Los Angeles man charged in bankruptcy frauds aimed at preventing foreclosure

In the following press release Thomas P. O’Brien, United States Attorney for the Central District of California, announced that a Los Angeles man was taken into federal custody last night on charges that he has been defrauding homeowners by falsely promising them that he could prevent foreclosures and evictions from their property.

Gilfert Welton Jackson, 64, was arrested without incident at a homeowner’s residence in Los Angeles yesterday by Los Angeles County Sheriff’s deputies and turned over to special agents with the Federal Bureau of Investigation. Jackson, a transient whose last known address was in Inglewood, made his initial court appearance this afternoon in United States District Court in Los Angeles, where he was ordered detained until he posts a $25,000 bond.

Jackson was indicted on June 4, and charged with six counts of making false representations and filing documents in bankruptcy proceedings in furtherance of a scheme to defraud. According to the indictment, which was unsealed after his arrest, Jackson’s scheme was designed to bilk distressed homeowners, as well as banks and other creditors by fraudulently obstructing lawful foreclosure and eviction actions.

The indictment alleges that Jackson falsely passed himself off as an attorney. Jackson allegedly told property owners and their tenants that he could prevent foreclosure and unlawful detainer and eviction actions in exchange for payments to purported non-profit organizations, including Silver Dollar Classic Foundation, Inc., and Herd Community Development Corporation. Jackson and others filed bankruptcy petitions to obtain an “automatic stay,” which under bankruptcy law prevents any action against the bankruptcy debtor and his property. Jackson created fraudulent notices of automatic stay that he gave to banks, their agents and others, including the Los Angeles County Sheriff’s Department, who were attempting to foreclose on properties and litigate unlawful detainer actions. In each such notice of automatic stay, Jackson fraudulently represented that the identified property was owned by a debtor in bankruptcy and was, therefore, subject to the automatic stay.

In addition to the banks and other creditors who were forced to delay taking possession of properties while they litigated the purported “automatic stay” in bankruptcy court, the indictment alleges that Jackson’s scheme victimized homeowners, who paid Jackson for his worthless services. According to the indictment, during the period of delay that Jackson caused, Jackson collected rent from third parties living in the properties based on the false representation that he was the rightful landlord of the properties.

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

The case against Jackson was referred to the United States Attorney’s Office by the Office of the United States Trustee, which is the component of the Department of Justice that oversees bankruptcy case administration and litigates to enforce the bankruptcy laws. “Protecting the integrity of the bankruptcy system is an important objective of the U.S. Trustee Program,” stated Peter C. Anderson, United States Trustee for the Central District of California (Region 16). “Our bankruptcy system is designed to provide honest people who have fallen on unfortunate times with a fresh start. Those who use the bankruptcy system to prey upon such people and others for their own financial gain undermine the fundamental purpose of the bankruptcy system and will be referred for criminal prosecution.”

Jackson was convicted of bankruptcy fraud in 1998 and sentenced to 63 months in federal prison. In 2006, the Bankruptcy Court for the Central District of California issued an order that forbade Jackson from filing any bankruptcy petitions or any other documents, without first obtaining Court approval to do so. If he is convicted of the six counts of bankruptcy fraud alleged in the indictment, Jackson would face a maximum statutory penalty of 30 years in federal prison.

The case against Jackson was investigated by the Federal Bureau of Investigation.


Man charged with forging deed transfers for Detroit church building

In the following press release Wayne County (MI) Prosecutor Kym L. Worthy has charged Tracy Carmichael (below), 46 of Detroit in connection with a fraudulent scheme to obtain an over $120,000 mortgage on a church property located on 11731 Mount Elliot in Detroit.

Between May and June, 2007 Carmichael allegedly offered to sell the Temple of God Deliverance Mount Elliot property to a female as an investment property. He represented that he would handle all of the paperwork, manage the property and give her the payments for the mortgage company. The victim later discovered that all documents conveying the property to her were false. The rightful owners never authorized Carmichael to sell the property and discovered their signatures were forged on the document.

Carmichael has been charged with two counts of Forgery, a felony punishable by up to 14 years in prison; 2 Counts of Uttering and Publishing which is punishable by up to 14 years in prison; False Pretenses > $20,000, a felony punishable by up to 10 years in prison; Money Laundering, Second Degree, a felony punishable by up to 10 years in prison.

This case was investigated and charged by the Wayne County Deed Fraud Task Force created by Register Bernard J. Youngblood, Wayne County Sheriff Warren Evans and Prosecutor Kym L. Worthy in 2007. Wayne County Assistant Prosecutor Abed Hammoud will be prosecuting this case.

Carmichael is next due in court on June 22, 2009.


Texas Attorney General hosts mortgage fraud summit

Texas Attorney General Greg Abbott today welcomed state and local authorities, law enforcement officials, prosecutors and other interested Texans to the Office of the Attorney General’s (OAG) Mortgage Fraud Summit.

In the summit’s keynote address, Attorney General Abbott highlighted the OAG’s prosecution of a multi-million dollar criminal mortgage fraud scheme in northeast Texas. Two defendants have been sentenced to lengthy prison terms for engaging in criminal mortgage fraud. Two additional suspects are still awaiting trial. Many of the defendants’ victims, like Corsicana resident Stacey Polk, lost their homes to foreclosure after the defendants inaccurately completed loan applications and falsified supporting documents.

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Press Release

“Federal, state and local officials must work cooperatively and proactively to crack down on mortgage fraud,” Attorney General Abbott said. “Today’s meeting offers officials from multiple agencies an important opportunity to exchange information and share experiences. Together, we can make a difference for Texas homeowners and help prevent one of the nation’s fastest growing crimes.”

Several panels of experts spoke at the Mortgage Fraud Summit, including Matt Gravelle, Special Agent with the FBI-Austin; Chris Day, Special Agent with the FBI-Dallas; Jim Amorin, President of the Appraisal Institute; and Tom Morgan with the Texas Association of Realtors.

Attorneys from the OAG’s Consumer Protection Division, along with county and district attorneys’ offices, presented information about law enforcement efforts to detect and stop fraudulent transactions.

Panelists discussed latest mortgage fraud trends, including foreclosure rescue fraud and falsified loan applications. Speakers also addressed potential legislative solutions, techniques for identifying suspicious banking transactions and the necessity for law enforcement agencies to share information.

Today’s Mortgage Fraud Summit reflects Attorney General Abbott’s continuing focus on schemes that target Texas homeowners. The OAG has taken legal action against a variety of mortgage-related practices, including shutting down eight foreclosure rescue scams. Attorney General Abbott also secured $21 million in restitution for Texas homeowners who were harmed by lending giant Ameriquest Mortgage Co. and obtained another $7 million for Countrywide Financial Corp. customers who lost their homes to foreclosure.

To find out more about Attorney General Abbott’s efforts to assist Texas homebuyers, visit www.texasattorneygeneral.gov or call (800) 252-8011.


Kansas developer accused in corruption probe over housing developement

In the following press release Lanny Welch, United States Attorney for the District of Kansas announced that David Ray Freeman, 45, Lawrence, Kan., has been charged with fraud in connection with a Junction City housing development project.

A criminal information filed today in U.S. District Court in Topeka charges Freeman with one count of conspiracy to commit bank fraud, evade federal currency reporting requirements and interfere with interstate commerce, by extortion of a public official.

The government alleges that Freeman, a building contractor who lives in Lawrence, is a part-owner of Bid D Development LLC and Big D Construction. He also is a signatory on accounts for Tri-County Foundations, LLC; L and K Trucking LLC, and Big D LLC, as well as other accounts at Lawrence Bank in Lawrence, Kan.

In 2004, Junction City officials were expecting a large troop buildup at Fort Riley that they thought had the potential to double the city’s population. As a result, the city moved to annex 1,400 acres in hopes of enhancing the local housing market and expanding the local economy. Freeman traveled to Junction City to look into acquiring land where houses could be built. During this time, he became friends with a member of the Junction City Commission.

On May 1, 2006, Freeman issued a $5,000 check payable to the wife of the member of the Junction City Commission. The check was drawn on the account of Tri-County Foundations, LLC. On May 5, 2006, Freeman and partners formed Big D Development LLC and Big D Construction LLC. At that time, he bragged to his partners that he had a member of the Junction City Commission in his pocket and he could get anything he wanted from the City Commission. On July 6, 2006, Freeman issued a check made payable to the member of the Junction City Commission. The check was drawn on an account of L and K Trucking.

On July 27, 2006, Freeman’s company, Big D, received a development contract for Sutter Woods Subdivision in Junction City. On Aug. 30, 2006, Freeman’s company, Big D, received a development contract for Sutter Highlands Subdivision. The two contracts had a total value to Freeman’s Company of more than $12 million.

After the City Commission awarded the Sutter Wood development contract to Big D, the company set aside a choice lot for a residential home for “Firefighter,” which was a code name for the member of the Junction City Commission.

On March 2007, Freeman directed an assistant to draw and cash a check for $9,000 and deliver the cash to the member of the Junction City Commission during a meeting at a rest stop between Topeka and Junction City. Freeman instructed the assistant to draw and cash checks for amounts less than $10,000 in order to avoid having to file a currency transaction report required by the U.S. Bank Secrecy Act.

If convicted, Freeman faces a maximum penalty of 30 years, a fine up to $1 million and forfeiture. The government also is seeking a judgment against Freeman for the proceeds of the crime, including cash and property. The Federal Bureau of Investigation and the Internal Revenue Service/Criminal Investigation Division worked on the case. Assistant U.S. Attorneys Richard Hathaway and Christine Kenney are prosecuting.


Realtors and attorney arrested in San Bernadino mortgage fraud scheme

On June 4, 2009, investigators from the San Bernardino County Real Estate Fraud Prosecution Unit arrested a Rancho Cucamonga real estate agent in a fraud scheme that has defrauded scores of victims in the county. Richard Nazabal, 51, was arrested without incident at his home in the 5000 block of Granada Court in Rancho Cucamonga. The following day, attorney Garabed Kamarian, 49, of Glendale was arrested at his Glendale office by DA Investigators and Glendale Police. Nazabal’s step-daughter Christina Martirossian surrendered herself to authorities on Monday. Nazabal’s wife, Desiree Wilcox Nazabal (pictured below) remains outstanding and is wanted on a $2.5 million arrest warrant.

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Beginning in 2006 and continuing through 2008, Richard and Desiree Nazabal solicited funds from victims to invest in several inland empire homes with the stated intention of renovating and reselling the properties at a profit. More than twenty-five people invested more than $2.5 million dollars with the Nazabals. Instead of investing the victims’ funds, the Nazabals used the money for personal gain and never purchased homes for the victims. Christina Martirossian conspired with her mother and step-father to falsely bill a cleaning company in order to continue to support the family’s lavish lifestyle. Attorney Garabed Kamarian allegedly applied for loans the Nazabals could not qualify for in order to purchase the luxury home in the extreme north end of Alta Loma in which the Nazabal family was living. Kamarian falsified the loan applications, showing he was the owner and primary occupant of the home in order to make the purchase of the residence on behalf of Richard and Desiree Nazabal.

Richard Nazabal and Garabed Kamarian were booked at the Sheriff’s West Valley Detention Center in Rancho Cucamonga on arrest warrants charging multiple counts of Grand Theft with a bail amount for Nazabal of $2,500,000 and $500,000 for Kamarian. Christina Marie Martirossian was booked and released on a $40,000 arrest warrant charging Grand Theft.

Investigators are seeking the public’s assistance in finding Desiree Wilcox Nazabal. If anyone has information of her whereabouts they are asked to contact their local police of sheriff’s department or Investigator Tina Greco at 909-891- 3348. Attached is a photo of Desiree Wilcox Nazabal.


Grand Jury indicts Dallas man for mortgage fraud

In the following press release John M. Bales, United States Attorney for the Eastern District of Texas announced that Pierre Sowell, 37, of Dallas, was indicted by a federal grand jury in Plano for several counts of mail fraud and conspiracy to commit mail fraud in connection with a mortgage fraud scheme. According to the indictment, Sowell and an unindicted, unnamed co-conspirator are alleged to have engaged in a scheme to make false statements to mortgage lenders to obtain mortgage loans for Sowell to enable him to purchase three residences. The indictment alleges that Sowell and the unnamed co-conspirator caused several false statements to be made in each of the loan applications that were submitted to the mortgage lenders. Two of the homes were located in Collin County and the other in Dallas County. Sowell faces up to 20 years in federal prison if convicted.

This case is being investigated by the Internal Revenue Service and prosecuted by Assistant U.S. Attorney J. Andrew Williams.


Former President of U.S. Mortgage pleads guilty in $139 million fraud that bankrupted the company

A Montclair man pleaded guilty today to mail and wire fraud and money laundering charges in connection with a $139 million fraud scheme that bankrupted Pine Brook-based U.S. Mortgage Corp. and its subsidiary, CU National Mortgage, LLC, Acting U.S. Attorney Ralph J. Marra, Jr. announced.

Michael J. McGrath, Jr., 46, the former president and director of U.S. Mortgage, pleaded guilty before U.S. District Judge Katharine S. Hayden to one count of mail and wire fraud conspiracy, which carries a statutory maximum prison sentence of 20 years, and one count of money laundering conspiracy, which carries a statutory maximum prison sentence of 10 years.

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Under his plea agreement, McGrath faces an actual sentencing range of between 150 and 240 months in federal prison. He also will have to pay restitution to the victims and has agreed to forfeit to the United States the contents of several bank and brokerage accounts and his interest in a Hoboken property. The plea agreement does not bind Judge Hayden, who must consult the advisory sentencing guidelines but has discretion in imposing a sentence within, above or below the determined guidelines range.

Judge Hayden scheduled sentencing for Oct. 1. Judge Hayden allowed McGrath to be released on a $1 million secured bond and ordered home confinement with electronic monitoring until sentencing.

McGrath admitted that during January 2004 through Jan. 28, 2009, he conspired with several others to fraudulently sell loans belonging to various credit unions and use the proceeds to fund U.S. Mortgage’s operations and his personal investments and investments he made on U.S. Mortgage’s behalf. McGrath further admitted that the scheme started with the diversion of funds that should have been paid to various credit unions for mortgage loans they had made and authorized CU National to sell to Fannie Mae. McGrath expained that he began withholding these funds to help U.S. Mortgage address cash flow problems caused by losing investments in mortgage-backed securities he had made on the company’s behalf.

McGrath further admitted that when U.S. Mortgage’s financial condition continued deteriorating, he sold hundreds of mortgage loans to Fannie Mae without the knowledge and consent of the credit unions that owned the loans.

“This was truly a massive fraud, a giant shell game by McGrath,” said Marra. “McGrath deftly and fraudulently moved these mortgage assets around and sold them while the institutional owners had no idea they no longer held the assets. The goal was to prop up his own company, which instead sunk deeper into trouble as his scheme grew larger and ultimately collapsed.”

To accomplish the fraudulent loan sales, he executed documents assigning the loans from the credit unions to U.S. Mortgage in which he pretended to be an officer of the credit unions in question. He also caused subordinates at U.S. Mortgage to execute documents purporting to assign the loans from U.S. Mortgage to Fannie Mae. And he sold some of these loans a second time, to an institution based in New Jersey. All told, the scheme netted approximately $139 million.

In addition, McGrath admitted that he took numerous steps to conceal the scheme. Those steps included: directing U.S. Mortgage’s servicing manager to generate reports for the credit unions falsely stating that loans that had been sold to Fannie Mae were still in their portfolios: directing the servicing manager to modify data in U.S. Mortgage’s servicing system; directing U.S. Mortgage’s chief financial officer to pay off or make monthly payments to the credit unions for the fraudulently-sold loans; and causing the chief financial officer and another subordinate to falsify documents.

McGrath further admitted that he transferred some of the proceeds of the scheme to bank and brokerage accounts controlled by or benefitting him. McGrath stated that he used the transferred proceeds to invest in, among other things: 1 million shares of Fannie Mae common stock; millions of shares of common and preferred stock of a New Orleans-based company; and a Hoboken property. McGrath conceded that approximately $13 million in funds that the government has frozen or seized to date were involved in, derived from or traceable to his offenses.

McGrath’s guilty plea is the latest step in an investigation by the U.S. Postal Inspection Service, the IRS Criminal Investigations, the FBI and the U.S. Department of Housing and Urban Development Office of Inspector General (HUD-OIG) that became public on Jan. 27, 2009, when dozens of law enforcement agents executed a search warrant at U.S. Mortgage’s and CU National’s Pine Brook headquarters. Shortly afer the search, McGrath indicated that he would take responsibility for the scheme. In the following weeks, U.S. Mortgage and CU National commenced bankruptcy proceedings.

Marra credited Postal Inspectors of the U.S. Postal Inspection Service, under the direction of Postal Inspector in Charge David L. Collins; Special Agents of the IRS Criminal Investigation Division, under the direction of Special Agent in Charge William P. Offord; Special Agents of the FBI, under the direction of Special Agent in Charge Weysan Dun; and Special Agents of the HUD-OIGl, under the direction of Special Agent in Charge Rene Febles, for their vigorous investigation leading to this guilty plea. Marra also thanked the United States Postal Service Office of Inspector General for assisting the investigation. The government is represented by Assistant U.S. Attorney Mark E. Coyne of the U.S. Attorney’s Commercial Crimes Unit.


7 charged with mortgage fraud by Michigan Attorney General

In the following press release Michigan Attorney General Mike Cox today announced that his office has filed charges against seven individuals at the forefront of a major mortgage fraud operation in Southeast Michigan. The charges resulted from a year-long investigation by the Michigan Mortgage Fraud Task Force and included efforts from the Michigan State Police, U.S. Secret Service, and the Attorney General’s office.

“Mortgage fraud is a serious threat to Michigan’s economy, killing jobs and hurting residents’ pocketbooks,” said Cox. “By committing wide scale fraud, these defendants have contributed to the declining home market that is ruining family finances.”

Arraigned today is Eddie Zaben, 39, of Dearborn. Zaben (below) is charged with one count of continuing criminal enterprise (racketeering), a 20-year felony, and eight counts of false pretenses over $20,000, each a 10-year felony. The joint investigation revealed Zaben used his business, MYA’s Investment Group, LLC, to perpetrate large scale mortgage fraud. The scheme involved the financing of at least eight Wayne County homes in 2006 and 2007.


For each property, a straw buyer was recruited and asked to sign the closing papers. Zaben presented fraudulent mortgage applications on their behalf containing falsified employment and income information. Records indicate that some or all of the proceeds disbursed at the closing went to Zaben. As a result of the scheme, each of the properties has been foreclosed or is in the process of foreclosure.

Six others were charged earlier for crimes including ID theft, false pretenses, and uttering and publishing: Dagoberto Reyes, 53 of Detroit, Evelyn Santana, 53 of Union City NJ, Mohamed Beydoun, 27 of Detroit, Memoud Makky, 29 of Dearborn, Ali Hassan Haidous, 25 of Dearborn and Balil Hashem, 26 of Dearborn.

Zaben was arraigned this morning in the 19th District Court in Dearborn before Judge Hultgren. The court imposed a $20,000 personal recognizance bond and Zaben is next due in court for a preliminary examination scheduled for July 31. Other arrests could come shortly.

“I would like to thank the Michigan State Police and the Secret Service for their hard work over a significant period of time to help build this serious case,” said Cox.

Attorney General Mike Cox has made prosecuting mortgage fraud a priority for his office. In 2008, Cox created a mortgage fraud unit and teamed up with the Michigan State Police and other law enforcement agencies to tackle the problem. In the last six months alone, Cox has charged 12 people with mortgage fraud-related offenses. Cox’s office has also held seven mortgage foreclosure forums to help families stay in their homes during these difficult times.

A criminal charge is merely an accusation and the Defendants are presumed innocent unless proven guilty.