds of desperate California homeowners took the bait and lost their money — and sometimes their homes.”

Brown filed the $60 million lawsuit against US Loan Auditors, My US Legal Services, and five individuals, including two attorneys, who operate a fraudulent mortgage audit scheme that preys on desperate homeowners anxious to save their homes. The suit demands civil penalties, restitution for victims, and permanent injunctions to keep the companies and other defendants from fraudulently marketing forensic loan audits and legal services of little value.

The companies, based in Rancho Cordova, work together to market and sell “forensic loan audits” to homeowners, who pay thousands of dollars in up-front fees for a dubious computer-generated review of their mortgages. The audits purport to show violations of law by lenders, which sales agents cite to convince homeowners they have a strong legal case. Sales agents use these findings to encourage homeowners to stop making their mortgage payments and instead pay additional fees to bring “predatory lending” lawsuits against their lenders.

Both companies deceive homeowners by assuring them that filing these lawsuits will give them “legal leverage” to obtain a loan modification and prevent lenders from foreclosing or collecting monthly mortgage payments. Homeowners who filed these lawsuits have lost thousands of dollars and placed themselves in greater danger of losing their homes.

My US Legal Services bilks clients for months, filing cookie-cutter complaints with little or no merit, billing unjustified monthly fees, and then dodging clients’ phone calls or stringing them along with false assurances that a settlement is in progress.

Hundreds of California homeowners, many of them facing possible loss of their homes, have been duped into paying thousands of dollars to the two companies — one homeowner paid more than $55,000 — but received little or no relief.

Meanwhile, the litigation mill run by My US Legal Services has littered courts with hundreds of lawsuits that have scant chance of success. Two federal judges have expressed concern about the legitimacy of these lawsuits and have several times sanctioned attorneys involved.

In addition to the companies, Brown is suing the three owners: attorney and real estate broker James Sandison, Jeffrey Pulvino, and Shane Barker, as well as two California attorneys, Sharon L. Lapin and Jonathan G. Stein.

The State Bar filed disciplinary charges yesterday against Sandison for alleged misappropriation of clients’ funds and aiding the unauthorized practice of law.

The Attorney General’s investigation, assisted by the State Bar and the Department of Real Estate, located victims throughout California cities hit hard by the foreclosure crisis: Corning, Fresno, Hayward, Irvine, Manteca, Richmond, Sacramento, Salinas, Sanger, Santa Ana, Stockton, Tracy, Vacaville and West Sacramento.

In February, Brown, along with the Bar and the Department of Real Estate, issued an alert ( http://ag.ca.gov/newsalerts/release.php?id=1862&) warning consumers to be wary of forensic loan audits that require homeowners to pay up-front fees. There is no evidence or statistical data to support claims that forensic loan audits of a lenders’ mortgage practices – even if performed by a licensed mortgage professional or a lawyer — help homeowners obtain loan modifications or any other foreclosure relief.

Brown has led the fight against fraudulent mortgage rescue and loan modification companies. He has obtained court orders to shut down several companies and has brought criminal charges against deceptive loan modification consultants. For more information on Brown’s actions against loan-modification fraud, see: http://ag.ca.gov/loanmod.

If you are a homeowner who has been scammed, you can file a complaint online with the Attorney General’s office at: www.ag.ca.gov/consumers/general.php. You can learn more about avoiding scams and obtain a complaint form by visiting the Department of Real Estate’s website at: www.dre.ca.gov.

If you have a complaint against Sandison, Lapin, Stein or any other lawyer involved in a loan modification or foreclosure relief service, contact the State Bar Complaint Hotline at 1-800-843-9053. Complaint forms and an explanation of the attorney discipline system are available online at: www.calbar.ca.gov.

Attached are a copy of the complaint and a sample of the fraudulent advertising mailers sent by the companies.

LOS ANGELES – Attorney General Edmund G. Brown Jr. has demanded that JP Morgan Chase prove immediately that it is complying with state law or, if it cannot, halt foreclosing on California homes.

“I’m taking this action to further protect California homeowners on the brink of foreclosure,” Brown said, “JP Morgan Chase, like GMAC/Ally Financial, has admitted that its review of key foreclosure documents was a ruse.”

“I’m directing Chase to prove it is following the law before it continues foreclosures in California,” Brown added.

California law prohibits lenders from recording notices of default on mortgages made between January 1, 2003 and December 31, 2007, unless, subject to limited exceptions, the lender contacts or tries diligently to contact the borrower to determine eligibility for a loan modification. A notice of default must include a declaration of compliance with California law.

JP Morgan Chase, the nation’s third largest loan servicer, has admitted that employees signed affidavits in 56,000 foreclosure cases nationwide without first personally reviewing the contents of the borrowers’ loan files. As a result, those borrowers lost their homes based on affidavits the bank never confirmed were accurate.

This practice strongly suggests that any purported verification by JP Morgan Chase that it complied with California law before beginning foreclosures here is also questionable.

JP Morgan has suspended foreclosures in 23 other states that, unlike California, require a court order for foreclosures.

On Sept. 24, Brown sent a similar letter to Ally Financial, Inc., formerly known as GMAC, directing it to prove it is complying with California law or cease foreclosures in California until it can. The Attorney General’s office is in contact with Ally.

Brown’s letter to JP Morgan Chase is attached.

LOS ANGELES – Attorney General Edmund G. Brown Jr. today joined the California Department of Real Estate and the State Bar of California to warn homeowners about an alarming rise in short sale fraud across California in a field “rife with scam artists”.

A short sale is an arrangement in which a homeowner sells his or her home for less than the outstanding mortgage, with the consent of the lender.

“While short sales can provide homeowners with a last-ditch alternative to foreclosure, this market is rife with scam artists,” Brown said. “Homeowners and buyers, agents, and lenders should beware of short sale negotiators who operate without licenses, use straw buyers or charge illegal fees.”

With so many homeowners now considering short sales, an entire industry of so-called short sale negotiators has emerged. These individuals solicit homeowners by promising to expedite the process and help coax lenders into taking part in the transaction.

The Department of Real Estate is investigating more than 40 complaints of short sale fraud, up from “virtually zero” cases only three months ago, a spokesman said.

In April, the Obama administration launched a new initiative called the Home Affordable Foreclosure Alternatives Program, which encourages homeowners in financial distress — especially those who have failed to complete a trial modification or qualify for a loan modification — to consider a short sale as an alternative to foreclosure.

Before working with — or paying — any short sale negotiator, homeowners should consider the following red flags:

No license
With limited exceptions, only licensed real estate agents or attorneys can engage in short sale negotiations with a homeowner’s lender.

Up-front fees
Licensed real estate agents wishing to collect up-front fees from homeowners for short sale transactions must first submit an advance fee contract to the Department of Real Estate and receive a no-objection letter.

Surcharges
With many distressed properties listed well below market value, negotiators and agents are charging potential buyers thousands of dollars in surcharges and hidden fees just to place an offer on a home. These illegal fees are frequently not disclosed and are paid outside escrow.

Straw buyers and house flipping
In this scheme, short sale negotiators misrepresent the market value of a property to a homeowner’s lender by only submitting offers on the property from an affiliated straw buyer. After the home is purchased below market value, the fraudsters immediately flip it and pocket the difference.

Short sale negotiators and agents use a number of titles including debt negotiator, debt resolution expert, loss mitigation practitioner, foreclosure rescue negotiator, short sale processor, short sale coordinator and short sale expeditor.

If you are a homeowner who has been scammed, contact Brown’s office at 1-800-952-5225 or file a complaint online at: www.ag.ca.gov/consumers/general.php.

Homeowners can also learn more about avoiding mortgage and real estate fraud by visiting the Department of Real Estate website at: http://www.dre.ca.gov/cons_alerts.html. A complaint form can be accessed online at: http://www.dre.ca.gov/frm_consumer.html.

“Short sale fraud appears to be the fraud of the moment, and it is proliferating statewide,” according to Real Estate Commissioner Jeff Davi. “Consumers, licensees and lenders must all arm themselves with the tools necessary to avoid such scams.”

Homeowners can file a complaint against a lawyer, a legal specialist or a company purporting to operate as a law firm with the State Bar by calling 1-800-843-9053 or visiting: www.calbar.ca.gov.

Homeowners can learn more about the federal government’s Home Affordable Foreclosure Alternatives Program by visiting: http://makinghomeaffordable.gov/hafa.html.

Non-profit housing counselors certified by the U.S. Department of Housing and Urban Development are also available to provide free help to homeowners. To find a counselor in your area, call 1-800-569-4287.

Time and again people don’t listen to that little inner voice that tells us – if it sounds too good to be true, then it probably is. We know that has always been the case and continues to be the case but sometimes… sometimes we think – well, reality may have suspended itself just this one time, just on this occasion, just for me.

NOT!

We continue to warn people about loan mod fraud – yet people continue to be victimized. I know people are desperate but sometimes you also have to be just a little bit naive and/or stupid to buy into some of these scams.

But the coalition formed by our Attorney Generals office, the Department of Real Estate and the State Bar of California keep trying to protect us from these scamsters and ourselves. I posted here some months back when they initially formed the coalition and were effective in passing legislation that required loan mod specialists to register with the Attorney Generals office and post a $100,000 bond (SB 94 Calderon). The same bill made it illegal for anybody to charge an up-front fee to modify, or attempt to modify, a loan. Yet in spite of shutting down hundreds of these scam artists and acting on 1,000′s of complaints, the problem continues.

So once again, AG Brown, the DRE and the State Bar have today submitted the following press release:

Brown Warns Homeowners to Avoid Forensic Loan Audits

Los Angeles-Attorney General Edmund G. Brown Jr. today joined the California Department of Real Estate (DRE) and the State Bar of California in warning Californians to avoid forensic loan audits, the loan-modification industry’s latest “phony foreclosure-relief service,” in which homeowners pay up-front fees for a forensic review of their lender’s practices, but are provided no actual foreclosure relief.

For more information on Brown’s action against loan-modification fraud visit: http://ag.ca.gov/loanmod.

The only thing better than cracking them now would have been to bust them back in 200 or 2003 when they were actively wreaking havoc on the market. It’s like our local Stonewood case, if they’d have been stopped in 2005 or 2006 the damages would only have been $40 or $50 million and a few dozen people would have been victimized. Since they weren’t stopped until late 2007 and into 2008, they racked up hundreds of victims, $140 million in fraud and tore a big hole in our market.

Case #1 is an extension of the classic Stonewood scenario for big kids. Stonewood would add anywhere from $50,000 to $150,000 to the price of a home and pocket the difference. These people  were blatantly bringing in appraisals at 3X the homes value in some very pricey areas like Beverly Hills, Pebble Beach & Malibu. Hey – if you’re going to commit fraud, no use wasting your efforts down the trailer park, ya know?

REAL ESTATE APPRAISER SENTENCED TO 3 YEARS IN PRISON IN MORTGAGE FRAUD SCHEME THAT LED TO $46 MILLION IN LOSSES

LOS ANGELES – A former state-licensed real estate appraiser was sentenced today to three years in federal prison and ordered to pay more than $46 million in restitution for her role in a massive mortgage fraud scheme that caused tens of millions of dollars in losses to federally insured banks.

Lila Rizk, 43, of Rancho Santa Margarita, received the three-year prison term after her conviction last summer on conspiracy, bank fraud and numerous loan fraud charges.

Rizk was sentenced by United States District Judge Dean D. Pregerson, who warned that other professional real estate appraisers should know that if they inflate appraisals and lie about the value of homes, “there is an overwhelming likelihood that they will be caught and go to prison.”

The evidence presented at Rizk’s trial last summer showed that she was part of a wide-ranging and sophisticated scheme that obtained inflated mortgage loans on homes in some of California’s most expensive neighborhoods, including Beverly Hills, Bel Air, Holmby Hills, Malibu, Carmel, Mill Valley, Pebble Beach and La Jolla. Members of the conspiracy sent false documentation, including bogus purchase contracts and appraisals, to the victim banks to deceive them into unwittingly funding mortgage loans that were hundreds of thousands of dollars more than the homes actually cost. Lehman Brothers Bank alone was deceived into funding more than 80 such inflated loans from 2000 into 2003, resulting in tens of millions of dollars in losses.

The evidence presented at trial showed that Rizk profited by collecting hundreds of thousands of dollars in fees for providing inflated appraisals in the scheme. Her appraisals typically valued the homes three times higher than what the homes really cost. In order to supposedly justify these inflated values, Rizk used “comps,” or comparable homes, that were far bigger, more luxurious, and in better neighborhoods than the homes she appraised. Once she had inflated a few dozen homes, she then used those homes as “comps” to supposedly justify inflated prices for homes later in the scheme.

Ten other real estate professionals have been convicted of federal charges related to the scheme.

Case #2 also involved fraud primarily perpetrated against lenders, in this case HUD. This crew not only defrauded the Federal Government but then he ran around buying a Vette, an RV, jewelry, etc. with the money. You’d think if you were smart enough to put together a scheme like this you’d have learned from watching TV that you don’t run around spending money like a drunken sailor or a liberal Senator.  HUD doesn’t so much mind getting taken but dammit you’d better pay your taxes on it.

FORMER PRESIDENT OF INLAND EMPIRE MORTGAGE COMPANY SENTENCED TO 13 YEARS IN FEDERAL PRISON IN FRAUD SCHEME THAT LED TO NEARLY $30 MILLION IN LOSSES AT H.U.D.

RIVERSIDE, California – The former president of Mortgage One Corporation in Hesperia was sentenced this afternoon to 13 years in federal prison for defrauding the United States Department of Housing and Urban Development and private lenders by fraudulently obtaining hundreds of federally insured loans and selling those mortgages to private lenders in a scheme that caused tens of millions of dollars in losses to the federal housing agency.

John Richard Varner, 56, of Hesperia, was sentenced to 156 months in prison by United States District Judge Virginia A. Phillips. In addition to the prison sentence, Judge Phillips ordered Varner to pay $29,749,239 in restitution.

Last April, following a nearly four-week trial, a federal jury convicted Varner of  one count of conspiracy to defraud HUD, one count of bank fraud and two counts of subscribing to false income tax returns. Varner was the fifteenth defendant convicted in relation to the scheme. Varner and co-defendant Richard Elroy Giddens, 69, of Riverside, were at the center of the fraud that was run out of Mortgage One Corporation, which was based in Hesperia, and M-1 Capital Corporation, which was based in Riverside and Rancho Cucamonga. Giddens, the former CEO of Mortgage One, pleaded guilty to the same charges Varner was convicted of at trial and in September 2009 was sentenced to 78 months in federal prison.

Varner and his co-defendants defrauded HUD by submitting fraudulent loan application documents in order to qualify the loans for FHA insurance. The loans went to borrowers who either did not meet the FHA requirements to qualify for the mortgages or were only “straw buyers.” Mortgage One and M-1 Capital sold the funded loans to banks, such as the FDIC-insured Firstar Bank, N.A. and Chase Manhattan Mortgage Corporation, using the same fraudulent documents.

As a result of the scheme, HUD lost $23,628,857 on 905 fraudulent loans, and a total of $29,638,011 when interest paid by HUD during the foreclosure and resale process is included.

Varner was found guilty of filing false tax returns for the years 1999 and 2000 when he failed to report income that he used for personal expenses such as a Corvette, a $153,000 RV, jewelry and more than $150,000 deposited into a personal investment account.

]]> http://gadblog.srcar.org/2010/02/01/more-local-fraudsters-bite-the-big-one-better-late-than-never/feed/ 0 http://gadblog.srcar.org/2009/12/15/another-one-bites-the-dust-usao-indicts-2-for-fraud/ http://gadblog.srcar.org/2009/12/15/another-one-bites-the-dust-usao-indicts-2-for-fraud/#comments Wed, 16 Dec 2009 00:48:03 +0000 Gene Wunderlich http://gadblog.srcar.org/?p=1113

And the hits just keep on comin’. Not that they’ve made a substantial dent yet in the army of fraudsters who contributed to our housing meltdown, but nonetheless it’s always gratifying to see another of these swine with their names up in lights.

These two were really small potatoes glomming only $777,000 (that they’re indicted for). In our area, where it took more than 5 years to indict perpetrators charged with over 200 fraudulent transactions and more than $140 million in ill-gotten gains, it is really really sweet to see these people getting cracked for just 2 deals and under $1 million.

There were numerous people in our market who, encouraged by the lack of timely prosecution of the Stonewood Gang, pulled off one or two or 6 of these kind of transactions, pocketed their $50,000 – $500,000 and sank back under the radar.

You know who you are. We know who you are. And with any luck and Karma, the AG, the DA, the USAO, FBI or SEC will be announcing who you are so all your neighbors know who you are as well. Don’t get too comfy yet –  sometimes the wheels of justice grind exceedingly slow – but they do grind very fine. Keep looking over your shoulder.

LANCASTER REAL ESTATE AGENT SENTENCED TO EIGHT YEARS
IN FEDERAL PRISON FOR MORTGAGE FRAUD SCHEME

Felix Pichardo, 27, was sentenced by United States District Judge Stephen V. Wilson. Pichardo pleaded guilty before Judge Wilson in September, admitting that he used the identities of two victims to obtain mortgage loans for properties that were not for sale.

… Pichardo sought out elderly vulnerable victims and that he poses a danger to the community.

According to court documents, Pichardo, a licensed real estate agent, and his co-defendant Latrice Shaunte Borders, 29, of Long Beach, participated in two separate fraudulent real estate sales transactions. Pichardo, using identities appropriated from other people, caused loan applications to be submitted to AmTrust bank in the amounts of $417,000 and $360,000. The loan applications were submitted without the property owner’s knowledge for real estate which was not for sale. The proceeds of the two loans were deposited into bank accounts under the control of Pichardo and Borders. ]]> http://gadblog.srcar.org/2009/12/15/another-one-bites-the-dust-usao-indicts-2-for-fraud/feed/ 0 http://gadblog.srcar.org/2009/11/19/stonewood-financial-perps-finally-charged/ http://gadblog.srcar.org/2009/11/19/stonewood-financial-perps-finally-charged/#comments Fri, 20 Nov 2009 04:06:47 +0000 Gene Wunderlich http://gadblog.srcar.org/?p=1099 HALLELUJAH!!!!

If I sound ecstatic it’s because the biggest fraudsters in our area have finally been charged! These three, Montecastro, Duncan and McLeod started their mortgage fraud scheme in Murrieta in 2004. Our association and our chief counsel started documenting the problem late that year. We took it to the District Attorney, the FBI, the Dept. of Real Estate, the Attorney General, local law enforcement, lenders, etc. – and nobody NOBODY would give us the time of day.

This scam was the incentive for our Association (SRCAR) to join our neighboring Association (IVAR) in a joint fraud task force with the Giardinelli Law Group. This effort has now expanded to include Ventura County, who had started their own, and Orange and San Diego County associations. We are trying to get our state association to at least give us a forum to educate other Realtors, lenders and the public about real estate fraud.

As Attorney Richard Ackerman puts it – ‘earlier intervention would have prevented a lot of damage to both investors and the community.’ These people operated unimpeded for at least three years, involving hundreds of homes throughout our valley. This spawned numerous copycats who saw that there was  money to be made and no apparent consequences.

Their early scheme involved the over-bidding by $50,000 – $100,000 on homes, bringing in fraudulent appraisals, taking the excess at COE and then sticking the unwary buyers with the result. Often they preyed on the unsophisticated and found a trusting audience in their fellow Filipino community. Many Buyers purchased multiple homes with the understanding the Stonewood would help them make the over-payments until they could refinance in the rising market. Yeah, like that actually happened.

These severely overburdened homes started the collapse in our community in late 2006 yet the fraud continued. As the economy headed south virtually every one of the hundreds of homes they had caused to be purchased went into foreclosure. As they had focused on certain neighborhoods,it was not unusual to see 8 out of 10 homes on a single street vacant and blighted as a result.

5 years later, fraud is still with us and has morphed into other avenues to follow the trail of opportunity. But at long last there may be justice for these early perpetrators who played a large role in the early demise of our market.

Here’s to justice finally served. Helooooo Bubba !

For the complete article, please go to: Charges Filed in Major Fraud Case.

Criminal charges have been filed against James B. Duncan, Hendrix Moreno Montecastro and Maurice McLeod, three Riverside County businessmen who allegedly orchestrated a major securities and mortgage fraud that drove many investors to financial ruin in California and Arizona.

The defendants allegedly created a complex network of companies, the chief of which were Pacific Wealth Management (which has no relationship to the company of the same name in San Diego), Stonewood Consulting and Total Return Fund.

He said while the District Attorney’s complaint concentrates on securities fraud, the U.S. Attorney will file a separate criminal complaint accusing the defendants of mortgage fraud.

Richard Ackerman, an attorney representing 85 alleged victims in a civil lawsuit against the defendants, said “It’s about time” the DA and U.S. Attorney made the move.

“What my clients wanted from day one is exactly what’s happening today. They wanted to create enough pressure on law enforcement so these people would be prosecuted and put away for a long time for destroying people’s lives,” Ackerman said.

The defendants allegedly persuaded investors to buy multiple homes and then broke their promise to continue paying the mortgage payments and allowed the properties to go to foreclosure. Ackerman contends that this scenario involved at least 250 houses in southwest Riverside County and contributed t the tremendous loss of home values in the region.

Ackerman said he believes earlier intervention would have prevented a lot of the damage to both investors and the larger community.

News Release

November 18, 2009

For Immediate Release

Contact: (916) 324-5500

Brown Recovers $1.4 Billion for Wells Fargo Investors in Landmark Settlement

San Francisco- Attorney General Edmund G. Brown Jr. today announced a landmark $1.4 billion settlement with three Wells Fargo affiliates to pay back investors, charities and small businesses that purchased auction-rate securities based on “misleading advice.”

In marketing and selling these investments, Wells Fargo failed to inform investors about how auction-rate securities or the auction process worked, as well as the risks and consequences of auction failure.

In the statement, Brown referred to the 1984 Credit Services Act that companies offering those services in the state would need to register with his office and post a $100,000 bond. He also published a list of companies who had not registered and posted a list on his website for consumers to refer to.

Today the hammer dropped on the first company for ignoring ‘repeated warnings’ to comply. Sounds like these folks hit the radar last year and Brown used the opportunity to warn other companies that he’s not just whistling Dixie.

There’s a long list of miscreants out there still making outrageous claims but hopefully we’ll see more of these releases from Jerry’s Office.

For more information or to search the list of non-complying companies, simply click on the logo or follow the link below.

Brown Sues Executive Financial Credit Services for Operating Illegally

LOS ANGELES — Attorney General Edmund G. Brown Jr. today sued Todd Wick and Michael Sarto, owners of Los Angeles based Executive Financial Credit Services, for ignoring “repeated warnings” to register with his office and post a $100,000 bond with the Secretary of State.

“Wick and Sarto violated California law by refusing to register their credit repair business with the Attorney General’s office and post a $100,000 bond, even after repeated warnings,” Brown said. “So today, attorneys from my office are filing suit, sending a clear signal to credit repair firms operating in California that they must register with the Attorney General’s office and follow the law.”

Executive Financial Credit Services offers to help repair their customers’ credit by challenging negative or inaccurate items on credit reports directly with the three credit report bureaus-Experian, TransUnion, and Equifax. Under California’s 1984 Credit Services Act, companies providing credit repair services in California are required to register with the Attorney General’s office and post a $100,000 surety bond with the Secretary of State.

In late 2008, Brown’s office sent a letter directing the business to register and provided information to assist in the process. The business did not respond. Despite repeated warnings, Executive Financial Credit Services did not register and obtain a bond.

Later Swick claimed the business was no longer conducting credit  repair services and didn’t need to register. Brown’s office, however, discovered the business was continuing to operate as a credit repair firm. In early 2009, Sardo informed Brown’s office that the business was moving from California to Arizona and would not complete the registration process. Brown’s office informed Sardo that if the business continued offering credit repair services in California, it was bound by California law to register.

Nevertheless, Executive Financial Credit Services still has not registered. So today, Brown filed suit in San Diego Superior Court, contending that the business violated:
- California Civil Code section 1789.18 for not posting a $100,000
surety bond with the Secretary of State’s office;

- California Civil Code section 1789.25 for conducting a business without first obtaining a certificate of  registration from the Attorney General’s Office; and
- California Civil Code section 1789.13(a) for charging consumers money before completely performing the services they promised.

The suit seeks a permanent injunction to keep Executive Financial Credit Services and its principals from operating illegally, civil penalties of not less than $200,000 and restitution for victims.

Brown has taken recent action against credit fraud. Last week, Brown arrested a con artist who stole more than $300,000 from over 600 victims through a credit card and credit repair scam. Ralph Adam Rendon
offered victims credit lines of up to $100,000 without any credit checks and offered credit repair counseling. Victims paid an upfront fee of $500 but never received the credit card or any credit repair services.

For more information, click here: http://ag.ca.gov/newsalerts/print_release.php?id=1815

Here’s the link to see non-compliant companies in your area. Taking names and kicking ass – love ya Jerry.

News Release

August 12, 2009

For Immediate Release

Contact: (916) 324-5500

Brown Orders Mortgage Foreclosure Consultants to Post $100,000 Bond or Face Prosecution

Los Angeles – Threatening possible criminal and civil prosecution, Attorney General Edmund G. Brown Jr. today ordered 386 mortgage foreclosure consultants to post $100,000 bonds and register with his office.

He also ordered more than two dozen companies to justify suspicious loan modification claims made in “slick advertising,” online and through the mail.

“Hoping to lower their mortgage payments, thousands of homeowners were instead duped by slick advertising and money-back guarantees,” Brown said. “The time for accountability is at hand, and this rogue industry must clean itself up or face legal action,” Brown added.

Brown also unveiled a new website ( http://ag.ca.gov/loanmod) that provides homeowners tips to avoid loan modification fraud, allows them to determine if a company is registered with his office and makes it easier to file complaints.

Brown today joined with the California Department of Real Estate and the State Bar of California in a new partnership to combat loan modification and foreclosure fraud.

Brown has sent letters directing 386 mortgage foreclosure consultants to register with his office within 10 days and post $100,000 bond, or demonstrate why they are not required to. If the consultants are required to register and have failed to do so, they are subject to criminal penalties of up to a year in jail and fines ranging from $1,000 to $25,000 per violation. Eighty-five of these consultants are based in Los Angeles County, 133 in Orange County, 47 in the Inland Empire, 68 in San Diego County and seven in the Bay Area.

Additionally, Brown sent letters today demanding that 27 loan consultants substantiate suspect claims made on the internet and in direct mail advertising. For instance:

· Brown directed Irsfeld, Irsfeld & Younger, LLP of Glendale, Calif. to substantiate its claims including: “Our team has 10 years of success in negotiating 90% of all mortgage loan modification requests to a successful outcome….For the modification requests we accept, our modification failure rate is less than 1%.”

· Brown directed 21st Century Real Estate Investment Corporation of Rancho Cucamonga to substantiate its written solicitations including: “[y]our proposed loan modification is a 30 year fixed/3.5% interest rate with a monthly payment of $495. Your monthly savings is $705. Total savings over a 30-year period is $253,800. . . . Your first payment will be negotiated to begin March 2009 – payable to your current lender for $495.”

· Brown directed Mortgage Modification Solutions of Irvine to substantiate its claims including: “Our services are due to the FEDERAL MANDATE which makes it mandatory for mortgagees, upon the default of a single family mortgage, to engage in loss mitigation actions” and “Why $3995.00 is nothing compared to what you can accomplish in return? #1- It’s 10 times more expensive to hire a CPA or a Financial Advisor to exclusively analyze & Research your financial affairs to create a plan acceptable to the Banking standards.”

· Brown directed Alliance Law Center of San Diego to substantiate its letters to consumers stating: “Final Notice: 3/11/09, our review of certain information indicates you may be a victim of federal disclosure violations and/or predatory lending violations, therefore your loan may be invalid, and you may qualify for a loan modification saving you thousands of dollars.”

The State Bar of California today announced that it has obtained resignations from two lawyers and filed charges against a third for their loan modification activities. The State Bar’s special team on loan modification complaints continues to investigate more than four hundred active complaints from consumers about lawyers’ roles in loan modification scams.

Brown has made it a top priority to combat loan modification fraud. As part of a nationwide sweep last month, Brown filed suits against 21 individuals and 14 companies who ripped off thousands of homeowners seeking mortgage relief. In total, Brown has sought court orders to shut down 32 companies and has brought criminal charges and obtained lengthy prison sentences for deceptive loan modification consultants.

Copies of the letters and a list of consultants who have not registered are attached.

You may view the full account of this posting, including attachments, in the News & Alerts section of our website at: http://ag.ca.gov/newsalerts/release.php?id=1780

Brown to Join Forces with Department of Real Estate and State Bar in New Round of Legal Action Against Loan Fixers

Los Angeles – At a news conference Wednesday at 10:00 a.m., Attorney General Edmund G. Brown will announce a new round of legal action against more than 200 Los Angeles and Orange County loan consultants who have not registered with his office and nearly two dozen companies that have made unsubstantiated promises to homeowners.

This action is part of new collaboration between Brown’s office, the California Department of Real Estate and the State Bar of California to combat loan modification and foreclosure rescue fraud.

Date: Wednesday, August 12, 2009
Time: 10:00 a.m.
Location: 300 South Spring Street
Los Angeles, Calif.

Participants:

Attorney General Edmund G. Brown
Jeff Davi, Commissioner of the Department of Real Estate
Suzan J. Anderson, Supervising Trial Counsel, State Bar of California
Bryan Batiste — an employee of the LA County Fire Department who paid $2,895 upfront to a loan modification company for services never provided.

Brown will also unveil a new website that provides homeowners tips to avoid loan modification fraud, allows them to determine if a company is registered with his office and makes it easier to file complaints.

Brown has made it a top priority to combat loan modification fraud. As part of a nationwide sweep last month, Brown filed suits against 21 individuals and 14 companies who ripped off thousands of homeowners seeking mortgage relief. In total, Brown has sought court orders to shut down 32 companies and has brought criminal charges and obtained lengthy prison sentences for deceptive loan modification consultants.

News Release

June 24, 2009

For Immediate Release

Contact: (916) 324-5500

Brown Sues to Invalidate Pleasanton’s Illegal Housing Cap

Pleasanton, Calif. – Attorney General Edmund G. Brown Jr. today sued the City of Pleasanton to remove its “draconian and illegal” limit on new housing, a significant cause of traffic congestion, air pollution and urban sprawl in the East Bay and Tri-Valley area.

“Pleasanton’s draconian and illegal limit on new housing forces people to commute long distances, adding to the bumper-to-bumper traffic along 580 and 680 and increasing dangerous air pollution,” Brown said. “It’s time for Pleasanton to balance its housing and its jobs and take full advantage of its underutilized land and proximity to BART.”

Brown today filed a motion to intervene in Alameda County Superior Court that would force Pleasanton to lift its housing cap. The suit was initially filed by the nonprofit group Public Advocates on October 17, 2006.

In 1996, Pleasanton adopted Measure GG, which imposed a strict, permanent cap of 29,000 total housing units within the city. At the time, Pleasanton had 21,180 homes, apartments and condominiums. The cap, therefore, allowed fewer than 8,000 new housing units to be built within city limits, regardless of demand or state law requirements.

The City is now on the verge of adopting a General Plan update, which calls for the creation of 45,000 additional jobs by 2025, while retaining the 29,000 limit on housing. This, Brown contends, violates state law, which requires every California city to provide sufficient housing to accommodate its fair share of regional needs.
The State requires Pleasanton to provide 3,277 additional housing units between 2007 and 2014. The cap, however, allows for only 2,000 more to be built – and that does not account for additional housing which will likely be required after 2014.

In the past 10 years, job growth in Pleasanton has nearly doubled — from 31,683 to more than 58,000. Yet, the number of new housing units has not kept pace with demand. This is despite the fact that there is ample land for development, including property adjacent to the Pleasanton BART station. Unless the city lifts its housing cap, this and other land near transit will most likely not be utilized for housing.

As a result of the cap, many workers have been unable to find affordable housing within Pleasanton. A 2005 Association of Bay Area Governments study found that 79 percent of Pleasanton’s 58,000 employees lived outside Pleasanton, and their commutes can take two hours per day or more.

Brown’s suit demands that Pleasanton’s housing cap be repealed – so that jobs and housing can increase in proportion with each other.

In his suit, Brown contends that:

- Pleasanton is violating state law by enforcing a housing cap that prevents the City from accommodating its fair share of the regional housing need, as required by state housing element law (Gov. Code §65583.).

- Pleasanton’s housing cap violates the state constitution, which prohibits cities from adopting ordinances that conflict with state law.

- Pleasanton’s general plan is internally inconsistent, in violation of California Government Code Section 65300.5. The City’s existing land use element contains the housing cap limit of 29,000 housing units, while its housing element recognizes that the cap must be addressed because it prevents the City from meeting its fair share of regional housing needs.

If Pleasanton continues to enforce its housing cap, the consequences for the region include:

- Increased traffic congestion and longer commute times. Interstate 580 has some of the longest commute times in the region, with evening eastbound commuters delayed 7,410 hours and morning westbound commuters delayed 5,120 hours in 2007.

- Urban sprawl. Communities outside of Pleasanton will continue to lose farmland and open space to accommodate Pleasanton’s workers. These communities will have to build more schools, fire and police stations to keep up with anticipated growth.

- Increased greenhouse gas emissions. More people will be commuting for longer periods and over greater distances. Pleasanton’s CO2 output was 1.388 million tons in 2008. When the City is projected to reach 105,000 jobs in 2025, it is estimated its CO2 output will increase to 1.940 million tons. The increase is the equivalent of adding 120,000 cars to the road every year.

- Increased dependence on foreign oil.

Transportation is the largest contributor to California’s greenhouse gas emissions. The California Air Resources Board estimates that transportation is currently responsible for 38 percent of the greenhouse gas emissions in the state. Transportation accounts for 50 percent of greenhouse gas emissions in the Bay Area.

Brown has reached several agreements and settlements with local governments and businesses across California to help them reduce their greenhouse gas emissions. Some of his actions include:

- A landmark settlement with San Bernardino County which established a greenhouse gas reduction plan that identifies sources of emissi ons and sets reduction targets.

- An agreement with Stockton requiring it to identify and reduce greenhouse gas emissions, permit construction of thousands of new residential units within its current city limits, develop a rapid transit bus system and require all new buildings to be energy efficient.

- An agreement with ConocoPhillips that offsets greenhouse gases attributable to an oil refinery expansion in Contra Costa County.

An agreement with the Port of Los Angeles that identifies and reduces greenhouse gas emissions generated from port operations.

Brown’s suit against the City of Pleasanton is attached.

News Release

June 01, 2009

For Immediate Release

Contact: (916) 324-5500

Tips for Homeowners

DON’T pay money to people who promise to work with your lender to modify your loan. It is unlawful for foreclosure consultants to collect money before (1) they give you a written contract describing the services they promise to provide and (2) they actually perform all the services described in the contract, such as negotiating new monthly payments or a new mortgage loan. However, an advance fee may be charged by an attorney, or by a real estate broker who has submitted the advance fee agreement to the Department of Real Estate, for review.

DO call your lender yourself. Your lender wants to hear from you, and will likely be much more willing to work directly with you than with a foreclosure consultant.

DON’T ignore letters from your lender. Consider contacting your lender yourself, many lenders are willing to work with homeowners who are behind on their payments.

DON’T transfer title or sell your house to a “foreclosure rescuer.” Fraudulent foreclosure consultants often promise that if homeowners transfer title, they may stay in the home as renters and buy their home back later. The foreclosure consultants claim that transfer is necessary so that someone with a better credit rating can obtain a new loan to prevent foreclosure. BEWARE! This is a common scheme so-called “rescuers” use to evict homeowners and steal all or most of the home’s equity.

DON’T pay your mortgage payments to someone other than your lender or loan servicer, even if he or she promises to pass the payment on. Fraudulent foreclosure consultants often keep the money for themselves.

DON’T sign any documents without reading them first. Many homeowners think that they are signing documents for a new loan to pay off the mortgage they are behind on. Later, they discover that they actually transferred ownership to the “rescuer.”

DO contact housing counselors approved by the U.S. Department of Housing and Urban Development (HUD), who may be able to help you for free. For a referral to a housing counselor near you, contact HUD at 1-800-569-4287 (TTY: 1-800-877-8339) or www.hud.gov.

Brown’s Actions to Help Homeowners and Stop Loan Modification Fraud

Sued Countrywide For Predatory Lending And Secured $8.6 Billion Settlement. In October 2008, Brown announced an $8.68 billion settlement with Countrywide Home Loans, once the largest lender in the county, after the company deceived borrowers by misrepresenting loan terms, loan payment increases, and borrowers’ ability to afford loans.

Obtained Guilty Plea From Woman Who Operated Sophisticated Loan Scam. In May 2009, Brown obtained a guilty plea from Anna Santos, 22, who used forged documents to convince more than 100 desperate homeowners to hand over an average of $3,000 for non-existent loan modification services.

Shut Down “Foreclosure Freedom” And Announced Arrest Of Two Loan Modification Scam Artists. In March 2009, Brown shut down Foreclosure Freedom, a fraudulent loan modification company that continued to collect fees and mortgage payments from dozens of homeowners without ever providing loan modification services. The two scam artists were charged with 24 counts of grand theft and 25 counts of foreclosure consultant statute violations.

Broke Up “First Gov” And Sent Five Members To Prison. In November 2008, Brown shut down First Gov, a company that demanded $1,500 to $5,000 in up-front fees to modify loans it never renegotiated. In March 2009, five members of the ring were sentenced to a total of 18 years in prison.

Ended “Federal Land Grant” Foreclosure Rescue Scam. In May 2008, Brown ended a scam in which hundreds of homeowners were convinced to pay $10,000 to place their property in a land grant, a phony and worthless real estate document, and then convinced to sign over the deed to their home.

Shut Down Six Predatory Lending Companies. In March 2008, Brown shut down Lifetime Financial, Nations Mortgage, Greenleaf Lending, Virtual Escrow, Olympic Escrow and Direct Credit Solutions for promising homeowners unrealistically low mortgage payments and then switching them to loans that did not match the original agreement, many with hidden fees of up to $20,000. The three scam artists who operated the scheme have been sentenced to three years in prison.