1:40PM

Chicago area attorney sentenced for stealing over $2 million in client funds

In the following press release the FBI in Chicago announced that a suburban real estate attorney and radio talk show host was sentenced today to 70 months’ imprisonment for stealing approximately $2.34 million from her clients. The defendant, KATHLEEN NIEW, 59, of Burr Ridge, was also ordered to pay restitution of $2.34 million to the victims of her fraud and forfeit assets related to the crime. “The sentence must promote respect for the law … something has to be done when a case like this comes up.” U.S. District Court Judge Harry Leinenweber said in imposing the sentence. Judge Leinenweber also ordered three years of supervised release, and Niew is to report to the Federal Bureau of Prisons on April 14, 2015.

Kathleen Niew

Niew operated Niew Legal Partners, LLC, in Oak Brook. She was charged with 10 counts of wire fraud by a federal grand jury in August 2013 and pled in June 2014 to all counts of the indictment. She was disbarred in 2013.

According to court records, the victims, a husband and wife, who were Niew’s clients, transferred approximately $2.34 million into Niew’s attorney escrow account to be used for closings on commercial real estate transactions. Niew used the funds for her own benefit, contrary to the false representations she made to the couple. Without the victims’ knowledge, Niew used their funds to finance the purchases of various gold mining operations and not to purchase any commercial property for the victims as originally intended. Further, as part of the fraud scheme, Niew arranged to receive a 20 percent finder’s fee for herself from mining operation investments in exchange for providing approximately $1.5 million in funds that belonged to her clients.

At the sentencing hearing today, Judge Leinenweber also found Niew responsible for defrauding another client out of $500,000. Niew falsely told that victim that she needed to borrow $500,000 to help buy assets in her upcoming divorce proceeding. Niew, however, was not divorcing her husband, and she sent the victim’s funds to one of the same investment operations where she had sent previous victims’ money.

“Niew blatantly stole $2.8 million of her clients’ money, and then lied to cover up the scam. When confronted and caught, Niew undertook acts that can only be described as shocking for an attorney licensed by the bar—creating false cover-up documents, lying to her clients, and lying under oath (once again) to the ARDC,” argued Assistant United States Attorney Sunil Harjani in the government’s sentencing memorandum.

The sentence was announced by Zachary T. Fardon, United States Attorney for the Northern District of Illinois, and Robert J. Holley, Special Agent-in-Charge of the Chicago office of the Federal Bureau of Investigation. The case was prosecuted by Assistant United States Attorneys Sunil Harjani and Andrew Boutros.

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4:25PM

Sacramento Man Sentenced to Two Years in Mortgage Fraud Conspiracy

In the following press release Benjamin B. Wagner, United States Attorney for the Eastern District of California, announced that Joshua Clymer, 28, of San Francisco, was sentenced today to two years in prison for conspiracy to commit mail and wire fraud in connection with a mortgage fraud scheme, announced. Clymer previously pleaded guilty pursuant to a plea agreement.

According to court documents and evidence presented at the trial of co-defendant Leonard Williams, from late 2006 into 2008, Clymer and Williams conspired to carry out a loan origination and property flipping mortgage fraud scheme using the companies Diamond Hill Financial and Bay Area Real Estate Holdings. To carry out the scheme, Clymer and Williams recruited underqualified buyers, including family and friends, to purchase homes with promises of cash back, no money down, and illusory equity in the homes. Clymer and others assisted these home buyers in securing loans with fraudulent loan applications that contained lies about the buyers’ employment, income, assets, and intent to occupy the homes as a primary residence. In most cases the loan applications falsely stated that the buyers worked at Diamond Hill Financial, a company associated with Clymer and Williams. Hundreds of thousands of dollars in home loans were issued as a result.  The profit to Clymer and Williams varied from $5,000 to over $30,000 per transaction, with the two of them often splitting the proceeds.

Clymer’s sentencing marks the last of 14 defendants to be sentenced for mortgage fraud offenses in connection with this and related cases.  Others who have already been convicted and sentenced include Garret Gililland (94 months), Leonard Williams (87 months), Niche Fortune (57 months), Kesha Haynie (46 months), Eric Clawson (37 months), Anthony Symmes (35 months), Carlos Chamorro (27 months), Shane Burreson (23 months), Christopher M. Chiavola (22 months), William E. Baker (18 months), Nicole Magpusao (535 days), Brandon Resendez (9 months), and Remy Heng (6 months home detention). Twelve of the defendants pleaded guilty, including Clymer.  Juries have convicted the two defendants who went to trial, Haynie and Clymer’s coconspirator Leonard Williams.

This case is the product of an investigation by the Federal Bureau of Investigation; the Internal Revenue Service, Criminal Investigation; and the Butte County District Attorney’s Office’s Major Crimes Unit. Assistant United States Attorneys Christopher S. Hales and Audrey B. Hemesath prosecuted the case.

4:16PM

Tycoon Owner Sentenced to Prison for Defrauding Mortgage Lenders and IRS

In the following press release Laura E. Duffy, United States Attorney for the Southern District of California announced that Grant McCollough, a real estate investor and owner of Tycoon Investments, along with his wife Marisa McCollough, a former Wells Fargo Bank employee, were sentenced today by U.S. District Judge Michael M. Anello for participating in a mortgage fraud conspiracy involving dozens of properties in Colorado and Maui, Hawaii.
Grant McCollough was sentenced to 10 months in custody; Marisa McCollough was sentenced to four months.  The court also ordered the couple to pay $25,746 in restitution to the IRS.
The McColloughs pleaded guilty on September 30, 2014, and admitted that as part of their conspiracy they recruited investors to act as “straw” buyers in real estate transactions.  The defendants then arranged for false information to be submitted to mortgage lenders in support of the straw buyers’ loan applications.  The McColloughs also fraudulently inflated the value of the homes and disguised the source of the down payments, in order to skim funds from the fraudulent transfer of property among their co-conspirators.  They then hid their skimmed profits from the Internal Revenue Service.
Nearly all of the fraudulent mortgages were arranged by coconspirator Donald Totten, a mortgage loan officer and broker operating from Rancho Santa Fe.  Totten was sentenced in October 2014 to 30 months in prison for his role in the scheme, which included mortgage fraud causing more than $20 million in losses to mortgage lenders, bankruptcy fraud, and filing a false tax return that failed to report more than $3 million in taxable income.  Totten operated the businesses “Money World” and “Integrated Home Loans,” and specialized in brokering a particularly toxic stated-income, stated-asset “negative amortization” loan product, which allowed borrowers to make monthly payments less than the interest charged over the same period and without paying down the principle balance, so that the monthly payments were low but the outstanding balance of the loan increased over time.
Grant McCollough was not the only principal of Tycoon Investments involved in the conspiracy.  McCollough’s business partner, Jason Kent, was also charged in the scheme.  On July 21, 2014, Kent pleaded guilty to wire fraud, and admitted assisting Totten, Grant McCollough, Marisa McCollough, and others with carrying out this mortgage and “kickback” scheme.  Kent’s case was transferred to the District of Hawaii and he is scheduled to be sentenced on February 26, 2015, before United States District Judge Leslie E. Kobayashi.
With Totten’s help, Marisa McCollough bought a $3.4 million oceanfront home in Lahaina, Hawaii.  In order to qualify, she falsely claimed that she earned $90,000 per month, had close to $700,000 in savings, and made a down payment of $630,000.  This was all false, and in fact Ms. McCollough did not contribute any of her own funds to the purchase.  The McColloughs lived in the home for several years, but never made the mortgage payments they owed.
According to court documents, many of the fraudulently-obtained mortgage loans subsequently defaulted, causing mortgage lenders and secondary purchasers, including Fannie Mae and Freddie Mac, to suffer significant losses as a result of the conspiracy.  Fannie Mae and Freddie Mac are government-sponsored enterprises with a mission to provide liquidity, stability, and affordability to the U.S. housing market.  Both enterprises assist mortgage lenders by purchasing the loans they originate, enabling the lenders to replenish their funds to finance additional mortgage loans for American homebuyers.  The statements borrowers make in loan applications are an important factor in Fannie Mae’s and Freddie Mac’s determination whether to purchase a mortgage loan.

DEFENDANTS                                      Case No. 14CR2787-MMA
Grant McCollough                Age: 38         Kearney, Nebraska
Marisa McCollough               Age: 36         Kearney, Nebraska
 
CHARGES
Conspiracy to commit wire fraud and defraud the United States, in violation of 18 U.S.C. § 371.
Maximum Penalties: 5 years’ imprisonment, $250,000 fine or twice the pecuniary gain or loss resulting from the offense, $100 special assessment, restitution.
 
DEFENDANT                                       Case No. 13CR2941-MMA
Donald Totten            Age: 58         Oakland, California
CHARGES
Conspiracy to commit wire fraud, in violation of 18 U.S.C. § 1349.
Maximum Penalties: 30 years’ imprisonment, $1,000,000 fine or twice the gain or loss resulting from the offense, $100 special assessment, restitution.
Filing a false tax return, in violation of 26 U.S.C. § 7206(1)
Maximum Penalties: 3 years’ imprisonment, $250,000 fine, $100 special assessment, restitution.
Bankruptcy fraud, in violation of 18 U.S.C. § 152
Maximum Penalties: 5 years’ imprisonment, $250,000 fine or twice the gain or loss resulting from the offense, $100 special assessment, restitution.
 
DEFENDANT                                       Case No. 14CR1667-MMA
Jason Kent                      Age: 37         Lahaina, HI
 
CHARGES
Wire fraud affecting a financial institution, in violation of 18 U.S.C. § 1343.
Maximum Penalties: 30 years’ imprisonment, $1,000,000 fine or twice the gain or loss resulting from the offense, $100 special assessment, restitution.
 
DEFENDANT                                       Case No. 13CR2772-MMA
Shellie Lockard          Age: 44         Ventura, CA
       
CHARGES
Conspiracy to commit wire fraud, in violation of 18 U.S.C. § 1349
Maximum Penalties: 30 years’ imprisonment, $1,000,000 fine or twice the gain or loss resulting from the offense, $100 special assessment, restitution.
 
AGENCIES
Federal Bureau of Investigation
Federal Housing Finance Agency – Office of Inspector General
Internal Revenue Service, Criminal Investigation
2:20PM

Pittsburgh Attorney Pleads Guilty to Bank Fraud Charge 

In the following Press Release the FBI in Pittsburgh, PA announced that an attorney has pleaded guilty in federal court to a charge of bank fraud, United States Attorney David J. Hickton announced today. Erik Sobkiewicz, 51, of 432 Morewood Ave., Pittsburgh, Pa., pleaded guilty to one count before United States District Judge David Cercone.

Assistant United States Attorney Brendan T. Conway is prosecuting this case on behalf of the government. Mr. Conway provided the following information to the Court at the time of the plea:

Sobkiewicz was an attorney involved in a number of interrelated schemes. The first scheme, involved Sobkiewicz embezzling funds from the law firm that employed him. He used the resources of the law firm to advance businesses that he, unbeknownst to the law firm, controlled. He had the law firm invoice those businesses, knowing that the businesses would not pay the bills. The billings lulled the law firm into believing that what the defendant was doing was legitimate. In addition, he diverted money from a real estate closing owed to the law firm to a personal account, and he diverted client funds held in the law firm’s escrow account to his personal account.

Sobkiewicz was also involved in several loan fraud schemes. He applied for a series of loans from Indiana First Savings Bank. For the last of the loans, which was for $350,000, Sobkiewicz used the securities account of an individual as collateral for the loan without that individual’s permission, and he falsely represented that Indiana First Savings Bank would be in first lien position with regard to the property serving as collateral for the loan when, in fact, Indiana First Savings Bank was not going to be in first lien position because of a previous loan Sobkiewicz obtained collateralized by that property.

Another loan fraud scheme involved Milestone Bank and a property in Philadelphia that Sobkiewicz claimed he was developing. As with Indiana First Savings Bank, Sobkiewicz falsely represented to Milestone Bank, the lender in the Philadelphia transaction, that Milestone Bank would sit in first lien position when, in fact, Milestone Bank was going to be in second lien position because of a previous loan obtained by Sobkiewicz and collateralized by this property. Sobkiewicz forged a mortgage satisfaction of the lender in first lien position to make it appear as though Milestone Bank would be in first lien position.

In addition, Milestone Bank wanted to see that Sobkiewicz had invested his own money into the Philadelphia property and that he had equity in the property. He was able to show them a $600,000 investment of purportedly his own money. In reality, however, the $600,000 was not Sobkiewicz’s money. He obtained that money by soliciting the investment of another individual using a series of misrepresentations, including that the investor would be in second lien position behind only Milestone Bank with regard to the Philadelphia property and in first lien position with regard to other properties owned by Sobkiewicz. In reality, the investor is in third lien position with regard to the Philadelphia property in the second lien position with regard to the other properties.

Judge Cercone scheduled sentencing for May 21, 2015, at 10 a.m.. The law provides for a total sentence of 50 years in prison, a fine of $1,250,000, or both. Under the Federal Sentencing Guidelines, the actual sentence imposed is based upon the seriousness of the offense and the prior criminal history, if any, of the defendant.

The Federal Bureau of Investigation and the Allegheny County District Attorney’s Office conducted the investigation that led to the prosecution of Sobkiewicz.

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1:58PM

Roseville (CA) Couple Plead Guilty in Loan Modification Scam

In the following press release Benjamin B. Wagner, United States Attorney for the Eastern District of California, announced that Martin Wayne Flanders, 50, formerly of Roseville, and Ligia Sandoval Spafford, 48, of Roseville, pleaded guilty today to mail fraud for their participation in a fraud scheme that targeted distressed homeowners,

According to court documents, between 2008 and 2010, Flanders charged clients advance fees in exchange for a number of financial services, including loan modifications, mortgage loan audits, credit repair, debt relief, bankruptcy filings, and a program to sell homes to “investors” with a rent-to-own option. Flanders and Sandoval marketed these services to economically distressed homeowners with particular emphasis on those who were Spanish-speakers. During a radio program aired twice weekly by a Bay Area Spanish-language Christian radio station, Radio Luz, Sandoval promoted the services she and Flanders offered. Flanders also advertised on a Spanish-language television station, Univision, and in Spanish-language magazines. About 98 percent of the defendants’ clients were of Hispanic descent, some of whom spoke little to no English. Sandoval speaks Spanish; Flanders does not.

Flanders and Sandoval made numerous false statements to investors as to the success of the programs being offered or refunds that would be available if the programs were not successful. “Ghost offers” – i.e., fictitious offers to purchase the victim’s property through short sale – and “skeleton bankruptcies” – i.e., sham bankruptcy petitions that were quickly dismissed by the bankruptcy court – were also used by Flanders or Sandoval to try to stall the foreclosure process. At least 25 to 30 individuals paid for services and did not receive them or did not receive refunds when the programs failed to deliver as promised. The total loss to the victims is at least $120,000. Some homeowners who were not able to obtain relief were foreclosed upon by their lenders.

“Flanders and Sandoval took advantage of victims with limited English proficiency,   when those victims were most financially vulnerable,” said United States Attorney Wagner.  “Predatory fraud schemes of this sort have been, and will continue to be, a prime focus of our efforts to prosecute mortgage fraud.”

This case is the product of an investigation by the Federal Bureau of Investigation. Assistant United States Attorney Todd A. Pickles is prosecuting the case.

Flanders has been detained since his arrest in October 2012. Sandoval is currently out of custody.

Flanders and Sandoval are scheduled to be sentenced by United States District Judge Troy L. Nunley on June 11, 2015.  Flanders and Sandoval face a maximum statutory penalty of 20 years in prison and a $250,000 fine. The actual sentence, however, will be determined at the discretion of the court after consideration of any applicable statutory factors and the Federal Sentencing Guidelines, which take into account a number of variables.

1:00PM

Former North Miami Mayor’s Co-Defendant Sentenced in Multi-Million Dollar Mortgage Fraud Scheme 

In the following press release the FBI in Miami announced that a Miramar resident and mortgage lender was sentenced today to 100 months’ imprisonment, to be followed by five years of supervised release, and ordered to pay $8,215,197.28 in restitution for his recruitment of straw buyers and other conduct in an $8,000,000 mortgage fraud scheme.

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Wifredo A. Ferrer, United States Attorney for the Southern District of Florida, George L. Piro, Special Agent in Charge, Federal Bureau of Investigation (FBI), Miami Field Office, and Drew J. Breakspear, Commissioner, Florida Office of Financial Regulation, made the announcement.

Karl Oreste, 56, pled guilty in July 2014 to one count of conspiracy to commit wire fraud affecting a financial institution. According to documents filed with the court and statements made in court during the plea, Oreste, president of KMC Mortgage Corporation of Florida, a mortgage lending business located in North Miami Beach, along with co-defendants, Okechukwu Josiah Odunna, a/k/a “O.J. Odunna,” Marie Lucie Tondreau, a/k/a “Lucie Tondreau”, and Kelly Augustin, operated a multi-million dollar mortgage fraud scheme in Miami-Dade and Broward Counties, between December 2005 and May 2008. Oreste and Tondreau, who at the time was a community activist, hosted several radio show programs in the South Florida area which catered to the South Florida Haitian community. During these programs they advertised the services offered by KMC Mortgage. Oreste and Tondreau recruited and paid some of the listeners who responded to those advertisements, as well as other individuals, to pose as borrowers to purchase properties identified by Oreste. Augustin, an employee of KMC Mortgage, also recruited straw borrowers.

According to statements made in court, Oreste, Odunna and other co-conspirators prepared or caused to be prepared applications on behalf of straw borrowers. Odunna was an attorney previously licensed to practice law in Florida and president of O.J. Odunna, P.A. and Direct Title and Escrow Services. These loan applications included false information relating to employment, wages, assets and intent to make the property being purchased a primary residence. The loan applications and documents were submitted by co-conspirators to various mortgage lenders throughout the United States. Once the loan applications were approved, the defendant wired loan funds to O.J. Odunna, P.A., Direct Title or other title companies for closing.

In some instances Oreste, Odunna and other co-conspirators created and submitted duplicate HUD-Settlement Statement Forms, which grossly inflated the true purchase price of the properties. Lenders were not told how the loan proceeds were being disbursed.

At closing, a portion of loan proceeds were disbursed to Oreste through his company, JR Investment and Mortgage Corporation, or other bank accounts controlled by him. A portion was in some instances diverted to accounts controlled by O.J. Odunna, P.A. and Direct Title. Oreste disbursed some of the proceeds that he received to pay recruiters, such as Tondreau and Augustin, and straw borrowers. Oreste also transferred a substantial portion of the funds to the bank account of LTO Investment Corporation’s, a company controlled by Tondreau. Tondreau used funds deposited in LTO Investment Corporation’s bank accounts to make payments on the falsely and fraudulently obtained mortgages in order to maintain the loans, and to conceal and further the fraud. She also used a portion of the funds deposited into LTO Investment Corporation’s bank accounts for her own personal use and benefit.

Over the course of the conspiracy, the defendants fraudulently obtained loans on approximately 20 properties, for which the lenders have suffered losses in the amount of approximately $8.2 million.

Mr. Ferrer commended the investigative efforts of the FBI and Florida’s Office of Financial Regulation. The case was prosecuted by Assistant U.S. Attorney Lois Foster-Steers.

A copy of this press release may be found on the website of the United States Attorney’s Office for the Southern District of Florida at http://www.usdoj.gov/usao/fls. Related court documents and information may be found on the website of the District Court for the Southern District of Florida at http://www.flsd.uscourts.gov or on http://pacer.flsd.uscourts.gov.

12:19PM

Mastermind of Florida Equity Skimming Scheme is Found Guilty

In the following press release A. Lee Bentley, III, United States Attorney for the Middle District of Florida announced that a federal jury has found Stephen Mayer (51, Miami) guilty of conspiracy to commit wire fraud affecting a financial institution and nine counts of wire fraud affecting a financial institution. He faces up to 30 years in federal prison on each count. His sentencing hearing is scheduled for May 5, 2015. Mayer was indicted on May 13, 2014.

According to evidence presented at trial, Mayer used a variety of shell companies that he controlled to purchase distressed properties. He then flipped the properties the same day or within days to “credit partners” for an increased price, and kept the proceeds. These “credit partners” were recruited by Mayer because they had good credit and were willing to sign documents. The partners never intended to live in the properties or make any mortgage payments. In exchange for helping him get the mortgages, Mayer would pay the down payment and mortgage, and pay the “credit partners” a commission from his proceeds.

Mayer also facilitated the securing of mortgages, many from FDIC-insured lenders, based on false information about the borrowers’ income, employment, and assets. Mayer instructed the “credit partners” to deed the properties back to him and/or companies under his control so that he could flip them again to other “credit partners” at increased prices, thereby skimming the equity.  Mayer failed to make mortgage payments as promised, and each of the properties ultimately went into foreclosure. He used the proceeds from his real estate flipping scheme to fund a lavish personal lifestyle. Agents identified more than 20 homes used by Mayer in this flipping conspiracy and estimate losses to the lenders in excess of $3 million.

This case was investigated by the Florida Department of Law Enforcement and the United States Secret Service. It is being prosecuted by Assistant United States Attorneys Kelley Howard-Allen and Mandy Riedel.

12:07PM

Two women sentenced in $7.5 million Maryland mortgage fraud case

In the following press release from the FBI it was announced that Orpel Tucker, 44, of Washington, D.C., and Tania Firmani, 46, of Brooms Island, Maryland, have been sentenced to prison terms for their roles in a mortgage fraud scheme that cost mortgage lenders more than $1.3 million.

Tucker was sentenced on May 16, 2013, to a 37-month prison term, and Firmani was sentenced today to 15 months of incarceration. Both appeared before the Honorable Reggie B. Walton in the U.S. District Court for the District of Columbia.

The sentences were announced by U.S. Attorney Ronald C. Machen, Jr.; Gary R. Barksdale, Inspector in Charge, Washington Division, U.S. Postal Inspection Service; Joseph W. Clarke, Special Agent in Charge of the Office of Inspector General of the U.S. Department of Housing and Urban Development; Valerie Parlave, Assistant Director in Charge of the FBI’s Washington Field Office; and William P. White, Commissioner of the District of Columbia Department of Insurance, Securities and Banking.

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