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

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.

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.

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

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

]]> http://gadblog.srcar.org/2010/10/25/a-raspberry-to-michael-t-pines-others/feed/ 6 http://gadblog.srcar.org/2010/10/22/shades-opf-stonewood-another-scam-artist-goes-down/ http://gadblog.srcar.org/2010/10/22/shades-opf-stonewood-another-scam-artist-goes-down/#comments Fri, 22 Oct 2010 17:16:50 +0000 Gene Wunderlich http://gadblog.srcar.org/?p=1673 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

“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.

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

Over dinner she asked if I knew anything about reverse mortgages? I told her I know 2 things about reverse mortgages –

1. For the right person a legitimate reverse mortgage can be a wonderful thng.
2. They are currently the most prevalent form of real estate fraud being perpetrated on elderly people.

Now Jan has had a reverse mortgage for 16 years and it has been a lifesaver. She gets just enough every month to augment her SS and pension but not enough to live a wild lifestyle – well, not too wild. She does drink White Zinfandel out of a box.

So she received a call from somebody she assumed was with her existing mortgage company telling her about a new product. He was very nice, claimed to be almost 70 himself, chatted about grand kids, told her the new product would save her money on interest rate, she would continue to get her monthly payment AND she would get a lump payment of more than $50,000 to spend as she saw fit – buy a new car, take a cruise, help her grandkids – whatever.

Well, she really wasn’t too interested in taking out more money that she really doesn’t need but thought the rest sounded good so she asked me to take a look at the paperwork the guy had sent over. Nice paperwork – 4 color brochures, info on government programs and a breakdown of her situation with numbers that sounded close to what she thought she owed and what her interest rate is.

Trouble is, when we got to looking at it and pulled her latest mortgage statement, we found the numbers really weren’t that accurate – in fact they were actually the sort of numbers you might get if you were just using a public tax database record and making some assumptions on balances and interest. An even closer look revealed that while the logo and name were similar to her existing mortgage company, they weren’t the same at all. Close but no cigar.

Finally, buried in the fine print was the disclosure that there were nearly $8,000 worth of costs & fees buried in the transaction along with some commission for the ‘very nice man’.

Now I’m not saying this is a fraud or a scam – in fact looking at their website they appear to be totally legitimate. Of course, who doesn’t these days. I’m just saying the marketing pitch is a little ‘iffy’. It confused Jan and she’s still pretty sharp – it could easily mislead others into thinking they were just getting a new product from their existing lender, that their rates would go down while their payments would stay the same.

So the worst that might have happened would have been that Jan did the refi, her interest rate might have dropped a few bucks and she would have paid $8 grand in fees and commissions.

OR she might have been signing over her home, forfeiting all her equity to a flim-flam man, and ended up living on the streets at 80. Or with me. That’s why I’ve gotta keep on top of this stuff.

Folks, if somebody calls you or sends you something you don’t quite understand, please, PLEASE talk to somebody you trust. Back in the day it might have been OK to just trust the nice man on the telephone. Today - not so much. You do bear some responsibility for your own well being and security – after all, you made it this far. Don’t blow it now.

NAR Legal Affairs has learned of a new scheme designed to trick unwary real estate professionals

NAR Legal Affairs has learned of a new scheme designed to trick unwary real estate professionals into forwarding money to the scheme operators. The scheme works in the following manner:

• Salesperson receives an inquiry via email from an individual who identifies himself (no known female aliases yet) as a wealthy individual seeking a residential property. The individual lives outside the market area, and usually outside of the country. The individual operates under a variety of aliases, and also varies his housing requirements. Sometimes he is married with children, sometimes he is single.
• The emails are written in a choppy fashion with incorrect grammar usage, suggesting English is not the writer’s first language. The emails also rarely contain any information relevant to the market in which he is seeking a home and are written in a generic style.
• The individual claims to hold an important position at an existing business, although no one with the individual’s name actually is listed as working for the business.

If the real estate professional responds to the inquiry and sends the individual listing information, the following actions take place:

• The alleged buyer selects the most expensive property from the listings that he receives and instructs the real estate professional to submit an offer for the property, stating that he will visit the property in the near future.
• He represents that the transaction will be an all cash transaction, and no title company should be involved.
• He requests the information that he needs to write on the deposit check, and states that the check will be sent either to the real estate brokerage or to an attorney.
• He will also send a forged bank (or brokerage) statement, showing significant assets, in addition to a copy of a forged ID.

If the Salesperson provides this information, the real estate professional (or attorney) will receive a check larger than the deposit amount. The reason for the higher amount will be attributed to something like needing funds for furnishing the new home. If the check is cashed, the alleged buyer will immediately withdraw the overage amount. The real estate professional’s bank will present the initial check for payment, and will then be told it is forged. Therefore, the real estate professional will lose the overage amount taken by the individual, as the trail of money is usually untraceable once it is withdrawn from the brokerage’s escrow account.

If you receive this email, you should ignore it and forward it to your local FBI office- SCAM@ic.fbi.gov

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 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:

We are researching more on this outfit but here’s what the Better Business Bureau had to say:

REAL ESTATE BROKER ADMITS FILING TAX RETURNS THAT FRAUDULENTLY CLAIMED THE FIRST-TIME HOMEBUYER CREDIT

LOS ANGELES – A Tarzana woman pleaded guilty to federal tax charges today, admitting that she filed more than 200 false tax returns with the Internal Revenue Service that sought over $1.3 million in refunds based on fraudulently claimed First-Time Homebuyer Credits and Earned Income Tax Credits.

Kashawn Monique Savery, a real estate broker who until recently lived in Reseda, pleaded guilty before United States District Judge Dale S. Fischer. Savery pleaded guilty to all of the charges in a criminal information that charged her with 10 counts of making false claims to the United States.

According to a search warrant executed earlier this year at Savery’s residence, IRS-Criminal Investigation began investigating this matter when an IRS Fraud Detection Center observed suspicious activity, including a group of 231 tax returns for the 2008 tax year that sought more than $1.3 million in refunds. The vast majority of the suspicious tax returns were filed from a computer that IRS investigators determined was located at Savery’s condominium in Reseda. Other suspicious tax returns linked to the same computer have been filed in recent months for the 2009 tax year.

Savery pleaded guilty to fraudulently filing or causing to be filed 10 tax returns, five of which sought refunds based on the Earned Income Tax Credit, and five of which sought refunds based on the First-Time Homebuyer Credit. The criminal information alleges that the 10 tax returns fraudulently sought nearly $68,000 in refunds. During today’s hearing, Savery admitted being involved in the filing of more fraudulent tax returns – over 200 that sought more than $1.3 million in fraudulent refunds.

Judge Fischer is scheduled to sentence Savery on October 18. As a result of today’s guilty pleas, Savery faces a maximum statutory sentence of 50 years in federal prison and a $2.5 million fine.

This case was investigated by IRS-Criminal Investigation.

CONTACT:        Assistant United States Attorney Edward E. Alon

Recently there has been an email circulating that has freaked a lot of you out – which would be the appropriate reaction IF IT WERE TRUE!

It’s usually titled ‘Listen Up Homeowners’ or ‘No More Home Sales’ or something equally sinister.

Here’s the scoop – that email has been circulating since last summer when the American Clean Energy & Security Act (also known as the Cap & Trade bill) was still in the House in DC. In the initial bill there were provisions for point-of-sale mandates that were almost as frightening as what that email claims.

The National Association of Realtor® worked extremely hard to get that portion of the bill removed – and we were successful!

Here is the story and an excerpt from Realtor.org:

The American Clean Energy & Security Act

Overall, REALTORS® succeeded in making a number of positive changes affecting the real estate provisions of the bill. The House-approved bill:

1. Does not create a federal energy audit requirement for real property;
2. Exempts existing homes and buildings from any federal guidelines for new construction energy efficiency information labels.
3. Prohibits the implementation of any labeling during a sales transaction.
4. Leaves the decision to states as to whether to require energy audits, disclosures, etc.
5. Provides property owners with significant financial incentives, matching grants and tools to make property improvements and reduce their energy bills;
6. Prohibits the Environmental Protection Agency from regulating residential and commercial buildings under the Clean Air Act;
7. Eliminated an early proposal to allow citizens to sue over minor climate risks under the Clean Air Act; and
8. Establishes green building incentives for HUD housing, including a loan program for renewable energy, block grants and credit for upgrades in mortgage underwriting.

And while the bill did indeed pass the House, it has all but died in the Senate. It has been sitting there for nearly a year with no action and, according to NAR, its chances of passage are slim at best. It is an onerous bill comparable to California’s AB32 in many respects. But while California races ahead with implementing this disastrous legislation, there is no such sentiment in Washington.

So thank you for bringing this to our attention but fear not. The federal government may be doing all it can to keep the housing market in turmoil but this isn’t one of them. Feel free to pass this information along to any of your friends or clients who may have questions on this matter.

Gene Wunderlich

Director, Government Affairs
Southwest Riverside County Association of Realtors
951-205-1911
GeneWunderlich@srcar.org
www.srcar.org/gadblog

LOS ANGELES – Concluding a mortgage fraud case involving more than $4 million in losses at several banks, the fourth defendant convicted in the scheme was sentenced today to 85 months in federal prison.

Terral Toole, 42, of Lake Elsinore, was sentenced by United States District Judge John F. Walter, who also ordered the defendant to pay $291,055 in restitution to three financial institutions.

Toole pleaded guilty last November to four counts of wire fraud and four counts of money laundering for his role in a mortgage fraud scheme that collected approximately $4 million in loan proceeds for properties that were not for sale.

Previously in this case, three other defendants were sentenced for their roles in the mortgage fraud scheme. They are:

Angela Cotton, 38, of Fontana, who ran a bogus title company, was sentenced last Thursday by Judge Walter to five years in federal prison and was ordered to pay restitution of $4,044,681;
Miles Davis, 47, of Reseda, a loan processor, was sentenced by United States District Judge Florence-Marie Cooper to three years of probation, including six months of home detention; and
Lisa Lievanos, 46, of Fontana, who was convicted at trial of five felony counts, was sentenced by Judge Cooper to one year and one day in prison.

According to court documents and the evidence presented at Lievanos’ trial, the participants in the scheme – including people such as Lievanos, who agreed to act as “straw buyers” – fraudulently “purchased” properties and obtained millions of dollars in mortgage loans. The defendants then spent the fraudulently obtained money on personal expenses such as luxury cars and gambling expenses. The various applications for mortgages contained false information, such as false employment and income information.

This case is a result of an investigation by the FBI’s Southern California Mortgage (SCAM) Task Force.

You all remember the great fanfare wherein President B H Obama introduced the fabulous Making Home Affordable Program (Help for the hardest hit – according to the website)? He said – and I quote, “this program will enable as many as 3 to 4 million home owners to modify the terms of their mortgage” preserving the dream of home ownership. Last May in Washington DC Housing Secretary Shaun Donovan trumpeted the program before a packed audience of Realtors® during our Legislative Summit Day – the plan ‘does a number of things to make sure that 3 to 4 million families can stay in their homes with affordable mortgages.”

Well here it is just a scant year later and, by all accounts, the program has been a dismal failure. The administration lays claim to having modified about 170,000 loans and even that is suspect. People I know (and have written about) who were initially excited about their loan mod’s have subsequently gotten bogged down in the quagmire. Promised mods have not been made and 10 – 11 months later they are still in limbo, making reduced payments but without the permanency promised. The ‘friendly’ loan reps no longer return calls promptly – if at all. Paperwork is lost time and again. Questions go unanswered. They were initially told they qualified but the rules have been changed and changed again – never in their favor.

Now the administration itself starts parsing words (what a shock). Current releases say the government planned to OFFER help to millions. Ooohhhh -  big difference between ‘enabling’ and ‘offering’ Barry. A treasury spokeshole said last week that the Presidents original remarks were ‘consistent with the goal of offering help to millions’ but that ‘details were still being worked out at the time.’ The hole went on to say there ‘is no significant difference between the offer to help and permanent modification’. Really you lying sack?

Thomas Lawler, who we also heard from last May at the NAR Summit begs to differ. “Merely offering to help is not what the President said and not what he meant. That’s not what anybody meant. Nobody cares if you offer something that people can’t qualify for. What’s the point?”

Precisely. Here’s the point – you can’t believe a word this man or his administration says. Yet a scant majority of the fools in Congress just handed over the tools to dismantle our healthcare system to this same prevaricator. The much vaunted ‘openness and transparency’ promised during the campaign has been replaced by the most secretive, back-room arm twisting and blackmail to have graced our White House since LBJ and Nixon. While thousands of people continue to sink into unemployment and thousands more lose their homes, this man singlehandedly gives us a high hard one with this healthcare system that will bankrupt our children and their children.

Well, much as with the Making Home Affordable, or TARP. or TELF or…, perhaps the details are still being worked on. We can only hope it’s as dismal a failure in execution as the rest of his great programs have been and it will never see the light of day.

And some of you people continue to believe him? Bend over – Barry’s got another promise for ya, sucker.