9 year fraud battle has a happy ending.

Over the years I’ve written a lot about real estate fraud. Real estate fraud had only just come to our region in a big way back in 2005/2005 and Realtors® were trying to grapple with this new issue. Problem was, nobody else thought it was an issue. Banks didn’t care, law enforcement wasn’t interested, our DA, the Dept. of Real Estate, FBI – you name it, nobody cared.

And over the years I’ve written a lot about the Stonewood Case – a house kiting scheme with some investment undertones. By the time the law finally got on the case, the perp’s were indicted for $143 MILLION dollars. Yeah, not exactly chump change. It really jump started our foreclosure market back in 2006-2007 as these places started to dump back onto the market in ever increasing numbers.

It’s been a 9 year effort led by local Realtors®, some tenacious reporters, our board attorney and a bunch of victims who weren’t afraid to stand up.

Yesterday the last two perp’s were found guilty. Hendrix Montecastro and his mother Helen Padrino. There were 9 people indicted, the others were so guilty they all plead guilty. These two decided to test it in court and act as their own counsel. Yeah, that worked well. So instead of the few or tens of years their cohorts were dealt, Padrino is up for 30+ and Hendrix is down for 100.

All I can say is, he looks a lot better in his orange jumpsuit than he did in the 3 piece Armani’s he used to sport when he’d come into the office to try to intimidate us. Sentencing comes in a couple weeks.

You can read some of the history and testimony here:

http://www.pe.com/business/business-headlines/20130325-fraud-trial-guilty-verdicts-in-multimillion-dollar-ponzi-case.ece

CA Attorney General files suit in massive 17 state mortgage fraud scheme.

CA State Attorney General Kamala Harris sued Philip Kramer, the Law Offices of Kramer & Kaslow, two other law firms, three other lawyers, and 14 other defendants who are accused of working together to defraud homeowners across the country through the deceptive marketing of “mass joinder” lawsuits. Prominent foreclosure attorneys Phillip Kramer and Mitchell Stein and at least 17 others have been accused of luring desperate homeowners into the scheme using deceptive advertising and telemarketing schemes aimed at millions of people in California and 16 other states.

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

Update: CA State Bar v. Michael T. Pines. SHARK ATTACK!

Last October I wrote about a local attorney by the name of Michael T. Pines who was making quite a name for himself in local real estate circles. (Another Real Estate Scam to beware of.) Counselor Pines was making the evening news by advising clients who had been foreclosed on and evicted to break back into their former homes under the theory that since the debt had been satisfied through foreclosure, they could now own their former home free and clear.

To say this hadn’t worked would be an understatement. Clients who actually followed his advice were summarily re-evicted if they were lucky and arrested if they were not. After all, the homes were now the property of the bank and in some cases had already been resold so charges of breaking and entering and other minor misdeeds were alleged.

Turns out Mr. Pines himself was in foreclosure on some homes he owned and lost his own law office building to foreclosure (he didn’t try to break into his own building). At that time a judge had also slapped him with a $16,000 fine for filing frivolous lawsuits and for wasting his time and not acting in the best interest of his clients.  He also had a couple restraining orders against him for civil harassment after a trial and had been cited for contempt at least once.

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Today attorneys for the State Bar of California asked a judge to suspend the law license of Mr. Pines. According to the state bar, Pines behavior had become ‘so
egregious’ that it filed to have his license suspended on an interim basis while it seeks a permanent removal. Jeez, that’s like watching sharks attack another shark – gruesome yet exciting, and as rare in legal circles as it is in nature.

Chief Trial Counsel James Towery was quoted in a written statement as saying “To remove a lawyer from active practice before formal charges are filed is a drastic remedy. In this case, that remedy is justified by the established misconduct of Michael T. Pines, who has shown complete disrespect for the law, the courts and especially the best interest of his clients.” Duh.

Never to be outdone, Pines has filed his own lawsuit against the state bar. “I’m sure the charges are going to be thrown out,” says Pines. “They’re going to be really embarrassed when they find out the truth.”

Hmm, attorneys vs. attorney. I’m guessing the truth might be a rare commodity in this v enue. Of course that’s just my opinion, I could be wrong.

Meanwhile people who have already suffered through a legal foreclosure in Southern California will not have the opportunity to be further victimized by this predator – at least until he teaches the state bar a lesson and gets his dorsal fin back.

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The opinions in this commentary are strictly Gene Wunderlich’s personal opinions. While any reasonable and/or rational indivdual should agree wholeheartedly, the opinons reflected herein may not necessarily be those of the Southwest Riverside County AOR, or any local or state government or other mental institution.

Court Bars Further Implementation of AB32

As we were wrapping up our Board of Directors meetings last week, the Superior Court of California in San Francisco barred further implementation of AB 32 pending CEQA compliance.  In Association of Irritated Residents, et al. v. California Air Resources Board, et al., the Superior Court issued a “tentative statement of decision” (Tentative Decision) that prevents the California Air Resources Board (CARB) from implementing a state-wide Green House Gas reduction regulatory program under AB 32 until the agency complies with the requirements of the California Environmental Quality Act (CEQA).

AB 32, the state’s landmark 2006 climate change statute, required CARB to develop a regulatory program to reduce state-wide GHG emissions to 1990 levels by 2020.  In response to this mandate, the Board of CARB already approved a first set of comprehensive regulations in December 2010; the regulations were based on an earlier “Scoping Plan” developed by the CARB staff.   The Tentative Decision partially grants a petition for a writ of mandate brought by a coalition of environmental justice organizations (Petitioners) that alleged that CARB’s Scoping Plan violated both AB 32 and CEQA. “Environmental Justice” is the fair treatment and meaningful involvement of all people regardless of race, color, national origin, or income with respect to the development, implementation, and enforcement of environmental laws, regulations, and policies.

Although the Superior Court denied all claims related to AB 32, the court found that CARB: 1) failed to adequately discuss and analyze the impacts of alternatives in its proposed Scoping Plan as required by its CEQA implementing regulations; and 2) improperly approved the Scoping Plan prior to completing the environmental review required by CEQA.  In upholding the Petitioners’ challenge on these two CEQA issues, the Superior Court issued a Peremptory Writ of Mandate and enjoined CARB from further implementation of the Scoping Plan until it complies with all CEQA requirements. Parties to the case have 15 days from the issuance of the Tentative Decision to file objections before the Superior Court issues a final decision in the case.

While this is good news for some, the order to stop the implementation of AB 32 has little effect on the housing sector and will not affect other Green House Gas reducing mandates already in place such as SB 375: the anti-sprawl law which requires regional governments to reduce Green House Gas emissions via land use and transportation planning, and AB 758: which will require energy efficient retrofits in California’s existing homes and commercial properties. The stay will, however, affect the development of regulations concerning Cap-and-Trade, Low Carbon Fuel Standards, Renewable Energy, Landfills, Vehicles, Industrial Emissions, etc.

C.A.R. took a neutral position on AB 32 when it passed through the legislature in 2006.  At the time, C.A.R. did not find tailpipe emissions reductions and cap-and-trade policies to be of direct and immediate concern to REALTORS®.  Subsequent to the passage of AB 32, C.A.R. has monitored AB 32 implementation planning and policy development meetings. C.A.R. remains neutral on the goal of GHG reduction yet continues to urge CARB and other state agencies to consider the real cost of doing business and to take a realistic approach to the implementation of their rules and policies.

Murrieta men agree to prison in fraud case

The headline was exciting yesterday when news of our long-time resident scam artists started to trickle out. The authors of a $142 million dollar ponzi scheme & investment fraud have been in jail awaiting this moment for the past 1 1/2 years and now start to look forward to doing the rest of their time.

Long-time readers will be familiar with the Stonewood case, wherein these perpetrators enticed hundreds of people to invest in real estate. But not just invest – they were talked into buying homes for $100,000 or more over asking price with that overage going to the third party – Stonewood. People who could barely qualify for a car loan were talked into buying multiple properties, most i the $500,000 and over range, with the promise that the deficit between rental payments and the mortgage payment would come out of an investment fund seeded by that ‘overage amount’.

In some cases deficit payments were made for a month or so but quickly vanished as the perpetrators lived large, driving fancy cars, boats and living in multi-million dollar homes themselves. Ultimately over 200 homes went onto foreclosure, many starting in 2006 – well before the foreclosure crisis started. This wave of dead lawns jump-started our local foreclosure fiasco as the 200 homes were dumped onto the market along with dozens more from people who had bought in neighborhoods where the fraudulent purchases has driven up the comps.

Our local real estate association started noticing these transactions in late 2004 and by mid-2005 had compiled an extensive dossier on the scheme. At that time it involved about 60 homes and maybe $30 – $40 million dollars. We tried in vain to get local law enforcement, our District Attorney, our Dept. of Real Estate, the FBI – ANYBODY – to take an interest. To no avail.

Finally in late 2007 the SEC got involved not from the real estate side but from the investment fraud angle. This prompted the DRE to yank the brokers license from the principles but by then the damage had largely been done. Finally in 2008, the Justice Department, FBI and our DA got involved and brought the scanm to a screeching halt. Of course by then it had ballooned from 60 homes and $30 million to over 200 homes and $140+ million. Our DA was all puffed up taking credit for this great bust when, for years we had not even been able to get a meeting with him to discuss it. He was the first incumbent DA in our county to be voted out of office in over a century when voters rejected him this past November.

Two local reporters, Leslie Berkman of the Press Enterprise, and Chris Bagley or the Californian, were instrumental in keeping this in the public eye. Dozens of the victims banded together in a class action lawsuit. That helped. Our own Real estate Fraud Task Force was born out of this scandal and remains active and vigilant to this day.

So while many of the victims say a 18 year prison sentence is not nearly long enough for the ringleader, it’s at least a start. No punishment can ever rebuild the damage done to our community and no jury award will ever compensate for the retirement savings lost and the lives ruined by these people.

Maybe the lesson to be learned is – if the deal sounds too good to be true…

Of course as we all know, there’s a sucker born every minute and two grifters to fleece him out of his cash.

For the full story, please click below:

Murrieta Men Agree to Prison Time
Victims of Duncan’s Scheme Speak Out

Identity Theft – Careful what you post and where.

SACRAMENTO – A Citrus Heights computer hacker pleaded guilty to seven felony charges for breaking into hundreds of women’s e-mail accounts, the sort of identity theft crime that Californians should take steps to protect themselves against, according to Attorney General Kamala D. Harris.

“This case highlights the fact that anyone with an e-mail account is vulnerable to identity theft,” Attorney General Harris said. “One of the major goals of my office is to track down and prosecute every criminal who would stoop to stealing people’s identities.”

George Samuel Bronk, 23, of Citrus Heights, faces six years in state prison after entering guilty pleas today in Sacramento Superior Court to seven felonies including computer intrusion, false impersonation and possession of child pornography. Bronk will have to register as a sex offender. He will return to court on March 10 for further proceedings relating to his sentence.

From December 2009 through September 2010, Bronk accessed e-mail accounts and Facebook pages of people in 17 states, as well as residents of England. He essentially found answers to the women’s e-mail security questions in information they had posted on their Facebook sites.

Bronk targeted his victims by scanning Facebook for women who also posted their e-mail addresses there. He then contacted the woman’s e-mail service, pretending he was the legitimate customer, and claimed to have forgotten the password. Bronk was able to correctly answer security questions posed by the e-mail service by finding the answers on victims’ Facebook pages.

Some of the security questions posed by e-mail providers included, “What is your high school mascot?” “What is your father’s middle name?” “What is your favorite food?” and “What is your favorite color?”

Once Bronk gained access to the e-mail account, he changed the password and the victim was locked out.

Bronk searched the victim’s “sent mail” folder for nude or semi-nude photographs and videos, which he often sent to the victim’s entire e-mail address book. He also gained access to some victims’ Facebook accounts by clicking the “Forgot Your Password?” link and asking for a new password to be sent to the victim’s e-mail account, which he now controlled. In many cases, he posted the photographs to victims’ Facebook pages and to other Internet sites and made comments on the Facebook sites of friends.

Bronk messaged one victim that he had taken over her e-mail account “because it was funny.” In an online chat session with another victim using the name “xogreeneyesx3,” Bronk demanded the victim send him more explicit photographs or he would post the photographs he already had more widely. The victim complied.

The investigation began after one victim contacted the Connecticut State Police, and the agency then contacted the California Highway Patrol because the suspect appeared to be operating here. The CHP requested the Attorney General’s assistance.

On the hard drive of Bronk’s desktop computer, which was confiscated from his Citrus Heights’ home during a search in September, investigators found more than 170 files containing explicit photographs of women, including a film actress, whose e-mail accounts he had commandeered. Finding victims, however, proved a challenge. CHP and Attorney General agents were able to use location tagging information embedded on the photographs on Bronk’s hard drive to assist in identifying victims, and e-mailed 3,200 questionnaires to potential victims asking them to come forward.

Some 46 victims did, including one who described Bronk’s actions as “virtual rape.”

Bronk was arrested in October and has been held since then on $500,000 bail.

Attorney General Harris reminded users of e-mail and social networking sites that security questions and answers need to be as secure as passwords. There are steps people can take to avoid being victimized by “security question” hacks. These steps include:

-Pick security questions and answers that do not involve any personal information that is available from social networking sites or any other sites.

-Try to switch the security questions you choose for password protection on e-mail services and social networks.

-Add numbers or special characters to your security answers. For example, the question “What was the name of your High School” could be answered “Middle02High@School.”

Joining the Attorney General’s office in this investigation were the Sacramento Valley Hi-Tech Crimes Task Force, the CHP, and the Connecticut State Police. The Attorney General’s office prosecuted the case.

For more information about identity theft, please see http://ag.ca.gov/idtheft/.

The arrest warrant and complaint are attached at the Attorney General’s website www.ag.ca.gov

Long overdue – Stonewood scam goes to trial

At long last the trial has begun for the perpetrators of the so-called Stonewood Scam in Southwest Riverside County. Long time readers are acquainted with the basics of this story from my years-long chronicle of events. Our local association tried to bring this to the attention of law enforcement beginning in late 2004 but were unsuccessful in catching anybody’s ear until the scam had nearly run its course and started to collapse under its own weight.

The real estate part of it consisted of representatives from Stonewood Financial buying homes at significant premiums over asking price. As this was at a time our housing market was appreciating 20% – 30% a year, the fact that someone would pay a 25% or 30% premium on a home purchase was not enough to warrant investigation by the authorities. Homes listed at $500,000 were routinely selling for $600,000 or more. Targeting specific neighborhoods, after the first two or three sales were obtained with fraudulent appraisals, it became a self-feeding scheme since subsequent appraisals were now based on actual sales, albeit fraudulent. Turns out many of the buyers were either made of straw, or people talked into buying multiple properties they couldn’t begin to afford. Naturally other buyers into those neighborhoods also became victims since selling prices became predicated on fraudulently inflated values. In addition to the 200+ documented cases, many more innocent victims lost their homes when prices tumbled by more than 2/3 in some cases.

How did they do it? Well, partially through affinity fraud – many of the buyers were either members of the same ethnicity as the perpetrators or were nurses at the same facility where one of the perpetrators worked. They were also promised that the properties could be rented, that any shortage between the rental income and the mortgage payment would be paid for them, and that the $100,000+ overage collected by Stonewood or a related entity, would be paid to an investment account with the promise of even greater dividends to come.

Naturally there was no investment account to produce income, after a month or two the promised rental offset payments dried up and houses started going into foreclosure by tens, then by hundreds. When we became aware that something smelled bad here, we documented about 60 homes and about $40 million dollars in potential scams. By the time authorities finally acted on it the result was over 200 homes with the perpetrators indicated for over $120 million dollars. Our local District Attorney did not see fit to take action until the SEC, FBI and US Attorneys Office had finally acted, then he stood up on the podium all puffed up taking the credit. I like to hope in some small way it was part of the reason he was soundly defeated in his recent re-election campaign by a relative unknown.

Anyway, in addition to our local real estate fraud task force, reporters Chris Bagley from the Californian and Leslie Berkman from the Press Enterprise payed significant roles in shining the spotlight on these nefarious activities and our own attorney John Giardinelli and an attorney for some of the plaintiffs Richard Ackerman were pivotal in keeping the focus on.

It took too damn long and cost too many people – not to mention the damage done to entire neighborhoods and our cities – but as they say – sometimes the wheels of justice grind slowly. Let’s hope in this case they also grind exceedingly fine.

You can read the whole story and related elements here.

Press Enterprise – Fraud Trail Begins

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The opinions in this commentary are strictly Gene Wunderlich’s personal opinions. While any reasonable and/or rational indivdual should agree wholeheartedly, the opinons reflected herein may not necessarily be those of the Southwest Riverside County AOR,  or any local or state government or other mental institution.

Another Real Estate Scam to beware of.

raspberry

Last week our local paper bestowed their ‘Raspberry’ award to a SoCal based attorney by the name of Michael T. Pines. Pines qualified for this award by virtue of the fact that his business model apparently involves advising clients who have been through foreclosure and been evicted from a home to break back into the home and set up residency. Of the four families he has recently convinced that his advice is sound, he has accompanied them to the house with attendant locksmith and whatever press he can scrounge up.

He garnered a couple headlines.

But most figured it for just what it appears to be – a scam based on the old ‘produce the original document’ scheme combined with his theory that since the bank has foreclosed and the underlying lien has been satisfied by the insurance company, the home has therefore been paid in full and the previous homeowner should be able
to reclaim it and occupy it. Yeah, I know. But he’s preying on unsophisticated and desperate people.

So a couple days ago a judge called him out for filing frivolous lawsuits and slapped him with a $16,000 judgment that he owes one of his clients for wasting their time and money. Today the 2nd family in Escondido who broke into their home to great fanfare a couple weeks ago, was unceremoniously dumped back out by the new owner of the house. According to Emiliano Bolanos, “The people that bought the house, they want to take it again.” DUH

Now here’s something that will surprise you – they haven’t been able to get in touch with Mr. Pines! Yeah, go figure. Mr. Bolanos said he talked to Pines last week and was promised some paper from a judge saying they could stay but the attorney never called back. Another Pines client up in Simi Valley was evicted on Tuesday and was told by the attorney he would be there along with some private security to stop the eviction. He never showed there either. Perhaps it was because Pines had been arrested for vandalism and trespassing a few days before trying the scheme yet again in Newport Beach. (WSJ 10/15/10)

Turns out, according to The Californian, Mr. Pines himself is in bankruptcy. He also has seven of his own properties in foreclosure and lost his own battles to keep his own home by litigating against his lender. Oddly enough, he apparently hasn’t broken back into his own homes – which include properties in Utah, Arkansas and his home and law building in CA. He also has two restraining orders against him in San Diego County for ‘civil harassment after a hearing’. Sounds like a fun guy.

Pines, who has had a law practice for over 30 years, switched to real estate law and investing in 2000. When the market headed south, and with his own personal business apparently tanking, Pines started doing seminars on strategic default, how to use Chapter 11 to your benefit and so forth. It is interesting to note that of the 70 or so cases he claims to represent, he hasn’t won one, including his own. Most real estate attorneys scoff at this sham practice and frown on yet another
‘professional’ victimizing people who have already been cracked once.

Funny thing is – nobody, including Mr. Pines, denies that his clients are deserving of foreclosure. There was no problem with the bank, they either bought way over their head, got caught in some other investment scheme that backfired, or simply ATM’s every nickel out of their home at peak value. Oh, Pines believes that the basic banking model is unsound and fraudulent – but doesn’t deny his clients were all waaaaay behind, several on homes worth a million or more.

Meanwhile, Mr. Bolanos, remember him?. The Bolanos family is now living with the Rochas family, another victim of Pines who referred Pines to Bolanos. Bolanos says “They haven’t called me yet. I’m waiting for their call.” Good luck on that Emiliano. If I were you and he actually does call, I probably wouldn’t take it. Way less trouble for you and your family – although you might get a friendly judge to force Pines to cough up a few more grand for your troubles.

Folks, I know you’re desperate out there but if the deal sounds too good to be true… if it sounds flaky and shaky and full of crap, go with your gut. Chances are you’ll thank yourself later. Unless you’re a professional victim and enjoy it, USE YOUR DAMN HEADS PEOPLE. After all, there’s a sucker born every minute and two grifters to fleece him.

Of course that’s just my opinion, I could be wrong .

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The opinions in this commentary are strictly Gene Wunderlich’s personal opinions. While any reasonable and/or rational indivdual should agree wholeheartedly, the opinons reflected herein may not necessarily be those of the Southwest Riverside County AOR, or any local or state government or other mental institution.

How Can You Lose Something You Never Had To Begin With?

How can you lose something you never had to begin with?

That’s the question that comes to mind when I read the Administrations continuing attack on housing. In Monday’s Wall Street Journal, another front page article states ‘Key Tax Breaks At Risk As Panel Looks At Cuts’. First sentence ‘Sacrosanct tax breaks, including deductions on mortgage interest, remain on the table…’ The article goes on to say ‘…these and other breaks cost the government about $1 trillion a year’. (emphasis mine).

But if the government never had these revenues to begin with, at least in the case of the MID, how can they claim it as a cost? It doesn’t cost them a dime. Wikipedia defines cost thusly: In business, retail, and accounting, a cost is the value of money that has been used up to produce something, and hence is not available for use anymore. Obviously that doesn’t apply here. The government hasn’t ‘produced’ anything of value and has not spent money on it therefore it is not a ‘cost’ to the government.

So the Government chooses to define costs as an economic model (unrelated to actual business, retail or accounting reality) and for their purposes they define it differently: Opportunity cost, also referred to as economic cost is the value of the best alternative that was not chosen in order to pursue the current endeavor—i.e., what could have been accomplished with the resources expended in the undertaking. In theoretical economics, cost used without qualification often means opportunity cost.

So apparently our government functions best in the world of theoretical economics where you can attribute something as a cost even if you produce nothing or spend any actual money on it. It’s not a real cost, it’s a theoretical cost. They could be making more money off us if we would just pay more taxes – so that lost opportunity becomes a cost in their eyes.

California has employed similar theoretical economics for years now – if we don’t increase a department’s budget as much as they requested, it’s called a cut even if they get more than they got last year. And you see where it got California.

The article went on to describe how the President’s Deficit Commission was looking at these ‘opportunities for revenue enhancement’ along with potential cuts in defense spending and a potential freeze on domestic discretionary spending. Hmmm, cut defense but just freeze spending at the current rate? How about this instead? How about making some REAL cuts to the massive spending and stimulus programs that aren’t working for sh**? How about that?  How about cutting the pork & earmarks like you campaignedyou would?

How about getting government out of the housing business and every other business which they are trying to regulate into insolvency and actually let businesses grow again and start creating real jobs instead of government jobs? When it has been proven time and again that a government run ‘business’ i.e. Postal Service, Welfare, Social Security, Fannie & Freddie, are not productive, are not competitive and constantly run at deficits in spite of massive infusions of our money, why would you continue to add more of these albatrosses – like healthcare, the financial regulatory agency, etc? Why is it that the only sector of our economy that has enjoyed robust job growth the past few years has been federal and state government jobs?

I was somewhat mollified to read an AP article a couple days later about the agenda Republicans are devolving, assuming they deliver the sound spanking on Tuesday anticipated by anybody this side of Mars (or Obama).  It involves $100 billion in spending cuts, tax reductions for individuals and businesses to stimulate real growth, and undoing elements of the healthcare program and the overreaching financial regulatory program. I hope they mean it. The attacks on housing have to stop.

Government, which has bloated up beyond all reasonable measure in this country, has exploded the past couple years and now encroaches into every aspect of our personal and business lives. It was  not meant to be so. If we don’t start reducing the role of government soon, we will either lose our Republic and the few remaining freedoms we take for granted today, or at some point we will face a much more volatile upheaval.

Well, Thomas Jefferson said it best when he said that every generation needs a new revolution. Hope and change wasn’t a revolution and has proven to be just more of the same – assuming you define ‘same’ as Chicago ward politics. Maybe this generation will finally stand up for something. You think?

Of course that’s just my opinion – I could be wrong.

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The opinions in this commentary are strictly Gene Wunderlich’s personal opinions. While any reasonable and/or rational indivdual should agree wholeheartedly,
the opinons reflected herein may not necessarily be those of the Southwest Riverside County AOR,  or any local or state government or other mental institution.

Another Mortgage Fraud Scammer Bites the dust.

DOWNEY MAN AGREES TO PLEAD GUILTY IN MULTI-MILLION DOLLAR FRAUD THAT BILKED INVESTORS AND HOMEOWNERS

Juan Rangel Agrees to Serve 15-Year Sentence for Targeting Spanish-Speaking Victims and Stealing Their Savings and Titles to their Homes

LOS ANGELES – A Downey man has agreed to plead guilty to federal fraud and money laundering charges, admitting that he ran two fraudulent operations – a Ponzi scheme that took in $30 million from more than 300 victims and a mortgage fraud scheme that preyed on homeowners by stealing the equity from their homes and secretly taking title to their properties.

Juan Rangel, 46, who is currently in federal custody, signed a plea agreement that was filed late Friday in United States District Court. Rangel agreed to plead guilty to one count of mail fraud and one count of money laundering. In the plea agreement, federal prosecutors and Rangel ask the court to impose a sentence of 15 years in prison.

Rangel agreed to plead guilty to a mail fraud count related to the Ponzi scheme in which Rangel and his company, the Commerce-based Financial Plus Investments, recruited new investors through Spanish-language newspapers and magazines, as well as in radio advertisements and infomercials broadcast on television. Rangel and Financial Plus promised to pay investors guaranteed returns of 60 percent each year out of the profits from Financial Plus’ real estate investments and lending business. However, Rangel admitted in the plea agreement that Financial Plus did not make any actual profits from real estate or lending. Rangel instead used the victims’ money to make Ponzi payments to other investors and for his own personal use, including the monthly mortgage payments on his $3 million home and monthly payments for his Lamborghini sports car.

In the plea agreement, Rangel also admitted that he and others operated a mortgage fraud scheme that targeted Latino homeowners at risk of losing their homes by offering them help to avoid foreclosure. Rather than assisting the distressed homeowners, however, Rangel took titles to their homes and drained the remaining equity out of the properties.  As part of this scheme, Rangel arranged to sell the homeowners’ properties, usually without their knowledge, to third-party straw buyers. He then applied for loans in the straw buyers’ names related to these supposed purchases, and used a variety of falsified documents to ensure that the fraudulent loans were approved. Rangel admitted that the scheme caused mortgage lenders to fund more than $10 million in fraudulent loans.

Rangel is scheduled to plead guilty Wednesday afternoon before United States District Judge S. James Otero. Once he pleads guilty, Rangel will face a statutory maximum sentence of 30 years in federal prison. Although the parties will recommend a sentence of 15 years, Judge Otero will make the final determination as to the appropriate sentence in the case.

A federal grand jury indicted Rangel last month in the Financial Plus schemes. The indictment also charges Javier Juanchi, 42, of Sherman Oaks, a vice president at Financial Plus, and Pablo Araque, 40, of Downey, who owns the Downey-based tax preparation and bookkeeping company A-One Tax Pros. Juanchi and Araque were charged in relation to the mortgage fraud and are currently scheduled to go to trial before Judge Otero on November 23.

The case involving Financial Plus is the result of an investigation by the Federal Bureau of Investigation, the United States Postal Inspection Service and IRS-Criminal Investigation.

CONTACT:        Assistant United States Attorney James A. Bowman

Major Frauds Section

A Raspberry to Michael T. Pines & Others

raspberry

The Californian today bestowed a raspberry entitled:

The “Uncommon Law’ award.

A raspberry to attorney Michael T. Pines, who has been advising his clients to break into their foreclosed homes.

Pines claims the actions are justified because lenders committed loan fraud and violated the Truth in Lending Act of 1968. A bankruptcy judge called his ideas frivolous and ordered him to pay $16,.430 in legal fees to the defendants in one case for wasting their time. Other local real estate lawyers are skeptical about his interpretation of the law.

While not every homeowner facing foreclosure is a victim, many are. They really don’t need one more expert giving them questionable advice that may further complicate their lives. They’ve gotten enough of that already.

To the Californian I say – AMEN. Folks, if it sounds too good to be true – you know the rest. And the same goes for those agents and attorneys advising their clients about short sale gimmicks through a series of trusts as well as those advising their clients they enable you to live in their homes indefinitely without paying. Our profession doesn’t need you, the market doesn’t need you and neither do people who have already been victimized once too often.

Shades of Stonewood – another scam artist goes down.

Sounds a lot like Stonewood. A member brought this to our attention a couple years back. The wheels of justice grind slowly but sometimes exceedingly fine. Thanks to Chris Plante for this update.

Irvine attorney indicted in mortgage fraud scheme

An Irvine attorney has been accused of profiting from a mortgage fraud scheme in which 15 mostly foreclosed homes in Orange County were purchased at inflated prices.

Gerald L. Wolfe, 41, a lawyer who was formerly a registered real estate broker, was indicted by a federal grand jury Wednesday on one count of conspiracy to commit wire fraud.

Wolfe, who lives in Corona del Mar, and other unidentified co-conspirators fraudulently purchased 30 residential properties in Orange and Riverside counties between the summer of 2005 and January 2006, the indictment says.

The alleged conspirators would recruit “straw buyers” and use their names and credit profiles to purchase the properties, according to the indictment.

The loan applications for the properties’ mortgages were a sham because they contained fake personal information about straw buyers, misled lenders into believing that Wolfe or straw buyers would reside in those properties, and sought mortgages for inflated sale prices with agreements that sellers would return the inflated portion of the sale price to the conspirators, said U.S. Attorney’s Office spokesman Thom Mrozek said.

Most of the 30 homes involved in the scheme went into foreclosure, Assistant U.S. Attorney Shashi Kewalramani said. The scheme resulted in more than a $2 million loss to the banks, he added.

Wolfe has agreed to surrender to authorities and will appear in federal court on Tuesday. His lawyer, Thomas Bienert Jr., could not be reached for comment Thursday.

Two co-conspirators, Andrew and William Bohuslavizki, also have pleaded guilty conspiracy to commit wire fraud and will be sentenced in January, Kewalramani said.

The statutory maximum penalty for a conspiracy to commit wire fraud charge is 20 years in prison.

Read the full article in The Orange County Register

Attorney General Announces Charges Against Two Con Artists Who Took Money From Struggling East Bay Homeowners

FREMONT — Attorney General Edmund G. Brown Jr. announced charges today against two “callous con artists” who took thousands of dollars from dozens of struggling Northern California homeowners for foreclosure services never delivered.

“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

Brown Files $60 Million Lawsuit Against Fraudulent Forensic Audit Loan Modification Scam

SACRAMENTO — Attorney General Edmund G. Brown Jr. today filed a $60 million lawsuit against a pair of Sacramento companies that lured desperate homeowners with a deceptive marketing scheme that promised to obtain mortgage modifications through the use of computer-generated “forensic loan audits.”

“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.

# # #

No Matter What The Economy is Doing, Fraud is Always With Us.

DOWNEY MAN CHARGED WITH RUNNING $11 MILLION PONZI SCHEME, AS WELL AS RELATED $10 MILLION MORTGAGE FRAUD SCHEME THAT TOOK ADVANTAGE OF DISTRESSED HOMEOWNERS

Juan Rangel’s Financial Plus Investments Targeted Spanish-Speaking Victims and Conned Them Out of Their Savings and Titles to their Homes

LOS ANGELES – A federal grand jury has indicted a Downey man on a series of fraud charges for allegedly running two related fraud schemes – a Ponzi scheme that took more than $11 million from more than 300 victims, and a mortgage fraud scheme that preyed on homeowners by stealing the equity from their homes and secretly taking title to their properties.

Juan Rangel, 46, who is already in federal custody after his conviction last year for bribing a bank manager at Bank of America, was charged in a 16-count indictment that was returned by a federal grand jury on September 22.

In relation to the Ponzi scheme, the indictment alleges that Rangel and his company, the Commerce-based Financial Plus Investments, recruited new investors through Spanish-language newspapers and magazines, as well as in radio advertisements and infomercials broadcast on television. Rangel and Financial Plus promised to pay investors guaranteed returns of 60 percent each year out of the profits from Financial Plus’ real estate investments and lending business. The indictment alleges that Financial Plus did not make any actual profits from real estate or lending, and that Rangel instead used the victims’ money to make Ponzi payments to other investors, as well as for his own personal use, including the monthly mortgage payments on his $3 million home, to make monthly lease payments for his Lamborghini sports car and a limousine, and to buy cocaine.

In the related mortgage fraud scheme, the indictment alleges that Rangel and others targeted Latino homeowners who were at risk of losing their homes and offered to help them avoid foreclosure. Rather than assist them, however, the indictment alleges that Rangel took titles to their homes and drained the remaining equity out of the properties.  As part of this scheme, Rangel arranged to sell the homeowners’ properties, usually without their knowledge, to third-party straw buyers. He then applied for loans in the straw buyers’ names related to these supposed purchases, and used a variety of falsified documents to ensure that the fraudulent loans were approved. The proceeds from these loans went to Rangel and his companies. The indictment alleges that this scheme was successful in duping mortgage lenders into approving more than $10 million in fraudulent loans.

United States Attorney André Birotte Jr. announced the indictment today after Rangel’s two co-defendants were taken into custody this week and the indictment was unsealed.

Co-defendant Javier Juanchi, 42, of Sherman Oaks, a vice president at Financial Plus, was arrested by special agents with the Federal Bureau of Investigation on Monday. Juanchi, who is charged only in relation to mortgage fraud part of the scheme, was ordered held without bond.

The third defendant in the case, Pablo Araque, 40, of Downey, who owns the Downey-based tax preparation and bookkeeping company A One Tax Pros, was arrested yesterday. Araque, who is also charged only in relation to the mortgage fraud component of the scheme, is being held in jail pending a detention hearing scheduled for tomorrow afternoon.

Rangel, who is scheduled to make his first court appearance in this case tomorrow afternoon, is charged with a total of 11 counts of mail fraud, four counts of aggravated identity theft, and one count of money laundering, in relation to the two schemes he ran out of Financial Plus. If he is convicted of all 16 counts, Rangel would face a statutory maximum sentence of 232 years in federal prison.

Rangel owned and operated Financial Plus Investments, which was based in Commerce. Financial Plus purported to provide guaranteed returns to investors by using their money to invest in real estate and make high-interest loans to homeowners facing foreclosure. Financial Plus originally offered returns as high as 60 percent each year to investors, but during the later part of the scheme began to offer investors guaranteed annual returns of 100 percent on their investments. The indictment alleges, however, that only a small fraction of the money that Financial Plus received from investors was ever used to invest in real estate or to make loans. Instead, investor money was used to make monthly Ponzi payments to other investors that were falsely characterized as investment profits. At the same time, Rangel allegedly diverted a substantial portion of the investors’ money for his own use.

In addition to the company’s purported investment business, Financial Plus also purported to offer foreclosure relief services. Rangel and Juanchi identified Latino homeowners who were at risk of losing their homes but who appeared to still have substantial equity in their properties. Financial Plus then offered to help these homeowners avoid foreclosure. Many of the homeowners were told that Financial Plus would save their home by refinancing their mortgages using a co-signer who would be provided by the company. These homeowners were told that the co-signer would be removed from the loan after one year, once the homeowners had fixed their credit.

The indictment alleges, however, that Rangel and Juanchi did not refinance these homeowners’ properties. Instead, they arranged to sell the homeowners’ properties to straw buyers and apply for loans related to these supposed purchases in the straw buyers’ names. Rangel and Juanchi allegedly paid Araque to create false documents, including pay stubs and tax forms, to support the false information listed for the straw buyers on the fraudulent loan applications. Once the loans were funded by the victim banks, Rangel and his companies received the proceeds from the loans, funded by the equity from the homeowners’ properties, as well as title to their homes.

An indictment contains allegations that a defendant has committed a crime.  Every defendant is presumed to be innocent until proven guilty.

Rangel is currently pending sentencing for his conviction last year on federal charges of bribing a bank manager to falsify bank records and release holds on millions of dollars in checks that he deposited at the bank. Rangel’s son, Harold Rangel, was also charged in that case, but fled while on pretrial release.

The cases against Rangel are the result of an investigation by the Federal Bureau of Investigation, the United States Postal Inspection Service and IRS-Criminal Investigation.

CONTACT:        Assistant United States Attorney James A. Bowman

Major Frauds Section

(213) 894-2213

Release No. 10-139

Short Sale Fraud on the Rise

Brown Issues Warning about Rise of Short Sale Fraud

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.

Riverside County Scam Artists Bite the Big One.

I’m lovin’ this. Our friends up at the Ventura County Association  of Realtors had a hand in this. They’ve been very pro-active for years in fighting real estate fraud in their community and have worked hand-in-glove with their local District Attorney. Maybe now that Riverside County has a new District Attorney we can get some of this same attention to fraud that Ventura has enjoyed. They’ve even helped their DA receive substantial federal grants to combat this scourge. Kay Runion and the REFAT team in Ventura are ‘Da Bomb’.

REGIONAL LAW ENFORCEMENT JOINS TOGETHER IN CRACKDOWN ON

MORTGAGE FRAUD, WITH SEVERAL DOZEN BEING NAMED IN CRIMINAL AND

CIVIL ACTIONS FILED IN FEDERAL COURT

Federal and local law enforcement officials joined together this morning to announce a series of cases that have resulted from coordinated efforts to target fraud in the mortgage loan industry. As part of a nationwide crackdown, federal prosecutors in Los Angeles, Riverside and Orange Counties worked with local and federal investigators to bring criminal charges against a wide range of individuals involved in mortgage fraud, including borrowers, “straw borrowers,” corrupt real estate professionals, bank employees who help facilitate fraud, and those who prey upon distressed homeowners.

In addition to recently filed criminal cases that charge about three dozen defendants, the Civil Division of the United States Attorney’s Office this week filed five civil lawsuits that allege mortgage fraud, including one case in which prosecutors are seeking an immediate order from a judge to shut down an organization allegedly engaged in an ongoing scheme that is defrauding the federal government.

“Over time, we have seen repeated spikes of fraud targeting financial institutions.  Over the last decade, we saw one of those spikes as mortgage fraud blossomed with the housing bubble,” said United States Attorney André Birotte Jr. “ When the bubble burst, in part because of fraud permeating the system, the effects were felt around the world. We are now sorting the through the wreckage to identify and prosecute the most egregious offenders. We are also targeting those who continue to exploit the system by fraudulently obtaining new loans or by bilking upside-down homeowners through loan modification and rescue scams.

As part of its enforcement efforts, the United States Attorney’s Office is working collaboratively with a number of law enforcement partners to use all available resources and bring to justice as many criminals as possible. This morning, arrests were made in two federal cases involving mortgage fraud in Ventura. The matters were initially reviewed by the Ventura County District Attorney’s Office, and the investigations grew to include agents from the Federal Bureau of Investigation, the U.S. Department of Housing and Urban Development’s Office of Inspector General of, U.S. Immigration and Customs Enforcement, the Secret Service, IRS-Criminal Investigation, as well as District Attorney investigators. (i.e. conspicuous by their absence is the Riverside District Attorney’s Office – even though one of the biggest indictments is in our turf.)

The two cases involving mortgage fraud in Ventura name a total of 14 defendants, all of whom face potential sentences of hundreds of years in prison if they are convicted in the schemes that cumulatively helped unqualified and straw borrowers obtain tens of millions of dollars in fraudulent mortgage loans. But this is only one of several cases that seek to address the mortgage fraud problem from different angles.

●       In a civil action filed yesterday, prosecutors are seeking up to $1 million in damages from several real estate professionals allegedly involved in an ongoing scheme to obtain government-insured mortgage loans for unqualified borrowers. The complaint seeks a preliminary injunction that would shut down the allegedly fraudulent operation being run out of The Team Realty Group in Riverside. The complaint alleges that, for the past three years, Peter Morris, a California licensed real estate broker, and other professionals working at Morris’ Team Realty Group submitted bogus documents to banks to make their clients appear to be eligible for mortgage loans insured by the Federal Housing Authority or the Veteran’s Administration. The complaint, which is one of five civil actions filed this week by the United States Attorney’s Office, was filed pursuant to the Financial Institutions Reform Recovery and Enforcement Act of 1989 (FIRREA), which became law in the wake of the savings and loan crisis and gave the Justice Department flexibility to pursue civil penalties, as well as criminal charges, against individuals involved in mortgage fraud.

●       In a criminal case indicted yesterday by a federal grand jury in Santa Ana, the owners of a mortgage brokerage firm are accused of obtaining more than $30 million in loans by submitting hundreds of loan applications that substantially inflated the borrowers’ true income and assets.

●       A Lancaster man pleaded guilty last month to conspiracy and making false statements for his role in a scheme to defraud homeowners by promising to delay or prevent foreclosures on their homes and pay-off delinquent mortgages in exchange for the homeowners making payments and transferring title.

Ellon Lindsey, Assistant Special Agent in Charge of IRS – Criminal Investigation’s Los Angeles Field Office, observed: “Mortgage fraud hurts our communities, drives some homebuyers into foreclosure, leaves lenders with bad loans, and burdens neighborhoods with deteriorating and abandoned properties. Today, IRS – Criminal Investigation is pleased to be a part of the numerous investigations that have successfully attacked these crimes on a variety of fronts. Using federal laws that include wire fraud, money laundering and tax offenses, we are able to successfully disrupt these schemes and bring their promoters to justice.”

The court cases that have been brought and resolved as part of the ongoing crackdown are the result of the collaborative efforts of a number of law enforcement agencies, including the United States Attorney’s Office, the Federal Bureau of Investigation, the Office of Inspector General for the United States Department of Housing and Urban Development, the United States Secret Service, IRS – Criminal Investigation, U.S. Immigration and Customs Enforcement, the United States Postal Inspection Service, and the Ventura County District Attorney’s Office.

Suspected fraud can be reported to the Financial Fraud Enforcement Task Forces at www.stopfraud.gov. The Los Angeles Field Office of the FBI also takes reports of suspected fraud at (310) 477-6565.

Temecula Man Accused of $20 million Mortgage Fraud Scam

californian

TEMECULA: Man accused of $20 million fraud

A Temecula man is among six people facing charges for what federal prosecutors said Thursday involves more than $20 million worth of mortgage fraud.

Michael Wayne Wickware, 54, faces one count of conspiracy to commit wire fraud and nine counts of wire fraud, the San Diego U.S. attorney’s office said.

According to online records, Wickware was in custody Thursday at the federal jail in downtown San Diego.

Also charged in the scheme are San Diego residents Brian Andrew La Porte, 34; Daniel John Schuetz, 37; Darryl Anthony Wallace, aka Darryl Anthony White, 47; and Terrence Smith, aka Terry Lee Smith, 45.

The final defendant is Chula Vista resident Roxanne Yvette Hempstead, 53.

The defendants are accused of submitting false and fraudulent mortgage loan applications —- inducing financial institutions to give 36 loans totaling approximately $20.8 million, according to the U.S. attorney’s office.

Federal prosecutors alleged in a newly unsealed indictment that the six defendants cooked up a scheme in which they lied to mortgage lenders to obtain money and property, and then diverted the proceeds for their personal use and benefit.

Under the alleged scheme, the defendants recruited straw buyers with good credit to take out mortgage loans.

But, other than having sound credit, the straw buyers would not have qualified for the loans —- so defendants La Porte and Schuetz allegedly prepared loan applications containing false financial and employment information from the straw buyers, according to the indictment.

Once the loans were made, the defendants allegedly had the escrow agents divert them the money so they could benefit from the proceeds.

The defendants are scheduled to be in federal court on June 28.

Read the article in The Californian here.

For more fraud info – click here the logo:

fraud

Loan Mod Scammers Bagged – Casino Boiler Room

State of  California - Office of the Attorney General, Edmund G. Brown Jr.

News Release

May 20, 2010
For Immediate Release
Contact: (510) 622-4500

Four Arrested, Five Wanted for Fleecing Hundreds of Homeowners Seeking Foreclosure Relief

**NOTE: Contact information for victims willing to speak with the press is available upon request**

LOS ANGELES – Attorney General Edmund G. Brown Jr. today announced that nine men engaged in a Southern California boiler room, tricked out in high-roller style with a roulette wheel and other casino equipment, have been charged with 97 criminal counts for stealing at least $2.3 million from more than 1,500 desperate homeowners who were promised loan modifications but received no relief.

Arrested Tuesday and Wednesday night were Gregg Scott Quinn, 37, of Camarillo and Juan Pierre Washington, 40, of Winnetka, who worked as company sales managers and supervisors. They are being held at Los Angeles County Jail.

Gary Arnold Eisenberg, 71, of Westwood, a top telemarketer with the company, and Ira Itskowitz, 58, a sales manager, each spent more than five years in federal prison for previous fraud convictions and are already in federal custody for violating parole in connection with their participation in the scheme.

The four principal owners of the business, Niv Iskin, 30, of Reseda, Reviv Karpman, 38, of Tarzana, Tomer Kogman, 29, of Receda and Avraham Yechizkia, 34, of Encino; and a sales manager, Barel Iskin, 23, of Woodland Hills, are still being pursued by law enforcement.

“This company was just a boiler room, long on promises and upfront fees but short on foreclosure relief,” Brown said. “Its operators cruelly defrauded citizens trying valiantly to hang on to their homes.”

Brown’s office initiated its investigation in March 2009 in response to numerous consumer complaints against the defendants’ Canoga Park-based loan modification business, which operated as Mason Capital Group, LLC and Gretchen Fox and Associates.

When agents executed a search warrant at the office, they found a Las Vegas casino-themed sales floor complete with craps, poker and black jack tables fashioned as workstations, and a roulette wheel that top-selling telemarketers spun for cash bonuses (see photos attached).

Between January 2008 and June 2009, the four owners took in at least $2.3 million in up-front fees, which ranged from $1,000 to $5,000, from more than 1,500 homeowners throughout the country. In almost every case, no loan modifications were completed, as promised. Financial records indicate that the four owners spent hundreds of thousands on private school tuition, travel, entertainment, shopping and other personal expenses while running Mason Capital Group, LLC and Gretchen Fox and Associates.

To corral sales, the four owners used a telemarketing operation that targeted homeowners facing mortgage payment increases or foreclosure. During an initial call, the telemarketers touted the company’s team of “attorneys, forensic accounting personnel, and loan negotiators” available to negotiate reductions in interest rates, monthly payments and principal balances; their supposed 90% to 100% loan modification success rate and refund guarantee. The telemarketers then collected financial information from homeowners to determine if they “qualified” for the company’s services.

Soon after the initial call, homeowners received a follow-up call to inform them that their case had been “reviewed” and “approved.” Telemarketers closed sales by insisting the approval would expire unless homeowners acted quickly, while reminding them about the refund guarantee if promised results were not achieved.

In fact, the company completed very few loan modifications, rarely contacted lenders, failed to honor the refund guarantee, employed unlicensed “loan processors” and had no legal staff negotiating with lenders.

While homeowners waited, they were told their loan modifications, or refunds, would be voided if they tried independently to contact their lender. Many lost their homes to foreclosure as a result.

To skirt the state’s foreclosure laws, avoid paying refunds and conceal profits, the owners changed company names, claimed bankruptcy and shifted loan modification files to another business they created called, American Financial Group, LLC.

Investigators located victims in dozens of California cities, including: American Canyon, Anaheim, Antioch, Artesia, Atwater, Bakersfield, Ceres, Chico, Cotati, Cloverdale, Crestline, Delano, Elk Grove, Encino, Fountain Valley, Fremont, Fresno, Guerneville, Hanford, Hayward, Hercules, Hood, Indio, La Jolla, Lancaster, Laguna Hills, Lodi, Long Beach, Los Angeles, Manteca, Modesto, Montclair, N. Hollywood, Newhall, Newman, North Highlands, Oakdale, Oakland, Ontario, Palmdale, Pittsburg, Pleasanton, Poplar, Porterville, Redding, Richmond, Riverbank, Rodeo, Sacramento, San Jose, San Pablo, Santa Clara, Santa Rosa, Sebastopol, Stanton, Stockton, Tracy, Tulare, Turlock, Union City, Upland, Valley Village, Van Nuys, Visalia, W. Sacramento and Yuba City.

Brown’s office will seek restitution for victims of this scam.

By law, all individuals and businesses offering mortgage foreclosure consulting or loan modification and foreclosure assistance services must register with Brown’s office and post a $100,000 bond. It is also illegal for loan modification consultants to charge up-front fees for their services.

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

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.

Brown 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 Brown’s action against loan modification fraud visit: http://ag.ca.gov/loanmod.

The 97 criminal counts filed against the nine defendants, include 63 counts of grand theft, 26 counts of unlawful foreclosure consulting, 7 counts of tax evasion and 1 count of conspiracy.

The United States Postal Inspection Service assisted in the investigation.

Copies of the complaint, filed in Los Angeles County Superior Court, and the Arrest Warrant are attached.

Another Day – Another Scam. Jury Duty Scheme Sweeps into SW County.

Our Riverside County Joint Fraud Task Force has adopted a new motto – ‘Changing Times – Changing Frauds’. When we started five years ago we were primarily focused on mortgage fraud as that was the predominant scam at the time. However, with the changing market the opportunity for that type of mortgage fraud has dwindle but we’ve seen an explosion in loan mod fraud, short-sale fraud and all kinds of housing schemes aimed at senior citizens including some very insidious reverse-mortgage scams.

Last week I brought to your attention a new one making the rounds. Actually it’s been around awhile but just making a new appearance on the scene – this is the ‘Title Compliance Office’ scam that warns you to have a copy of your grant deed in your hot little hands or else people can just waltz in and take your home. If you don’t have it they can get you ‘certified’ or ‘official’ copy for just $167 IF you respond before 5/24. Of course anybody who has purchased a house has received a copy of their grant deed. If they can’t find it, the County Clerk will happily get them a duplicate for about $10. It’s been primarily seniors who have received this latest mailing so far.

Today there’s a new one that has also been around since at least 2004 but seems to be cropping up again out here (CA) and at least 11 other states that I’m aware of. It has become so prevalent that our Riverside County Court System has posted a warning on their jury duty site – here’s how it works:

You get a phone call purportedly from the court system claiming you’ve failed to report for jury duty and an arrest warrant is about to be issued for you. YIKES! The victim will rightly claim they never received a jury duty notice but the caller will inform them it was mailed and the presumption is that they received it and ignored it.

The caller will then request some information from the victim so they can ‘verify’ the callers claim and ‘hopefully’ get the arrest warrant canceled. This information includes your social security number, date of birth and sometimes even a credit card # and/or other private information.

Congratulations! Your identity has just been stolen. People tend to go along with this scam because it sounds plausible, it’s entirely possible they didn’t receive or overlooked a jury duty notice and they want to avoid an arrest warrant. They’re a little less vigilant about giving up their information because, after all, it’s the court system.

In reality the court system will NEVER call you to ask for your social security number or other private info. Most courts will follow up with regular mail and will rarely, if ever, call you.

It doesn’t matter who is calling or why – NEVER give out your social security number or other private information to somebody you don’t know over the phone. NEVER! The reasons may be different – the scam is not. The goal is to lift your identity and by the time you hang up from the call, they have already sold your identity to countless other people and you are up the proverbial creek – no paddle, no sail.

Here’s the official warning on the Riverside County Courts website:

Be careful what information you reveal over the phone.  Identity thieves have called Riverside County
residents and threatened them for failing to report for jury service. The thieves then asked for confidential
information.
The Court and Jury Assembly Room staff will NEVER call you and ask for Social Security Numbers,
credit card numbers or other sensitive information.
Do not give out such information over the phone to
anyone who calls you claiming to be with the judicial system.

Realtors, we’re part of the solution – not part of the problem. Make it so. fraud